Net zero would shrink Britain’s economy by £60bn and cause the global economy to be $3.6 trillion (£2.8 trillion) smaller, according to the Organisation for Economic Cooperation and Development.
Eliminating coal and reducing reliance on oil and gas will slightly decrease global GDP growth in the next few years, according to economists from the Paris-based group.
As the deadline of 2050 to decarbonise our economy approaches, the impact will increase to a 0.6 percent point drop.
In 2050, the cumulative effect will be a 3.7pc reduction in the global economy. This is the equivalent of $3.6 trillion in lost output across all 38 OECD member countries.
The UK will only suffer a 1.65pc hit, which is equivalent to $79bn or around £62.5bn.
Net Zero will hinder economic growth because countries will have to invest heavily in replacing current power systems with cleaner technology.
Solar panels and wind farms are two examples of new infrastructure that costs billions to install, but produces the same amount energy with little economic benefit.
The OECD says that Britain needs to spend 25 billion pounds a year (equivalent) on the expansion of the electricity network in order to reach net zero.
Investments also involve diverting money that would have otherwise been spent to other places.
The OECD said that we need to keep making big investments until 2050. This will put more pressure on public finances.
Carbon taxes could encourage a shift in the direction of renewable energy while also generating temporary revenue for the government. This money could be used to ease the transition.
The think-tank also suggested a wider program of economic liberalization in order to boost growth. This “could help offset the output cost of CO2 reduction”.
The nations with the most oil and gas or fossil fuel industries will suffer the greatest economic impact.
China, India and Brazil will lose 11pc of their GDP. By 2050, this would amount to a loss of $1.4 trillion in output.
Costs of decarbonisation are high at a moment when the OECD thinks the global economy is already slowing down.
Before the pandemic hit, the average growth rate for rich countries in OECD/G20 was around 3pc.
This is expected to drop to 1.7pc in 2060 due to the ageing population and slower productivity growth of emerging market countries.
Despite the costs, the OECD warned that if the world fails to act it will not be able to limit global heating below 1.5 degrees centigrade. This could have catastrophic consequences.
The OECD report doesn’t fully include the benefits of net-zero economics, according to a spokesperson from the Department for Energy Security and Net Zero.
The UK government has invested £200bn in low-carbon technologies since 2010, with an additional £100bn expected from private investors in the UK between 2020 and 2030. This will support 480,000 jobs.
According to the independent OBR, not controlling climate change is more expensive than reducing emissions. That’s why we make long-term decisions.