Costs and benefits of the Paris climate targets

The temperature targets in the Paris Agreement cannot be met without very rapid reduction of greenhouse gas emissions and removal of carbon dioxide from the atmosphere. The latter requires large, perhaps prohibitively large subsidies. The central estimate of the costs of climate policy, unrealistically assuming least-cost implementation, is 3.8–5.6% of GDP in 2100. The central estimate of the benefits of climate policy, unrealistically assuming high no-policy emissions and constant vulnerability, is 2.8–3.2% of GDP. The uncertainty about the benefits is larger than the uncertainty about the costs. The Paris targets do not pass the cost-benefit test unless risk aversion is high and discount rate low.