Climate transition: some crucial issues

The link between global warming and greenhouse gas (GHG) emissions is not in dispute and the world’s public opinion has become aware of it. CO2 accounts for three quarters of GHG emissions, although the share of methane has been increasing in recent years.


The negative macroeconomic impacts of global warming are obvious, with an increase in natural disasters and economic damage. At the same time, we know that in the event of inaction, the effects on GDP growth would be negative (around -2.5 points of GDP per capita by 2050 at the global level), albeit differentiated according to country. The costs of global warming are multiple: extreme climatic shocks (floods, heat waves, giant forest fires, disruption of monsoons, droughts, etc.); disappearance of arable agricultural land and food insecurity; rise in sea level (coastal erosion, marine submersion, soil salinisation, reduction in coastal activity); increase in demographic risks (climatic migrations) and environmental risks (damage to biodiversity).

However, emissions continue to rise rapidly, with China and India in particular more than offsetting the reduction in developed countries.

It is therefore essential to continue – or even increase – the efforts undertaken to reduce emissions in trend and to move, for the first time in history, from an additive logic to a substitution logic in terms of energy resources, bearing in mind, moreover, that global warming is linked to the stock of gases and not to the flow of emissions.

However, we should not be overly negative. Carbon neutrality is still within reach, in particular because of the fall in the cost of renewable energies, which makes them competitive (technical progress and economies of scale), the improvement of energy storage devices (e.g. solar and wind power thanks to fuel cells), the spectacular reorientation of the automobile industry and the progress of various forms of sobriety (development of soft mobility, reduction in the consumption of red meat in rich countries, reduction in plastic packaging, development of recycling, etc.).

The transition to renewable energies can obviously be encouraged by public action. In particular, to encourage companies to internalise externalities, the public authorities have three categories of instruments at their disposal: regulation, economic incentives and the creation of markets for trading pollution rights.

However, we must be aware of the difficulties of political action in the fight against global warming, including:

    •  The problem of the dual intergenerational and international adequacy (need for climate justice)
    • The need for strong credibility in the medium term (as for central banks) to guide private choices, while not promoting too abruptly the necessary adjustments and, above all, the decarbonisation of the economy.
    • The need for action on all fronts: it is not only a question of ensuring the energy transition but also of ensuring an agro-ecological transition.

It should also be noted that public measures to reduce the impact of global warming can be favourable to activity and employment, even if the projections for growth over the next few decades are too positive. The latter focus on the flow of gross investment in renewable energies and do not take sufficient account of possible financing difficulties, the negative impact on public finances or the inflationary impact. Above all, we must also consider the net investment; yet we must also take into account the disinvestment of carbon-based industries, which has not started anywhere, either in fossil fuel producing countries or in consumer countries.

Let us add that the climate transition will also have recessionary impacts on qualifications, patents and asset values. It will also produce complex reallocations between skills, sectors and regions.

Finally, geopolitical aspects must be borne in mind. The energy transition reduces dependence on OPEC and Russia, but increases dependence on China and/or politically unstable countries, notably via access to strategic metals (e.g. lithium, cobalt, rare earths, etc.) that are widely used in batteries, photovoltaic panels, wind turbines, etc.