April 18, 2022
The available carbon budget to avoid 1.5°C is quickly closing, but certain mitigation measures are gaining traction
On April 4th, the United Nations Intergovernmental Panel on Climate Change (IPCC) released the Working Group III report, Climate Change 2022: Mitigation of Climate Change. Findings from the IPCC report are highly relevant across business sectors and likely to foreshadow increased challenges in conducting business operations, greater scrutiny of corporate sustainability commitments, and potentially increased regulation or litigation.
Takeaway 1: increases in greenhouse gas (GHG) emissions are slowing but not reversing
More GHG emissions were released from 2010 to 2019 than in any prior decade. However, the rate of increase has slowed. The changes in GHG emissions are uneven both chemically and geographically. Highly potent greenhouse gases like methane and nitrous oxide increased only approximately 30% from 1990 to 2019, while fossil fuel-based CO2 emissions increased 67% during that time. Similarly, the geographical distribution of global emissions has changed substantially, with emissions from Eastern Asia increasing from 13 to 27% and emissions from North America and Europe decreasing significantly.
Takeaway 2: the costs of low-emissions technologies are rapidly dropping due to innovative policies
A significant success story of the past decade has been the drop in costs for solar technologies (photovoltaic and thermal), wind (onshore and offshore), and electric vehicles. Much of this success has been driven by innovative policies that helped these technologies mature. Adoption in developing countries, where such policies were less prevalent, has been slower. The report also notes that smaller-scale technologies, such as solar and batteries, have progressed faster than large capital-intensive technologies such as carbon capture and sequestration (CCS). This highlights the opportunity of thoughtful policy to support positive outcomes given the right technology.
Takeaway 3: GHG markets and policies have also helped avoid emissions, but the price of carbon is still too low to motivate change
Since the Kyoto protocol, a number of frameworks have emerged that provide methods for measuring, reporting, and trading GHG emissions. According to the IPCC, now over 20% of global emissions are covered by emissions markets and 53% of GHG emissions are covered by "direct" climate laws. However, the IPCC noted that only limited policies were in place for emissions from agriculture and the production of industrial materials and feedstocks, and while significant money is being put into Green Bonds and ESG investment products, there are still challenges around the integrity of these market tools.
Though the current cost of carbon is too low to motivate significant technological change in most markets, these policy and market frameworks could allow for the relatively quick implementation of significant carbon reductions if the cost of carbon were to increase significantly.
Takeaway 4: The expected emissions from the current fossil fuel fleet already exceed the allowable emissions to maintain warming to 1.5°C
The IPCC's analysis shows that without additional abatement (e.g., carbon capture or early retirements) the existing fossil fuel infrastructure would release 660 gigatons of CO2 (GtCO2). When including planned infrastructure, this would amount to 850 GtCO2. Conversely, to limit warming to 1.5 or 2°C, total emissions until reaching net-zero would need to be 510 and 890 GtCO2, respectively. As a result, the IPCC recommends a combination of canceling new projects, decommissioning some existing infrastructure, and retrofitting carbon capture on existing systems. Such stark findings could motivate governments and investors to further discourage fossil energy through regulations, policies, and capital markets.
Takeaway 5: Net-zero CO2 emissions from the industrial sector are challenging but possible
Reducing emissions from industrial products — including from major material production such as steel, cement, and plastics — can be challenging. It would require better efficiency in their production and use and increased recycling. Many low-emissions technologies are at pilot or near-commercial scale but have yet to be adopted by industry. Regions with abundant low GHG energy and feedstocks will need to become energy and feedstock exporters with significant reorganization of current supply chains. International cooperation requiring low GHG products for commodities will be important for the success of low GHG alternatives to current products. Companies will need to consider the risks to their portfolio of products from shifting regulations and carbon adjustment mechanisms.
How Exponent Can Help
Exponent offers strategic, multidisciplinary climate and sustainability consulting to public and private sector stakeholders seeking to mitigate the risks of climate factors, reduce GHG emissions and water consumption, and assess the environmental and ecological impacts of business operations. Exponent published a series on how companies can use SMART goals to implement sustainability programs to help them lower their carbon and water footprint. Our broad expertise across numerous engineering disciplines, public health, ecological and environmental sciences, hydrology, natural resource damage assessment, and restoration and mitigation analysis gives our clients access to an unparalleled wealth of skills and resources that can help build unique solutions to unprecedented challenges.