Mitigating climate change requires a large-scale transition to a low-carbon economy. The scientific consensus is that climate change is undermining the ecological systems on which human and all other forms of life depend, and that mitigating climate change is crucial to preserving the conditions for economic growth and life within earth systems. There is also a strong scientific consensus that limiting global warming to well below 2°C requires a transformation in the structure of global economic activity on a massive scale.
On their own, markets cannot deliver sufficient mitigation. Market failures, unaddressed and exacerbated by government failures, prevent an appropriate market response to the challenge of mitigating climate change. Some market failures can prevent needed long-term private investment even if public investments were sufficient and relative energy prices appropriate, justifying the use of financial policies as complements to fiscal policies.
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The broad consensus in the literature is that expected damages caused by unmitigated climate change will be high and the probability of catastrophic tail-risk events is nonnegligible. There is high uncertainty around climate damage estimates and many different estimates have been produced in the literature. Some studies point to large damages.
[T]he uncertainties are more important than the baseline scenarios, and that climate change is likely to uncover previously hidden interdependencies between the economy and natural systems, revealing new and potentially enormous disruptions and costs.
There is growing agreement between economists and scientists that the tail risks are material and the risk of catastrophic and irreversible disaster is rising, implying potentially infinite costs of unmitigated climate change, including, in the extreme, human extinction.