The key insight from the study is summarized in the following three scenarios with starting point at what will happen in 2030 and in the longer term toward 2050:
1. Low carbon revolution
This scenario reaches zero emissions and limits global warming to 1.5°C by 2050, thanks to swift and rigorous public policy on climate and innovation.
This results in the lowest physical risk of the scenarios, with a shorter period of uncertainty compared to the other two scenarios. There will be more extreme weather towards 2030, less physical risks compared to the other scenarios and more transition risks in terms of much stricter requirements for everything that has to do with environmental footprint.
“A scenario where one succeeds in reaching the 1.5°C goal will require a more ambitious climate policy in almost all economies, and thus less uncertainty associated with the design of various measures. It will provide increased security for long-term investments in green solutions, and it will provide great opportunities in future-oriented agriculture,” says CFO of Yara, Thor Giæver.
2. Gradual adjustment
In this scenario, the temperature rise will exceed 2°C by 2050; this involves a lot of physical risk, more regional differences and variations in policy implementation. The variations in global action on national commitments adds to the future uncertainty for businesses.
“To put it simply, it will be a mix of everything. There will probably be more regional differences, a lot of physical risk, a lot of different opportunities. But the situation will be quite confusing on the regulatory side, there may be large regional differences in the regulations which we will have to adjust to,” says Giæver.
“In the 2°C scenario, there are several different approaches to regulations, which will provide much more complexity and unpredictability. In contrast, in the 1.5°C scenario, there will have to be a global coordination which won’t be as demanding, having to deal with regulations that now only applies in the EU,” says Hanne Thornam, Nordic Head of Climate Change and Sustainability Services in EY.
3. Climate chaos
This scenario assumes temperatures rise above 2.4°C by 2050 and above 4°C by 2100. This involves a lot of physical risk, especially after 2030. Agriculture will possibly change the most during this scenario.
“This is a gloomy scenario with a lot of physical risk and great uncertainty about what happens in terms of regulations. It will be unpredictable and difficult to know where to invest resources, because it is very unclear how it will be regulated. But there are opportunities as well; agriculture will change drastically under this scenario. In large parts of the southern hemisphere and around the equator, it will be more or less impossible to farm. Developing new ways of farming will probably be necessary to protect crops against weather effects, and there will be a significant change in which crops can be grown where,” says Giæver.