• IPCC's latest report on Mitigation of Climate Change was published on 4 April.
  • Emissions must peak by 2025 to limit global warming and reduce by 43% by 2030.
  • We need to cut fossil fuel use, transition to renewable energy at scale and invest in carbon dioxide removal.

The third and final instalment of the IPCC’s Sixth Assessment report Mitigation of Climate Change, published on 4 April, found that average annual global greenhouse gas emissions were at their highest levels in human history between 2010 to 2019, but the rate of growth of emissions has since slowed.

Central to averting climate disaster is the need for immediate and deep emissions reductions across all sectors if we are to meet the goals of the Paris Agreement. According to Professor Jim Skea, co-chair of the report, “It’s now or never, if we want to limit global warming to 1.5C.”

Greenhouse gas emissions must peak by 2025 and reduce by 43% by 2030. We need to move swiftly to a low-carbon society, but it will require an enormous effort by governments, businesses and individuals.

UN Secretary-General António Guterres’s response to the report began with a damning rebuke of some governments and business leaders who he accused of political and corporate inaction: “Some government and business leaders are saying one thing, but doing another. Simply put, they are lying.”

Despite this stark warning, there are some positive signs: since 2010 there have been sustained decreases in costs for renewable energy, with reductions of 85% for solar, 55% for wind power and 85% for batteries. The urgent need to shift from fossil fuels to renewables is not just a necessary alternative but a financially viable one.

The lengthy scientific review process is critical to ensure the assessment is objective and transparent. Compiled by 278 authors from 65 countries, reviewing over 18,000 scientific papers and nearly 60,000 comments from governments and experts.

What does the IPCC report tell us?

We already knew the science in terms of the key things that we need to do: emissions must peak by 2025 and reduce by 43% by 2030. Our carbon "budget" to keep within 1.5C of global warming and therefore avoid the worst effects of climate change, equated to the amount we emitted in the last 10 years.

All of the commitments that were made at Glasgow for example, and in the lead up to COP26 hadn't actually started and made a tangible impact on emissions reductions, but this is the first time that there has been some kind of positive news. The rate of increase of emissions has decreased – we're increasing at roughly 1.3% each year and in the previous decade it was around double that. So, we are almost reaching that peak but it needs to be achieved by 2025 and we need to reduce emissions by 45 to 50% by 2030.

Immediate action is needed to reduce supply and demand of fossil fuels

People don’t often believe this, but COP26 in Glasgow last year was the first time the international community agreed to explicitly mention the burning of fossil fuels as the primary cause of climate change. The IPCC report published yesterday is explicit about the need to rapidly phase out fossil fuel supply and demand: coal by 95%, oil by 60% and gas by 45% by 2050.

But energy companies can still survive and maintain their social license to operate. Actually there is a massive business opportunity for these companies to pivot to low carbon operations. The science tells us that it is incumbent on all companies to clearly communicate how they plan to phase out oil and gas production, or to show how they are competitively advantaged to maintain drastically scaled-down production to meet our energy needs over the next decades.

There are several tangible things that energy companies need to do to demonstrate they are compatible with limiting the worst effects of the climate crisis:

  • Reduce direct emissions. Oil and gas companies need to reduce direct Scope 1 and 2 emissions. These energy efficiency measures, powering operations from renewables and stopping fugitive methane leakage – a greenhouse gas up to 34 times more potent than carbon dioxide – can mostly be taken at no cost, or even with net profit, to companies.
  • Invest in new technologies. Oil and gas companies have some of the largest free cashflows, as well as strong technical and project execution capabilities, which should be meaningfully shifted to help scale low-carbon technologies such as renewables, clean hydrogen, and carbon dioxide removal technologies.
  • Manage a rapid and immediate transition of oil and gas to a net-zero world. Sectors and markets that are powered by fossil fuels must work with their upstream suppliers to manage the rapid phase down of oil and gas in a way that minimizes the risk of energy supply shortages and crises. This can only be achieved through public-private collaboration where governments, energy companies, finance, and industry are at the table.

What about hard-to-abate industry sectors like aviation and shipping?

Hard-to-abate sectors such as aviation, trucking, heavy trucking and cargo and shipping, account for over 30% of global emissions. The problem with hard-to-abate sectors is that the low carbon alternatives are still too expensive. Unlike in energy, where solar offshore wind is actually cheaper in most parts of the world than fossil fuels.

In aviation, conventional jet fuel is still much cheaper than sustainable aviation fuel. And that's the case across all hard-to-abate sectors, including aluminium, aviation, chemicals, cement, direct air capture, shipping, steel and trucking.

The First Movers Coalition was created to drive down the cost of these low carbon technologies by getting companies to commit to buying goods that use low carbon technologies in a similar way to, for example, the COVID-19 vaccinations. Governments committed to buying effective vaccines that stimulated innovation and reduced prices.

What’s the World Economic Forum doing about climate change?

Climate change poses an urgent threat demanding decisive action. Communities around the world are already experiencing increased climate impacts, from droughts to floods to rising seas. The World Economic Forum's Global Risks Report continues to rank these environmental threats at the top of the list.

To limit global temperature rise to well below 2°C and as close as possible to 1.5°C above pre-industrial levels, it is essential that businesses, policy-makers, and civil society advance comprehensive near- and long-term climate actions in line with the goals of the Paris Agreement on climate change.

The World Economic Forum's Climate Initiative supports the scaling and acceleration of global climate action through public and private-sector collaboration. The Initiative works across several workstreams to develop and implement inclusive and ambitious solutions.

This includes the Alliance of CEO Climate Leaders, a global network of business leaders from various industries developing cost-effective solutions to transitioning to a low-carbon, climate-resilient economy. CEOs use their position and influence with policy-makers and corporate partners to accelerate the transition and realize the economic benefits of delivering a safer climate.

Contact us to get involved.

Is carbon dioxide removal viable?

Carbon dioxide removal has to be a mix of both engineered and nature-based solutions because if we just used reforestation methods it would require forests five times the size of India to actually suck in the carbon. Efforts should be focused on geographic areas such as the tropics, which have high sequestration density and low risk of wildfire.

Aside from the really high cost of carbon dioxide removal, we need to be careful about the so-called “rebound effect”, which legitimizes less radical action based on the false assumption that we can remove all emissions this way by 2050.

The key challenge, and opportunity, is to drive down costs in engineered solutions by investing now. The First Movers Coalition will send a clear 2030 demand for carbon dioxide removal, to drive down the cost and scale the update on this technology.

The Natural Climate Solutions Alliance is a global, CEO-led organization of over 200 leading businesses working together to accelerate the transition to a sustainable world.

What more can the public and private sector do?

At COP26 the “global stocktake process” was launched – whereas previous COPs focused on what we are going to do in the future with regards to our net zero commitments – next year at COP28 in UAE all governments will have to come forward to demonstrate the actual implementation and delivery of commitments they've made.

Lots of governments have set their nationally determined contributions and net-zero commitments but they haven't translated that into sector specific pathways – there are still some lofty commitments.

At the World Economic Forum, we provide a platform for action driven by governments, business, industry, and finance together to implement these commitments. We have a European Action Group for a Green New Deal who are pivotal in helping accelerate the EU’s Green New Deal. This year, 2022, is a "now or never" moment to build these high-ambition public-private communities in key countries such as India, China, Indonesia, and the Middle East and North Africa region.

In terms of smart policy-making, there is an opportunity around, for example, urban planning, where governments, local businesses and can be quite intentional in the way that they formulate policies to help residents live in a healthier and more sustainable way. Also, while there should be an emphasis on individual behaviour changes, it is not solely the responsibility of the individual - we need collective action.

What can individuals do?

Firstly, it’s the responsibility of governments and businesses to empower their citizens to make the right choices. With rising global energy prices, it's difficult to make the right choices. That said there are very tangible things that everyone can do:

  • Eat a plant-based diet. Beef is the most carbon intensive animal in the world, not only because of the methane they emit, but also the deforestation required to create land for grazing.
  • Fly less. Did you know flying from London to Singapore and back would constitute our entire carbon budget for one whole year based on 2050 targets?
  • Don’t drive. Living car free is more impactful than driving an electric car. Seek alternative low-carbon forms of transport where possible.

Will the energy crisis and geopolitical tensions halt progress?

The energy crisis has put into even sharper focus the issue of energy security, placing greater demand on fossil fuels in the short-term. The war in Ukraine and global energy price shocks are continuing to put pressure on the global economy.

Now more than ever we need to ensure greater investment in renewable energy – reducing emissions and driving down costs for consumers. Now is the time for direct action.