Climate Scenarios: Unpacking the 1.5°C Pathways

The 1.5°C level is a critical limit for climate regulation around the globe, as the landmark 2015 Paris Accord aimed to hold down global warming to well below 2°C above pre-industrial levels, and pursue efforts to limit the temperature increase to 1.5°C. The three main scenario data providers focusing on 1.5°C scenarios outline different paths to reach that goal, in terms of emissions reduction, timing and other variables.

In this paper, we study how the scenarios differ qualitatively (i.e., in assumptions, high-level modeling choices, etc.), as well as quantitatively (i.e., emissions, energy use, carbon pricing, and other outputs).

We focus our attention on scenarios from three providers: the International Energy Agency (IEA), the Intergovernmental Panel on Climate Change (IPCC) and the Network for Greening the Financial System (NGFS). All scenarios considered here are characterised by a temperature outcome of 1.5^oC with no or low overshoot (50% probability).¹

Details on the scenarios are as follows:

1. IEA Net Zero Emissions by 2050^2,3 (IEA-NZE). This scenario aims to achieve net zero CO₂ emissions from energy and industrial processes by 2050. Its primary lever relies on a large shift to renewables, though this follows along with a slower movement away from fossil fuels relative to the other 1.5^oC scenarios. The IEA Scenarios are updated biennially, and are an integral part of discussions at the UN Climate Change Conference of Parties (COP).
2. IPCC Focus on Renewables⁴ (IPCC-Ren). This scenario implies a large focus on climate-related policy to limit global warming, a regulatory shift that could make carbon based fuels very expensive. This scenario, given the decreasing cost of photovoltaics, wind power and battery storage, along with the accelerating progress in solar and wind power technology, and the increase in carbon prices, assumes that electricity will soon be cheaper than carbon based fuels. In addition, demand side innovation is likely to induce a fundamental transformation of energy systems towards a dominance of electricity based end uses. We see a jump in which electricity will account for about 66% of final energy by 2050 (more than 3 times its current value), and renewables will account for about 75% of the primary energy source (nearly 4 times its current value).
3. IPCC Focus on SDGs⁵ (IPCC-SP). This scenario focuses on economic development, education, technological progress, less-resource-intensive lifestyles, and ambitious climate policies, all geared toward progress on the UN Sustainable Development Goals. Furthermore, the model expands on the existing SDGs, requiring not only strong interventions and lifestyle changes, but also sustainable development packages, redistribution of carbon pricing revenues, and an increased focus on sufficient and healthy nutrition – all of which are likely to aid significant climate action within the framework of the UN 2030 Agenda. Given these assumed policy-driven distributions, the shift to greener sources of energy is slower compared to the other scenarios.
4. IPCC Low Energy Demand (IPCC-LD). This scenario focuses on demand-side solutions. It assumes a rapid transition towards producing electricity via low-emission methods and increased use of electricity, instead of other fuels. The scenario looks closely at sectors such as transportation, but it assumes a significant reduction in energy demand across all sectors, resulting in the lowest energy demand across all scenarios considered. In parallel, this scenario also includes substantial reductions in fossil fuels (to the lowest levels across the scenarios considered), higher energy efficiency, and increased use of alternate carriers such as hydrogen. Like the previous scenarios, this also requires significant changes in societal behaviour, including shifts to less-resource-intensive lifestyles and diets. Early action and accelerated demand-side solutions minimize the need for Carbon Dioxide Removal (CDR) technologies.
5. NGFS Net Zero 2050 (NGFS-NZORD)⁶ Net Zero 2050 is an ambitious scenario that limits global warming to 1.5 °C through stringent climate policies and innovation, with the goal of reaching net zero CO₂ emissions around 2050. In this scenario, some jurisdictions such as the US, EU and Japan reach net zero for all greenhouse gases by this point. This scenario assumes that ambitious climate policies are introduced immediately. CDR is used to accelerate the decarbonisation but kept broadly in line with sustainable levels of bioenergy production. In this scenario, physical risks, which broadly encompass the quantification of a company or country’s exposure to natural catastrophes that could be reliably tied to climate change and a warming environment, are relatively low. However, transition risks are high.
6. NGFS Divergent Net Zero 2050 (NGFS-NZDIS)⁷ Divergent Net Zero is based on the goal to reach net-zero by 2050, but it assumes higher costs due to divergent policies introduced across sectors, and a quicker phase out of fossil fuels. This scenario differentiates itself from NGFS-NZORD by assuming that climate policies are more stringent in the transportation and buildings sectors. This illustrates a potential situation in which the failure to coordinate policy stringency across sectors results in a high burden on consumers, but industry and energy supply is still not efficiently regulated. Furthermore, the availability of CDR technologies is assumed to be lower than in NGFS-NZORD. This scenario leads to considerably higher transition risks than NGFS-NZORD but overall the lowest physical risks among NGFS scenarios.

The scenarios differ in their analysis of the world’s path toward net zero CO₂ emissions. IEA-NZE reaches the target earliest (in 2050), while IPCC-SP hits the goal latest (in 2060-2070). The use of Carbon Dioxide Removal (CDR) varies; IEA-NZE and NGFS-NZORD have high usage, while IPCC-LD has minimal usage. Not surprisingly, carbon prices increase over time across all scenarios. However, IEA-NZE and IPCC-SP display relatively lower carbon prices, while IPCC-Ren and NGFS-NZDIS output the highest prices.

Green energy use⁸ increases sharply by 2030, with IPCC-Ren, NGFS-NZORD and NGFS-NZDIS showing the highest uptick. Brown energy use⁹ decreases at a moderate pace by 2030, with IPCC-LD showing the largest drop. The use of all three main fossil fuel sources decreases; however, coal use falls at the fastest pace, followed by gas use. Oil use shrinks at the slowest pace.