Wednesday 06 Oct 2021 | 22:27 | SYDNEY
Wednesday 06 Oct 2021 | 22:27 | SYDNEY

The profits of climate change


Sam Roggeveen


24 June 2008 10:11

You need to set up a free subscription to read this McKinsey report (h/t GSI online), but it's worth it. Here's the headline conclusion from McKinsey's study on what can be done to cut carbon emissions in four major economies; the US, UK, Germany and Australia:

...each of these four large economies can reduce its emissions by 25 percent below the levels they will reach in 2030 if nothing is done to abate emissions. In addition, such cuts can be achieved at relatively little or no cost and without significantly changing the lifestyles of these countries. In Australia, the potential is even bigger—a reduction of 70 percent at little or no cost.

What’s more, many of these opportunities are profitable. Most involve improved energy efficiency—in other words, investments in better insulation for buildings, energy-efficient appliances and machinery, and more energy-efficient heating and air-conditioning systems, all of which will pay off through reduced energy bills.

That second paragraph is important because it suggests a way past the climate change scepticism debate. If these emissions mitigation measures can actually turn a profit, why wouldn't you invest in them, even if you think climate change is a crock?

But the question begs: if it's profitable, why aren't we doing it already? The report suggests a range of reasons, but one is that consumers are apparently reluctant to invest in higher upfront costs if the payback time exceeds two years.