Net-zero Flashcards
What is the relationship between the cumulative net emissions of CO2 + other GHGs and the changes in global surface temperature?
Near linear
Any increases to global GHG concentrations will result in in more warming, thus resulting in more extreme weather events
True or false
It is possible to attain net-zero by reducing emissions entirely
False
It needs to be balanced by corresponding GHG removals
True or false
The targets of 1.5C and 2C are a result of political consensus rather than a scientific assessment of what is acceptable
True
Why is the Paris Agreement so groundbreaking?
First document of its kind where governments agreed on a common goal to limit global warming
Which body was tasked to prepare a special report to investigate the differences between a 1.5C and 2C warming scenario?
IPCC
It was called the “Special Report on the Impacts of Global Warming of 1.5CC” and it was released in 2018. The report found that the likely effects of an extra 0.5C would be substantial
Which gathering was the ambition to “pursue best efforts to limit the temperature increase to 1.5C” codified in 2021?
The Glasgow Climate Pact
“Recognises that the impacts of cliamte change will be much lower at the temperature increase of 1.5C compared with 2C and resolves to pursue best efforts to limit the temperature increase to 1.5C”
Which of these conclusions did the 2018 IPCC Special Report come to?
1. The estimated share of global population exposed to severe heat at least every five years rises from 14% under a 1.5C scenario, to 37% under 2C of warming
2. An additional 10 million people are estimated to be at risk of flooding under a 2C scneario
3. Although 1.5C of warming would still likely lead to 70-90% reduction in average coral cover, it would prevent the total loss of coral reefs projected with warming of 2C
4. All of the above
5. None of the above
(4) All of the above
In the 2022 report, the IPCC estimates that global net emissions need to peak when?
1. 2020
2. 2025
3. 2030
4. 2035
(2) 2025
In the 2022 report, the IPCC estimates that global net emissions need to decline by how much by 2030?
1. 43%
2. 56%
3. 62%
4. 74%
(1) 43%
True or false
By June 2022, 128 countries that repersented 83% of the global emissions and 91% of the global GDP made net-zero commitments
True
Typically this would be 2050 net-zero, but there are some exceptions
Which initiative did non-state actors use to help drive net-zero ambition?
eg: companies, FIs, regions, cities etc
UN Race to zero
UN Race to Zero acts as a coordinating umbrella framework of partner initiatives, which either has sectoral focus or represents coalitions of a particular type of entity
List 3 things
Although many corporations have sumbitted their net-zero pledge, what are some of the issues that have been encountered in their commitments?
- Differences in target year of when they hope to achieve net-zero
- Scope of emissions included
- Extent which they have presented an implementation plan
This is similarly reflected in countries, where they might even have different country-level commitments etc. It presents an issue for those seeking to navigate the transition over the coming years
What percentage of countires have published their net-zero pledges as a non-legally binding policy document?
1. 24%
2. 43%
3. 65%
4. 83%
(2) 43%
Which of these are NOT key alliances in the Race to Zero?
1. GFANZ
2. Net Zero Banking Alliance
3. Under 2C Coalition
4. NGFS
(4) NGFS
True or false
The Net-Zero Insurance Alliance (NZIA) stipulates that to join, it must do the following:
* Transitioning all operational and attributable GHG emissions from insurance and reinsurance underwriting portfolios to net-zero emissions by 2050
* Establishing intermediate, science-based targets every 5 years, based on one or more scientific metrics that build on recognised methodologies, which will be defined via an NZIA target-setting protocol
* Engaging with clients and potential clients on their decarbonisation strategies and net-zero pathways
* Developing and offering insurance and reinsurance products, solutions, and arrangements for low-emission and zero-emission technologies and NbS that are key to the net-zero transition
True
These entry requirements are specifically tailored to the insurance market and goes beyond the minimum criteria established by the UN Race to Zero
Which of these are NOT the identified attributes that net-zero targets need to fulfill to provide a meaningful framework for action?
1. Front-lloaded emission reductions
2. Comprehensive approach to emission reductions
3. Cautious use of carbon dioxide removal
4. Timely implementation of climate-related issues in strategy and decision-making process
5. Effective regulation of carbon offsets
6. Equitable transition to net-zero
7. Alignment with broader socio-ecological objectives
8. Pursuit of economic opportunities
(4) Timely implementation of climate-related issues in strategy and decision-making process
- Front-loaded emissions reductions - Since global temperature change is determined by cumulative emissions, entities need to reduce as soon as possible to meet Paris targets
- Comprehensive approach to emission reductions - All emissions need to be tackled, even in hard-to-abate sectors or pursuing best efforts to reduce emisisons across Scope 1, 2, and 3 and engaging with stakeholders along the value chain
- Cautious use of carbon dioxide removal - A significant amount of carbon removal will be needed HOWEVER, there are still issues with most forms of removals :. need to prioritise deep emisisons reductions
- Effective regulation of carbon offsets - There needs to be a mechanism that balances global sources and sinks via the carbon market. These mechanisms will need to underlie governance structures for better monitoring, reporting and verification of removed carbon
- Equitable transition to net-zero - Relates back to the “common but differentiated responsibilities adn respective capacities”. The transition cannot exacerbate existing inequalities
- Alignment with broader socio-ecological objectives - Need to look at the bigger picture and the various complex interlinkages to prevent negative repercussions in other dimensions
What is the production-based accounting method?
Reports on country’s emissions that directly originated from within geographic boundaries
A national net-zero target that uses this way of GHG accounting means that they will strive to significantly reduce all domestic greenhouse gas emissions whilst removing any additional net-flows via sinks
Give 3 things
What are the issues with the production-based accounting approach?
- Not enough attention give to the consumption patterns that drives these emissions in the first place
- May result in the country moving their emisison-intensive production elsewhere –> carbon leakage
- Places undue burden of decarbonising onto developing countries, allowing developed countries to shirk away from addressing their emissions intensity of domestic consumption
What has been proposed to remedy the issues found in production-based accounting?
Consumption-based accounting method
What does the consumption-based accounting method mean?
Measuring of cumulative emissions that arise from the production of all goods and services consumed in that country, regardless of the source of production
True or false
High income countries have a higher production-based than consumption-based emisisons
False
High income countries have a higher consumption-based emissions than production-based. The reverse is true for low- and medium-income countries
True or false
There is currently no globally recognised standard for accounting emissions at the sub-national level.
True
This creates an issue for cities and regions looking to build their GHG inventory, derive baseline emissions, and the scope of their target
What is a widely recognised best-practice standard that sub-national states can use for their GHG reporting?
Community-scale
Protocol for Community-Scale Greenhouse Gas Emissions Inventory
Developed by GHG Protocol, it sets the distinction among Scope 1, 2 and 3 emissions
- Scope 1 - Emission which are sourced within the city boundary
- Scope 2 - Emissions that arise as a result of the use of the grid-supplied electricity, heat, steam, and/or cooling within the city boundary
- Scope 3 - Emissions that occur outside the city as a result of activities that take place within the city boundary
Give 2
What are the two GHG reporting standards for cities and regions and how do they differ?
- BASIC
- BASIC +
How does BASIC level emissions inventories differ from BASIC + level emissions inventories?
Remember that BASIC and BASIC+ are part of the Global Protocol for Community Scale GHG emissions
Think stationary energy and transboundary emissions
- BASIC - covers scope 1 and 2 from stationary energy and transport, and Scope 1 and 3 for waste
- BASIC+ -more comprehensive and cover sources such as scope 3 emissions from transboundary transport and scope 1 emissions from agriculture, forestry and land use
What will be the core challenge of energy-intensive industries to transition towards net-zero?
1. Implement the latest technology to assist in the decarbonisation process
2. Navigating the changing policy landscape
3. Develop alternatives to current production processes
4. Understanding the broader market shift and consumer mentality
(3) Develop alternatives to current production processes
This requires:
* investing in technological innovation
* developing solutions that are less emissions intensive
* can be deployed at scale
True or false
The main climate impact of financial institutions come from the electricity usage
False
Most of it comes from the activities they enable through their investments and other services
Which of these is NOT an approach that FIs can used to set a science-based target?
1. Sectoral decarbonisation approach
2. SBTi portfolio coverage approach
3. Temperature rating approach
4. Absolute emissions approach
(4) Absolute emissions approach
Sectoral decarbonisation approach - define emissions-based physical intensity targets for investments and loans in a defined list of emission-intensive sectors
SBTi portfolio coverage approach - Ensure that increasing % of investees in their portfolios have committed their own respective science-based target
The temperature rating approach - Assess the current temperature rating of a portfolio and work to align it with the long-term temperature targets by engaging with portfolio companies
What is the definition of a transition plan?
A strategy document that outlines the targets and actions to facilitate the transition of an organisation towards net-zero
Which body published high-level guidance that outlined the core components required for an effective transition plan?
TCFD
GFANZ released something similar but for FI
True or false
The UK Government has committed to making transition plans mandatory for publicly listed firms as well as firms with more than £500m in revenue
False
It’s mandatory for EVERYONE across the economy
When did the Transition Plan Taskforce launch their draft disclosure framework?
1. Glasgow Climate Pact
2. COP27
3. UN Climate Action Summit
4. Action for Climate Empowerment
(2) COP27
Give 2
What are the concerns with entities using carbon credits and the current state of the carbon market?
Think credible activities
- What activities are eligible for generating credits?
- Environmental integrity of sold credits
- There are ongoing discussions about whether carbon credits should be generated from only removal projects or if activities that avoid would-have-otherwise-occured emissions should be eligible
- Will carbon emissions actually reduce, even without the financing through the sale of carbon credits?
Give 3 things
What are the issues associated with carbon-credit projects?
L,P,M
- Leakage
- Permanance
- Measurement
- Leakage –> refers to displacing emissions
- Permanence –> long-term storage of carbon
Give 4
What principles did the Oxford Principles for Net-Zero Aligned Carbon Offsetting set out for an environmentally sound approach to offsetting?
- Cut emisisons and regularly revise offsetting strategy as best practice evolves
- Shift to carbon removal offsetting
- Shift to long-lived carbon storage
- Support the development of net-zero aligned offsetting
What is another reason why interim targets are so important?
cumulative effect
Because of the cumulative stock of GHG in atmosphere, need to reduce ASAP.
Pathways which delay emission reductions have a much higher cumulative effect on radiative forcing
What is an issue with current global NDCs?
1. They don’t have enough targets
2. They aren’t transparent enough
3. Targets are not underpinned with robust plans or clear, short-term milestones
4. They don’t align with the Paris Agreement targets enough
(3) Targets are not underpinned with robust plans or clear, short-term milestones
This undermines the credibility of the governments and lessens the chances of staying within the 1.5C . It is called the credibility gap
Give 3 reasons
What are the reasons for the low number of large companies committing to net-zero and even fewer with their defined pathways?
- Lacks regulatory pressure
- Complexity of understanding what net-zero implies for their operations
- Complex GHG accounting standards
Why are organisations such as Industry tracker and Transition Pathway Initiative important?
1. They give definitions of what net-zero means for companies
2. They define benchmarks for sectoral transition pathways based on key metrics and target dates
3. They help provide guidance on navigating GHG accounting standars
4. All of the above
(2) They define benchmarks for sectoral transition pathways based on key metrics and target dates
To ensure that transition plans are granular enough to support net-zero pledges, companies should which of these recommendations?
1. Join industry-specific benchmarks and consider joining the Race to Zero initiatives
2. Any defined transition plan should not contravene with existing local net-zero policies
3. Implement short- and medium- term interim targets
4. All of the above
(4) All of the above
Give 3 examples
Which climate-related metrics does the TCFD recommend should be disclosed?
- Climate-related risks and opportunities in line with strategy and risk management
- Scope 1 and 2, and if possible Scope 3
- Targets that were used to manage climate-related risks and opportunities
The TCFD also recommends compnaies disclose metrics used to assess progress against their decarbonisation targets (including: related operational and financial performance metrics, industry-spcific metrics etc)
True or false
Typically, an industry will use the same sets of metrics due to similar operations and exposure to physical and transition risks
False
There is no single set of metrics that can caputre hte cross-section of climate risks for all organisations. Not even if they are of the same industry
What are organisations encouraged to do first regarding the calcuation and estimations of the relevant climate-related metrics?
Define the processes to automate and standardise the calculation of some more complex quantitative measures
What else can carbon-related metrics be used for beyond reporting?
Project Selection
Can use the metrics to describe the carbon intensity of projects and decisions can be made based on metric threholds or relative to rivalling projects
What is a benefit of using binary measurement as a climate-related metric?
1. Easy to use
2. Easy to communicate to stakeholders
3. Shortest to conduct
4. All of the above
(1) Easy to use
It’s also based off on easily attainable data and is broadly applicable to any asset class.
HOWEVER, it is limited in the insights that it can provide since it doesn’t show the degree of misalignment
What are the disadvantages of using maturity scale alignment metrics?
Not commonly used, making it hard to compare
True or false
One of the key benfits of benchmark divergence is its ease of use and interpretability
False
In fact, the complex nature of its calculations is one of its disadvantages. It is also based off on potentially difficult-to-obtain data (eg: company-level emissions projections) that may require expertise to interpret
True or false
One of the disadvantages of implied temperature rise is that it requries climate-scenario expertise and is based off on potentially difficult-to-obtain data
True
Since ESG ratings lack depth to assess whether a company is on track to meet its net-zero path, what tools have been made to remedy this?
Portfolio alignment tools
These include 4 categories
1. Binary target measurement - % of porfolio companies with science-validated 1.5C aligned reduction targets
2. Maturity scale alignment metrics - Groups portfolio companies into alignment categories
3. Benchmark divergence - Evaluates the distance from a net-zero aligned pathway
4. Implied temperature rise - translates the distance from a measured pathway into a projection of likely end-of-century global warming outcomes
Which of these organisations have provided reporting frameworks?
1. TCFD
2. SASB
3. ISSB
4. GRI
5. All of them
(5) All of them
Though, in the realm of climate risk disclosures, TCFD has emerged as the baseline setter of recommendations. The ISSB is more deatiled and looks to create a lasting carbon-related financial disclosure standard
True or false
Transition disclosure standards have long existed, however, they have only started to be utilised now
False
They have only started to emerge recently, with teh TCFD publishing its high-level guidance on transition plans at the end of 2021.
True or false
The UK Chancellor has announced that the preparation and publishing of transition plans will become mandatory across the economy
True
Adds an extra level of requirements for existing disclosure recommendations as companies will be required to explicitly publish a roadmap to achieve net-zero
What scheme has the EU implemented to end greenwashing and strengthen the EU’s social market economy?
Corporate Sustainability Reporting Directive (CSRD)
Will require all large companies in the EU to disclose their information on societal and environmental impact
What are the initial exposure drafts that the ISSB published in 2022 about?
Aligning various recommendations from the CDSB, SASB and TCFD
The drafts included iniital guidance on what parts of the transition strategies companeis should disclose
What is a controvery regarding the development of net-zero disclosure standards?
1. Double materiality
2. Double counting of emissions
3. Use of carbon intensity reduction or absolute carbon reduction
4. All of the above
(1) Double materiality
Double materiality is the concept that companies must disclose their activities that would be material to both society and the environment
