How will the costs of tackling climate change be distributed around the world and between sectors?
The cost may be unevenly distributed amongst countries. For equity reasons, rich countries may at least initially need to take on more of the costs. For illustration, if the costs of mitigation are 1% of global GDP, then if the rich countries agreed to pay 20% more in the initial decades (1.2% of GDP), then this would allow poorer countries – accounting for 80% of the world’s population – to pay only 0.2% of GDP. If some countries take action that is much more significant than others over long periods of time, this may lead to impacts on the competitiveness of some firms or sectors, particularly in energy-intensive industries. It is important to use quantitative analysis to assess the size of these impacts, and to find ways to reduce the problems. If all countries act in a broadly similar way, there will be no impact on competitiveness or on firms’ decisions to invest in particular locations. For some industries, a global sectoral agreement in advance of a broader international agreeme
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