To limit global warming to 1.5 degrees Celsius above pre-industrial levels means zero carbon emissions by 2055. This objective is one of the biggest challenges of our time.
The Intergovernmental Panel on Climate Change (IPCC) states that limiting global warming to 1.5°C would require rapid and far-reaching transitions in energy, land, urban and infrastructure (including transport and buildings), and industrial systems . These systems’ transitions are unprecedented in terms of scale and will require deep emissions reductions in all sectors, a wide portfolio of mitigation options and a significant upscaling of investments in those options.
In order to successfully reduce carbon emissions, much depends on China. It is the world’s largest emitter of carbon dioxide, and levels are rising at their fastest rate in years. Hitting worldwide climate goals will be nearly impossible unless China begins making sharp cuts soon. The good news is that President Xi Jinping is serious about reducing emissions and establishing the nation as a world leader on climate and energy issues, driven by concerns about air pollution, domestic energy, national security, and economic development.
Climate change regulations and laws will affect commodity flows by encouraging a move towards renewable energy sources and cleaner fossil fuels such as LNG. Carbon pricing will also create new opportunities. By spotting these opportunities and through efficient capital allocation, the commodities industry will contribute to speeding up technical innovation.