4 scenarios to address climate change … which is the most effective pathway for business and society to limit global warming to under 2°C?

November 6, 2022

The 2015 UN Paris Agreement commits countries to limit the global average temperature rise to well below 2°C above pre-industrial levels, and to aim for 1.5°C. Scientists have said crossing the 1.5°C threshold risks unleashing far more severe climate change effects on people, wildlife and ecosystems.

Forum for the Future, together with the Aditya Birla Group, used a scenario planning approach to imagine alternative scenarios for 2040, and produced a set of materials to help businesses understand what the journey to climate resilience might look like.

The four scenarios can be used as lenses to see into the future, in order to make better decisions today.

The climate challenge

The challenge is clear. How to keep global temperatures within 2 degrees of pre-industrial levels.

A range of physical impacts of climate change are locked in due to our past emissions. And we know that major changes are necessary in our energy and mobility systems, in how we construct and live our lives if we are to stay under this limit. These ‘physical’ and ‘transition’ impacts are only just beginning to be understood by the business community.

More difficult to understand – and therefore factor into strategy making, innovation and investment decisions – are the different pathways we could take to stay under 2°C. What levers could be pulled, by whom and by when? And, importantly, what does this mean businesses need to take action on now in order to be successful in a below 2°C future?

The scenario approach

Scenario planning is a relatively simple process, but depends on effective facilitating to set context, stretch and support the teams working on each scenario, and to provoke a meaningful set of discussions that lead to useful insights, and practical action.

4 scenarios for 2040

The output was 4 scenarios for 2040 to promote discussion, innovation and action by business and society into how most effectively to address the challenge. The report includes:

“Baseline” infographics conveying the physical changes we can expect in 2040 due to climate change, and the ‘transition’ changes that are needed to get on a <2°C trajectory such as the banning of internal combustion engines and the phase out of much of coal.

Four scenarios that represent different pathways our research tells us are viable from the standpoint of 2018 to limit warming to under 2°C.

Scenario 1: “Efficiency First” … a precarious globalised house of cards where constant and often risky technological innovation, motivated by high carbon prices, is just keeping us on track

Scenario 2: “Redefining Progress” … a digitally connected, yet highly localised world where priorities in many countries have shifted from rapid growth to healthier growth

Scenario 3: “New Protectionism” … a splintered world of protectionist blocs, where tackling climate change is a matter of national security

Scenario 4: “Service Transformation” … a world where the mainstreaming of access over ownership has happened quickly, and globally applied, individual carbon budgets are traded and tracked.

Which scenario is the better? What actions should business and society take now, in order to work together towards the preferred scenario?

The UN’s IPCC has itself used scenario planning to envision potential futures, outcomes and most effective actions. You can read more about their 5 scenarios here.

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