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More ambitious emissions cuts could generate 6 million jobs more in Europe alone

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A new study by a research consortium led by the Potsdam Institute for Climate Impact Research has revealed that shifting the European Union’s target from 20 to 30 percent of greenhouse gas reduction by 2020 could trigger more economic growth and create 6 million jobs.
More ambitious emissions cuts could generate 6 million jobs more in Europe alone

The report, “A New Growth Path for Europe ‐ Generating Growth and Jobs in the Low‐Carbon Economy”, was commissioned by the German Federal Ministry of the Environment, Nature Conservation and Nuclear Safety, and conducted by a international consortium of experts and researchers from the Potsdam Institute for Climate Impact Research, Oxford University, University of Paris Panthéon‐Sorbonne, National Technical University of Athens, and European Climate Forum, and led by Professor Carlo C. Jaeger from the Potsdam Institute.

Traditional models assume a ‘single stable equilibrium’, where investments are determined by an assumption of business‐as‐usual economic trends. The financial crisis however has exposed the fact that different expectations can lead to different investment behaviours, turning those expectations into self‐fulfilling prophecies. This experience has been used to develop a new model highlighting the importance of policy in shaping investors’ expectations, leading to a virtuous circle of increased investments, faster ‘learning by doing’ in technology and manufacturing and enhanced expectations by investors in the market.

By applying this theory to the GEM E3‐model used by the European Commission for its analysis of the impact of a 30% greenhouse gas reduction target, the report’s authors have been able to show that the European economy could be shifted into a new ‘low carbon equilibrium’ through a decisive move to a domestic 30% emissions reduction target and independently of an international post‐2012 agreement, thereby setting expectations for growth of the European economy at a higher level. European industry can maintain and enhance its competitiveness by developing the low carbon materials and technologies that will shape the future.

Increasing the EU’s 2020 greenhouse gas reduction target from 20% to 30%, the report says, could help boosting European investments from 18% to 22% of GDP, leading to a GDP increase of up to €620 billion and the creation of up to 6 million additional jobs.

“In traditional economic models, reducing greenhouse gas emissions incurs an extra cost in the short term which is justified by avoiding long term damages. However what we are showing here is that by credibly engaging on the transition to a low carbon economy through the adoption of an ambitious target and adequate policies, Europe will find itself in a win‐win situation of increasing economic growth while reducing greenhouse gases,” explains Prof. Carlo C. Jaeger.

“It is time for Europe to understand the opportunities and the challenges from the transition to a low‐carbon economy. This study makes a compelling case for an increase of EU’s climate target to 30% that will strengthen the European economy,” he emphasises.

For additional information:

A New Growth Path for Europe ‐ Generating Growth and Jobs in the Low‐Carbon Economy

Tags: Europe , Jobs , Nuclear , SAF , Carbón
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