Investors should brace for a disorderly energy transition, a new study has warned. Major economies have failed to implement the measures necessary to reduce their emissions in line with the Paris Agreement, increasing the necessity and likelihood of radical government interventions in the years ahead.
While most members of the G20 have made at least some progress towards closing the gap between their current emissions and their 2030 targets, Brazil, Russia, Turkey and Saudi Arabia have all seen this gap widen since 2017.
Major economies such as the US, China, the UK, Germany and Japan will need to yank the handbrake on emissions to meet agreed climate goals. Will Nichols, Verisk Maplecroft
The UK is the strongest performer in the group, the researchers found, with relatively low dependence on fossil fuels and relatively strong progress towards its 2030 target. The fact that the UK’s commitment to achieving net zero by 2050 is enshrined in law also puts it top of the group in terms of policy. France has also enshrined its target into law, while Canada and the EU are considering doing so.
Even the UK, however, is currently not on track to meet its targets without drastic government intervention. Environmental think tank Green Alliance estimates that the UK will need to spend £44bn a year for the next three years in order to get on track – more than twice the $21bn currently pledged by the government.
"Major economies such as the US, China, the UK, Germany and Japan will need to yank the handbrake on emissions to meet agreed climate goals at the same time as dangerous rises in extreme weather events play an increasingly disruptive role in the global economy," says Will Nichols, Verisk Maplecroft's head of environments and climate change.
"These conditions will leave businesses in carbon-intensive sectors facing the most disorderly of transitions to a low-carbon economy, with measures – such as restrictive emissions limits for factories, mandates for buying clean energy and high levies on carbon – imposed with little warning.”
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