Paris Hopes Alive Even if COP26 Talks Stall, says PRI-backed Research

Accelerated policy action will put below-two-degree scenarios in reach, claims new report from investor-focused Inevitable Policy Response.

A “significant acceleration” of climate policy action up to 2025 is likely to keep the world on course for keeping global warming to below two degrees Celsius.

The Inevitable Policy Response’s (IPR) 2021 Forecast Policy Scenario, an assessment of the impact on climate of expected policy developments, finds that the goal of the Paris Agreement is still in reach, if policymakers “build on the current national decarbonisation plans with significant but realistic policy action”.

However, an accompanying IPR report says more and faster action is needed to hold average global temperature increases to 1.5 degrees. These include an end to deforestation, ideally by 2025, full decommissioning of unabated coal in China by 2035, phase-out of ICE cars by 2040 and global transition to clean energy by 2045.

“The discrepancy between the Forecast and Required Policy Scenarios reiterates the fact that we’re not going to get to 1.5C without serious action: companies, investors and governments committed to achieving net zero by 2050 must accelerate their efforts now more than ever. That is the key message heading into COP26,” said Alex Bernhardt, Global Head of Sustainability Research, BNP Paribas AM.

Separately, a group of regional investor networks have released an assessment of G20 countries which says “significant policy barriers” are deterring investment in climate solutions in countries including Argentina, Australia, China, India, Indonesia, Mexico, Russia and Saudi Arabia. The report card measures countries’ progress towards the five policy recommendations in the Investor Agenda’s 2021 Global Investor Statement to Governments on the Climate Crisis.

The reports are released amid growing concerns that intergovernmental talks at COP26 in Glasgow could fail to make expected headway on the coordination of national commitments to reducing emissions in line with the Paris Agreement.

“The 2021 IPR forecasts signal to investors that they must focus on the transition, 2030 and net zero pathways and the investment opportunities emerging as policy makers respond to growing climate challenges,” said Fiona Reynolds, CEO of the PRI.

The IPR is a climate forecasting consortium supported by the PRI, focused on helping investors to protect portfolios from climate risks and to identify opportunities in the transition to a low-carbon global economy.

Sweeping policy changes over next decade

The update to IPR’s 2019 forecast sees total CO2 emissions falling by 80% by 2050, giving a one in two chance of keeping warming to well below two degrees at (1.8 degrees), driven by a 75% drop in energy sector emissions and a 125% reduction in land sector emissions. The IPR forecasts released today include detailed summaries of expected policy impacts on energy and land use systems.

Existing nationally determined contributions by governments will see an absolute fall in CO2 emissions by 2030, following a 16% rise in the prior decade. But accelerated policy actions taken by 2025 will increase the rate of reduction from 2030 onward, as fossil fuel technologies are replaced by clean alternatives.

Sweeping policy changes could see an increase in the proportion of zero emissions vehicles to 30% by 2030 and a trebling of the contribution of wind and solar power to global electricity generation, according to the IPR’s 2021 Forecast Policy Scenario.

“Huge shifts” in food production could see land use becoming a net carbon sink within 30 years as the world reaches ‘peak meat’ consumption in 2030,the report said, as nature-based solutions accelerate.

The IPR said tougher policy action would be triggered particularly by the 2023 Global Stocktake, which will detail just how far the world is from meeting the Paris goals, and then by the need for governments to submit their third round of climate pledges in the 2025 Paris Ratchet.

In parallel, says the IPR policy forecast, policymakers will be incentivised to act by the combined force of reduced technology costs, increased evidence of the impacts of climate change, and intensifying pressure from civil society, business and investor pressure.

IPR analysis said the doubling of net zero commitments by countries representing 70% of global GDP have made a “forceful and accelerated” policy response to climate change even more likely than before the pandemic. Almost half (48%) of 124 forecasts show higher policy ambition, and only 6% lower, versus IPR’s 2019 outlook.

The Forecast Policy Scenario is based on a detailed review of key climate policy developments in 21 major economies alongside an extensive survey of 200+ leading experts in national climate policy.

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