Thread by @Peters_Glen

THREAD

What are climate scenarios?

We use scenarios to explore the consequences of uncertainties (social, political, technical, climate).

cicero.oslo.no/en/posts/news/…

Climate scenarios are generally separated into two categories:
1. Transition risks related to the transition to a lower-carbon economy
2. Physical risks related to the physical impacts of climate change
Both types depend on different tools & methods

Scenarios should cover a range of possible outcomes. In practice, scenarios often focus on particular outcomes (levels of radiative forcing, policy characteristics, technology portfolios, behavioural change) meaning that a large part of the scenario space can be left unexplored.

All scenarios have advantages & disadvantages:
* IEA has detailed annual updates, but low scenario & model diversity
* IPCC assesses a range of models & scenarios, but are less frequent (& not as well known in the investment community)

The world is currently heading for around 3°C:
* For physical risk, important to explore the risk of higher outcomes
* For transition risk, important to explore risk of increased climate policy ambition, technological breakthroughs, social change, etc

What scenarios to use?
* Physical risks, short-term: Locked in impacts independent of scenario
* Physical risk, mid-term: Scenario selection important
* Transition risk, a range of scenarios important for all time frames

IEA scenarios (2°C green) generally more conservative than scenarios assessed by IPCC (2°C grey). To follow a 2°C pathway the scenario building blocks have to be consistent. If reductions in coal are not met, then more ambition needed in other building blocks (eg oil or CCS).

This is a part of a presentation from the @CICERO_klima guide on how to demystify scenarios for investors.
* Read the full report cicero.oslo.no/en/posts/news/…
* Details of event at @NorgesBank Investment Management (NBIM) norgesbank-event.no/u/skxw9m