A report by the Economic and Social Research Institute (ESRI) warns that failure to decarbonise the economy would result in declines in gross domestic product (GDP), investment, and consumption expenditures. The report quantifies the cost of inaction and states that if international energy prices remain high, real GDP in 2030 would be around 0.7% lower than the business-as-usual scenario. The higher carbon tax and EU Emissions Trading System (EU ETS) price also have contractionary economic effects.
Failure to decarbonise the economy would lead to declines in gross domestic product , investment and consumption expenditures , while labour market outcomes would also deteriorate, according to a report by the Economic and Social Research Institute
The costs stemming from the higher carbon tax and the EU Emissions Trading System price have contractionary economic effects, further reducing real GDP by 0.7 and 1.1 percentage points respectively compared to the GDP impacts of higher energy prices. The impacts of the higher carbon tax are especially strong for the aggregate mining, transportation, and electricity sectors.
Reduced economic activity would lead to reduced emissions. Also, with a shrinking economy, government revenues would decrease, and the government debt burden would increase. The results show that becoming a low-carbon economy would not only help mitigate the adverse impacts of climate change but also make the Irish economy more resilient against an external energy price shock.
Decarbonisation Economy GDP Investment Consumption Expenditures Report Cost Of Inaction Energy Prices Carbon Tax EU ETS
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