Need to Know: The IPCC Working Group 1 Report
By Matt Rennie and Simone Rennie
From time to time, it’s important to move through the noise and focus on the detail. So much is about to be written on the IPCC Report, and so let’s focus on what it is, what they said last time, what they are saying now, and what this all means.
What it is – A Report by Working Group 1
The Intergovernmental Panel on Climate Change (IPCC) is the UN body for assessing the science related to climate change. Its purpose is simple – it was established and endorsed by the United Nations to provide political leaders with periodic scientific assessments concerning climate change, its implications and risks, as well as to put forward adaptation and mitigation strategies. It has 195 member states.
The IPCC has three working groups: Working Group 1, which deals with the physical science basis of climate change; Working Group 2, which deals with impacts, adaptation and vulnerability; and Working Group 3, which deals with the mitigation of climate change.
This latest Report is from Working Group 1. Specifically, it is Working Group 1’s contribution to the Sixth Assessment Report titled “Climate Change 2021: The Physical Science Basis”. The last time that Working Group 1 issued one of these reports was in September 2013.
The Working Group 2 and 3 reports are still being written – they will be finalised in February and March 2022 respectively. The Synthesis Report of all three contributions is due in 2022.
What they said last time…
In 2013, Working Group 1 said:
Warming of the climate system is unequivocal, and since the 1950s, many of the observed changes are unprecedented over decades to millennia. The atmosphere and ocean have warmed, the amounts of snow and ice have diminished, sea level has risen, and the concentrations of greenhouse gases have increased;
Each of the last three decades has been successively warmer at the Earth’s surface than any preceding decade since 1850. In the Northern Hemisphere, 1983–2012 was likely the warmest 30-year period of the last 1400 years (medium confidence);
Ocean warming dominates the increase in energy stored in the climate system, accounting for more than 90% of the energy accumulated between 1971 and 2010 (high confidence). It is virtually certain that the upper ocean (0−700 m) warmed from 1971 to 2010 and it likely warmed between the 1870s and 1971;
Over the last two decades, the Greenland and Antarctic ice sheets have been losing mass, glaciers have continued to shrink almost worldwide, and Arctic sea ice and Northern Hemisphere spring snow cover have continued to decrease in extent (high confidence);
The rate of sea level rise since the mid-19th century has been larger than the mean rate during the previous two millennia (high confidence);
The atmospheric concentrations of carbon dioxide, methane, and nitrous oxide have increased to levels unprecedented in at least the last 800,000 years. Carbon dioxide concentrations have increased by 40% since pre-industrial times, primarily from fossil fuel emissions and secondarily from net land use change emissions. The ocean has absorbed about 30% of the emitted anthropogenic carbon dioxide, causing ocean acidification;
It is extremely likely that human influence has been the dominant cause of the observed warming since the mid-20th century
Continued emissions of greenhouse gases will cause further warming and changes in all components of the climate system. Limiting climate change will require substantial and sustained reductions of greenhouse gas emissions;
The global mean surface temperature change for the period 2016–2035 relative to 1986–2005 will likely be in the range of 0.3°C to 0.7°C (medium confidence);
It is virtually certain that there will be more frequent hot and fewer cold temperature extremes over most land areas on daily and seasonal timescales as global mean temperatures increase. It is very likely that heat waves will occur with a higher frequency and duration;
Global mean sea level will continue to rise during the 21st century;
Climate change will affect carbon cycle processes in a way that will exacerbate the increase of CO2 in the atmosphere (high confidence). Further uptake of carbon by the ocean will increase ocean acidification;
Most aspects of climate change will persist for many centuries even if emissions of CO2 are stopped. This represents a substantial multi-century climate change commitment created by past, present and future emissions of CO2.
What they are saying this time…
This time, Working Group 1 is saying: [1]
It is unequivocal that human influence has warmed the atmosphere, ocean and land. Widespread and rapid changes in the atmosphere, ocean, cryosphere and biosphere have occurred;
The scale of recent changes across the climate system as a whole and the present state of many aspects of the climate system are unprecedented over many centuries to many thousands of years;
Human-induced climate change is already affecting many weather and climate extremes in every region across the globe. Evidence of observed changes in extremes such as heatwaves, heavy precipitation, droughts, and tropical cyclones, and, in particular, their attribution to human influence, has strengthened;
Global surface temperature will continue to increase until at least the mid-century under all emissions scenarios considered. Global warming of 1.5°C and 2°C will be exceeded during the 21st century unless deep reductions in CO2 and other greenhouse gas emissions occur in the coming decades;
Many changes in the climate system become larger in direct relation to increasing global warming. They include increases in the frequency and intensity of hot extremes, marine heatwaves, and heavy precipitation, agricultural and ecological droughts in some regions, and proportion of intense tropical cyclones, as well as reductions in Arctic sea ice, snow cover and permafrost;
Continued global warming is projected to further intensify the global water cycle, including its variability, global monsoon precipitation and the severity of wet and dry events;
Under scenarios with increasing CO2 emissions, the ocean and land carbon sinks are projected to be less effective at slowing the accumulation of CO2 in the atmosphere;
Many changes due to past and future greenhouse gas emissions are irreversible for centuries to millennia, especially changes in the ocean, ice sheets and global sea levels;
With further global warming, every region is projected to increasingly experience concurrent and multiple changes in climatic impact-drivers. Changes in several climatic impact-drivers would be more widespread at 2°C compared to 1.5°C global warming and even more widespread and/or pronounced for higher warming levels;
At 1.5°C global warming, heavy precipitation and associated flooding are projected to intensify and be more frequent in most regions in Africa and Asia (high confidence), North America (medium to high confidence) 40 and Europe (medium confidence);
Low-likelihood, high-impact outcomes34 could occur at global and regional scales even for global warming within the very likely range for a given GHG emissions scenario. The probability of low-likelihood, high impact outcomes increases with higher global warming levels (high confidence). Abrupt responses and tipping points of the climate system, such as strongly increased Antarctic ice sheet melt and forest dieback, cannot be ruled out (high confidence);
From a physical science perspective, limiting human-induced global warming to a specific level requires limiting cumulative CO2 emissions, reaching at least net zero CO2 emissions, along with strong reductions in other greenhouse gas emissions. Strong, rapid and sustained reductions in CH4 emissions would also limit the warming effect resulting from declining aerosol pollution and would improve air quality.
What this all means…
There are two significant implications of this Working Group 1 Report.
The first is that it will greatly increase the pressure being brought on countries which have not yet committed to net-zero emissions. The UK will host the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow on 31 October – 12 November 2021. Ahead of that, the UN is asking countries to come forward with ambitious 2030 emissions reductions targets (NDCs) that align with reaching net zero by the middle of the century. There is a pressure being brought to bear on countries to finalise a “Paris Rulebook” (the rules needed to implement the Paris Agreement). Put simply, it’s getting more and more difficult for Governments to stall on making binding commitments, particularly given that trade relationships and capital flows are increasingly being discussed in the same sentences. This greatly increases the risk of non-linear policy announcements and pivots by jurisdictions which will impact positively and negatively on operating environments and new investments for companies.
The second is that there are now real social license risks for companies who do not have a plan for the transition. It is no longer optional for Boards or management to consider net zero a virtue signalling exercise. This Report will alter the weightings in carbon intensive companies for both debt and equity providers, impact insurability, change asset risk weightings and alter the choices made by employees about who they work for. The difficulty of course is that transition is both challenging and costly.
Overall, this Report signals a need for companies to shift from tactical to strategic decision making, and from optimisation of in-year factors of production to long term scenario-based strategy.
It is critical now to answer four questions:
1. What does a net zero future look like in my current markets?
2. How will that future impact my core revenue drivers?
3. What are the risks and opportunities?
4. What strategic, commercial and regulatory decisions do we need to take now?
For some companies, these changes will be existential. For others, they will provide the impetus for generational re-platforming to new markets and new opportunities.
Where are you placed?