Niklas Höhne is the director of energy and climate policy at Ecofys. Michel den Elzen is the senior climate policy analyst at PBL Netherlands Environmental Assessment Agency.

As the world continues to warm, many academics question whether the international goal to limit global temperature rise to 2°C is still realistic. New analysis shows that achieving this goal is not only possible, it’s economically advantageous.

Staying on world’s current emissions trajectory will cost 3.5-4 percent of global GDP by 2100 and then continue to rise, thanks to damages incurred by unmitigated sea level rise, extreme weather, and other impacts. On the other hand, a draft paper from the Agreement for Climate Transformation 2015 (ACT 2015) initiative lays out three ways countries can forge an international climate action plan that limits global temperature rise to 2°C. These strategies would only cost about 1.5-2 percent of global GDP by 2100—factoring in mitigation and adaptation costs, damage caused by climate impacts, and some co-benefits—and would yield further economic benefits over the long term.

3 Scenarios for an International Climate Agreement

As part of the U.N. Framework Convention on Climate Change (UNFCCC), countries are currently working to establish an international climate action agreement by 2015. Part of this process involves countries submitting their plans to reduce their emissions nationally. Ideally, counties will submit national emissions-reduction plans in 2015 that clearly achieve the 2°C objective, but how the 2015 agreement eventually gets to the 2°C goal remains to be seen.

As part of its analysis, ACT 2015 developed three hypothetical scenarios (three propositions) for the outcome of an international climate agreement in 2015 that would keep temperature rise below 2°C. This analysis shows that taking action to limit global warming to below 2°C is advantageous, as by the end of the century, total costs would be approximately half the costs of a business-as-usual scenario without mitigation policies. And in all three scenarios, the co-benefits (mainly in terms of air quality and energy security) and avoided damages are likely to exceed mitigation costs in the long term.

The three propositions all keep global temperatures from rising above 2°C, but achieve this in different ways.

  • Under the Steady proposition, countries would commit to ambitious, upfront emissions-reduction targets. This means that by 2030, countries’ emissions levels will be on track to limit warming to 2°C. This scenario results in the lowest mitigation costs of all three propositions, with a maximum of about 1 percent of global GDP.

  • Under the Dynamic proposition, immediate emissions-reduction plans would not be ambitious enough, but efforts would be ramped up over time. With this delayed action, initial mitigation costs would be lower, but after around 2030, mitigation costs increase steeply through 2050 to around 2 percent of GDP and then begin to decrease.

  • Under the Pioneer proposition, countries would send a clear signal to business, investors and the public by setting a global goal to phase out greenhouse gas emissions to net zero by the middle of the century. This would require significant action and investment in technology, resulting initially in higher mitigation costs through 2050, followed by costs that are lower than the other two propositions for the second half of the century.

Moving Toward a Real International Climate Agreement

All three propositions are hypothetical examples and are not mutually exclusive. The actual 2015 agreement could be a blend of these scenarios—or it could pursue a different path entirely. Each scenario comes with inherent risks and limitations, so the cost and benefits associated with each of the scenarios will be different.

These propositions were developed to spur dialogue on what the 2015 agreement could look like under different arrangements and identify the interests and perspectives of various stakeholders and countries. But while this analysis is based on hypothetical propositions, its bottom line has decidedly real implications: Climate action is not without its costs, but the world absolutely cannot afford to exceed 2°C of warming. As negotiators prepare for the next U.N. climate negotiations in Lima in December, they should keep a key message in mind: It’s both possible and beneficial to prevent the worst costs of climate change—but it’s going to take ambition.