According to a new report from Boston Consulting Group (BCG) and the World Economic Forum’s Alliance of CEO Climate Leaders, global emissions, which are continuing to rise by 1.5% a year, must be cut by 7% annually until 2030 to limit global warming to 1.5°C, as agreed by countries who signed the Paris Agreement in 2015.
This size of emissions reduction is unprecedented, surpassing the percentage of reduced global emissions during the shutdowns caused by the Covid-19 crisis. Progress has been made in a number of areas, but significant gaps remain in national commitments and policies, corporate climate action, green-technology scaling, and funding.
The report underscores the worrying state of our planet’s climate, and the urgency of taking immediate substantial action to combat global warming.
“The findings in this report are a wake-up call to the world, reaffirming that the status quo is no longer an option,” said Rich Lesser, Global Chair of Boston Consulting Group and Chief Advisor to the World Economic Forum’s Alliance of CEO Climate Leaders.
“The Alliance recognizes the pivotal role we play in driving transformational change. Governments, companies, and other stakeholders must act in lock step to meet our ambitious climate goals. It is our collective responsibility to build a more resilient and greener future for generations to come, and we are unwavering in our mission to make that a reality.”
National, corporate commitments and actions still widely insufficient
As of mid-2023, the share of global emissions covered by national net zero targets exceeded 80%—up from virtually zero only a few years ago. However, only a third of global emissions are covered by net zero targets for 2050—the rough target date required to maintain a 1.5°C limit.
The shorter-term gap is even more significant, with only 20% of emissions also covered by Nationally Determined Contributions almost aligned to a 1.5°C ceiling. Stronger commitments and actions are most critically needed from the ten largest emitters, which account for half of the gap to 1.5°C.
On the corporate side, progress in recent years has been substantial. The total number of companies with commitments to 1.5°C science-based targets has increased more than six-fold between the end of 2020 and August 2023. However, fewer than 20% of the world’s 1,000 largest companies have now set this type of target, and almost 40% have no net zero commitment at all.
Enormous technology and funding gap
Most green technologies required to achieve net zero exist already, but those that are, or will soon be, cost competitive would only cover around 55% of global emissions.
Others, including deep decarbonization technologies such as hydrogen; carbon capture, usage, and storage (CCUS); and direct air capture, are still in early stages of development and scaling too slowly.
To catch up, innovation and industrial scaling need to accelerate at nearly unprecedented levels.
Among key root causes, an over US$2 trillion gap in climate funding remained in 2022, with critical gaps in early technologies and infrastructure: bioenergy, hydrogen, sustainable aviation fuel, CCUS, and battery storage collectively received only around 2% of 2022 global mitigation funds.
The gap is also twice as large in lower-income countries as in higher-income ones, with the former subject to lower capital availability and higher perceived risks.
Major course correction needed
Several near-term priorities are put forward in the report to keep the 1.5°C limit within reach. These actions include:
- Unlock bolder, more rapid, national commitments and actions
- Deploy carbon pricing and border taxes, and support actions in nature, agriculture, and food
- Remove obstacles to the transition, such as permitting times, supply chain risks, and skill gaps
- Shift corporate focus to bolder targets and transparency for themselves and their supply chains
- Strengthen incentives to massively scale-up high-impact technologies and necessary infrastructure
- Raise climate financing for the Global South, together with ambitious mitigation action
“The alarming trends and lack of progress underscored in this comprehensive paper cannot be ignored. The urgency and scale of the climate crisis demand immediate and coordinated action at a global level,” said Pim Valdre, Head of Climate Ambition Initiatives at the World Economic Forum.
“The World Economic Forum is committed to working alongside governments, businesses, and civil society to drive innovative solutions, harness sustainable technologies, and catalyze transformative change. The cost of inaction is simply too high, and our shared responsibility is to secure a sustainable and prosperous future for all.”
