Despite mounting pressure on public finances, the shocks related to the pandemic and the energy prices provide important lessons for the design of social protection. This is particularly important where untargeted, price-based measures have the undesirable potential of blurring the price signals needed to underpin the transition to a low-carbon economy.
Sustainable economic growth
While most OECD countries have set ambitious climate targets, policies currently in place are likely to be insufficient to put greenhouse gas emissions on a downward path before 2030, making the goal of net-zero emissions by mid-century challenging to attain. Reaching decarbonisation by mid-century will require structural changes across the economy, notably through substantial reallocation of workers and capital from emission-intensive activities towards greener activities.
Key messages
Climate change mitigation constitutes a large share of priorities in both advanced and emerging-market economies, underscoring the urgent need to accelerate the green transition.
Steering growth in a more durable, resilient and inclusive direction requires structural policy action to increase labour mobility and support firms in becoming more dynamic, innovative and greener. This is particularly important given adverse demographics in most countries, which will require gains in labour productivity to offset slower labour force growth over the medium-to-longer term.
With appropriate policies and incentives in place, notably strong structural reforms combined with coherent climate policy, governments can secure convergence towards net-zero emissions trajectories. This requires action across a variety of policy areas, including the need to deal with transition costs for both businesses and workers.
Digital technologies are transforming economies and offer a vast potential to enhance productivity of firms. Improving policies in a range of areas can support digital adoption and thereby substantially lift productivity.
What's new?
COP 30 Focus
As the impacts of climate change intensify, the need to understand and quantify the economic costs becomes increasingly urgent. Accurate data and metrics are essential for governments, businesses and communities to make informed decisions about where and how to invest in climate adaptation, and how it is interlinked with mitigation efforts.
