Article in Journal

How to Overcome the Short-term Costs of the Climate Transition?

Lorenzo Forni, Massimo Tavoni
CESifo, Munich, 2023

EconPol Forum 24 (6), 07-11
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  • Transitioning to a climate-resilient future can offer significant economic benefits when compared to maintaining current emissions levels. Renewables and electrification promise reducing dependence on fossil fuels, benefiting both the environment and human well-being
  • The transition to a green economy, however, faces shortterm challenges, including stranded assets and skill obsolescence. Overcoming these obstacles requires securing public buy-in, addressing the disparity between private costs and societal benefits, and developing comprehensive policy strategies
  • Public acceptance of climate policies hinges on perceived fairness and policy efficacy, with effective communication about benefits playing a pivotal role. While carbon revenue recycling can gain short-term public support, a holistic approach, integrating various mitigation strategies and transparent communication, is vital for a sustainable transition
  • Several authors emphasize the importance of aggressive early action for a successful green transition, highlighting the momentum and cost reductions achieved with the diffusion of green goods and technologies
  • Challenges such as political divides, economic disparities, and the interplay between market and government failures can potentially hinder the positive feedback loop and derail green transition efforts. To ensure success, a concerted effort from both the public and private sectors, backed by rigorous research to understand societal behaviors and attitudes, is necessary

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