Cutting emissions will hit growth, but costs of inaction much higher, says IMF

theguardian.com:

Vital steps to reduce greenhouse gases by 25% by the end of the decade will lead to lower growth and higher inflation but the costs of inaction would be far greater, the International Monetary Fund has said.

The IMF said decades of procrastination meant what could have been a smooth transition to decarbonised economies would now be more challenging, and the world had to cut fossil fuel use by a quarter in eight years to have a chance of hitting the global climate crisis goals set in Paris in 2015.

“Because the energy transition needed to accomplish this has to be rapid, it is bound to involve some costs in the next few years,” the Washington-based fund said in a chapter from its forthcoming half-yearly World Economic Outlook.

IMF officials have estimated growth will be reduced by between 0.15 and 0.25 percentage points a year between now and 2030 while inflation will be between 0.1 and 0.4 points higher.

But the IMF said its central message was “that if the right measures are implemented immediately and phased in gradually over the next eight years, the costs will remain manageable and are dwarfed by the innumerable long-term costs of inaction”.

Under the Paris deal, nations vowed to prevent the world’s average temperature rising 1.5C above pre-industrial times in order to avoid dangerous climate breakdown, and the IMF said more effort was needed if there was to be a “fighting chance” of achieving the goal.

China, the US and the European Union would experience less of a growth hit – ranging between 0.05 points and 0.20 points a year on average – while the impact on the rest of the world – including fossil-fuel exporting countries and energy-intensive emerging market countries – would be higher.

The IMF said governments should