Climate Change Scenarios: Difference between revisions

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Due to the complex interplay of climatic and socioeconomic systems, it is impossible to accurately predict the future, including the frequency, severity,  impacts of climate hazards and the transition pathways. To address this inherent uncertainty in modeling climate-related macroeconomic and financial risks, TCFD recommends the adoption of scenario analysis to explore a range of plausible outcomes of climate change’s impacts on the financial system (ref of TCFD paper).
Due to the complex interplay of climatic and socioeconomic systems, it is impossible to accurately predict the future, including the frequency, severity,  impacts of climate hazards and the transition pathways. To address this inherent uncertainty in modeling climate-related macroeconomic and financial risks, TCFD recommends the adoption of '''scenario analysis''' to explore a range of plausible outcomes of climate change’s impacts on the financial system<ref name=":0">Taskforce on Climate-Related Financial Disclosures (June 2017). “Recommendations of the Taskforce on Climate-related Financial Disclosures: Final Report.” Available at: <nowiki>https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf</nowiki></ref>.


The selection of climate change scenarios determines the range of impacts expected.  
The selection of climate change scenarios determines the range of impacts expected. Various organizations, including the TCFD<ref name=":0" />, IPCC<ref>IPCC, 2023: ''Climate Change 2023: Synthesis Report.'' Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)]. IPCC, Geneva, Switzerland, pp. 35-115, doi: 10.59327/IPCC/AR6-9789291691647.</ref>, NGFS<ref>NGFS, 2020: Guide to climate scenario analysis for central banks and supervisors.</ref>, and third-party vendors, provide climate scenarios that outline different pathways, from low-carbon transitions to high-emissions futures. Most of them are built around a '''global temperature target''' or '''emission pathways''' and follow four '''common pathways''': (i) ambitious Paris Agreement-aligned action; (ii) delayed Paris Agreement-aligned action; (iii) current policy commitments; and (iv) business as usual.<ref name=":1">UNEP FI (2023). The Climate Risk Landscape. Available at: https://www.unepfi.org/themes/climate-change/2023-climate-risk-landscape/</ref> 
Transition risk assessments start with transition scenarios definition as it forms the basis of core assumptions when evaluating climate-related financial risks.  


Various organizations, including the TCFD, IPCC, NGFS, and third-party vendors, provide climate scenarios that outline different pathways, from low-carbon transitions to high-emissions futures. Most of them are built around a global temperature target or emission pathways and follow four common pathways: (i) ambitious Paris Agreement-aligned action; (ii) delayed Paris Agreement-aligned action; (iii) current policy  commitments; and (iv) business as usual (ref. UNEP FI landscape 2023 paper).
Table 1 of the landscape report by UNEP FI<ref name=":1" /> listed the most commonly used scenarios, namely, IPCC, IEA, and NGFS, as of December 2022. In this section, we focus on NGFS scenarios <ref>NGFS (2023). NGFS Scenarios for central banks and supervisors. Available at: <nowiki>https://www.ngfs.net/sites/default/files/medias/documents/ngfs_climate_scenarios_for_central_banks_and_supervisors_phase_iv.pdf</nowiki></ref> which are frequently used by central banks and financial supervisors (ref the ECB and Moroccan report). The NGFS provides a comprehensive suite of models, including data, scripts, tools, and detailed documentation. For users seeking more information, the NGFS technical documentation (ref.) and presentation (ref. here) offer further insights, including comparisons with IEA and IPCC scenarios."
{| class="wikitable"
|+Overview of Transition Scenarios
|'''Scenario Provider'''
|'''Name'''
|'''Sector'''
|'''Est. implied temp. rise'''
|'''Basis'''
|
|-
| rowspan="5" |IEA World Energy Outlook (WEO)


Table 1 of the landscape report by UNEP FI listed the most commonly used scenarios, namely, IPCC, IEA, and NGFS, as of December 2022. In this section, we focus on NGFS scenarios (cite updated NGFS scenario documentation), which are frequently used by central banks and financial supervisors (ref the ECB and Moroccan report). The NGFS provides a comprehensive suite of models, including data, scripts, tools, and detailed documentation. For users seeking more information, the NGFS technical documentation (ref.) and presentation (ref. here) offer further insights, including comparisons with IEA and IPCC scenarios."
[updated annu- ally]
| colspan="1" |NZE2050 (Net-zero emissions by 2050)
|Energy
|1.5°C
|Outlines the technology, policies, and behaviour change necessary to bring about net-zero emissions by 2050 and includes key energy related UN SDGs.
|
|-
|SDS 2020 (Sustain- able Development Scenario)
|Energy
|1.8°C (66%) 1.5°C (50%)
|Considers social (SDG) and climate goals
|
|-
|STEPS (Stated Poli- cies Scenario)
|Energy
|Around~2.5°C
|Accounts for stated policies and measures in place or under develop- ment in each sector (replaces the New Policies Scenario, NPS)
|
|-
|APS (Announced Pledges Scenario)
|All sectors
|1.7°C
|Assumes that governments will meet fully and on-time all climate-related commitments made, and includes related pledges made by the private sector and NGOs; does not achieve outcomes targeted in SDS 2020.
|
|-
|Delayed Recovery Scenario (DRS)
|Energy
|<2.7°C
|STEPS with a delayed recovery from pandemic
|
|-
| colspan="1" rowspan="3" |IEA Energy Technology
Perspectives (ETP)
 
[2020 release feeds into SDS scenario]
|2DS (2 Degrees Scenario)
|Energy
|2°C
|Rapid decarbonisation pathway in line with the Paris Agreement
|
|-
| colspan="1" |B2DS (Beyond 2 Degrees Scenario)
|Energy
|1.75°C
|Includes the extent of clean energy technologies if pushed to their practical limits, in line with ambitious aspirations of the Paris Agreement
|
|-
|RTS (Reference Technology
 
Scenario)
|Energy
|2.75°C
|Takes into account existing energy and climate-related pledges, including NDCs.
|
|-
|IPCC
|RCP (Representa- tive Concentration Pathways)
|All sectors
|1.0°C (RCP 2.6) 1.8°C (RCP 4.5) 2.2°C (RCP 6.0) 3.7°C (RCP 8.5)
|RCPs outline pathways according to different levels of radiative forcing in the CMIP5
|
|-
|IPCC
| colspan="1" |SR15
|All sectors
|1.5°C
|Set of P1–4 pathways to meet 1.5°C target, building on RCP 1.9
|
|-
|IPCC
|AR6
|All sectors
|1.6°C (SSP1– 1.9)
 
1.7°C (SSP1– 2.6)
 
2.0°C (SSP2– 4.5)
 
2.1°C (SSP3– 7.0)
 
2.4°C (SSP5– 8.5)
 
(mid-term estimates 2041–2060)
|Assesses results from the CMIP6 proj- ect in 5 SSP scenarios, with a broader range of GHG, land-use, air-pollutant futures than AR5, and accounts for solar activity and background forcing from volcanoes
|
|-
| colspan="1" rowspan="3" |NGFS
| colspan="1" |Orderly (NZ 2050 and Below 2°C)
|All sectors
|1.4°C (NZ 2050)
 
1.6°C (Below 2°C)
|Transition Risks include policy reactions, technology change, CO2 removal, and regional policy variation. Both orderly and disorderly have alternate scenarios with limited or full CDR
|
|-
|Disorderly (Diver- gent NZ and Delayed Transition)
|All sectors
|1.4°C (Diver- gent NZ)
 
1.6°C (Delayed Transition)
|Higher transition risk than for Orderly scenario
|
|-
|Hot-house World (NDCs and Current Policies)
|All sectors
|2.6°C (NDCs)
 
3°C+ (Current Policies)
|Only current policies implemented, not NDCs, i.e. equivalent to IEA STEPS
|
|-
|OECM
|One Climate Earth Model (OECM 1.0)
 
OECM 2.0 (2022)
|All sectors
|1.5°C
|1.5°C trajectory in 10 world regions without the continued use of fossil fuels
 
Sectoral decarbonisation pathways and targets broken into Scope 1, 2, and 3 for industry sectors defined by CIGS standard
|
|-
| colspan="1" rowspan="3" |UNPRI Inev- itable Policy Response (IPR)
|Forecast Policy Scenario
|All sectors
|1.8°C
|Based on the anticipated policy response to meeting the Paris Agree- ment and subsequent impact on emissions reduction and temperature outcomes
|
|-
|Forecast Policy Scenario + Nature
|All sectors
|Currently no agreed upon target for biodi- versity levels analogous to 1.5°C
|Focused on climate policy trends and their interaction with land use, including nature-related policy action.
|
|-
|Required Policy Scenario
|All sectors
|1.5°C
|Current assessment of future policy developments needed to deliver 1.5°C outcome
|
|}
 
== References ==

Revision as of 12:55, 16 October 2024

Due to the complex interplay of climatic and socioeconomic systems, it is impossible to accurately predict the future, including the frequency, severity, impacts of climate hazards and the transition pathways. To address this inherent uncertainty in modeling climate-related macroeconomic and financial risks, TCFD recommends the adoption of scenario analysis to explore a range of plausible outcomes of climate change’s impacts on the financial system[1].

The selection of climate change scenarios determines the range of impacts expected. Various organizations, including the TCFD[1], IPCC[2], NGFS[3], and third-party vendors, provide climate scenarios that outline different pathways, from low-carbon transitions to high-emissions futures. Most of them are built around a global temperature target or emission pathways and follow four common pathways: (i) ambitious Paris Agreement-aligned action; (ii) delayed Paris Agreement-aligned action; (iii) current policy commitments; and (iv) business as usual.[4]

Table 1 of the landscape report by UNEP FI[4] listed the most commonly used scenarios, namely, IPCC, IEA, and NGFS, as of December 2022. In this section, we focus on NGFS scenarios [5] which are frequently used by central banks and financial supervisors (ref the ECB and Moroccan report). The NGFS provides a comprehensive suite of models, including data, scripts, tools, and detailed documentation. For users seeking more information, the NGFS technical documentation (ref.) and presentation (ref. here) offer further insights, including comparisons with IEA and IPCC scenarios."

Overview of Transition Scenarios
Scenario Provider Name Sector Est. implied temp. rise Basis
IEA World Energy Outlook (WEO)

[updated annu- ally]

NZE2050 (Net-zero emissions by 2050) Energy 1.5°C Outlines the technology, policies, and behaviour change necessary to bring about net-zero emissions by 2050 and includes key energy related UN SDGs.
SDS 2020 (Sustain- able Development Scenario) Energy 1.8°C (66%) 1.5°C (50%) Considers social (SDG) and climate goals
STEPS (Stated Poli- cies Scenario) Energy Around~2.5°C Accounts for stated policies and measures in place or under develop- ment in each sector (replaces the New Policies Scenario, NPS)
APS (Announced Pledges Scenario) All sectors 1.7°C Assumes that governments will meet fully and on-time all climate-related commitments made, and includes related pledges made by the private sector and NGOs; does not achieve outcomes targeted in SDS 2020.
Delayed Recovery Scenario (DRS) Energy <2.7°C STEPS with a delayed recovery from pandemic
IEA Energy Technology

Perspectives (ETP)

[2020 release feeds into SDS scenario]

2DS (2 Degrees Scenario) Energy 2°C Rapid decarbonisation pathway in line with the Paris Agreement
B2DS (Beyond 2 Degrees Scenario) Energy 1.75°C Includes the extent of clean energy technologies if pushed to their practical limits, in line with ambitious aspirations of the Paris Agreement
RTS (Reference Technology

Scenario)

Energy 2.75°C Takes into account existing energy and climate-related pledges, including NDCs.
IPCC RCP (Representa- tive Concentration Pathways) All sectors 1.0°C (RCP 2.6) 1.8°C (RCP 4.5) 2.2°C (RCP 6.0) 3.7°C (RCP 8.5) RCPs outline pathways according to different levels of radiative forcing in the CMIP5
IPCC SR15 All sectors 1.5°C Set of P1–4 pathways to meet 1.5°C target, building on RCP 1.9
IPCC AR6 All sectors 1.6°C (SSP1– 1.9)

1.7°C (SSP1– 2.6)

2.0°C (SSP2– 4.5)

2.1°C (SSP3– 7.0)

2.4°C (SSP5– 8.5)

(mid-term estimates 2041–2060)

Assesses results from the CMIP6 proj- ect in 5 SSP scenarios, with a broader range of GHG, land-use, air-pollutant futures than AR5, and accounts for solar activity and background forcing from volcanoes
NGFS Orderly (NZ 2050 and Below 2°C) All sectors 1.4°C (NZ 2050)

1.6°C (Below 2°C)

Transition Risks include policy reactions, technology change, CO2 removal, and regional policy variation. Both orderly and disorderly have alternate scenarios with limited or full CDR
Disorderly (Diver- gent NZ and Delayed Transition) All sectors 1.4°C (Diver- gent NZ)

1.6°C (Delayed Transition)

Higher transition risk than for Orderly scenario
Hot-house World (NDCs and Current Policies) All sectors 2.6°C (NDCs)

3°C+ (Current Policies)

Only current policies implemented, not NDCs, i.e. equivalent to IEA STEPS
OECM One Climate Earth Model (OECM 1.0)

OECM 2.0 (2022)

All sectors 1.5°C 1.5°C trajectory in 10 world regions without the continued use of fossil fuels

Sectoral decarbonisation pathways and targets broken into Scope 1, 2, and 3 for industry sectors defined by CIGS standard

UNPRI Inev- itable Policy Response (IPR) Forecast Policy Scenario All sectors 1.8°C Based on the anticipated policy response to meeting the Paris Agree- ment and subsequent impact on emissions reduction and temperature outcomes
Forecast Policy Scenario + Nature All sectors Currently no agreed upon target for biodi- versity levels analogous to 1.5°C Focused on climate policy trends and their interaction with land use, including nature-related policy action.
Required Policy Scenario All sectors 1.5°C Current assessment of future policy developments needed to deliver 1.5°C outcome

References

  1. ↑ 1.0 1.1 Taskforce on Climate-Related Financial Disclosures (June 2017). “Recommendations of the Taskforce on Climate-related Financial Disclosures: Final Report.” Available at: https://assets.bbhub.io/company/sites/60/2021/10/FINAL-2017-TCFD-Report.pdf
  2. ↑ IPCC, 2023: Climate Change 2023: Synthesis Report. Contribution of Working Groups I, II and III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)]. IPCC, Geneva, Switzerland, pp. 35-115, doi: 10.59327/IPCC/AR6-9789291691647.
  3. ↑ NGFS, 2020: Guide to climate scenario analysis for central banks and supervisors.
  4. ↑ 4.0 4.1 UNEP FI (2023). The Climate Risk Landscape. Available at: https://www.unepfi.org/themes/climate-change/2023-climate-risk-landscape/
  5. ↑ NGFS (2023). NGFS Scenarios for central banks and supervisors. Available at: https://www.ngfs.net/sites/default/files/medias/documents/ngfs_climate_scenarios_for_central_banks_and_supervisors_phase_iv.pdf
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