UN Report Could Add Transition Momentum

Copyright © 2021 Energy Intelligence Group

A new UN climate science report released this week offered a stark “reality check,” warning that time is running out to avert the most damaging effects of global warming. Although compiled primarily as a guide for policymakers, the report from the Intergovernmental Panel on Climate Change (IPCC) is likely to also be widely used as a reference framework, for example by insurance companies, investors pressing companies to adapt to climate risk, and judges in climate litigation cases (NE Jun.17'21). The report -- considered influential because of its strong grounding in science -- could also add to growing pressure from policymakers, investors and others to address carbon emissions, which had already been mounting in the run-up to the UN climate conference in Glasgow later this year (NE Jun.10'21) Based on the findings of over 14,000 scientific papers, the report reflects the latest advances in climate science to offer a much clearer picture of past, present and future climate change. This will “provide an invaluable input into climate negotiations and decision-making,” says Hoesung Lee, chair of the IPCC. The IPCC was set up in 1988 to assess climate science and provide political leaders with periodic scientific assessments about its implications and risks, as well as putting forward adaptation and mitigation strategies. This latest IPCC report instalment states that emissions of greenhouse gases from human activities are responsible for approximately 1.1°C of warming since the period between 1850-1900. It suggests that unless there are rapid and large-scale reductions in greenhouse gas emissions, the world could exceed the “carbon budget” to stay within a 1.5°C increase by around 2030 and within a 2°C rise in the mid-2040s. The “carbon budget” weighs the atmospheric CO2 levels scientists say will lead to certain temperature increases against the cumulative level of CO2 humans have already added to the atmosphere. This is measured in probabilities. For example, if humans add another 500 billion tons of CO2 to the existing total of around 2,390 billion tons released since 1850, that would leave us with a 50% chance of limiting the temperature rise to 1.5°C. The IPCC warns we are currently on course to exceed this without concerted action. “Stabilizing the climate will require strong, rapid and sustained reductions in greenhouse gas emissions, and reaching net-zero CO2 emissions. Limiting other greenhouse gases and air pollutants, especially methane, could have benefits both for health and the climate,” said Panmao Zhai, co-chair of the IPCC working group that produced the report. This particular IPCC report on the physical science of climate change does not specify how CO2 emissions should be cut. However, coal is clearly first in the firing line. Oil and gas companies also facing growing pressure to decarbonize. After the release of the report, UN Secretary General Antonio Guterres called on all nations, particularly G20 members and other major emitters, to commit to net-zero emissions targets, and “sound a death knell for coal and fossil fuels.” He called for an end to construction of new coal plants after this year and the total phaseout of existing coal by 2040. Countries should also end all new fossil fuel exploration and new developments, and shift fossil fuel subsidies into renewable energy (NE Jul.29'21). By 2030, solar and wind capacity should quadruple and renewable energy investments should triple to maintain a net-zero trajectory by mid-century, Guterres said. One key question for the energy industry is how much further momentum the IPCC report will generate for global decarbonization, particularly its claim that climate change threats are increasingly present and real. Even before the latest IPCC findings, political discourse in the West has increasingly focused on how decarbonization efforts might accelerate. The International Energy Agency’s (IEA) recent Net Zero by 2050 roadmap provided fuel became an instant rallying cry to cut emissions (NE Jun.24'21). Energy Intelligence analysis previously outlined a number of ways the energy transition could unfold, ranging from a slow, transition, with inconsistent progress and pressure for change only gradually building, through faster change, with the energy transition driven by rising policy pressures, and falling clean energy costs, to an even faster low-carbon adoption led by rapid policy and technology advances. Since last year, Energy Intelligence Research has presented three energy transition scenarios along these lines -- Blowout, Accelerate and Boost, with Accelerate seen as the base case. The IPCC report “reinforces our view that climate pressures are rising and that the energy transition will keep gaining momentum,” says TJ Conway, head of Energy Transition Research. The research analysis considers the slower Blowout scenario least likely. Neither the IPCC report nor the IEA road map would, in themselves, be enough to alter the transition’s trajectory. However, the Energy Intelligence base case could start to tilt toward the more rapid "Boost" scenario heading into the COP26 climate conference in Glasgow, Conway says. If these reports help set off a self-reinforcing cycle in which policy support rises, investors and companies prioritize increased investments in decarbonization, and, as a result, technological progress accelerates, including in emerging areas like hydrogen and carbon capture and storage, he explains. This would rely on the report’s conclusions being translated into faster, more radical and more coordinated action by governments, which is far from guaranteed. Ronan Kavanagh, London

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