New research gives hope to limit global warming to 1.5°C

Scientists use One Earth Climate Model to develop 1.5°C compatible climate and energy pathways for 12 energy-intensive industries

It is still possible to limit global warming to 1.5˚C and implement the Paris Agreement if timely climate actions by energy intensive industries are supported by the finance sector and backed by reliable and long-term government policies, according to a new study published by the University of Technology Sydney (UTS).

The researchers developed energy-related carbon budgets for 12 main industries and service sectors, which include aluminium, chemical, cement, steel and textile and leather industry, power and gas utilities, agriculture, forestry, the aviation and shipping industry, road transport and the real estate & building industry. The carbon budgets were further subdivided into so-called Scope 1, 2 and 3 emissions, which defined the responsibility for the emissions.

OECM model to develop energy pathways

According to the study, the global carbon budget to limit global warming to +1.5°C with 67% certainty is 400 GtCO2 until 2050. It used the One Earth Climate Model (OECM) to determine this. The largest carbon budgets were calculated for buildings (climatisation and electricity) with 88 Gt CO2 and road transport with 82 GtCO2.

OECM also tackled the highly complex process of investment decisions for achieving investment portfolio decarbonisation. It not only aligned with the needed 1.5°C trajectory, but also provided the necessary granularity and sectoral breakdowns directly applicable to the sector classifications used by the financial sector. 

“The One Earth Climate Model’s sector pathway work is important to inform the financial industry for portfolio decision-making as the model is based on a holistic, integrated approach. It also shows the granularity that is needed to feed into investors’ analysis. The information details on sector budgets and scope, on interconnections and responsibilities are exceptional,” said Günther Thallinger, chair of the UN-convened Net-Zero Asset Owner Alliance. 

According to the report, members of this alliance, currently comprising 60 institutional investors, with more than $10 trillion of assets under management, have already started using the model.

The way ahead

The study stated it is still possible to remain within the 1.5˚C limit, but only if governments, industries and the financial sector act immediately. 

“To enable a rapid climate transition, investors need detailed information about the emission reductions that are needed for high emitting sectors in the short term, for them to be aligned with a 1.5-degree world in the longer term. The One Earth Climate Model gives us one of very few sector pathways showing how future energy demand can be produced in a way that is aligned with a 1.5-degree scenario,” said Odd Arild Grefstad, CEO of Storebrand, a financial services company in Norway.

The report called for coal phase out by 2030 in OECD countries and governments to provide detailed plans to net zero. It recommended setting and implementing investment, lending and underwriting portfolio decarbonisation targets in line with 1.5˚C no/low overshoot. It also advocated that industries should immediately stop new coal, oil and gas projects.

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