Image of people watching a sunset for representation
| Photo Credit: AP

The global economy is expected to lose about 19% income in the next 25 years due to climate change, with countries least responsible for the problem and having minimum resources to adapt to impacts suffering the most, according to a new study published on Wednesday.

The study by scientists at Germany’s Potsdam Institute for Climate Impact Research said climate impacts could cost the global economy around $38 trillion a year by 2049.

“Our analysis shows climate change will cause massive economic damages within the next 25 years in almost all countries around the world, also in highly developed ones such as Germany, France, and the United States,” said scientist Leonie Wenz who led the study published in the journal Nature.

South Asia to be affected

South Asia and Africa will be strongly affected, said Maximilian Kotz, another researcher.

The researchers looked at detailed weather and economic data from over 1,600 regions globally, covering the last 40 years.

They said global income loss could vary between 11% and 29%, depending on different climate scenarios and uncertainties in the data.

The predicted loss is massive and already about six times more than what it would cost to reduce carbon emissions enough to keep the average temperature rise below two degrees Celsius, the researchers said.

These economic damages are mostly due to rising average temperatures. However, when the researchers also considered other factors like rains and storms, the predicted economic damages increased by about 50 per cent and varied more from one region to another.

Regions closest to equator to be hit

While most regions in the world are expected to suffer economically due to these changes, they said regions near the poles might see some benefits due to less temperature variability.

On the other hand, the hardest-hit regions will likely be those closer to the equator, which historically have contributed less to global emissions and currently have lower incomes.

“Our study highlights the considerable inequity of climate impacts: We find damages almost everywhere, but countries in the tropics will suffer the most because they are already warmer. Further temperature increases will therefore be most harmful there,” said Anders Levermann, head of Research Department Complexity Science at the Potsdam Institute and co-author of the study.

The countries least responsible for climate change are predicted to suffer income loss that is 60% greater than the higher-income countries and 40% greater than higher-emission countries. They are also the ones with the least resources to adapt to its impacts, he said.

“These near-term damages are a result of our past emissions. We will need more adaptation efforts if we want to avoid at least some of them. We have to cut down our emissions drastically and immediately; if not, economic losses will become even bigger in the second half of the century, amounting to up to 60 per cent of the global average by 2100,” Mr. Wenz said.

“It is on us to decide: structural change towards a renewable energy system is needed for our security and will save us money. Staying on the path we are currently on will lead to catastrophic consequences. The temperature of the planet can only be stabilized if we stop burning oil, gas, and coal,” Mr. Levermann said.

Average temperatures

Global average temperatures have risen by more than 1.1 degrees Celsius since 1850, exacerbating climate impacts, with 2023 being the hottest on record.

The greenhouse gases spewed into the atmosphere, largely due to the burning of fossil fuels since the start of the Industrial Revolution, is closely tied to it.

According to the World Meteorological Organization’s “State of the Global Climate 2023” report, greenhouse gas levels, surface temperatures, ocean heat and acidification, and sea level rise all reached record highs in 2023.

Climate science says the world needs to slash CO2 emissions by 43% by 2030 to limit the average temperature rise to 1.5 degrees Celsius, the guardrail to prevent worsening of climate impacts.

The business-as-usual scenario will take the world to a temperature rise of around three degrees Celsius by the end of the century, scientists have warned.

FILE PHOTO: Celsius Network logo and representations of cryptocurrencies are seen in this illustration
| Photo Credit: REUTERS

Cryptocurrency lender Celsius Network said Bitcoin mining is key to the company’s restructuring efforts at a U.S. bankruptcy court hearing on Monday in Manhattan.

(Sign up to our Technology newsletter, Today’s Cache, for insights on emerging themes at the intersection of technology, business and policy. Click here to subscribe for free.)

New Jersey-based Celsius received approval from U.S. Bankruptcy Judge Martin Glenn to spend $3.7 million in construction costs at a new Bitcoin mining facility and $1.5 million on customs and duties on imported Bitcoin mining rigs. Patrick Nash, a lawyer for Celsius, told Glenn that Bitcoin mining could provide a way for the company, which halted other business operations like its cryptocurrency lending, to repay customers, whose assets its froze in the weeks leading up to its bankruptcy filing.

“In a world where the crypto market rebounds, the mining business has the potential to be quite valuable,” Nash said.

Celsius filed for Chapter 11 protection on July 13, listing a $1.19 billion deficit on its balance sheet. Crypto lenders’ business model came under scrutiny following a sharp crypto market sell-off spurred by the collapse of major tokens TerraUSD [UST] and LUNA in May.

Celsius’ assets shrank amid the extreme volatility, and its freezing of customer accounts was an attempt to stem losses and stabilise its business, Nash said.

Celsius hopes the mining effort will help it repair its relationship with customers, some of whom sent threats and hate mail to some company employees in the weeks before the Chapter 11 filing.

But a group of equity investors previewed a possible fight for control over the Bitcoin mining operations. Dennis Dunne, the investors’ lawyer, said they may argue that the newly mined coins should be considered property of the UK subsidiary that raised the funds for the mining operation, rather than being distributed for the benefit of all Celsius creditors.

Customers might also object to Celsius’ spending on Bitcoin mining vendors at a time when their own recovery is in doubt, the U.S. Department of Justice’s bankruptcy watchdog said.