Global Trend

Climate Mitigation

Ten years to halve emissions

2020 marks the beginning of the climate mitigation decade.

We have just ten years to halve global greenhouse gas (GHG) emissions and keep global warming to 1.5°C. Four industries — electricity and heating, transportation, agriculture and forestry, and manufacturing and construction — remain responsible for the majority of global GHG emissions. More than 220 global companies have now set 100% renewable energy targets, though only a relatively small subset are from the high-emitting sectors. The world’s largest polluters are the United States and China, and both are on track to considerably overshoot 1.5°C. Current trajectories put the planet on track to experience warming of at least 3–4°C this century.

2020 Forecast

As the impacts of climate change become increasingly tangible and public concern heightens, we will likely see an escalation of citizen protests, increased employee advocacy and disruption of fossil fuel supply chains by climate activists. Both the public and private sectors will need to focus on an accelerated transition to low-carbon energy, as well as pragmatic investment in carbon capture solutions, in an attempt to mitigate the ongoing large-scale combustion of coal, oil and gas. We will see rapid acceleration in the advancement and application of low-carbon technologies, including hydrogen fuel cells, biomass, electric batteries and others. Finally, asset managers will increasingly move to divest from carbon intensive coal companies in their actively managed portfolios, in an attempt to reduce exposure to risk.

Signals to Watch

  • Atmospheric concentrations of GHG emissions have climbed to record highs year after year following a brief plateau from 2014 to 2016 due to an economic downturn in China.

  • Catastrophic fires in Australia have burnt more than 32,400 square miles, an area more than 80 times larger than the 2019 California wildfires. The fires increased Australia’s annual carbon dioxide emissions by 50%.

  • The interrelated challenges of failure of climate mitigation and adaptation, extreme weather, and biodiversity loss are the top three risks to business in 2020. This is the first time in the history of the World Economic Forum’s Global Risks Report that environmental concerns dominate the key risks selected by over 12,000 business leader respondents.

  • The Task Force on Climate-related Financial Disclosures estimates that the low-carbon energy transition requires around $1 trillion of investment each year for the foreseeable future.

  • HeidelbergCement is the first company in the building and construction sector to commit to producing carbon-neutral concrete by 2050, alongside its science-based climate target.

  • Repsol, a global oil company based in Spain, recently became the first large oil and gas company to set a goal of becoming carbon neutral by 2050.

  • Microsoft recently announced an ambitious goal to become carbon negative by 2030, without the use of offsets. The company simultaneously announced a $1 billion Climate Innovation Fund.

  • A survey of senior auto executives conducted by KPMG found they believe hydrogen fuel cells may have a better long-term future than battery electric cars, with fast refueling seen as the main competitive advantage. Executives estimate that by 2040, hydrogen fuel cell EV’s will make up 23% of the global auto market.

  • India and Brazil have formally agreed to collaborate on accelerating bioenergy production. India is following in the footsteps of both the United States and Brazil, investing heavily in biofuel technology in order to better utilize its surplus crops.

  • Coal, oil and gas received more than 5.2 trillion a year in total pre-tax and post-tax subsidies, a recent International Monetary Fund (IMF) report found. Shifting 100 billion of the annual subsidies received by fossil fuels, to investment in renewable energy, would double existing subsidies for clean energy, and help pay for a global transition to clean energy, according to the International Institute for Sustainable Development.  

“The most urgent challenge is for industry to advocate for government regulation that will support the transition to a lower carbon economic model. This will need to include an economy-wide carbon price, support for development and scaling of low-carbon technologies and regulation to phase out high-carbon activities.”
Charles Allison, Partner, Energy & Climate Change Services, ERM

Source: Global Greenhouse Gas Emissions by Economic Sector, IPCC

Advice for Business

  • Commit to reducing emissions in line with the 1.5°C target and utilizing 100% renewable energy. Make sure your science-based emission reductions are at least in line with the Paris Agreement. If you are a high emitter, commit to net zero by 2050 at the latest.

  • Encourage suppliers and peers to set 1.5°C-aligned targets.

  • Consider what role your business can play in supporting and increasing carbon sequestration in the supply chain.

  • Advocate for government regulation and clear policies on climate and energy (e.g., carbon pricing) to give business the certainty to invest in low-carbon technologies and markets.

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