From heatwaves to floods, extreme weather events are not only costly but increasingly causing upheaval across the globe, pushing governments and industries to seek to cut greenhouse gas emissions and mitigate climate change.

“As economists, we have to be honest about the fact that mitigating climate change will be expensive,” Oxford Economics’ Chief Executive Adrian Cooper said in a statement. “But the transition to a carbon-neutral global economy also presents compelling opportunities.”

The analysis showed emerging new markets for carbon-neutral goods and services that help reach the Paris Agreement net-zero target will be worth $10.3 trillion, or about 5 percent of projected gross domestic product, by mid-century.

“This includes the direct contribution to GDP of electric vehicles manufacturing, renewable power generation, clean energy equipment manufacturing, renewable fuels and green finance; plus the activity supported across global supply chains,” the report stated.

It also showed, as industries shift to clean power amid a global energy supply crisis, that resulting disruptions will create new competitive opportunities for companies able to adapt quickly to changing demands.

Arup and Oxford Economics found the green transition would lead to substantial productivity gains from climate change mitigation compared to “a world in which climate change has been left unchecked, or poorly tackled.”

A scenario analysis by Oxford Economics suggested a failure to act could damage global GDP by around 5 percent by 2050. In 2021, it said the cost of weather-related interruptions to economic activity had already reached $233 billion.

“This report shows the green transition is not a burden on the global economy, but a substantial opportunity to bring about a greater and more inclusive prosperity,” Arup Global Strategy Skills Leader Brice Richard said.