Contrary to popular opinion the drive to tackle global warming will result in a significant boost to the global economy.
That is the conclusion of a new report from investment bank Barclays Capital, which claims the need to increase energy supply by 50 percent over the next 25 years while simultaneously weaning our economies off of hydrocarbons will lead to an "energy revolution" that will "prove highly stimulatory for the global economy".
Speaking to GBN, report author and global head of asset allocation at Barclays Capital Tim Bond said that the current political and economic focus on how much climate change is going to cost in terms of GDP was "fundamentally flawed".
"We've seen throughout history that wherever an economy adopts a new general purpose technology there has been no circumstance where it has had a negative effect on growth," he explained. "The shift from hydrocarbons to alternatives should be seen in these terms."
The report argues that with the transition towards green technologies and business practices estimated to require at least 15 percent of global investment in the medium term there is bound to be a stimulatory effect on the global economy as more people are employed and more money invested.
Bond also argued that a shift to renewable energy sources would help create a more stable investment environment. "Hydrocarbon based energy may be cheap in nominal terms but it has been characterised by volatility," he said. "One thing alternative energy should give us is stable and predictable pricing, which means uncertainty will be diminished and the cost of investment in energy will come down."
Unfortunately however Bond admitted that this rosy outlook is dependent upon the development in the near future of a clear political and regulatory framework to underpin the transition towards clean energy.
"The capital is queuing up and the markets are raring to go," he said. "But the only barrier is the uncertainty around the politicians sitting down and sorting out a framework. In the past businesses have shifted and the politicians haven't shifted enough, but the feeling of us and other investment houses is that the defeat of the Republicans at the mid-term elections means the log jam has been removed and that an international agreement is now likely."
Failure to deliver such a regulatory framework would have a negative impact from an investment as well as an environmental perspective, according to Bond. "Without an agreement we will have persistent uncertainty around which energy sources to back, which will deter investment," he argued.
Bond argued that the current uncertainty around international energy policy has already had a dampening effect on the global economy of around 1.5 percent a year since energy prices started to rise in 2002. He said that while demand was currently outstripping supply investment in real terms in energy was not climbing to meet that demand due to fears amongst investors that they might back energy projects that could be hit by a new legislative framework.
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