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Keeping 1.5°C alive continues to be the main focus of the UTS Institute of Sustainable Futures (ISF) One Earth Climate Model team, despite the challenges that loom following the hit and miss negotiations at COP27, the UN Climate Conference in mid-November.
“Climate change is the defining threat of the 21st century and the events of 2022 – heat waves in Europe, floods in Australia and wildfires in California – prove it is no longer a future scenario,” says Associate Professor Sven Teske, Research Director at ISF.
The goal of limiting global warming to a maximum of 1.5°C was the central tenet of the Paris Agreement, a treaty within the United Nations Framework Convention on Climate Change. This treaty was negotiated between 196 countries in 1996 and, in 2021, the Intergovernmental Panel on Climate Change (IPCC) suggested that global warming can be limited to 1.5°C with a ‘carbon budget’ of 400 billion tonnes of carbon dioxide in total.
Teske, who presented at COP27, says that while the news coming out of the conference is not as good as hoped - there is still hope, as long as the global finance industry “takes bold action now.”
“Because it is widely recognised that those in the financial industry have the highest capacity to mobilise capital and direct it towards climate solutions, ISF was thrilled to have been invited in 2019 to collaborate with the UN-convened Net-Zero Asset Owners Alliance (NZAOA), a coalition of 83 leading global financial institutions committed to decarbonising the global economy,” he says.
“The Alliance manages over AU$11 trillion in assets worldwide, so using the IPCC’s ‘carbon budget,’ we used the OECM to apportion the 400 billion tonnes across 12 key industries and we calculated the decarbonisation pathway each of the 12 industry groups must take in five-year steps between 2025 and 2050 to reach net zero.”
While many governments continue to be caught in a kind of stalemate between the old-world order of fossil fuels and the new reality of climate change, the finance industry, according to Prof Teske, is increasingly ambitious to make the necessary change.
“In many cases the finance industry is asking governments to set the frameworks so they can reallocate the money,” he says.
“Our datasets are a significant forward step because they give the granularity needed for them to confidently align their investment, insurance, lending and underwriting activities to the goal of the Paris Agreement.”
The modelling, which was published in 2022 as an open access book called Achieving the Paris Climate Agreement Goals Part 2: Science-based Target Setting for the Finance Industry – Net-Zero Sectoral 1.5˚C Pathways for Real Economy Sectors, translates science-based technology pathways into economic pathways for finance-industry-compatible real economy sectors. These sectors include aluminium, chemical, agriculture, forestry and real estate and buildings.
Importantly, these pathways include Scope 1, 2 and 3 emissions and are aligned with a maximum temperature rise of 1.5°C on a no/limited overshoot path. In addition, these pathways do not rely on unproven carbon removal technologies.
We calculated the decarbonisation pathway each of the 12 industry groups must take in five-year steps between 2025 and 2050 to reach net zero.
- Associate Professor Sven Teske
“They build on the rapid deployment of renewable energy and the preservation of natural carbon sinks. They are the most detailed sectoral breakdown available globally to decarbonise within the IPCC carbon budget and show it still possible to limit global warming to 1.5°C,” Prof Teske says.
The NZAOA’s heavyweight members include Allianz, Caisse des Dépôts, Credit Suisse, AMF, Danske Bank and Zurich Insurance. It has been endorsed by António Guterres, UN Secretary General who said it is the “gold standard for credible commitments and transparent targets.” The research has also been showcased by the high-profile Glasgow Financial Alliance for Net-Zero.
Elke Pfeiffer, Senior Project Manager, Principles for Responsible Investment worked closely with ISF on the project and says the research is well recognised in the climate modelling world.
“ISF’s work now feeds into financial institutions’ investment portfolio analysis and other organisations’ models like the Paris Agreement Capital Transition Assessment (PACTA); Science Based Targets initiative (SBTi); and Carbon Risk Real Estate Monitor (CRREM),” she says.
The support of so many global finance institutions is an indication of the import, impact and quality of the OECM and ISF’s research continues onwards with a focus on country energy scenarios.
“I recently presented our work in six European countries and returned with significant amount of further research work for UTS, so there is a clear hunger and active hope that there is still time to limit the damage,” says Prof Teske.
→ Read more about the decarbonisation pathways for financial sectors
