Meat consumption peaking in 2030 globally will be one of the consequences of dramatically accelerating climate policy by 2025, according to a new forecast from a research partnership commissioned by the Principles for Responsible Investment (PRI).
As meat consumption rapidly decreases after alternatives become cost-competitive by 2035, current pasture and rangelands will be replaced with forests, cropland and other “nature-based solutions”, according to the Inevitable Policy Response’s (IPR) Forecast Policy Scenario (FPS).
These changes will mean land will be a net carbon dioxide sink before 2050, the forecast goes. Nature-based solutions that remove carbon from the atmosphere and projects that avoid deforestation will lead to an industry with an estimated $167bn (€144bn) in annual revenue by 2050, according to the FPS.
As for the energy system, meanwhile, the forecast is that it will be rapidly transformed, alongside a seismic shift in transport within this decade. For example, the forecast is that wind and solar power generation will represent over 30% of electricity generation by 2030, around three times the level of today, according to the FPS.
Commissioned by the PRI in 2018, the IPR is a climate forecasting consortium that aims to prepare institutional investors for the portfolio risks and opportunities associated with a forecast acceleration of policy responses to climate change.
Its two main applications so far have been a policy forecast and a companion FPS, which models the impact of the forecasted policies on the real economy up to 2050.
The FPS being released today takes into account a major update to the underlying forecast policies from earlier this year, plus some minor changes “where the evidence base has moved on,” said Eric Ling, engagement manager at Vivid Economics, co-lead of the IPR consortium.
Next month the IPR will be publishing data sets to allow investors to produce portfolio-level analysis, taking into account feedback from its new strategic partners about which data elements are key for asset owners and asset managers for application in company and sector valuation models.
Ling said the FPS 2021 and IPR’s new 1.5°C Required Policy Scenario (see below) were “important context” for the investment database IPR would be publishing next month.
Direct market intervention for 1.5°C
The 2021 FPS is IPR’s current assessment of what is expected to happen. According to IPR, it sees total carbon dioxide emissions falling by 80% by 2050, giving a 50% chance of keeping global warming to well below 2°C above pre-industrial levels.
The 1.5°C Required Policy Scenario (RPS), a new application released today, is IPR’s current assessment of future policy developments needed to hold the global temperature increase to 1.5°C above pre-industrial levels, the “stretch goal” of the Paris Agreement.
It said it was comparable to the International Energy Agency’s Net Zero Emissions scenario, “but by deepening the analysis of the food and land systems provides the first roadmap of policies needed across both the energy and land use systems to hold temperature increases to 1.5°C”.
It said analysis suggested it would not be politically feasible to drive carbon markets and carbon pricing further and rapidly enough to achieve the required shift and that, to push for 1.5°C, “governments around the globe would need to pursue immediate policy action which directly intervenes in markets to set performance standards, including strict bans, to drive a step change in the energy system”.
Such action included phasing out unabated coal by 2035, and a fossil fuel vehicle phase-out by 2030 for light duty vehicles and 2035 for heavy duty vehicles.
In the 1.5°C RPS, the food and land use system again proves to be critical, the IPR said, with deforestation stopped in 2025, as opposed to 2030 in the FPS 2021. According to IPR, this could be driven by stronger government intervention in the food system, for example subsidising the development of plant-based and cellular meat.
The consortium also said its 1.5°C RPS analysis highlighted that policy acceleration in developing countries will be especially critical, “reinforcing the importance of significantly increasing climate finance to developing counties and investing in the energy and land use transitions in these countries from both the public and private sector in the coming years”.
The IPR consortium will be providing an overview of its new reports during a breakout session at the PRI digital conference tomorrow.