The UN’s climate science body, the Intergovernmental Panel on Climate Change (IPCC), released the third report of the sixth assessment cycle (AR6) on the Mitigation of Climate Change. Emissions are still growing but the rate is slowing and varied across all regions and sectors. Global emissions were 12 per cent higher in 2019 than 2010 and 54 per cent higher than 1990, whereas emissions growth in the 2010-19 decade was 1.3 per cent per year in comparison to the 2.1 per cent for the 2000-09 decade. The IPCC analyses decarbonisation options and strategies across six key sectors including energy, transport and buildings and demonstrates the disparities in emissions growth across these sectors. This article, produced by HSBC Global research, summarises the 10 key points you need to know and provides essential background on the IPCC and scenario analysis from their latest report.

The article draws attention to the fact that the carbon budget is finite, as 42 per cent of the budget was consumed over the last thirty years (1990-2019) and how current fossil fuel use and infrastructure would exceed the estimated carbon budget. The report also draws attention to growing non-CO2 emissions such as methane and that limiting CO2 emissions would still leave a substantial amount of other GHGs, emphasising the importance of lowering these non-CO2 emissions to reduce ‘peak global warming’.

The article provides an overview of the mitigation options laid out by the IPCC, comparing their cost-effectiveness and ability to reduce emissions across sectors. It depicts the synergies and trade-offs across the various mitigation options, demonstrating how these are largely dependent on the scale and context of options available. Carbon removal technologies are needed, however these require scale-up and commercialization. The importance of finance in combating climate change is referenced as ‘mitigation options are widespread but sufficient deployment requires adequate finance and broad stakeholder involvement’. The IPCC estimates the global benefit of limiting global temperature rise to 2°C outweighs the cost of climate mitigation in most of the current literature and as the authors point out, it will become increasingly important for investors to look for the most cost-effective route to decarbonise their portfolios alongside the real economy.

 

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