Third quarterly CCMI report
date: 06/10/2021
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Section 1 - Finance sector
The first section of the report is dedicated to modelling developments linked to the finance sector. The finance sector is key for achieving the green transition and must therefore transform rapidly. The research featured in this section of the report highlights that there is growing demand by the business and finance community for reliable climate information; the articles assess the impact of higher cost of green finance on developing economies and the impact of 2°C and 1.5°C scenarios have on banks’ portfolios in Australia. Another article from Australian researchers highlights the need to improve climate models to enable business and financial organisations better integrate climate risks (such as extreme weather events, risks to supply chain infrastructure) into financial decisions. Echoing the view that current economic and climate models are not designed to assess climate-related financial risks, a set of a high-level reference scenarios have been presented in a guide developed by the Network for Greening the Financial System (NGFS). Researchers from University College London study implications of unequal access to finance across countries. They show that earlier action to improve financial conditions in developing economies could have a significant impact on the speed of the mitigation transition. For example, it would allow countries in Africa to reach net zero emissions 10 years earlier. Finally, analysis from the International Monetary Fund suggests that green investments can guide the Covid-19 recovery in a more sustainable direction.
Section 2 - Nationally Determined Contributions (NDCs)
Various research developments linked to the implementation of the Nationally Determined Contributions (NDCs) are reported in the second section. Research teams across the world are developing new scenarios and combining various data sources to improve prediction capacities. Researchers from Germany and Brazil have updated the Model of Agricultural Production and its Impact on the Environment, a modular open-source framework for modelling global land systems. A research team in China find that energy-saving retrofitting technologies help short-term CO2 emissions reduction, but breakthrough technologies (e.g., CCS) are crucial in achieving carbon neutrality. An interdisciplinary team from Italy and the USA has combined species distribution and climate modelling with historical land use records to reconstruct changes in plant species distribution in Central Italy. Australian researchers have implemented scenarios representing a more diverse range of decarbonisation pathways for Australia. Their study shows that net zero emissions by 2050 are hard to achieve and requires potentially unrealistic levels of action in the latter end of the 2040s.
Section 3 - Mid-century strategies
In the third section, the report features research linked to mid-century strategies. As part of the REINVENT project, a research team is modelling decarbonisation pathways for industry and analysing the contribution of industry within a net-zero context on a global scale. Their key finding is that "net-zero" emission pathways for the global industry sector are needed before or by 2050 to remain aligned with the Paris Agreement. In Germany, a research team has developed a model to underpin the first National Energy and Climate Plan (NECP) of EU candidate countries Albania and Montenegro providing the analytical basis to the first NECPs in the two countries. And finally, a new model used by the New Zealand government indicates that as emissions fall over time, the impact of carbon prices on economic activity also diminishes; therefore, the overall impact of climate policy on New Zealand’s GDP is modest.