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Near-term transition and longer-term physical climate risks of greenhouse gas emissions pathways

Abstract

Policy, business, finance and civil society stakeholders are increasingly looking to compare future emissions pathways across both their associated physical climate risks stemming from increasing temperatures and their transition climate risks stemming from the shift to a low-carbon economy. Here, we present an integrated framework to explore near-term (to 2030) transition risks and longer-term (to 2050) physical risks, globally and in specific regions, for a range of plausible greenhouse gas emissions and associated temperature pathways, spanning 1.5–4 °C levels of long-term warming. By 2050, physical risks deriving from major heatwaves, agricultural drought, heat stress and crop duration reductions depend greatly on the temperature pathway. By 2030, transition risks most sensitive to temperature pathways stem from economy-wide mitigation costs, carbon price increases, fossil fuel demand reductions and coal plant capacity reductions. Considering several pathways with a 2 °C target demonstrates that transition risks also depend on technological, policy and socio-economic factors.

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Fig. 1: Scenario emissions and temperature outcomes across the twenty-first century.
Fig. 2: Physical and transition risk metrics for world and four major regions.
Fig. 3: Transition metrics for world and four major regions.
Fig. 4: From an integrated scenario risk framework to sectoral and financial risk analysis.

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Data availability

The datasets generated during and/or analysed during the current study are available from the corresponding author on reasonable request. The GCAM data system is publicly available at https://github.com/JGCRI/gcamdata.

Code availability

All code used for data analysis and creating the figures is available from the corresponding author on reasonable request.

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Acknowledgements

The study was funded by ClimateWorks Foundation. A.C.K. and S. Mittal acknowledge the H2020 European Commission Project ‘PARIS REINFORCE’ under grant agreement no. 820846. We would like to thank G. Ganguly for constructive comments on the scenario design and draft manuscript.

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Contributions

A.G. and S. Monteith conceived the study. A.G., D.B., J.L., H.M., J.R., M.G., N.W.A. and S. Monteith designed the scenarios and modelling protocol. H.M. and M.G. ran GCAM. D.B. ran MAGICC. N.W.A. ran the climate impact models. S. Mittal undertook all scenario data analysis and visualization. A.C.K. advised on financial risk analysis and literature. A.G. wrote the manuscript, with input from all authors.

Corresponding author

Correspondence to Ajay Gambhir.

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The authors declare no competing interests.

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Peer review information Nature Climate Change thanks Benjamin Leibowicz and the other, anonymous, reviewer(s) for their contribution to the peer review of this work.

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Extended data

Extended Data Fig. 1 Model set-up to produce physical and transition risk-related output indicators for each scenario.

The different scenarios are set up in the GCAM integrated assessment model, considering the specific GDP and population growth characteristics of the scenarios, the temperature goals, the scenario variants in terms of policy action, and any technological and behavioural constraints or availability. The GCAM model outputs a range of energy, agricultural and land system metrics which are used to specify the transition risk-related output indicators. The emissions (spanning all GHGs, aerosols and other climate forcers) are fed into the probabilistic climate model MAGICC, whose range of temperature outputs are then fed into the suite of impacts models. These produce measures of physical hazard which form the physical risk-related output metrics.

Extended Data Fig. 2 Physical and transition risk metrics for five additional regions.

Each heat map shows 7 physical hazard metrics on the left-hand panel and 7 transition risk metrics on the right-hand panel. The metrics are expressed as a ratio of each scenario’s value and the value for the 2 C Central scenario. For the physical hazard metrics, this is the median ratio across the uncertainty range. Each transition risk metric is for the year 2030, whereas each physical risk metric is for the year 2050. Circle size indicates 2100 median temperature increase on pre-industrial (1850–1900) levels in each temperature scenario. SSA = Sub-Saharan Africa. These indicators reflect the key findings for the USA, EU + UK, India and China, in terms of (in general) the increasing severity of 2050 physical hazards for the higher long-term temperature scenarios, contrasted with the lower transition risks for these scenarios. One notable exception is Japan, which, like the USA and EU + UK, has a relatively stringent NDC to 2030, with commensurately higher transition risks in this period, compared to the GCAM-modelled cost-optimal pathways targeting 2–2.5oC warming by 2100.

Extended Data Fig. 3 High (a) and Median (b) physical risk metrics for world and four regions.

Each heat map shows 7 physical hazard metrics, with the right-hand side (b) showing the median ratio of hazard values for each scenario compared to the 2 C Central scenario, and the left-hand side (a) showing the high (90th centile) ratio of each scenario compared to the 2 C Central scenario. Each physical risk metric is for the year 2050. The relative physical hazard of the higher temperature scenarios is more severe compared to the 2 C Central scenarios when using the high (90th) centile values in the distribution. This is shown by the deeper green and blue colours for each scenario and physical hazard metric in panel a), compared to its equivalent in panel b).

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Supplementary Information

Supplementary Sections 1–4 containing Figs. 1, 2.1, 2.2, 3.1–3.25, 4.1–4.10 and Table 2.1.

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Gambhir, A., George, M., McJeon, H. et al. Near-term transition and longer-term physical climate risks of greenhouse gas emissions pathways. Nat. Clim. Chang. 12, 88–96 (2022). https://doi.org/10.1038/s41558-021-01236-x

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