Ending deforestation, decommissioning unabated coal in China and phasing out fossil cars are key requirements if net zero by 2050 is to be reached, according to a series of reports out this week.
Commissioned by the Principles for Responsible Investment (PRI) and partnered with BlackRock, BNP Paribas and Nuveen, the Inevitable Policy Response’s (IPR) Required Policy Scenario report drew insights from 200 global policy experts.
It outlines the need for:
- An end to deforestation across the entire globe, ideally by 2025. If not, the energy system has to absorb greater reductions. This goal could be achieved by more government intervention in the food system.
- Unabated coal fully decommissioned in China by 2035
- To phase out of new fossil cars in almost all markets by 2040 and transition to 100% clean power globally by 2045
Commenting on these findings, Mark Campanale, founder and executive chair of Carbon Tracker, said: “It is viable to electrify the majority of global transport fleet by 2040, while also transitioning to 100% global clean power by 2045. The technologies to achieve this are available now, but we need stronger, explicit policy signals and immediate investor action.”
He added: “With global use of all fossil fuels needing to halve by 2050, IPR’s conclusions underpins the IEA’s 1.5C Net Zero scenario, which says no new investment is needed, anywhere, in new fossil fuels. Investors should act accordingly, withdraw financing of stop financing planned expansion in fossil fuel infrastructure, and cease all participation in fossil fuel IPOs, new bond issues and syndicated loans.”
Forecasted scenarios
Meanwhile, IPR’s Forecast Policy Scenario shows what is expected in the coming years, if “sweeping policy changes in the next decade” are made. These include zero-emissions vehicles making up around 30% of all vehicles on the roads by 2030, which will speed up the demise of oil; and that wind and solar power will represent more than 30% of global electricity by 2030, triple today’s levels.
The Forecast also predicts 2023-2025 will be a tipping point for policy. This is because in 2025, countries under the Paris Agreement submit their third round of climate pledges following the Global Stocktake in 2023, which detail just how far the world is from meeting the Paris goals and should force governments to accelerate policy. At the same time, it said as technology costs fall and the real impact of climate change becomes even more visible, civil society, business and investor pressure on governments will increase.
Fiona Reynolds, outgoing CEO of the PRI, said: “Global finance has an increasingly vital role to play in rapidly moving capital markets and corporations towards sustainable outcomes. IPR is now a significant tool for investors committed to making that a reality.
“IPR scenarios for investors encompass both the large-scale market shifts to come in carbon, energy and land use as well as invaluable granular analysis to help guide investment directions. 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.”
Alex Bernhardt, global head of sustainability research at BNP Paribas added: “Forward-looking scenarios are critical in a changing world. 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.”
