If years of warnings from climate scientists have made for a panicked cacophony, then the latest report from the United Nations’ Intergovernmental Panel on Climate Change (IPCC) is surely the death knell.
IPCC scientists say it is “now or never” to limit global warming. All sectors and regions must reduce greenhouse gas emissions and pollution must peak “at the latest before 2025” in order to limit global warming to 1.5°C above pre-industrial levels, reads the April 4 IPCC report.
Known formally as the IPCC Working Group III Report, Climate Change 2022: Mitigation of Climate Change, the 3,000-page report states emissions must decrease 43% by 2030, while methane emissions must be reduced by over a third from current levels.
That warning of danger ahead is already dealing damage today — at least to the financial markets. The report's call for urgent climate action may increase credit risks, says Moody’s Investors Service.
“Accelerated climate action would have credit-negative effects on carbon-intensive industries and sovereigns in the short term,” notes Moody’s analysts in an April 6 note. “Existing fossil fuel assets, including infrastructure and unburnt fossil fuel reserves, as well as new investments, are at high risk of becoming stranded.”
Moody’s expects the report’s findings to accelerate the pace of climate policy in the run-up to COP27, the UN climate change conference scheduled to take place this November in Egypt.
“We also expect changes will be aimed first at the sectors and shifts the IPCC report identifies as the lowest-cost options for climate change mitigation.” they add.
According to the report, half of the emissions avoidance required by 2030 could come from options at a cost of less than US$20 per tonne of carbon dioxide (CO2) equivalent. These include the deployment of wind and solar power, electric vehicles, energy efficiency in aviation and shipping, and energy efficiency in homes.
They also include changes in consumer behavior including shifts to more sustainable means of land transportation and reduced household energy demand, among others.
A very small window
The report warned that even with no new fossil fuel expansion, current global emissions would be 66% too high to stay within 1.5°C by 2030.
Reaching net zero by 2050 will require a huge ramp up in the deployment of renewable technologies like wind and solar, as costs continue to fall, says the Asia Investor Group on Climate Change (AIGCC).
To accelerate adoption of renewables, countries should set out clear energy policy that favours clean options, and embrace sustainable finance to help drive the investment needed, says the group in an April 5 press release.
The AIGCC has over 50 members from 11 markets, with over US$36 trillion in assets under management.
AIGCC CEO Rebecca Mikula-Wright says: “Net zero commitments must focus on deep emissions reductions first and be supported by detailed and transparent action plans.”
She adds: “Governments will also need to follow up on these pledges with the implementation of strong policy support measures to ensure that companies are able to take timely action to reduce dependence on fossil fuels.”
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Last year’s monumental COP26 saw several countries sign a pledge to reduce methane emissions this decade by 30%. However, the two largest emitters of methane, Russia and China, did not sign this agreement.
Politicking slowed even the latest IPCC report itself. Two weeks of virtual negotiations among nearly 200 countries reached consensus on April 3. But wrapping up the report, which dozens of co-authors had expected to do on April 1, turned into a 40-hour slog that lasted through the weekend.
“The IPCC’s work is scientific, but this layer of geopolitics leads to competition over every word, as negotiators try to embed in final language protections of their own national interests,” writes Bloomberg’s Eric Roston.
This marks the third of four parts in the IPCC’s current cycle of reports, and the final instalment is expected later this year.