Planning for a future beyond 1.5°C

GENEVA – The negotiators and activists preparing to attend the upcoming United Nations Climate Change Conference (COP28) in Dubai are grimly aware that there is no realistic chance of limiting global warming to 1.5°C above pre-industrial levels. But what has become an open secret in climate circles must be shared more widely. Paradoxically, it may be the only way to muster the political will needed to eschew incrementalism in favour of disruptive action that is commensurate with the scale of the challenge.

The official view remains that the 1.5°C target set by the 2015 Paris climate agreement is still achievable, but only if we act decisively and immediately. While that may be true in theory, the necessary reforms are politically painful and therefore almost non-existent. Global coal consumption, for example, climbed to a new all-time high of 8.3 billion tonnes in 2022. Moreover, Chevron and ExxonMobil recently invested a combined $113 billion in securing additional oil and gas reserves, an unambiguous bet on the long-term profitability of fossil fuels.

It has become starkly apparent that we are barreling towards global temperatures at least 2°C above pre-industrial levels. This aligns with the International Energy Agency’s recent conclusion that, based on today’s policies, global emissions could push up average temperatures by around 2.4°C this century.

A future beyond 1.5°C will look very different from our current reality, and every tenth of a degree will have major consequences. At 2°C warming, it is estimated that around 40 per cent of the world’s population will be exposed to severe heatwaves, while up to one-third will experience chronic water scarcity The human cost, in terms of displacement, lost livelihoods and early deaths, will be unprecedented, with vulnerable communities, largely in poorer countries, bearing the heaviest burden.

We must do everything within our power to prevent these outcomes. But, ironically, raising false hopes of achieving the 1.5°C target has become a roadblock to progress on climate action. As NatureFinance highlights in a publication released on the eve of COP28, “Time to Plan for a Future Beyond 1.5 Degrees”, this goal reflects our ambition but, perversely, has embedded the fiction of a “win-win” energy transition, whereby the future world looks much like ours, only without carbon emissions. This narrative, promoted by many political, business, and civil-society leaders, constrains our response, forcing us to act within the confines of conventional wisdom.

Humans struggle to react to slow-moving crises. Escaping this pattern usually requires a “new truth” to become self-evident, often through a sudden jolt that cements a paradigm shift and broadens the realm of possibility.

In the aftermath of the 2008 global financial crisis, for example, finance ministers and central bank governors abandoned the long-held belief that monetary expansion must be avoided at all costs for fear of inflation; instead, they embraced quantitative easing, in effect, printing money, to stimulate recovery. Similarly, after the COVID-19 pandemic erupted, leading G-20 governments renounced their commitment to fiscal probity and adopted costly universal-income payments previously derided as utopian fantasy.

Pivoting to a “beyond 1.5°C” narrative could provide the jolt necessary to reject a business-as-usual mindset in favour of interventions that break from accepted norms and disrupt the status quo. Consider, for example, the existential issue of food security. Helping vulnerable smallholder farmers shift to regenerative practices might work in a world where warming is limited to 1.5°C. But it could hinder their pivot away from farming methods and livelihoods that will no longer exist if temperatures exceed that target.

At the same time, global food supply chains may become less important beyond 1.5°C of warming, as producing countries restrict exports and major sovereign importers like China focus on achieving self-sufficiency. Such on-shoring is likely to accelerate investment in capital-intensive food production that is more climate-resilient and less nature-dependent, including vertical farming and lab-grown proteins. Judging by the rollout of renewable-energy technologies, the main challenge may be deploying these resilient food systems at scale in poorer countries.

The finance sector is also ripe for disruption. Investments must urgently be steered away from carbon-intensive assets. Yet, ongoing efforts to factor climate-related risks into asset valuation and allocation have obviously failed. Much bolder action is needed to align financial flows with national and international climate policies and commitments. Central banks and supervisors, for example, must move beyond financial risk and discard their cherished policy independence, which they have previously done in times of crisis. Under such circumstances, regulators could align with national net-zero policy goals and international commitments in imposing mandatory requirements on financial institutions to deliver net-zero, nature-positive portfolios within a certain timeframe.

Realism about the 1.5°C target is necessary to abandon incremental efforts and begin thinking bigger. Truly innovative climate action is impossible without letting go of this much-hoped-for goal and the comforting vision of an illusory future that accompanied it. While such a pivot would not guarantee success, it could unlock unconventional measures to limit rising temperatures and prepare for a warmer world.

Simon Zadek is executive director of NatureFinance and co-lead of the Secretariat for the Taskforce on Nature Markets. Copyright: Project Syndicate, 2023. www.project-syndicate.org