Global | Transition to decarbonization — A challenge and an opportunity

Summary

For a successful transition to a decarbonized economy, public policies must be aligned so that the private sector can multiply its positive impact through the incentive of economic profitability.

Key points

• Key points:
• Decarbonization policies must internalize the cost to society of carbon emissions into the atmosphere. They must also be global in scope (as we are dealing with a global problem), redistributive (given the unequal impacts on both households and companies) and, last but not least, predictable in the long run.
• Reducing the risk premium of decarbonization projects (known as “derisking”) is key to achieving this positive impact by the private sector, which has a key role to play given the ambitious emission reduction targets that have been set.
• It is estimated that Spain will have to channel 6.2% of its annual GDP into green investments alone until 2050, almost two times the country’s GDP in 2022.
• Degrowth is not the solution: economic and technological development helps to mitigate climate change. Only with high levels of development can we hope to reduce the intensity of emissions into the atmosphere. Moreover, a digital society will be more energy efficient.

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