Last week, the UN Secretary-General, António Guterres, announced that the central objective of the UN for 2021 will be to build a Global Coalition for Carbon Neutrality. He stated that he firmly believes that “2021 can be a new kind of leap year — the year of a quantum leap towards carbon neutrality”.
With 110 countries having committed to carbon neutrality by 2050 there is already much progress to build upon. Beyond these announcements, countries need to produce detailed analysis to understand whether these targets to meet the 1.5 degrees Celsius goal are doable while achieving a sustainable recovery from COVID-19, which generates prosperity, jobs and leaves no one behind.
Cue Costa Rica. The Central American country has crunched the numbers in a groundbreaking cost-benefit analysis of its National Decarbonization Plan. The study shows that Costa Rica’s Decarbonization Plan will bring USD 41 billion in net benefits within three decades through energy savings, reduced cost of accidents and time wasted in congestion, and improvements in ecosystem services and agriculture yields.
Costa Rica’s Decarbonization Plan could bring multiple benefits and drive sustainable recovery
As Costa Rica’s Christiana Figueres, the former chief of the UN Climate Secretariat, recently told El País, “[we] have thought that decarbonizing is something expensive, but no, it is an investment that gives benefits in the short, medium and long term, that creates jobs and helps the economy to grow.”
The new study, “The Benefits and costs of decarbonizing Costa Rica’s economy” produced by the IDB with RAND Corporation, the University of Costa Rica and the Government of Costa Rica shows just that.
Despite the colossal shock caused by COVID-19, the study stresses that well-executed, the plan will bring major benefits in areas including economic productivity, competitiveness and quality of life even after paying investment costs necessary to electrify transport, improve agricultural and livestock practices, and the restoration and protection of ecosystems.
Implementing the National Decarbonization Plan is not free: it would cost about USD 37 billion in investments and the forgone economic value of land used to reforest. But it would save or provide USD 78 million in benefits – more than twice as much as its costs.
Two key sectors for a beneficial implementation of the National Decarbonization Plan are public and private transport and land-use in rural areas, particularly in livestock, agriculture and forests. These are the sectors that combine greater economic benefits with greater emission reductions. Waste management, efficient industry and buildings, and keeping Costa Rica’s electricity almost entirely renewable are also key to achieving net-zero emissions. Successfully implementing the Plan would imply that Costa Rica would reach 2050 with greenhouse gas emissions so small that its forests could fully offset them.
In all sectors, the role of the private sector will be essential. Public transportation on buses, for instance, is provided by the private sector. Government regulations and procurement practices can make or break the profitability of electric buses for private operators. That is why the decarbonization plan comes with a policy roadmap designed to enable the uptake of carbon-free solutions in the private sector. And it is not about subsidizing clean technology deployment. Rather, much of it can be through removing red tape, which inhibits the uptake of already existing and profitable carbon-free solutions.
To assess the uncertainty surrounding a plan that would take three decades to implement, the technical team repeated their calculations of emissions, benefits, and costs for 3,003 plausible futures, making assumptions over 300 uncertainties and 47 additional factors. More than 50 government agencies and organizations representing key sectors linked to the National Decarbonization Plan provided inputs to set up these simulations. Of the 3,003 times that the team repeated their calculations with varying assumptions, only in 21 did the Plan have net costs.
The study builds on the work that the IDB has carried out with the Government of Costa Rica on its National Decarbonization Plan, which illustrates the role that development banks can play to finance climate ambition. This approach has emphasized that the transition towards net-zero emissions economy must be carried out with the involvement of key ministries, productive sectors, companies and civil society. This is critical to ensure that governments can enable a just transition by making sure that everyone has a voice in the design of climate plans, and that the country collectively seizes the opportunities and manages the challenges of the transition.
Decarbonization aligned with the Paris goals can boost prosperity and enable a recovery from COVID-19
As Costa Rica’s president, Carlos Alvarado Quesada and the Minister of Environment and Energy, Andrea Meza, say in the report’s foreword, “[the pandemic] has provided a glimpse of what the impacts of the climate crisis will bring if we do not change the development paradigm. We must move towards a sustainable recovery that creates jobs and fosters growth, but also increases inclusiveness and our resilience, reduces emissions and protects our ecosystems.”
This call to action is especially pressing as the international community prepares to celebrate the fifth anniversary of the Paris Agreement on December 12th. While various major announcements by China and Europe mark a significant geopolitical shift on climate change and show that the agreement is working, there is still a huge amount of heavy lifting required to secure a climate-safe future.
The UN’s 2020 Emissions Gap Report finds that, despite a small dip in this year’s carbon dioxide emissions caused by the pandemic, the world is still heading towards 3 degrees Celsius of warming this century. Meanwhile, the UN’s Production Gap Report shows that countries are planning to increase fossil fuel production by 2% on average annually, which by 2030 would be more than double the production consistent with limiting global heating to 1.5 degrees Celsius.
Costa Rica’s efforts to demonstrate the economic benefits of decarbonization show that aiming for net-zero emissions can be a win-win for achieving a transition towards net-zero emissions by 2050 and to support a sustainable recovery today. To secure the quantum leap called for by the UN Secretary-General other countries large and small should take note of this pioneering decarbonization laboratory.
The Benefits and Costs of Decarbonizing Costa Rica’s Economy: Informing the Implementation of Costa Rica’s National Decarbonization Plan under Uncertainty
Jobs in a Net-Zero Emissions Future in Latin America and the Caribbean
Costa Rica’s Decarbonization Plan provides a framework for the future
Can nature support a green and inclusive economic recovery?
Long-term decarbonization strategies can guide Latin America’s sustainable recovery
Follow us on Twitter: @BIDCambioClima
Photo by Zdeněk Macháček
Leave a Reply