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Book/Special report

Investment and growth in the time of climate change

Largely focussing on the European dimension of this goal, this report considers investment and economic growth on a greenhouse-gas emissions trajectory that breaks with the past. At the heart of this analysis is the quest for economic efficiency. Considering trade-offs and government policy together, the key message from this report is that there is unexploited scope for making Europe’s climate action more efficient, growth-friendly, and in tune with fiscal constraints.

By: , , and Date: June 13, 2012 Topic: Energy & Climate

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Climate scientists mostly agree that, if current trends continue, global greenhouse-gas emissions are very likely to result in dangerous interference by mankind in the earth’s climate. Against this background, the world community has set itself the goal of limiting the increase in the global average temperature by the end of this century to no more than 2°C compared to pre-industrial times. To get there, global emissions will have to fall substantially.

Largely focussing on the European dimension of this goal, this report considers investment and economic growth on a greenhouse-gas emissions trajectory that breaks with the past. Investment-related questions that this report pursues include: how should Europe properly balance investment in mitigating greenhouse-gas emissions and adaptation to climate change?

How urgent is it to invest in both? How do global cooperation on climate action and fear of climate catastrophe impact on the balance between mitigation and adaptation? What are the key obstacles to climate investment? Which policies promise to remove these obstacles and make investment profitable, thereby encouraging investment finance? What are the respective roles of the private and the public sector? Growth-related questions include: how are climate action and economic growth linked and, specifically,what is the role of innovation? Are there only trade-offs between climate action and growth or are therewin-wins, too? Can climate action help Europe emerge from its economic crisis? How can climate action be made as growth-friendly as possible?

In addressing these questions, this report takes an economic perspective. More specifically, at the heart of the analysis is the quest for economic efficiency. Not surprisingly for this type of analysis, a key theme running through the report is one of trade-offs and difficult choices that society needs to make. Cognisant of the fact that markets left alone will not make economically efficient choices, another common theme is the role of government policies in bringing about efficient outcomes. Considering trade-offs and government policy together, the key message from this report is that there is unexploited scope for making Europe’s climate action more efficient, growth-friendly, and in tune with fiscal constraints.

The report is the result of a joint research effort by the Economics Department of the European Investment Bank and Bruegel. It is our hope that it will help to clarify some of the complexities involved in designing effective policies to address climate change without sacrificing too much economic growth, in a world in which international cooperation on climate action is so difficult to achieve.

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External Publication

A Safety Net for the Green Economy

How to protect workers hurt by the fight against climate change.

By: Simone Tagliapietra Topic: Energy & Climate Date: July 20, 2021
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Podcast

Podcast

Are robots taking our jobs?

What will be the impact of automation on the economy? Bruegel's own Giuseppe Porcaro discusses with Aaron Benanav, Laura Nurski, and Alexis Moraitis.

By: The Sound of Economics Topic: Innovation & Competition Policy Date: July 20, 2021
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Blog Post

Will European Union recovery spending be enough to fill digital investment gaps?

The recovery facility will boost digital transformation, but questions remain whether it will be sufficient to achieve Europe’s digital ambitions.

By: Zsolt Darvas, J. Scott Marcus and Alkiviadis Tzaras Topic: European Macroeconomics & Governance, Innovation & Competition Policy Date: July 20, 2021
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Blog Post

The European Union’s carbon border mechanism and the WTO

To avoid any backlash, the European Union should work with other World Trade Organisation members to define basic principles of carbon border adjustment mechanisms.

By: André Sapir Topic: Energy & Climate, Global Economics & Governance Date: July 19, 2021
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Blog Post

Making sure green household investment pays off

Policies are needed to support green fuel switching by households; support should be phased out as the carbon price rises.

By: Ben McWilliams and Georg Zachmann Topic: Energy & Climate Date: July 19, 2021
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Podcast

Podcast

A fitting plan for the European Green Deal?

How does the world's first roadmap for meeting climate goals stack up?

By: The Sound of Economics Topic: Energy & Climate Date: July 15, 2021
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Opinion

‘Fit-for-55’ package: Squaring the circle

The European Union finds itself at the centre of a three-dimensional puzzle. Burdens need to be shared between 450 million citizens, 25 million businesses and EU countries in a way that is acceptable to enough of them.

By: Georg Zachmann Topic: Energy & Climate Date: July 15, 2021
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Policy Contribution

A new direction for the European Union’s half-hearted semiconductor strategy

The EU needs a more targeted strategy to increase its presence in this strategic and thriving sector, building on its existing strengths, while accommodating its relatively low domestic needs.

By: Niclas Poitiers and Pauline Weil Topic: European Macroeconomics & Governance, Innovation & Competition Policy Date: July 15, 2021
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Blog Post

Fit for 55 marks Europe’s climate moment of truth

With Fit for 55, Europe is the global first mover in turning a long-term net-zero goal into real-world policies, marking the entry of climate policy into the daily life of all citizens and businesses.

By: Simone Tagliapietra Topic: Energy & Climate, European Macroeconomics & Governance Date: July 14, 2021
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Upcoming Event

Sep
2
10:15

The role of the state in providing infrastructure for decarbonisation

Bruegel Annual Meetings, Day 2 - Who should be responsible for providing crucial infrastructure for decarbonisation and how should it be managed?

Speakers: Jean-Bernard Lévy, Diederik Samsom, Simone Tagliapietra, Laurence Tubiana and Georg Zachmann Topic: Energy & Climate Location: Palais des Academies, Rue Ducale 1
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Upcoming Event

Sep
2
14:30

Brave new digital industrial policy

Bruegel Annual Meetings, Day 2 - In this session our speakers will dicuss innovation and digitalisation.

Speakers: Francesca Bria, Kerstin Jorna, Marietje Schaake and Reinhilde Veugelers Topic: Innovation & Competition Policy Location: Palais des Académies, Rue Ducale 1, Brussels
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Upcoming Event

Sep
3
10:15

Sustainable finance

Bruegel Annual Meetings, Day 3 - In this session on the final day of the Meetings, our panelists will discuss the future of finance and its sustainability.

Speakers: John Berrigan, Maria Demertzis, Alberto De Paoli and Pierre Heilbronn Topic: Energy & Climate, Finance & Financial Regulation Location: Palais des Académies, Rue Ducale 1, Brussels
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