Increased need is seen for negative emissions technologies, but policies could mean that overshoot is temporary.
The current policies of global governments mean the goal of limiting the rise in global temperatures to 1.5°C is likely to be missed, at least for a period, but it may be possible to bring it back to target.
“We believe we are headed for overshoot, but we think that can be managed,” said Mark Fulton, Programme Director of Inevitable Policy Response (IPR), a climate forecasting consortium which seeks to prepare investors for the risks and opportunities associated with official moves to limit climate change.
“IPR’s forecast is where we are likely to end up,” concurred Jakob Thomae, Managing Director of the 2° Investing Initiative, a think-tank that co-ordinates research into sustainable finance.
Nor is an overshoot of this size the worst-case scenario, said Jane Ambachtsheer, Sustainability Executive at BNP Paribas Asset Management: “1.8°C is a lot lower than some of the other predictions.”
All were speaking at an investor webinar sharing the IPR’s latest forecasts and modelling, based on recent policy initiatives as well as climate-related developments and discussions at COP27. It was organised by IPR in conjunction with Principles for Responsible Investment, which established IPR in 2018.
The IPR published its most recent quarterly assessments of climate-related policies by global governments at the beginning of October.
Genie back in the bottle
COP27 has been held against a backdrop of warnings of insufficiently strong actions being taken by governments to mitigate climate change, which included the latest UN Environment Programme Emissions Gap Report, which said policies currently in place point to a 2.8°C temperature rise by 2100, while implementation of pre-COP27 pledges would only reduce this to a 2.4-2.6°C temperature rise.
This has led some to question whether the 1.5°C should be abandoned or qualified, while others have used the risk to urge for increased ambition.
“It is a tall and, some would say, impossible order to almost halve greenhouse gas emissions by 2030, but we must try,” Fulton acknowledged. “They’re worried about overshooting as well.”
He reminded the audience that the original Paris Agreement target was not 1.5°C but “well below” 2°C. Should we reach 1.8°C, he said, the world should look at negative emissions technologies, which remove greenhouse gases from the atmosphere and either absorb or store them.
Thomae agreed: “We need to lay the groundwork, to take negative emissions technology seriously,” he said, adding: “The temperature goal is just one part of the equation. There are different possible worlds even if we reach 1.5°C.”
But he warned: “The more we move from 1.5°C, the harder it will be to get back, to put the genie back in the bottle.”
Fulton highlighted some of the positive climate-related policy developments which could give investors confidence that an overshoot would be temporary. Noting significant regulatory changes in the US and Australia, he noted a growing gap between OECD and non-OECD countries, with the former largely on track to achieving net zero emissions by 2050. And while large non-OECD emitters were more likely to achieve that target a decade or so later, they were still making significant strides forward.
“We see China doing a huge amount, India making big efforts [along with] Mexico, Nigeria.” Indonesia’s pledge, confirmed this week, to wean itself off coal was greatly welcomed: “We love announcements that coal is going to be phased out. It is the biggest problem in the climate system,” said Fulton.
“Never going to take responsibility”
Using the IPR’s predictive policy framework, Fulton highlighted continuing sectoral gaps which threaten countries’ ability to meet their net zero commitments and goals. When it comes to de-carbonising heavy-duty vehicles “there is quite a way to go,” he said, while agriculture is “coming along quite nicely” and forestry poses “a big challenge but we’re still hopeful”.
Overall, he said, “we think the momentum is there,” adding: “The US is using all the levers they have to stay on track.”
Another panellist, Simon Clark, a Partner at Kaya Advisory, a climate policy consultancy firm, noted that the results of two elections close to the COP27 meeting could prove beneficial in climate terms. The return to office in Brazil of former president Lula da Silva has been seen as the country re-joining the climate debate, while the better-than-expected Congressional performance of President Joe Biden’s Democratic Party may reinforce his efforts in this area.
But Clark warned against expectations of significant progress on negotiations around loss and damage which have begun to dominate relationships between developed countries and those of the ‘global south’. “Developed countries are never going to take responsibility for loss and damage,” he said.
The IPR consortium includes research from Vivid Economics and Energy Transition Advisors. Last month, it reported that President Biden’s Inflation Reduction Act, pledging about US$370 billion in investment to reducing US greenhouse gas (GHG) emissions and upscaling domestic renewable energy production, was expected to cut US emissions by over 40% from 2005 levels by 2030.
