By Simon Dietz, Research Lead at the Grantham Research Institute at the London School of Economics and Political Science
- Investors can now see if a company’s carbon performance aligns with a 1.5°C pathway
- ‘Paris Pledges’ pathway to be replaced as COP26 approaches
- Energy sector analysis in October will be the first to feature the 1.5°C pathway and the updated TPI benchmarks: National Pledges and Below 2 Degrees
We are approaching the next milestone in the decade of transition with less than two months until COP26. To help investors stay ahead of the curve, the TPI team is introducing new benchmark low-carbon scenarios to our
Carbon Performance analysis, including a pathway to holding the global temperature increase to 1.5°C above pre-industrial levels. According to the
Intergovernmental Panel on Climate Change, restricting the global temperature increase to this level would substantially reduce the probability of extreme weather events, biodiversity loss, sea level rise, water scarcity, and food insecurity, with enormous implications for loss of life and adaptation costs.
The new benchmark will be built using the International Energy Agency (IEA) report ‘
Net Zero by 2050’, which sets out a pathway for the global energy sector to reach net-zero emissions by mid-century and keep the temperature rise to 1.5°C with a 50% probability. Achieving these targets will require a transformation of the energy systems that define our economies; it will be unparalleled in size and scope.
The 1.5 Degrees scenario will become the most ambitious of the TPI benchmarks. Its release will be accompanied by an update of the other TPI benchmarks: ‘National Pledges’, building on the IEA’s STEPS scenario with national targets announced as of mid-2020, and a Below 2 Degrees scenario building on the IEA’s SDS scenario, which holds the temperature rise to below 1.8 °C with a 66% probability [1]. The National Pledges scenario will replace TPI’s current Paris Pledges scenario, which was based on the Nationally Determined Contributions announced in Paris in 2015.
The update of the TPI benchmarks comes at a time when the need for a more ambitious energy transition is increasingly recognised by the investor and policymaking community. It will enable the work of Climate Action 100+ to consider the implications for companies’ targets and alignment to the goals of the initiative.
As the science and economics of climate change develop, so does our understanding of what it takes to fulfil the aims of the Paris Agreement. These new benchmark scenarios are intended to keep up with recent policy developments and what is required to limit temperatures to 1.5°C and well below 2°C. We look forward to continuing to support investors with our
TPI tool.
TPI’s next annual assessment of the energy sector in October will be our first report to measure companies’ decarbonisation efforts using the 1.5°C and the updated TPI’s pathways.
[1] TPI will use IEA data to create sectoral benchmarks for all TPI sectors covered by the ETP2020 and NZE2050. Additional data sources are being identified to cover those TPI sectors, which are excluded either from both ETP2020 and NZE2050 (autos and paper) or from NZE2050 (aluminium).
