According to a 2018 report by the Intergovernmental Panel on Climate Change, baseline spending on clean energy around the world is about US$1.1 Trillion every year, equivalent to 1.3% of Global GDP. In order to limit global warming to 1.5°C, the IPCC projects that investments in clean energy spending will have to increase to around US$2.6 Trillion, which is 3% of Global GDP. (See chart B on page 155). That’s a difference of just 1.7%!
Other agencies have produced similar estimates. In a 2021 publication titled Net Zero by 2050: A Roadmap for the Global Energy Sector, the International Energy Agency estimates that achieving a net-zero economy will require investments in clean energy and energy efficiency to rise to US$4.25 Trillion by 2030 (see the chart on page 22). Since the International Monetary Fund projects that Global GDP in 2030 will be around US$149 Trillion (see the chart on page 6), these investments in clean energy will amount to about 2.85% of Global GDP. Since we already spend about 1.3% of Global GDP on clean energy and energy efficiency, this is an increase of just 1.55%!
The Amazon rainforest covers a massive area stretching over 6.7 Million square kilometers, in 9 different countries. Our calculation relied on estimates of the cost of land in the region. According to the Inter-American Development Bank, a hectare of cleared land in the Amazon costs about US$1,200, or US$120,000 per square kilometer. At that price, the cost for local conservation groups wishing to buy all 6.7 Million square kilometers would be US$804 Billion, equal to about 1% of Global GDP.
This hypothetical nature reserve could shield local communities and biodiversity from destructive business interests.
A 2019 report by the Global Commission on Adaptation states that an investment of US$1.8 Trillion in climate adaptation over the next 10 years could yield over US$7 Trillion in net benefits. This initial investment could fund a range of projects including resilient infrastructure and advanced early warning systems.
According to the Stockholm International Peace Research Institute, global military spending topped US$2 Trillion in 2020 — that adds up to 2.4% of annual Global GDP. But the world’s militaries don’t just cost a lot—Scientists for Global Responsibility estimates that they are also responsible for 6% of all global emissions.
Direct fossil fuel subsidies often come in the form of tax breaks to fossil fuel producers. These subsidies serve to artificially lower the cost of extracting and selling coal, oil and gas. But beyond direct subsidies, fossil fuel producers also receive a number of indirect subsidies. These are social and environmental costs that the fossil fuel producers are not made to pay, including the healthcare expenses arising from air pollution. According to the International Monetary Fund, the cost of both the direct and indirect subsidies amounts to an astonishing US$5.9 Trillion, or almost 7% of Global GDP each year!
The European Union estimates the amount of money held in offshore tax havens to be US$7.8 Trillion. According to another report, corporations stash an average of US$1.38 Trillion in profits offshore each year. When combined together, private and corporate tax evasion cause governments to lose US$427 Billion in annual tax revenue. That’s almost 0.5% of Global GDP!
According to research by the UN, the economic value of food that is lost and wasted each year is US$1 Trillion. That’s slightly more than 1% of Global GDP. This includes edible food lost at the production stage, during transport, and thrown away by retailers and consumers. But wasted food also has numerous environmental and social costs, including the costs of carbon emissions associated with growing and transporting food that goes uneaten. After including these factors, the cost of lost and wasted food balloons to US$2.6 Trillion, or 3% of Global GDP! Another major source of food waste includes the practice of feeding grain to farm animals. This could be costing the global economy as much as US$1.3 Trillion every year. That’s about 1.5% of Global GDP!