Page:The Cost of Delaying Action to Stem Climate Change.pdf/6

The second type of cost of delay is the increased cost of reducing emissions more sharply if, instead, the delayed policy is to achieve the same climate target as the non-delayed policy. Taking meaningful steps now sends a signal to the market that reduces long-run costs of meeting the target. Part of this signal is that new carbon-intensive polluting facilities will be seen as bad investments; this reduces the amount of locked-in high-carbon infrastructure that is expensive to replace. Second, taking steps now to reduce CO₂ emissions signals the value of developing new low- and zero-emissions technologies, so additional steps towards a zero-carbon future can be taken as policy action incentivizes the development of new technologies. For both reasons, the least-cost mitigation path to achieve a given concentration target typically starts with a relatively low price of carbon to send these signals to the market, and subsequently increases as new low-carbon technology becomes available.^[1]

The research discussed in Section II of this report shows that any short run gains from delay tend to be outweighed by the additional costs arising from the need to adopt a more abrupt and stringent policy later.^[2] An analysis of the collective results from that research, described in more detail in Section II, suggests that the cost of hitting a specific climate target increases, on average, by approximately 40 percent for each decade of delay. These costs are higher for more aggressive climate goals: the longer the delay, the more difficult it becomes to hit a climate target. Furthermore, the research also finds that delay substantially decreases the chances that even concerted efforts in the future will hit the most aggressive climate targets.

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1. The 2010 National Research Council, Limiting the Magnitude of Future Climate Change, also stressed the importance of acting now to implement mitigation policies as a way to reduce costs. The NRC emphasized the importance of technology development in holding down costs, including by providing clear signals to the private sector through predictable policies that support development of and investment in low-carbon technologies.
2. The IPCC WG III AR5 (2014) includes an extensive discussion of mitigation, including sectoral detail, potential for technological progress, and the timing of mitigation policies.