All eyes on Glasgow

There is a huge amount at stake at the COP26 summit, taking place in Glasgow between October 31 and November 12. After the fanfare that greeted the historic Paris Agreement at the COP21 event, there is a growing sense that greater urgency is needed by governments, the private sector and individuals to get the world back on track to achieving the climate commitments of 2015.

So, in our own small effort to focus minds on the climate crisis, we look at the number of carbon pricing schemes, the rise in global temperatures and the impact on human health, the connection between socio-economic development and environmental degradation, and why we need to start decarbonising hard-to-abate industries urgently.

Carbon pricing schemes: Can we do more?

As a response to fight climate change, carbon pricing schemes have been growing both in number and ambition over the last decades.

Figure 1 shows that, as of April 2021, there are 64 initiatives in this area, of which 29 are emissions trading schemes and 35 are carbon taxes. This is a big jump from the previous year, in which there were 57 initiatives.  However, what’s interesting is that Chinese national emissions trading schemes are leading the trend in 2021.

Yet while things are moving in the right direction, carbon pricing schemes still only cover 22 per cent of global emissions – leaving considerable room for improvement. All countries need to do more.

Figure 1: Share of global emissions covered by global pricing initiatives (ETS and carbon tax) (per cent)¹

Note: The GHG emissions coverage for each jurisdiction is based on official government sources and/or estimates.  The information on the China national ETS represents early unofficial estimates based on the announcement of China’s National Development and Reform Commission on the launch of the national ETS of December 2017.
Source: The World Bank, April 1, 2021

Global temperatures: What happens if they continue to rise?

It has been hard to miss news headlines on temperature records. A shattering heatwave in the Pacific Northwest, Arctic zones reaching over 30 degrees Celsius in summertime and new highs in Africa are just a few examples that continue a worrying trend. The latest climate summary from the Intergovernmental Panel on Climate Change (IPCC) revealed how each of the last four decades has been successively warmer than the preceding ones, while the last seven years (2014-20) have been the hottest on record.²

But what does it mean for humans? According to Figure 2, there are physical limits to contend with too in the form of an upper temperature bound above which human activity becomes difficult or even impossible.

Figure 2: The human climate comfort zone

Source: Aviva Investors, September 2021. Originally created by M.A. Maslin from T.R. Oke, ‘Boundary layer climates’, 1988

It is no surprise then that nausea, cramps, and an inability to focus have been reported in recent heatwaves – hitting lower-income groups, particularly those carrying out low-paid, physical work outdoors. At the extreme, there is a point when irreversible brain damage and, ultimately, death can occur.

Is there a connection between socioeconomic development and environmental degradation?

Rich countries such as the US – along with some fast-growing emerging economies like China – have achieved development through carbon-intensive resource use, while low-income countries like Malawi have kept within their ecological bounds but fallen behind on social metrics (as shown in Figure 3).

The blue areas in the middle of the circles below show progress towards social development objectives, while the green wedges indicate sustainable resource use, and red wedges on the outside of the circles show the extent to which countries have shot through their ecological ceilings – i.e. shortfalls below the social threshold in the middle of each circle or overshoots beyond the biophysical boundary on the outer edge.

Figure 3: Developed economies (and some fast-growing emerging economies) have achieved social goals by transgressing ecological boundaries³

MALAWI

CHINA

US

LS = Life Satisfaction; IN = Income Proverty; DQ = Democratic Quality; LE = Healthy life Expectancy; EN = Access to Energy; EQ = Equality; NU = Nutrition; ED = Education; EM = Employment; SA = Sanitation; SS = Social support

Note: Green wedges show resource use relative to a biophysical boundary associated with sustainability. Red wedges show shortfalls below the social threshold (in the middle of each circle) or overshoots beyond the biophysical boundary (on the outer edge).
Source: Nature Sustainability, 2018

What if we don’t decarbonise hard-to-abate industries?

Heavy industry (cement, steel, chemicals and aluminium) and heavy-duty transport (shipping, trucking and aviation) are collectively responsible for nearly one-third of global CO₂ emissions (a percentage expected to double under business-as-usual scenarios).⁴

As such, these sectors have a vital role to play in halting global average temperature rises.

But decarbonising these sectors cannot happen one foundry or aircraft at a time; they are embedded in a whole network of suppliers and infrastructure, all of which must be transformed. Figure 4 shows that without changes being implemented, CO₂ emissions from heavy industry alone would remain above 500 Mt a year.

Figure 4: Steel, chemicals and cement emissions in a baseline scenario (Mt CO2/year)

Source: Material Economics, 2019

The good news is that it is technically possible to decarbonise all hard-to-abate sectors by mid-century at a total estimated cost of well under 0.5 per cent of global GDP. That is a positive starting point.⁵