Net-zero

Question 1

What is the relationship between the cumulative net emissions of CO2 + other GHGs and the changes in global surface temperature?

Answer 1

Near linear

Any increases to global GHG concentrations will result in in more warming, thus resulting in more extreme weather events

Question 2

True or false

It is possible to attain net-zero by reducing emissions entirely

Answer 2

False

It needs to be balanced by corresponding GHG removals

Question 3

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

Answer 3

True

Question 4

Why is the Paris Agreement so groundbreaking?

Answer 4

First document of its kind where governments agreed on a common goal to limit global warming

Question 5

Which body was tasked to prepare a special report to investigate the differences between a 1.5C and 2C warming scenario?

Answer 5

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

Question 6

Which gathering was the ambition to “pursue best efforts to limit the temperature increase to 1.5C” codified in 2021?

Answer 6

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”

Question 7

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

Answer 7

(4) All of the above

Question 8

In the 2022 report, the IPCC estimates that global net emissions need to peak when?
1. 2020
2. 2025
3. 2030
4. 2035

Answer 8

(2) 2025

Question 9

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%

Answer 9

(1) 43%

Question 10

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

Answer 10

True

Typically this would be 2050 net-zero, but there are some exceptions

Question 11

Which initiative did non-state actors use to help drive net-zero ambition?

eg: companies, FIs, regions, cities etc

Answer 11

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

Question 12

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?

Answer 12

1. Differences in target year of when they hope to achieve net-zero
2. Scope of emissions included
3. 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

Question 13

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%

Answer 13

(2) 43%

Question 14

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

Answer 14

(4) NGFS

Question 15

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

Answer 15

True

These entry requirements are specifically tailored to the insurance market and goes beyond the minimum criteria established by the UN Race to Zero

Question 16

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

Answer 16

(4) Timely implementation of climate-related issues in strategy and decision-making process

1. 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
2. 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
3. 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
4. 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
5. Equitable transition to net-zero - Relates back to the “common but differentiated responsibilities adn respective capacities”. The transition cannot exacerbate existing inequalities
6. 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

Question 17

What is the production-based accounting method?

Answer 17

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

Question 18

Give 3 things

What are the issues with the production-based accounting approach?

Answer 18

1. Not enough attention give to the consumption patterns that drives these emissions in the first place
2. May result in the country moving their emisison-intensive production elsewhere –> carbon leakage
3. Places undue burden of decarbonising onto developing countries, allowing developed countries to shirk away from addressing their emissions intensity of domestic consumption

Question 19

What has been proposed to remedy the issues found in production-based accounting?

Answer 19

Consumption-based accounting method

Question 20

What does the consumption-based accounting method mean?

Answer 20

Measuring of cumulative emissions that arise from the production of all goods and services consumed in that country, regardless of the source of production

Question 21

True or false

High income countries have a higher production-based than consumption-based emisisons

Answer 21

False

High income countries have a higher consumption-based emissions than production-based. The reverse is true for low- and medium-income countries

Question 22

True or false

There is currently no globally recognised standard for accounting emissions at the sub-national level.

Answer 22

True

This creates an issue for cities and regions looking to build their GHG inventory, derive baseline emissions, and the scope of their target

Question 23

What is a widely recognised best-practice standard that sub-national states can use for their GHG reporting?

Community-scale

Answer 23

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

Question 24

Give 2

What are the two GHG reporting standards for cities and regions and how do they differ?

Answer 24

• BASIC
• BASIC +

Question 25

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

Answer 25

• 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

Question 26

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

Answer 26

(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

Question 27

True or false

The main climate impact of financial institutions come from the electricity usage

Answer 27

False

Most of it comes from the activities they enable through their investments and other services

Question 28

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

Answer 28

(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

Question 29

What is the definition of a transition plan?

Answer 29

A strategy document that outlines the targets and actions to facilitate the transition of an organisation towards net-zero

Question 30

Which body published high-level guidance that outlined the core components required for an effective transition plan?

Answer 30

TCFD

GFANZ released something similar but for FI

Question 31

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

Answer 31

False

It’s mandatory for EVERYONE across the economy

Question 32

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

Answer 32

(2) COP27

Question 33

Give 2

What are the concerns with entities using carbon credits and the current state of the carbon market?

Think credible activities

Answer 33

1. What activities are eligible for generating credits?
2. Environmental integrity of sold credits

1. 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
2. Will carbon emissions actually reduce, even without the financing through the sale of carbon credits?

Question 34

Give 3 things

What are the issues associated with carbon-credit projects?

L,P,M

Answer 34

1. Leakage
2. Permanance
3. Measurement

1. Leakage –> refers to displacing emissions
2. Permanence –> long-term storage of carbon

Question 35

Give 4

What principles did the Oxford Principles for Net-Zero Aligned Carbon Offsetting set out for an environmentally sound approach to offsetting?

Answer 35

1. Cut emisisons and regularly revise offsetting strategy as best practice evolves
2. Shift to carbon removal offsetting
3. Shift to long-lived carbon storage
4. Support the development of net-zero aligned offsetting

Question 36

What is another reason why interim targets are so important?

cumulative effect

Answer 36

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

Question 37

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

Answer 37

(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

Question 38

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?

Answer 38

1. Lacks regulatory pressure
2. Complexity of understanding what net-zero implies for their operations
3. Complex GHG accounting standards

Question 39

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

Answer 39

(2) They define benchmarks for sectoral transition pathways based on key metrics and target dates

Question 40

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

Answer 40

(4) All of the above

Question 41

Give 3 examples

Which climate-related metrics does the TCFD recommend should be disclosed?

Answer 41

1. Climate-related risks and opportunities in line with strategy and risk management
2. Scope 1 and 2, and if possible Scope 3
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)

Question 42

True or false

Typically, an industry will use the same sets of metrics due to similar operations and exposure to physical and transition risks

Answer 42

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

Question 43

What are organisations encouraged to do first regarding the calcuation and estimations of the relevant climate-related metrics?

Answer 43

Define the processes to automate and standardise the calculation of some more complex quantitative measures

Question 44

What else can carbon-related metrics be used for beyond reporting?

Answer 44

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

Question 45

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

Answer 45

(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

Question 46

What are the disadvantages of using maturity scale alignment metrics?

Answer 46

Not commonly used, making it hard to compare

Question 47

True or false

One of the key benfits of benchmark divergence is its ease of use and interpretability

Answer 47

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

Question 48

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

Answer 48

True

Question 49

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?

Answer 49

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

Question 50

Which of these organisations have provided reporting frameworks?
1. TCFD
2. SASB
3. ISSB
4. GRI
5. All of them

Answer 50

(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

Question 51

True or false

Transition disclosure standards have long existed, however, they have only started to be utilised now

Answer 51

False

They have only started to emerge recently, with teh TCFD publishing its high-level guidance on transition plans at the end of 2021.

Question 52

True or false

The UK Chancellor has announced that the preparation and publishing of transition plans will become mandatory across the economy

Answer 52

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

Question 53

What scheme has the EU implemented to end greenwashing and strengthen the EU’s social market economy?

Answer 53

Corporate Sustainability Reporting Directive (CSRD)

Will require all large companies in the EU to disclose their information on societal and environmental impact

Question 54

What are the initial exposure drafts that the ISSB published in 2022 about?

Answer 54

Aligning various recommendations from the CDSB, SASB and TCFD

The drafts included iniital guidance on what parts of the transition strategies companeis should disclose

Question 55

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

Answer 55

(1) Double materiality

Double materiality is the concept that companies must disclose their activities that would be material to both society and the environment