The Representative Concentration Pathways (RCPs) are the result of a groundbreaking partnership between climate scientists from different disciplines, including integrated assessment modelers, climate modelers, and emission inventory experts. The RCPs were projected models developed to represent different possible warming outcomes at the end of the century. The RCPs range from very stringent climate policy (RCP 2.6) to no climate policy at all (RCP 8.5). RCP 8.5 results in close to five degrees of warming, RCP 4.5 is just below three degrees, and RCP 2.6 represents the Paris Agreement goal of limiting warming to 1.5 ºC.
There were some interesting behaviors that began to emerge in the time of the global financial crises when emissions significantly dropped for the first time in developed countries. Emissions generally align with economic strength and GDP, but we began to see for the first time in 2014 that coal use remained flat and even declined a little bit even as the economy recovered.
Certainly, the falling cost of clean energy and government policies to help subsidize / rebate and encourage clean energy innovation has been a positive contributor coming out of the 2015 Paris agreement.
However, the world is not currently on track to meet the climate benchmarks set in the Paris Agreement. The latest report from the Climate Action Tracker (CAT) found that global greenhouse gas emissions are projected to reach 52.8 gigatons of carbon dioxide equivalent (GtCO2e) in 2030, which is well above the 36 GtCO2e needed to limit global warming to 1.5 degrees Celsius.
The CAT also found that only a handful of countries are on track to meet their Paris Agreement targets. Most countries need to significantly scale up their climate action in order to avoid the modeled worst impacts of climate change.
Despite the challenges, there is still hope that the world can meet the Paris Agreement benchmarks. There is a growing movement towards renewable energy, and many countries are investing in new technologies to reduce their emissions.
According to the Intergovernmental Panel on Climate Change (IPCC – an intergovernmental body of the U.N.) very little increment of global warming has a huge impact. The IPCC states that greater the impact of global warming, the more difficult it will be for countries to respond and mitigate the environmental issues that emerge. The initiatives surrounding global warming seek of course to curb emissions and by slowing it down. This would allow for scenarios where countries can respond more effectively to the projected issues that could arise. According to the World Meteorological Organization (WMO) over the last 50 years there is a 400% increase in the number of global disasters. However, there is some positive news that the number of deaths has actually fallen by 2/3rds.
A dire scenario such as the RCP 8.5, where there is no action taken to curb emissions, shows that the planet will warm so quickly so there isn’t adequate time to adapt to climate change). There are new voluntary commitments emerging from countries; as of 2022 approximately 75% of the global emissions are addressed by net zero commitments.
Concerted action of governments and regulators have helped drive change. However, the most important, positive catalyst moving the needle forward is the Corporations that are responding to the demand from investors, employees, customers, and communities.
How do we measure emissions?
Emissions are currently categorized as either Scope 1, 2, and 3. This is a way to measure and report on different kinds of greenhouse gas (GHG) emissions that a company or organization produces. The definitions are as follows:
· Scope 1 emissions are direct emissions from sources that are owned or controlled by the company. This includes emissions from fuel combustion in boilers, furnaces, vehicles, and industrial processes.
· Scope 2 emissions are indirect emissions from the generation of purchased electricity, steam, heat, or cooling. Although scope 2 emissions physically occur at the facility where they are generated, they are accounted for in the company’s GHG inventory because they are a result of the company’s energy use.
· Scope 3 emissions are all other indirect emissions (not included in scope 2) that occur in the value chain of the reporting company, including both upstream and downstream emissions. This can include emissions from the extraction and transportation of raw materials, the production of goods and services, the transportation of products to customers, and the disposal of products at the end of their lifecycles.
Many public companies now have a sustainability report and are capturing information on their scope 1 and 2 emissions. Scope 3 emissions are a very controversial topic as they are harder to measure and report on because they occur outside of a company’s direct control and can be complex to track. Some of the specific challenges include data availability and transparency, complex value chains, and lack of standardized methodologies. There is also a large unspecific cost and impact for companies to consider. Despite these challenges, it is important for companies to begin to understand and try to measure at least parts their scope 3 emissions to set a baseline beginning point. According to a study from Deloitte, scope 3 emissions often make up the majority of a company’s overall GHG footprint (estimated at around 70%) so reducing these emissions is essential for achieving climate goals.
Current and Proposed Legislation
- EU: The EU’s Corporate Sustainability Reporting Directive (CSRD), which comes into force on January 1, 2024, will require large companies (criteria varies depending on number of employees, balance sheet totals, and other markers) and listed companies to publish regular reports on their social and environmental impacts. This includes reporting on scope 1, 2, and 3 greenhouse gas emissions.
- US: The US Securities and Exchange Commission (SEC) has proposed new rules that would require public companies to disclose their climate-related risks, including scope 1, 2, and 3 emissions. The proposed rules are currently in the public comment phase, and it is unclear when they will be finalized and implemented.
- US: In addition to the SEC’s proposed climate disclosure rules, there are a number of bills pending in Congress that would require companies to disclose their scope 1, 2, and 3 emissions. For example, the Sustainable Accounting Standards Board (SASB) Standards Reporting Act would require public companies to file reports with the SEC that include SASB standards, which include reporting on scope 1, 2, and 3 emissions.
