Scenarios for global temperatures, 2010-2100
The speed of the energy transition is key to assessing climate risks and opportunities. Most countries have submitted plans to reduce carbon emissions in so-called intended nationally determined contributions (INDCs). The aim is to limit global warming to less than two degrees Celsius (2°C) above pre-industrial levels – the threshold where many scientists see irreversible damage and extreme weather effects kicking in.
Yet the INDCs are just a first step, as the chart above shows. No action at all or current policies would lock in much more severe warming. Slow action would mitigate regulatory risk in the short run, but raise the possibility of extreme weather events. These events, in turn, could prompt more drastic policy actions down the road. The bolder the policy action taken today, by contrast, the greater the “transition risk” for industries and assets due to fast technological and other changes.
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