Methodology

Technical Note

This technical note describes our methods for identifying key systems that must transform, identifying the most critical shifts within each system, translating these shifts into global targets, and selecting indicators with accompanying datasets that we use to monitor annual change. It outlines our approach for assessing the world’s collective progress made toward the targets and categorizing recent efforts as on track, off track, well off track, headed in the wrong direction, or insufficient data. Finally, it details how we identify critical barriers to change and drivers that can support transformations, as well as limitations to our methodology.

This technical note covers the overall methods that we applied to all systems on the platform. The methods that are specific to each system can be found below.

Parts of this technical note are the same as the State of Climate Action technical note, Methodology Underpinning the State of Climate Action Series (2022) and we have marked them accordingly. However, the Systems Change Lab platform is a larger undertaking in that it expands the coverage of climate-focused systems change, incorporates protection of biodiversity and improvement of equity, and expands the coverage of drivers of change.

Read the technical note

System Background Information

Power

See the technical note linked at the top of this web page for an explanation of the methodology underpinning the Systems Change Lab platform. This section explains how the methodology was applied in the Power system.

Selection of Shifts

For the Power system, we chose four shifts:

Phase out unabated coal and fossil gas electricity generation
Rapidly scale up renewable electricity generation
Modernize grids, scale storage and manage demand
Ensure energy access and a just and equitable transition for all

Decarbonizing power generation is essential to hold global warming to 1.5˚C. These shifts were chosen to represent eliminating polluting generation sources from the system, meeting demand with zero-carbon sources, upgrading physical infrastructure to facilitate a zero-carbon system, and integrating equity and access concerns into the energy transition. Together, these actions can dramatically reduce the carbon intensity of electricity generation and ensure that no one is left behind in the transition.

Together these shifts provide a comprehensive picture of progress for the Power system, because they represent the key changes needed to decarbonize power generation and supply.

Shifts 1–3 are primarily focused on reducing power system emissions to help limit global temperature rise to 1.5˚C, while shift 4 is primarily focused on improving equity. This system does not include any specific shifts focused on biodiversity, but as described in the following section we did in some cases consider biodiversity as a safeguard for the other shifts (e.g., limiting biomass use as a method to reduce emissions).

Selection of Targets and Indicators

To track progress made toward accelerating these systemwide shifts, we identified key indicators from the reports and data platforms of major agencies, including the IPCC and the International Energy Agency (IEA), as shown in the table below (IPCC 2018; IPCC 2022; IEA 2021).

For three climate-related indicators (share of unabated coal in electricity generation, share of unabated gas in power generation, and share of zero-carbon power in electricity generation), we adopted targets developed by Climate Action Tracker (CAT) in their Paris Agreement Compatible Sectoral Benchmarks: Methods Report (Climate Action Tracker 2020a). These targets were compared with other targets in the literature from sources such as IEA 2021, IRENA 2021, and Falk et al. 2020. These targets were chosen because they represent the high-end of ambition within 1.5˚C-compliant pathways. The CAT process uses a combination of top-down and bottom-up methods to establish these near- and long-term power generation targets. To do so, CAT first takes modelled sectoral pathways from Global Warming of 1.5°C: An IPCC Special Report (IPCC 2018), which presents a total of 1,184 scenarios generated by 31 models. Each scenario represents a development pathway for the Power system at varying end-points (e.g., final demands, mix of technologies deployed, speed of decarbonization) at different spatial and temporal resolution. These scenarios were then filtered based on four conditions: 1) a global warming limit of 1.5°C with “no overshoot” or “low overshoot” (IPCC 2018); 2) a sustainable use of technological carbon removal (to be smaller than 3.6 Gt CO2 per year on average for the period between 2050 and 2100); 3) a sustainable use of biomass (i.e., power generation from biomass that falls under 8,000 terawatt-hours electric); and 4) a removal of any scenarios that have incomplete data or those that are at a coarse temporal resolution.

Eleven pathways remain after this CAT filtering process. It is important to note that none of these modelled pathways considers an equitable distribution of costs and required action, but rather they indicate least-cost pathways to holding global temperature rise to roughly 1.5°C with no or low overshoot. Achieving the global targets derived from these modelled pathways, then, would imply either that substantial financial transfers have occurred between countries, that richer countries decarbonize more quickly than in the underlying models, or both (Bauer et al. 2020). The modelled pathways from Integrated Assessment Models were then combined with a bottom-up review of systemwide modelling, which included assessments of the feasibility and cost of different technological features (Climate Action Tracker 2020). Targets derived from these bottom-up analyses were then compared with those developed using 1.5°C-compatible modelled pathways (which serve as an emission budget constraint) to ensure that if there were any discrepancy, the bottom-up approaches would be more ambitious in achieving decarbonization more rapidly and that the targets used here would be 1.5°C compatible (Climate Action Tracker 2020).

Equity-related targets were established for three indicators (premature deaths from air pollution, population without access to electricity, and share of household income spent on electricity), as explained in the table below.

Not every indicator in the Power system has an associated target. For climate-related indicators, this is because there is no general agreement in the literature on what the target should be, but the indicator was deemed important based on a review of the literature and expert elicitation. Some equity- or just transition-related indicators do not have targets because there is no general agreement in the literature about quantitative targets, just as there is no widely agreed-upon equity or just-transition scenario akin to 1.5°C. The equity and just transition indicators for the Power system were chosen based on the principles outlined in the Systems Change Lab technical note. Lack of data is also a methodological challenge affecting many of the indicators on equity and just transition.

Design of Power Indicators and Targets

Indicator	Target(s)	Target Source	Additional information
Shift 1: Phase out unabated coal and fossil gas electricity generation
Share of unabated coal in electricity generation (%)	0-2.5 (2030) 0 (2040) 0 (2050)	Climate Action Tracker 2020	Targets were designed by Climate Action Tracker from a review of 1.5°C scenarios from IPCC 2018. The development of these targets is described in more detail in the text preceding this table.
Share of unabated fossil gas in electricity generation (%)	17 (2030) 5 (2040) 0 (2050)	Climate Action Tracker 2020	Described above
Premature deaths from air pollution (millions of deaths)	>20% reduction (2030) 50% reduction (2050)	Derived from United Nations 2015	This target also appears in multiple other systems. It reflects the health and equity improvements that result from phasing out fossil fuels. About half of PM2.5 impact is caused by the combustion of fossil fuel sources and indoor biomass burning. The targets are set assuming universal clean fuel access by 2030 (SDG 7.2), which would deliver a 20% reduction in PM2.5 deaths from 2015 levels by that year, and decarbonization by 2050, which would deliver a 50% reduction in PM2.5 deaths by that year.
Percent of requalified workers in coal and gas that reentered labor force and employment (%)	No target	N/A
Shift 2: Rapidly scale up renewable electricity generation
Share of zero-carbon sources in electricity generation (%)	74-92 (2030) 87-100 (2040) 98-100 (2050)	Climate Action Tracker 2020	Zero-carbon sources include solar, wind, hydropower, geothermal, nuclear, geothermal, marine, and biomass technologies. Climate Action Tracker 2020 excludes nuclear power generation from this target and indicator due to political economy challenges, safety issues, concerns in relation to the nuclear fuel cycle (e.g., the disposal of nuclear waste), high economic cost, slow build times, and inflexibility. However, this target and indicator on the SCL platform have been modified to include nuclear power generation in an effort to remain neutral over the role of nuclear power in a future net-zero electricity system, given that nuclear is a zero-carbon, low-emissions technology and makes up a small (<10%) share of power generation in most modelled 1.5°C pathways (see, for example, IPCC 2022, IEA 2021, and IRENA 2021).
Renewables share of total capacity (%)	No target	N/A
Annual capacity additions of renewable energy (GW/year)	No target	N/A
Renewable energy capacity per capita in developing vs. developed countries (ratio [%])	No target	N/A	This indicator focuses on the ratio of renewable energy capacity per capita in developing countries to that of developed countries (expressed as a percentage) to highlight progress toward reducing inequality among countries. In this indicator, renewable energy includes wind, solar, hydropower, bioenergy, and geothermal. We use the UNFCCC Annex and non-Annex countries as a proxy for developed and developing countries.
Shift 3: Modernize grids, scale storage and manage demand
Total battery storage capacity (GW)	585 (2030) 3,100 (2050)	IEA 2021
Flexible power demand as a share of total demand	No target	N/A	Flexible power demand refers to demand that can be reduced, increased, or shifted within a specific duration. For the purposes of this shift, this flexibility is intended to help integrate renewable energy and deal with the fact that supply is inherently variable. This indicator measures the sum of flexible loads at each hour of the year.
Shift 4: Ensure energy access and a just and equitable transition for all
Population without access to electricity (# of people)	0 (2030)	United Nations 2015	The 2030 target comes from SDG 7.1.1
Share of household income spent on electricity (%)	Less than 5% of household income (for 365kWh/year)	Bhatia and Angelou 2015	The Energy Sector Management Assistance Program’s Multi-Tier Framework establishes that 365 kWh/year provides sufficient electricity for basic needs (excluding cooking and heating) (Bhatia and Angelou 2015). The framework also establishes that paying less than 5% of household income on electricity, approximately half of the global average, is an appropriate normative target for affordability.
Share of women in the renewable energy workforce	No target	N/A
Average outage duration per customer by country	No target	N/A
Average frequency of outages per customer by country	No target	N/A

Exponential Categorizations

Exponential likely

Indicator	Explanation
Share of zero-carbon sources in electricity generation	Changes in these indicators are based on the adoption of innovative technologies. These types of technologies often follow an S-curve trajectory in their adoption if they are successful, although this is not guaranteed.
Renewables share of total capacity
Total battery storage capacity

Exponential possible

Indicator	Explanation
Share of unabated coal in electricity generation	Changes in these indicators depend partly on the adoption of renewable energy technologies, which will likely will be nonlinear, as well as other factors like switches between multiple types of fossil fuel and changes in overall electricity demand, which are more likely to be incremental.
Share of unabated fossil gas in electricity generation

The other indicators in this system are categorized as “Exponential Unlikely.” We do not expect them to follow the nonlinear dynamics seen in technology diffusion, given that they do not specifically track technology adoption and are instead based on other processes.

Works Cited

Bauer, Nico, Bertram, Christoph, Schultes, Anselm, Klein, David, Luderer, Gunnar, Kriegler, Elmar, Popp, Alexander, and Edenhofer, Ottmar. 2020. “Quantification of an Efficiency–Sovereignty Trade-off in Climate Policy.” Nature 588 (7837): 261–66. https://doi.org/10.1038/s41586-020-2982-5.

Bhatia, Mikul, and Niki Angelou. 2015. “Beyond Connections: Energy Access Redefined.” Working Paper. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/24368.

Climate Action Tracker. 2020. “Paris Agreement Compatible Sectoral Benchmarks: Methods Report.” Berlin, Germany:

Climate Action Tracker. https://climateactiontracker.org/documents/753/CAT_2020-07-10_ParisAgreementBenchmarks_FullReport.pdf.

Falk, Johan and Owen Gaffney et al. 2020. “Exponential Roadmap.” Sweden: Future Earth. https://exponentialroadmap.org/exponential-roadmap/.

IEA. 2021. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: International Energy Agency. https://www.iea.org/reports/net-zero-by-2050.

IRENA. 2021. “World Energy Transitions Outlook - 1.5C Pathway.” Abu Dhabi: International Renewable Energy Agency. https://www.irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook.

IPCC. 2018. Global Warming of 1.5°C. An IPCC Special Report on the Impacts of Global Warming of 1.5°C above Pre-Industrial Levels and Related Global Greenhouse Gas Emission Pathways, in the Context of Strengthening the Global Response to the Threat of Climate Change, Sustainable Development, and Efforts to Eradicate Poverty. Edited by Valérie Masson-Delmotte, Panmao Zhai, Hans-Otto Pörtner, Debra Roberts, Jim Skea, Priyadarshi R. Shukla, Anna Pirani, et al. Geneva, Switzerland: In Press. https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf.

IPCC. 2022. “IPCC Sixth Assessment Report: Mitigation of Climate Change.” Geneva: IPCC. https://www.ipcc.ch/report/ar6/wg3/.

United Nations. 2015. “The 17 Goals - Sustainable Development Goals.” United Nations. https://sdgs.un.org/goals.

Transport

Selection of Shifts

For the Transport system, we chose five shifts:

Guarantee reliable access to safe and modern mobility
Reduce avoidable vehicle and air travel
Shift to public, shared, and non-motorized transport
Transition to zero-carbon cars and trucks
Transition to zero-carbon shipping and aviation

While technological solutions such as electric vehicles are capturing the most attention with announcements by major vehicle manufacturers and countries related to moving away from the internal combustion engine (see IEA 2021a), achieving full decarbonization of the transport sector expediently and efficiently requires more than just a change in technology (BloombergNEF 2022).

We chose these shifts because they broadly follow the “avoid-shift-improve” framework in the transportation literature (Dalkmann and Brannigan 2014) while also accounting for equity and just transition concerns. Guaranteeing reliable access to safe and modern mobility (accessible, affordable, and zero-carbon travel) is a priority for equity. Reducing avoidable travel by vehicle and plane is a strategy to avoid travel. Shifting to public, shared, and non-motorized transport moves passengers from high-carbon internal combustion engine vehicles to more efficient, lower-carbon modes and helps address additional concerns such as traffic, air pollution, and safety. Transitioning to zero-carbon cars, trucks, shipping, and aviation improves the modes that we use to transport people and goods by lowering carbon emissions from the modes we use when we cannot shift to other modes.

Together these shifts provide a comprehensive picture of progress for the Transport system because they tackle supply and demand across all major transport modes, including passenger transport and freight.

Shift 1 is focused on improving equity, while shifts 2–5 are primarily focused on reducing transport system emissions to help limit global temperature rise to 1.5°C. This system does not include any specific shifts focused on biodiversity, but as described in the following section we did in some cases consider biodiversity as a safeguard for the other shifts (e.g., limitations on biomass use as a method to reduce emissions).

Selection of Targets and Indicators

The targets and indicators used on this platform cover all three elements of the avoid-shift-improve framework (Bongardt et al. 2019). The “avoid” segment of this framework is also accounted for in the Cities system because it entails urban planning and behavior changes that affect transportation infrastructure in cities.

Indicators and targets in this system minimize the use of primary biofuels because only a small amount of sustainable biomass is available for energy production in hard-to-abate sectors without jeopardizing the land and resources needed to feed a growing population (Searchinger et al. 2019).

Two of the climate-related Transport system targets on this platform are derived from the Climate Action Tracker (CAT) consortium’s 2020 paper, Paris Agreement Sectoral Benchmarks: Methods Report (Climate Action Tracker 2020). These targets were compared with other targets in the literature from sources such as IEA 2021, IRENA 2021, and ICCT 2020. These targets were chosen because they represent the high-end of ambition within 1.5°C-compliant pathways. Using a similar approach to the Power system analysis, the CAT team first considered Integrated Assessment Models (IAMs) that were able to limit warming to 1.5°C (“no overshoot” and “low overshoot” scenarios in which a brief and limited overshoot of average warming occurred). They refined their selection to include only those scenarios that assumed sustainable use of carbon removal and use of biomass. These pathways are defined on a least-cost pathway and do not consider equitable distribution of costs and required action. Finally, the CAT team also used a combination of its own bottom-up modeling (e.g., for electric vehicles) and other independent literature to finalize the more disaggregated targets. Each sectoral target that was derived from such bottom-up analyses was still compared with 1.5°C-compatible IAMs to ensure that, if there were any discrepancy, it would be at least as ambitious as the IAM targets (and therefore 1.5°C-compatible).

Four targets were chosen from 1.5°C-compatible pathways in the literature, including the International Energy Agency’s Net Zero by 2050 report, Mission Possible Partnership’s Making Net-Zero Aviation Possible, and UMAS’s A Strategy for the Transition to Zero-Emission Shipping (IEA 2021a; Mission Possible Partnership 2022; UMAS 2021). For the targets and indicators designed and selected by WRI, the sources and methodological approaches used are described in the following table.

Not every indicator in the Transport system has an associated target. For climate-related indicators, this is because there is no general agreement in the literature on what the target should be, but the indicator was deemed important based on a review of the literature and expert elicitation. Currently, none of the equity- or just transition-related indicators have a target. This is because there is no general agreement in the literature about quantitative targets, as there is no widely agreed-upon equity or just transition scenario akin to 1.5°C. The equity and just transition indicators for the Transport system were chosen based on the principles outlined in the Systems Change Lab technical note found at the top of this web page. Lack of data is also a methodological challenge affecting many of the indicators on equity and just transition

Design of Transport Indicators and Targets

Indicator	Target(s)	Target Source	Additional information
Shift 1: Guarantee reliable access to safe and modern mobility
Access to green mobility for lower-income and disadvantaged communities	No target	N/A	“Green mobility” refers to low- or zero-carbon transport, including public transport and zero-emission vehicles.
Number of road fatalities (deaths per 100,000)	50% reduction from 2021 levels by 2030	United Nations General Assembly 2020	This indicator is shared with the Cities system.
Shift 2: Reduce avoidable vehicle and air travel
Share of kilometers traveled by passenger cars (%)	34-44 (2030)	BloombergNEF 2021	To establish this target, we compared the bottom and top of the range for electric vehicle uptake (in which electric vehicle penetration is 20–40 % of global vehicle stock by 2030) against its projected business-as-usual (BAU) scenario (BloombergNEF 2021). In the BAU scenario, EVs make up 12 % of the global vehicle stock in 2030. There is therefore a gap of 8–28 percentage points in the number of EVs between a BAU and a Paris-aligned scenario. We propose closing this gap by facilitating the use of nonmotorized vehicle transport—such as walking, cycling, and taking motorized public transport—rather than travel in cars and light trucks where possible. We assume in this analysis that these non–motor vehicle modes will be either zero-emissions (e.g., walking and cycling) or for motorized modes, fully electrified by 2030.
Share of long-distance trips (1,000 km and above) by mode	No target	N/A
Shift 3: Shift to public, shared and non-motorized transport
Number of kilometers of rapid transit per 1,000,000 inhabitants (in the top 50 emitting cities) (km/1,000,000 inhabitants)	38 (2030)	Teske et al. 2021; Moran et al. 2018; ITDP 2021; United Nations 2019b	We aligned this target with Teske et al. (2021), who identified the need to double the capacity of public transport from 2021 levels through 2030 to enact changes in modal shift that align with a 1.5°C carbon budget. We then used ITDP’s rapid transit database as a data source, complementing it with additional desk research for the cities that were not part of the database. Notably, we selected the top 50 emitting cities from Moran et al. (2018) and used the ITDP (2021) rapid transit database to identify the number of kilometers of rapid transit (bus rapid transit, light rail and metro). For the cities that were not included in ITDP’s database, we collected the data from official government documents. We utilized population estimates from the United Nations’ 2018 Revision of World Urbanization Prospects, which presented data in five-year increments (United Nations 2019b). We then created an aggregate indicator by dividing the total number of kilometers by 1,000 urban inhabitants to calculate a rapid-transit-to-resident ratio and calculated the target by doubling this number through 2030. This indicator is shared with the Cities system.
Number of kilometers of high-quality bike lanes per 1,000 inhabitants (in the top 50 emitting cities) (km/1,000 inhabitants)	2 (2030)	Moser and Wagner 2021; Mueller et al. 2018; Moran et al. 2018	We followed the target identified by Moser and Wagner (2021) of 2 kilometers of high-quality infrastructure/1000 inhabitants by 2030, which is aligned with a 1.5°C carbon budget. This metric is derived from Mueller et al. (2018), who looked at the relationship between modal share of cycling and availability of high-quality cycling infrastructure. As we did to calculate the rapid-transit-to-resident ratio, we selected the top 50 emitting cities from Moran et al. (2018) and used Open Street Maps to calculate the number of high-quality (Level of Traffic Stress^a 1 or 2) kilometers of cycling infrastructure for each year and each city from 2010 to today (Moran et al. 2018). Indeed, our method filtered for tags that indicated lower stress, high-quality bike lanes within the overall bike network, defined as any street or passageway where biking is permitted. This included discrete bike paths and trails, cycle tracks, and buffered cycle lanes. This kind of filtering did not count some street types that might be low-stress for cyclists but which are not explicitly designed for their use, such as low-volume and/or low-speed residential streets or multi-use paths without dedicated space for cyclists. The result was aggregated at the city level, giving the total kilometers of protected, low-stress segments within the city boundaries. It is important to note here that not all cities around the world are well mapped in Open Street Maps, especially when it comes to bike lanes in earlier years (during the first decade). In those cities with limited mapping activities, the coverage of bike lanes in the data may be driven more by how active volunteers have been in mapping their cities rather than the true length of bike lanes in those cities. On the other hand, cities can use this historical information as a benchmark to identify their own individual progress. This indicator is shared with the Cities system.
Shift 4: Transition to zero-carbon cars and trucks
Share of electric vehicles in light-duty vehicle sales (%)	75-95 (2030) 100 (2035)	Climate Action Tracker 2020	Targets were designed by Climate Action Tracker from a review of 1.5°C scenarios from (IPCC 2018). The development of these targets is described in more detail in the text preceding this table.
Share of electric vehicles in the light-duty fleet (%)	20-40 (2030) 85-100 (2050)	Climate Action Tracker 2020	Described above
Share of battery electric vehicles and fuel cell electric vehicles in medium- and heavy-duty vehicle sales (%)	30 (2030) 99 (2050)	IEA 2021b	This target was taken directly from the IEA net-zero emissions scenario.
Share of battery electric vehicles and fuel cell electric vehicles in bus sales (%)	60 (2030) 100 (2050)	IEA 2021b	This target was taken directly from the IEA net-zero emissions scenario.
Number of displaced ICE workers who re-gained employment	No target	N/A
Shift 5: Transition to zero-carbon shipping and aviation
Share of zero-emissions fuels in marine shipping fuel supply (%)	5-17 (2030) 84-100 (2050)	IEA 2021b; UMAS 2021	These targets reflect a range in the literature. IEA’s net-zero scenario calls for 17% in 2030 and 84% in 2050, while UMAS’ net-zero scenario calls for 5% in 2030 and 100% in 2050.
Share of sustainable aviation fuels in global aviation fuel supply (%)	13-18 (2030) 78-93 (2050)	IEA 2021b; Mission Possible Partnership 2022	These targets reflect a range in the literature. IEA’s net-zero scenario calls for 18% in 2030 and 78% in 2050, while MPP’s net-zero scenario calls for 13% in 2030 and 93% in 2050.

Note: gCO2/pkm = grams of carbon dioxide per passenger kilometer; km = kilometer; IEA = International Energy Agency; ITDP = Institute for Transportation and Development Policy.
^a Level of traffic stress (LTS) is an approach that quantifies the amount of discomfort that people feel when they bicycle close to traffic. The methodology was developed in 2012 by the Mineta Transportation Institute and San Jose State University. The LTS methodology assigns a numeric stress level to streets and trails based on attributes such as traffic speed, traffic volume, number of lanes, frequency of parking turnover, ease of intersection crossings and others” (Montgomery County Planning 2017).

Exponential Categorizations

Exponential likely

Indicator	Explanation
Share of electric vehicles in light-duty vehicle sales	Changes in these indicators are based on the adoption of an innovative technology. These types of technologies often follow an S-curve trajectory in their adoption if they are successful, although this is not guaranteed.
Share of electric vehicles in the light-duty fleet
Share of battery electric vehicles and fuel cell electric vehicles in bus sales
Share of zero-emissions fuels in marine shipping fuel supply
Share of sustainable aviation fuels in global aviation fuel supply

No indicators in this system are classified as “Exponential Possible.” Other indicators in this system are categorized as “Exponential Unlikely.” We do not expect them to follow the nonlinear dynamics seen in technology diffusion, given that they do not specifically track technology adoption and are instead based on other processes.

Works Cited

BloombergNEF. 2021. “Electric Vehicle Outlook 2021.” New York: BloombergNEF. https://about.bnef.com/electric-vehicle-outlook/.

BloombergNEF. 2022. “Electric Vehicle Outlook 2022.” New York: BloombergNEF. https://about.bnef.com/electric-vehicle-outlook/.

Bongardt, Daniel, Lena Stiller, Anthea Swart, and Armin Wagner. 2019. “Sustainable Urban Transport: Avoid-Shift-Improve (A-S-I).” Bonn and Eschborn, Germany: TUMI. https://www.transformative-mobility.org/assets/publications/ASI_TUMI_SUTP_iNUA_No-9_April-2019.pdf.

Climate Action Tracker. 2020. “Paris Agreement Compatible Sectoral Benchmarks: Methods Report.” Berlin, Germany: Climate Action Tracker. https://climateactiontracker.org/documents/753/CAT_2020-07-10_ParisAgreementBenchmarks_FullReport.pdf.

Dalkmann, Holger, and Charlotte Brannigan. 2014. “Transport and Climate Change. Module 5e: Sustainable Transport: A Sourcebook for Policy-Makers in Developing Cities.” Bonn, Germany: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. https://doi.org/10.13140/2.1.4286.8009.

ICCT. 2020. “Vision 2050: A Strategy to Decarbonize the Global Transport Sector by Mid-Century | International Council on Clean Transportation.” ICCT. 2020. https://theicct.org/publications/vision2050.

IEA. 2021a. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: IEA. https://www.iea.org/reports/net-zero-by-2050.

IEA. 2021b. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: International Energy Agency. https://www.iea.org/reports/net-zero-by-2050.

IRENA. 2021. “World Energy Transitions Outlook - 1.5C Pathway.” Abu Dhabi: International Renewable Energy Agency. https://www.irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook.

ITDP. 2021. “Rapid Transit Database.” ITDP. 2021. https://www.itdp.org/rapid-transit-database/.

Mission Possible Partnership. 2022. “Making Net-Zero Aviation Possible.” Mission Possible Partnership.

Montgomery County Planning. 2017. “Level of Traffic Stress Methodology.” Maryland: Montgomery Planning. https://montgomeryplanning.org/wp-content/uploads/2017/11/Appendix-D.pdf.

Moran, Daniel, Keiichiro Kanemoto, Magnus Jiborn, Richard Wood, Johannes Többen, and Karen C. Seto. 2018. “Carbon Footprints of 13 000 Cities.” Environmental Research Letters 13 (6):064041. c.

Moser, Daniel, and Armin Wagner. 2021. “Here Is Why Cities around the World Should Build 2 Km High Quality, Segregated Cycling Lane per 1000 Inhabitants.” Bonn: TUMI. https://www.transformative-mobility.org/assets/publications/TUMI_Strategy-Outlook_2km-bike-lanes-per-1000-inhabitants.pdf.

Mueller, Natalie, David Rojas-Rueda, Maelle Salmon, David Martinez, Albert Ambros, Christian Brand, Audrey de Nazelle, et al. 2018. “Health Impact Assessment of Cycling Network Expansions in European Cities.” Preventive Medicine 109 (April):62–70. doi:10.1016/j.ypmed.2017.12.011.

Searchinger, Tim, Richard Waite, Craig Hanson, and Janet Ranganathan. 2019. “World Resources Report: Creating a Sustainable Food Future.” Washington, D.C.:

World Resources Institute. https://research.wri.org/sites/default/files/2019-07/WRR_Food_Full_Report_0.pdf.

Teske, Sven, Sarah Niklas, and Rusty Langdon. 2021. “TUMI Transport Outlook 1.5°C - A Global Scenario to Decarbonize Transport.” Bonn: TUMI. https://outlook.transformative-mobility.org/.

UMAS. 2021. “A Strategy for the Transition to Zero-Emission Shipping.” London: UMAS. https://www.u-mas.co.uk/wp-content/uploads/2021/10/Transition-Strategy-Report.pdf.

United Nations. 2015. “The 17 Goals - Sustainable Development Goals.” United Nations. https://sdgs.un.org/goals.

United Nations. 2019. World Urbanization Prospects: The 2018 Revision.

United Nations General Assembly. 2020. Resolution Adopted by the General Assembly on 31 August 2020. https://documents-dds-ny.un.org/doc/UNDOC/GEN/N20/226/30/PDF/N2022630.pdf?OpenElement.

Finance

Selection of Shifts

For the Finance system, we chose six shifts:

Measure, disclose and manage climate- and nature-related financial risks
Scale up public finance for climate and nature
Scale up private finance for climate and nature
Extend financial services to underserved and marginalized groups
Price GHG emissions and other environmental externalities
Eliminate harmful subsidies and financing

These shifts were chosen to track the investments and financial incentives needed to achieve the system transformations necessary to limit global temperatures to 1.5°C while protecting biodiversity and improving equity. Finance is a key means of enabling climate action, with investment and aligned financial incentives playing a critical role in enabling change across all other systems. To reach net-zero greenhouse gas emissions, halt biodiversity loss, and ensure an equitable and just transition across all systems, sufficient finance from both public and private sources must be made available, and investments in emissions-intensive practices and technologies must be disincentivized through carbon pricing mechanisms, removal of fossil fuel subsidies, and more. The shifts reflect the different types of public and private financing and the various roles they can play, from corporate finance to international climate finance dedicated to adaptation.

Together, these shifts provide a comprehensive picture of progress for the Finance system as they look at the different stages and players necessary to align financial flows with climate, nature and equity goals.
Transforming the global financial system to support ambitious climate, nature and equity goals entails measuring, reporting, and managing climate- and nature-related risks; scaling up climate and nature finance, both public and private; expanding economic and financial inclusion; properly accounting for the full cost of GHG emissions and other environmental externalities; and ending harmful subsidies and financing.

The shifts start by looking at the measurement, disclosure, and management of climate- and nature-related risks that relevant actors such as corporations, investors, and regulators must embrace to make it possible to correctly assess and price those risks into the economic system. Then the two sources of financial investments – the public and private sector – are analyzed with their own unique drivers but also their interdependent links that can scale up the investments needed to meet climate and nature targets. The final shifts cover public policies that can better shape markets, ranging from economic and financial inclusion policies to underserved and/or marginalized groups, market mechanisms that price in externalities (e.g., carbon pricing) with systems to mitigate unequitable distributional impacts, and the removal of market distortions such as fossil fuel subsidies that support continued emissions and nature degradation.

Shifts 1, 2, 3, 5, and 6 are primarily focused on limiting global temperature rise to 1.5°C and protecting biodiversity, but they also incorporate equity considerations which include the tracking of finance flows destined for low-income countries and the elimination of harmful financing which can reduce the inequities stemming from disproportionate impacts of climate change and nature degradation that will impact vulnerable and marginalized communities the most. Shift 4 is primarily focused on improving equity across underserved and/or marginalized communities so they can have greater access to financial services and economic resources that can help them become more resilient to climate shocks and natural degradation that affect their livelihoods.

Selection of Targets and Indicators

In the Finance system, we examine six shifts, each with respective indicators with 2030 or 2050 targets for insight into how finance can unlock greater action on climate, nature, and equity. We used a variety of methodological approaches to design the targets for each indicator. Justification for the target design for indicators is described in the following table. Some indicators do not have an associated target because there is no general agreement in the literature on what the target should be, but the indicator was deemed important based on a review of the literature and expert elicitation.

Some indicators are shown in more than one shift, especially in shifts 2 and 3, as the targets identified in the literature involve all sources (public and private), and a breakdown of the target is either not available or cannot be reliably calculated. In these instances, indicators show the total amount to match the target while providing a breakdown of the amount by source when data is available. It is important to note that methodologies and efforts to account for climate and nature finance flows are still in development. Due to fragmented reporting and limited data availability from both public and private sources, it remains difficult to make exact projections in these areas (Buchner et al. 2021).

Design of Finance Indicators and Targets

Indicator	Target(s)	Target Source	Additional information
Shift 1: Measure, disclose and manage climate- and nature-related financial risks
Corporations measuring and disclosing climate-related financial risks and management (%)	100% (2030)	TCFD 2017; Forbes 2022	Accurate, timely, and comparable disclosures of climate risks from all Forbes Global 2000 corporations (financial and non-financial) is essential for investors, creditors, regulators, and other market participants to correctly price assets and efficiently allocate capital. The Financial Stability Board, an international body under the G20 that monitors and makes recommendations about the global financial system, created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related risks. It developed a comprehensive framework to help companies and other organizations more effectively disclose those risks in 2017 (TCFD 2017). It has become the standard framework for climate-related financial disclosures.
Corporations measuring and disclosing nature-related financial risks and management (%)	100% (2030)	TNFD 2022; Forbes 2022	It is critical for all Forbes Global 2000 corporations (financial and non-financial) to disclose nature-related financial risks (including biodiversity loss and ecosystem degradation) in order to incorporate and plan for these risks in corporate and financial decision-making. The Taskforce on Nature-related Financial Disclosures (TNFD) is in the process of developing a disclosure framework on nature-related risks and opportunities (TNFD 2022).
Shift 2: Scale up public finance for climate and nature
Public climate finance (billion USD)	1,305 – 2,610 (2030) 1,285 – 2,570 (2050)	Boehm et al. 2022; Buchner et al. 2021; IPCC 2018	To keep temperature rise to 1.5°C and build climate-resilient societies, estimates suggest that $5.2 trillion of climate finance per year will be required by 2030 and $5.1 trillion by 2050 (Boehm et al. 2022). It is difficult to determine the precise breakdown between public and private finance needed to meet climate goals, given that this depends on social and political choices about the ideal mix of market and state intervention in economies. Based on historic tracking of global flows from 2012 to 2020, public and private climate finance have been about equally balanced. If these levels are maintained, then, it implies that the global climate finance will need to be split 50:50. The IPCC’s Special Report on 1.5 Degrees cites a projection that a quarter of global climate investment will come from public sources (IPCC 2018). We therefore have a target range of 25-50% of global climate finance from public sources.
Total climate finance flows to developing countries (focus on public) (billion USD)	100 (2025)	UNFCCC 2009, 2015; UNEP 2021a	We measure the total amount of climate finance (public and private) destined for developing countries against the current $100 billion a year commitment that was pledged in 2009 and 2015 (UNFCCC 2009, 2015) by developed countries. Negotiations are underway to set a higher target post-2025 given the drastically increased needs for adaptation and loss and damage financing estimated to reach $140-300 billion by 2030 in developing countries alone (UNEP 2021a). The target will be updated once negotiations are concluded. We also track the breakdown by contributor and recipient for better visibility on which countries are meeting their pledges and which recipients haven’t received the funding they need.
Total finance for nature-based solutions (focus on public) (billion USD)	354 (2030) 536 (2050)	UNEP 2021b	According to the State of Finance for Nature, to keep 1.5°C in reach, protect biodiversity, and promote equity, investments made by public and private finance in nature-based solutions must triple between 2020 and 2030 and increase four-fold by 2050, reaching $354 billion per year by 2030 and $536 billion per year by 2050 (UNEP 2021b).
Total finance for biodiversity (focus on public) (billion USD)	200 (2030)	CBD 2022	According to the post-2020 global biodiversity framework being drafted by the Secretariat of the UN Convention on Biological Diversity, financing from all sources toward nature preservation and protection need to reach $200 billion per year by 2030 (CBD 2022). The target will be updated once the final framework is released.
Shift 3: Scale up private finance for climate and nature
Private climate finance (billion USD)	2,610 – 3,915 (2030) 2,570 – 3,855 (2050)	Boehm et al. 2022; Buchner et al. 2021; IPCC 2018	To keep temperature rise to 1.5°C and build climate-resilient societies, estimates suggest that $4.8 trillion of climate finance per year will be required by 2030 and $5.1 trillion by 2050 (Boehm et al. 2022). It is difficult to determine the precise breakdown between public and private finance needed to meet climate goals, given that it depends on social and political choices about the ideal mix of market and state intervention in economies. Based on historic tracking of global flows from 2012 to 2020, public and private climate finance have been about equally balanced. If these levels are maintained, then, it implies that the global climate finance will need to be split 50:50. The IPCC’s Special Report on 1.5 Degrees cites a projection that a quarter of global climate investment will come from public sources (IPCC 2018). We therefore have a target range of 50-75% of global climate finance needs coming from private sources.
Total climate finance flows to developing countries (focus on private) (billion USD)	100 (2025)	UNFCCC 2009, 2015; UNEP 2021a	We measure the total amount of climate finance (public and private) destined to developing countries against the current $100 billion a year commitment that was pledged in 2009 and 2015 (UNFCCC 2009, 2015) by developed countries. Negotiations are underway to set a higher target post-2025 given the drastically increased needs for adaptation and loss and damage financing estimated to reach $140-300 billion by 2030 in developing countries alone (UNEP 2021a). The target will be updated once negotiations are concluded. We also track the breakdown by contributor and recipient for better visibility on which countries are meeting their pledges and which recipients haven’t received the funding they need.
Cost of capital for low-carbon technologies, starting with renewable energy (%)	No target	N/A
Total finance for nature-based solutions (focus on private) (billion USD)	354 (2030) 536 (2050)	UNEP 2021b	According to the State of Finance for Nature, to keep 1.5°C in reach, protect biodiversity, and promote equity, investments made by public and private finance in nature-based solutions must triple between 2020 and 2030 and increase four-fold by 2050, reaching $354 billion per year by 2030 and $536 billion per year by 2050 (UNEP 2021b).
Total finance for biodiversity (focus on private) (billion USD)	200 (2030)	CBD 2022	According to the post-2020 global biodiversity framework being drafted by the Secretariat of the UN Convention on Biological Diversity, financing from all sources toward nature preservation and protection need to reach $200 billion per year by 2030 (CBD 2022). The target will be updated once the final framework is released.
Significant GHG-emitting companies with credible transition plans according to their performance under the CA100+ benchmark	No target	N/A
Shift 4: Extend financial services to underserved and marginalized groups
Number of quality green jobs	No target	N/A
Proportion of climate finance flowing to underserved and marginalized communities	No target	N/A
Percent of population aged 15+ with a financial account (%)	100% (2050)	WRI; Demirgüç-Kunt et al. 2022; UNCDF n.d.	Financial inclusion is one of the key enablers to achieve the 2030 Sustainable Development Goals, especially those that are related to eradicating poverty, reducing inequality, and promoting economic growth and jobs. (UNCDF n.d.) Target designed so that the global adult population has access to formal banking accounts, mobile money services, or other financial institutions by 2030. The World Bank defines the adult population as over the age of 15 (Demirgüç-Kunt et al. 2022).
Percent of population aged 15+ with savings in a financial institution in the past year (%)	100% (2030)	WRI; Demirgüç-Kunt et al. 2022; UNCDF n.d.	Financial inclusion is one of the key enablers to achieve the 2030 Sustainable Development Goals, especially those that are related to eradicating poverty, reducing inequality, and promoting economic growth and jobs. (UNCDF n.d.) Target designed so that the global adult population saves or sets aside money in the formal and regulated financial system by 2030. The World Bank defines the adult population as over the age of 15 (Demirgüç-Kunt et al. 2022).
Shift 5: Price GHG emissions and other environmental externalities
Average global carbon price in nominal U.S. dollars (USD/tCO2e)	170 (2030) 430 (2050)	IPCC 2022	These benchmarks are derived from the IPCC Sixth Assessment report’s updated estimates of the marginal abatement cost of carbon (i.e., the optimal carbon price) for pathways that limit warming to 1.5°C with no or limited overshoot (IPCC 2022). The targets are the minimum end of the price ranges.
GHG emissions covered by direct carbon pricing (% of global GHG emissions)	100% (2030)	WRI	Target designed so that all GHG emissions are covered by at least some level of carbon pricing, even if prices are below the minimum levels consistent with the 1.5°C pathway.
GHG emissions covered by carbon prices consistent with 1.5°C pathway (% of global GHG emissions)	No target	N/A
Environmental tax revenue (billion USD)	No target	N/A
Shift 6: Eliminate harmful subsidies and financing
Fossil fuel subsidies (billion USD)	0 (2030)	G20 2009; G7 2016	Both the G20 and G7 have made long-standing commitments to phase out inefficient fossil fuel subsidies, with the former stating in 2009 that it would do so “over the medium term,” and the latter in 2016 setting a deadline for doing so by 2025. 2030 would be 21 years after the G20 commitment was made, stretching the limit of the definition of “medium term.” Therefore, our target is for fossil fuel subsidies to be phased out globally by 2030, with G7 countries achieving this by 2025, in line with their commitment.
Public financing for fossil fuels (billion USD)	0 (2030)	IEA 2021; IPCC 2022; G20 2009; G7 2016; COP 26 Presidency 2021	The IEA’s net-zero roadmap to achieve 1.5°C found that, beyond projects already committed to in 2021, no new investment in new fossil fuel supply is required to meet global energy needs, a finding echoed by the IPCC’s Sixth Assessment Report (IEA 2021; IPCC 2022) Both the G20 and G7 have made longstanding commitments to phase out fossil fuel subsidies, with the former stating in 2009 that it would do so “over the medium term,” and the latter in 2016 setting a deadline for doing so by 2025. 2030 would be 21 years after the G20 commitment was made, stretching the limit of the definition of “medium term.” In addition, at COP26, 34 countries and five financial institutions committed to ending international public finance for unabated fossil fuels by the end of 2022 (COP 26 Presidency 2021). Therefore, our target is for public financing for fossil fuels to be phased out globally by 2030, with G7 countries and international financial institutions achieving this by 2025, in line with their commitments.
Private financing for fossil fuels (billion USD)	0 (2030)	IEA 2021; IPCC 2022	The IEA’s net-zero roadmap to achieve 1.5°C found that, beyond projects already committed to in 2021, no new investment in new fossil fuel supply is required to meet global energy needs, a finding echoed by the IPCC’s Sixth Assessment Report (IEA 2021; IPCC 2022). The UN-backed Race to Zero campaign, of which GFANZ and financial institutions are part, requires members to “phase down and out unabated fossil fuels,” although timelines would vary across regions and types of fossil fuels. It is difficult to choose one target year that applies to different regions and fossil fuels, but we choose a 2030 target in line with the target for phasing out public financing for fossil fuels.
Cost of capital for high-carbon activities, starting with fossil fuel production (%)	No target	N/A
Total capital investment planned in high-carbon activities misaligned with a 1.5°C pathway, starting with fossil fuel production and power generation (billion USD)	0 (2030)	IEA 2021; IPCC 2022	The IEA’s net-zero roadmap to achieve 1.5°C found that, beyond projects already committed to in 2021, no new investment in new fossil fuel supply is required to meet global energy needs, a finding echoed by the IPCC’s Sixth Assessment Report (IEA 2021; IPCC 2022). Timelines for the phaseout of fossil fuels vary across regions and types of fossil fuels. It is difficult to choose one target year that applies to different regions and fossil fuels, but we choose a 2030 target in line with the target for phasing out public financing for fossil fuels.
Harmful fisheries subsidies (billion USD)	0 (2025)	UN DESA 2015; WTO 2022	One of the UN’s Sustainable Development Goals, SDG Target 14.6, aimed to prohibit harmful fisheries subsidies by 2020 (UN DESA 2015). Recently the WTO reached an agreement to ban certain harmful fisheries subsidies (WTO 2022). While the agreement is still in the process of being approved, we carry over the previous 2020 target to 2025.
Agricultural subsidies that incentivize unsustainable intensification and overuse of natural resources (billion USD)	0 (2030)	UNDP et al. 2021	According to A Multi-Billion-Dollar Opportunity – Repurposing agricultural Support to Transform Food Systems, the reduction and redirection of harmful agricultural subsidies is essential for the world to meet the UN’s Sustainable Development Goals by 2030 (UNDP et al. 2021). Harmful subsidies (especially the most distorting and harmful) need to be phased out and, most importantly, repurposed to support sustainable agricultural production.
Corporations implementing on commitments to reduce deforestation (%)	100% (2030)	Global Canopy Programme 2022	Corporations play a critical role in reducing and stopping deforestation related to their operations, supply chain, and financing decisions. This benchmark targets a complete phaseout of these practices across Forest 500 corporations – the most influential corporations linked to deforestation – in order to reduce GHG emissions; protect nature and Indigenous communities, promote adaptation and food security; and protect biodiversity (Global Canopy Programme 2022).

Exponential Categorizations

In the Finance system, all indicators are categorized as “Exponential Unlikely.” We do not expect them to follow the nonlinear dynamics seen in technology diffusion, given that they do not specifically track technology adoption and are instead based on other processes.

Works Cited

Boehm, Sophie, Louise Jeffery, Kelly Levin, Judit Hecke, Clea Schumer, Claire Fyson, Aman Majid, and Joel Jaeger. 2022. “State of Climate Action 2022.” World Resources Institute. https://www.wri.org/research/state-climate-action-2022

Buchner, Barbara, Baysa Naran, Pedro de Aragão Fernandes, Rajashree Padmanabhi, Paul Rosane, Matthew Solomon, Sean Stout, et al. 2021. “Global Landscape of Climate Finance 2021.” London: Climate Policy Initiative. https://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2021/.

CBD. 2022. “Report of the Open-Ended Working Group on the Post-2020 Global Biodiversity Framework on Its Third Meeting (Part II).” Geneva, Switzerland. https://www.cbd.int/doc/c/50c9/a685/3844e4030802e9325bc5e0b4/wg2020-03-07-en.pdf.

COP 26 Presidency. 2021. “Statement on International Public Support for the Clean Energy Transition.” 2021. https://ukcop26.org/statement-on-international-public-support-for-the-clean-energy-transition/.

Demirgüç-Kunt, A., L. Klapper, D. Singer, and S. Ansar. 2022. The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. The World Bank. doi:10.1596/978-1-4648-1897-4.

Forbes. 2022. “The Global 2000.” https://www.forbes.com/lists/global2000/?sh=6b81aed65ac0.

G7. 2016. “G7 Ise-Shima Leaders’ Declaration.”G7 Ise-Shima Summit, May 26-27 2016. Ise-Shima. https://www.mofa.go.jp/files/000160266.pdf.

G20. 2009. “Leaders’ Statement: The Pittsburgh Summit.” G20 Pittsburgh Summit, September 24-25, 2009. Pittsburgh. https://www.oecd.org/g20/summits/pittsburgh/G20-Pittsburgh-Leaders-Declaration.pdf.

GFANZ. 2021. “The Glasgow Financial Alliance for Net Zero: Our Progress and Plan towards a Net-Zero Global Economy.” Glasgow: The Glasgow Financial Alliance for Net Zero. https://www.gfanzero.com/progress-report/.

Global Canopy Programme. 2022. “Forest 500 - 2022 Annual Report.” https://forest500.org/sites/default/files/forest500_2022report_final.pdf.

IEA. 2021. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: International Energy Agency. https://www.iea.org/reports/net-zero-by-2050.

IPCC. 2022. “IPCC Sixth Assessment Report: Mitigation of Climate Change.” Geneva: IPCC. https://www.ipcc.ch/report/ar6/wg3/.

Kennedy, Kevin. 2019. “Putting a Price on Carbon: Evaluating A Carbon Price and Complementary Policies for a 1.5° World.” Washington, DC: World Resources Institute. https://www.wri.org/research/putting-price-carbon-evaluating-carbon-price-and-complementary-policies-15deg-world.

Net Zero Asset Managers Initiative. 2021. “Net Zero Asset Managers Initiative - Progress Report.” https://www.netzeroassetmanagers.org/media/2021/12/NZAM-Progress-Report.pdf.

Sovereign Wealth Fund Institute. n.d. “Top 100 Largest Insurance Rankings by Total Assets.” https://www.swfinstitute.org/fund-rankings/insurance.

S&P Global Market Intelligence. 2021. “The World’s Top 100 Largest Banks 2020.” https://pages.marketintelligence.spglobal.com/SM-Global-Bank-Ranking-Content-request-Global.html.

TCFD. 2017. “Recommendations of the Task Force on Climate-Related Financial Disclosures.” Task Force on Climate-related Financial Disclosures. https://www.fsb-tcfd.org/wp-content/ uploads/2017/06/FINAL-TCFD-Report-062817.pdf.

Thinking Ahead Institute. 2021. “The Asset Owner 100 – 2021.” https://www.thinkingaheadinstitute.org/research-papers/the-asset-owner-100-2021/.

Thinking Ahead Institute and Pensions & Investments. 2021. “The World’s Largest Asset Managers – 2021.” https://www.thinkingaheadinstitute.org/research-papers/the-worlds-largest-asset-managers-2021/.

TNFD. 2022. “TNFD Nature-Related Risk & Opportunity Management and Disclosure Framework.” https://framework.tnfd.global/.

UN DESA. 2015. “SDG Goal 14 Target 14.6.1.” 2015. https://unstats.un.org/sdgs/metadata/?Text=&Goal=14&Target=14.6.

UNCDF. n.d. “Financial Inclusion and the SDGs - UN Capital Development Fund (UNCDF).” https://www.uncdf.org/financial-inclusion-and-the-sdgs.

UNDP, UNEP, and FAO. 2021. A Multi-Billion-Dollar Opportunity: Repurposing Agricultural Support to Transform Food Systems. S.l.: Food & Agriculture Org.

UNEP. 2021a. Adaptation Gap Report 2020. https://www.un-ilibrary.org/content/books/9789280738346.

UNEP. 2021b. “State of Finance for Nature.” Nairobi, Kenya: United Nations Environment Programme. https://www.unep.org/resources/state-finance-nature.

UNFCCC. 2009. Copenhagen Accord. https://unfccc.int/process-and-meetings/conferences/past-conferences/copenhagen-climate-change-conference-december-2009/cop-15/cop-15-decisions.

UNFCCC. 2015. Adoption of the Paris Agreement. https://unfccc.int/resource/docs/2015/cop21/eng/10a01.pdf.

WTO. 2022. “Agreement on Fisheries Subsidies.” https://docs.wto.org/dol2fe/Pages/SS/directdoc.aspx?filename=q:/WT/MIN22/W22.pdf&Open=True.

Industry

Selection of Shifts

Moving toward net-zero GHG emissions from industry will be key to limiting global warming to no more than 1.5°C (IPCC 2022). For the Industry system, we chose five shifts which, collectively, will help decarbonize the industry sector:

Reduce demand for cement, steel and plastics
Improve industrial energy efficiency
Electrify industry
Commercialize new solutions for cement, steel and plastics
Reduce methane emissions from oil and gas operations as they are phased down

All five shifts are primarily focused on helping limit global temperature rise to 1.5°C. They were chosen to cover both the demand and supply sides of industrial manufacturing, and the various emission sources of industrial activities. These shifts represent key mitigation areas including circularity and the reduction of demand for industrial products, as well as already available technologies to improve energy efficiency. They also reflect the need to develop and deploy new technologies, solutions, infrastructure, and supply chains. Together, monitoring progress toward these shifts provides a comprehensive picture of progress for the Industry system because they cover the key mitigation areas required to decarbonize industrial activities.

Significantly increasing energy efficiency, which reduces energy use while maintaining services, can not only help reduce this system’s GHG emissions, but also lower the total amount of energy consumed across industry that would otherwise need to be decarbonized. This must be achieved through technical energy efficiency, material efficiency, and service efficiency, in addition to retrofits and shifting production from old facilities to newer ones (ETC 2020). These are covered in shifts 1 and 2.

Electrification with a clean grid or with dedicated distributed/on-site low-carbon electricity supply offers another strategy for curbing releases of GHGs, particularly for low- and medium-temperature heat processes that currently rely on fossil fuels. This is covered in shift 3. However, not all industrial processes can be easily electrified. Thus, decarbonizing these processes requires strategies such as switching to new fuels to deliver high-temperature heat, developing and switching to technologies that eliminate process emissions and/or reliance on high heat, and using conventional technologies with carbon capture, utilization, or storage (CCUS), all of which are covered in shift 4.

The literature shows that production of oil and gas must be significantly scaled down by 2050 to achieve a 1.5°C scenario, and new investments in production would be detrimental (IEA 2021b). As long as oil and gas are still produced and abandoned wells have not been capped, it is important to reduce fugitive methane emissions, which cannot be mitigated through carbon capture and sequestration. We cover this in shift 5. Methane, a major component of fossil gas, causes the atmosphere to absorb 83 times more heat over 20 years than CO2 and about 30 times more over a century, so reducing methane emissions can deliver large GHG benefits in the short term (IPCC 2021). Controlling methane emissions from oil and gas operations requires upgrades to equipment alongside better data to detect and repair leaks from equipment across the supply chain.

Selection of Targets and Indicators

The industry indicators were selected with the aim of gauging overall progress across the system, as well as progress made in achieving the aforementioned required shifts. We track progress made toward the first shift by tracking the demand for key industrial materials. The second and fourth shifts are tracked through a closer look at the production of cement, steel and plasticsⁱ – three of the most difficult industrial sub-sectors to decarbonize that, when taken together, account for about 70 percent of CO2 emissions from the Industry system (IEA 2021b). We track the third shift by monitoring the share of electricity in industry’s final energy demand.

Reductions in carbon intensity of cement, steel, and plastics production reflect improvements in energy efficiency, alongside progress made in implementing mitigation measures that go beyond efficiency (e.g., electrification of high-temperature heat processes or adoption of new fuels and feedstocks). We placed these carbon-intensity indicators in shift 4, but they are relevant for other shifts as well. We also track green hydrogen production and installed electrolyzer capacity as part of shift 4, as hydrogen is one of the most promising non-carbon chemical feedstocks (e.g., for steel, ammonia, and methanol production) and could also be used as an energy carrier for high temperature heat generation.

For shift 5, we track overall methane emissions from oil and gas operations and the volume of fossil gas flared (intentionally burned off for economic or safety reasons).

Climate Action Tracker 2020 used both top-down and bottom-up methods to establish targets for the share of electricity in the industry sector’s final energy demand, the carbon intensity of global cement production, and the carbon intensity of global steel production.

For the share of electricity in the industry sector’s final energy demand, CAT relied on the top-down approach to develop the targets, using global IAM scenarios that limit global warming to below 1.5°C with no or limited overshoot (Climate Action Tracker 2020). Similar to the approach described for the Climate Action Tracker 2020 targets in the Power system, CAT derived this target from least-cost pathways, which do not consider equitable distribution of costs and required action.

CAT derived targets for the carbon intensities of cement and steel from bottom-up sectoral modelling tools, applying mitigation options that would enable full decarbonization of the sector as quickly as possible. The modelling was informed by academic and grey literature and further compared with 1.5°C-compatible IAM pathways to ensure that, if there were any discrepancies, the bottom-up approaches would be more ambitious in achieving decarbonization more rapidly. For the carbon intensity of global cement production indicator, CAT considered both direct emissions and emissions generated by power used during production (indirect emissions).

The bottom-up approach described here was used for the development of these targets, because IAMs provide less sectoral granularity and are thus limited in terms of their potential for defining sectoral benchmarks. The bottom-up tools used for the targets are not based on a comprehensive economic analysis, but rather prioritize the changes necessary to limit global warming to 1.5°C by midcentury from a technical feasibility perspective. This structure means that the benchmarks reflect goals that are achievable within a certain period from a technical perspective, not restricted by potential political, economic, or social barriers. Assumptions in the bottom-up modelling exercise are informed by the literature on what is needed across the Industry system to achieve compatibility with the Paris Agreement (Climate Action Tracker 2020).

The green hydrogen production and installed electrolyzer capacity targets were sourced from (IEA 2021b), which models the projected demand for green hydrogen across sectors by 2030 and 2050 in order to reach net-zero emissions by 2050.
Targets for oil and gas methane indicators in shift 5 were identified from the International Energy Agency’s Global Methane Tracker and Net Zero by 2050 scenario.
Equity-related targets have not yet been established for the Industry system, but may be included in a future iteration. We are still exploring how best to measure equity in this system. Biodiversity-related indicators are not established under this system, and these are addressed in other systems such as circular economy and biomes-related systems.

Not every indicator in the Industry system has an associated target. This is either because no targets have been developed for that indicator or because there is no general agreement in the literature on what the target should be, but the indicator was deemed important based on a review of the literature and expert elicitation.

ⁱ Although plastics are not currently covered in the list of indicators, they will be added in the near-term future.

Design of Industry Indicators and Targets

Indicator	Target(s)	Target Source
Shift 1: Reduce demand for cement, steel and plastics
Apparent steel use (Mt)	No target	N/A
Global consumption of cement (Mt)	No target	N/A
Demand growth for key materials (index)	No target	N/A
Shift 2: Improve industrial energy efficiency
Final energy use per unit of manufacturing output (GJ/tonne crude steel cast)	No target	N/A
Shift 3: Electrify industry
Share of electricity in industry sector final energy demand (%)	35% (2030) 40-45% (2040) 50-55% (2050)	Climate Action Tracker 2020
Share of low- and medium temperature heat that is electrified	No target	N/A
Shift 4: Commercialize new solutions for cement, steel and plastics
Carbon intensity per ton of cement (kgCO2/t)	360-370 (2030) 55-90 (2050)	Climate Action Tracker 2020
CO2 emissions from cement production (MtCO2)	No target	N/A
Production of novel low-carbon cement types (t)	Target will be published by MPP at COP	MPP 2022
Carbon intensity per ton of steel (kgCO2/t)	1335-1350 (2030) 0-130 (2050)	Climate Action Tracker 2020
CO2 emissions from steel production (MtCO2)	No target	N/A
Production of near-zero-emission ore-based steel (Mt)	167 (2030)	MPP 2022
Total installed electrolyzer capacity (GW)	850 GW (2030) 3,600 GW (2050)	IEA 2021b
Green hydrogen production (Mt)	81 (2030) 322 (2050)	IEA 2021b
Shift 5: Reduce methane emissions from oil and gas operations as they are phased down
Methane emissions from oil and gas (MtCH4)	18 (2030)	IEA 2022
Volume of fossil gas flared (billion cubic meters)	14 (2030)	IEA 2021a
GHG emissions covered by carbon prices consistent with 1.5°C pathway (% of global GHG emissions)	No target	N/A

ⁱⁱ At least 280 Mt near-zero-emission ore-based steel production by 2030 (>=13% of total steel production) (Source – MPP Steel Sector Transition Strategy – forthcoming)

Exponential Categorizations

Exponential likely

Indicator	Explanation
Production of near-zero-emission ore-based steel	The production of near-zero emissions ore-based steel will require the development and deployment of novel technologies that are not yet commercialized. These types of technologies often follow an S-curve trajectory in their adoption if they are successful, although this is not guaranteed.
Total installed electrolyzer capacity	Changes in this indicator are based on the adoption of electrolyzers, which indeed are an established technology, but with recent innovations available. Such technologies tend to follow an S-curve trajectory if they are successfully adopted.
Green hydrogen production	Green hydrogen is produced using an electrolyzer fed by power generated from renewable sources (i.e., solar and wind). The electrolyzer is indeed an established technology, but with recent innovations available. Such technologies tend to follow an S-curve trajectory if they are successfully adopted. Similarly, the deployment of solar and wind power is also expected to follow exponential growth.

Exponential possible

Indicator	Explanation
Share of electricity in industry sector final energy demand	Even though the historical trend of this indicator is linear, future growth rate could possibly take an exponential form. That is because future electrification of the industry sector will require both already available and novel technologies such as electric cement kilns.
Share of low- and medium temperature heat that is electrified	Changes in this indicator are affected by the advancements of other indicators which have the potential to change at a nonlinear rate, such as the price of clean electricity.
Carbon intensity per ton of cement	Changes in this indicator are based on adoption of innovative technologies such as the electrification of high heat, development of novel cement chemistries, and carbon capture and storage, which may be nonlinear. However, it is also dependent on other developments such as industrial energy efficiency and clinker substitution, which are likely to be incremental.
CO2 emissions from cement production	Changes in this indicator are based on the adoption of innovative technologies such as the electrification of high heat, development of novel cement chemistries, and carbon capture and storage. However, it is also dependent on other developments such as industrial energy efficiency, clinker substitution, and cement demand reduction, which are likely to be incremental.
Carbon intensity per ton of steel	Changes in this indicator are, to a large extent, based on adoption of innovative technologies such as hydrogen-based steel production and carbon capture and storage among others, which may be nonlinear. However, they are also dependent on other developments such as the availability of steel scrap and clean electricity supply which are likely to be incremental.
CO2 emissions from steel production	Changes in this indicator are, to a large extent, based on adoption of innovative technologies such as hydrogen-based steel production and carbon capture and storage among others, which may be nonlinear. However, they are also dependent on other developments such as the availability of steel scrap, clean electricity supply, and steel demand reduction, which are likely to be incremental.
Methane emissions from oil and gas	Changes in this indicator are partially based on innovative leak detection technologies that could allow for better data to identify and prevent significant quantities of methane emissions.

Other indicators in this system are categorized as “Exponential Unlikely.” We do not expect them to follow the nonlinear dynamics seen in technology diffusion, given that they do not specifically track technology adoption and are instead based on other processes.

Works Cited

ETC. 2020. “Making Mission Possible: Delivering a Net-Zero Economy.” https://www.energy-transitions.org/wp-content/uploads/2020/09/Making-Mission-Possible-Executive-Summary-English.pdf.

IEA. 2021a. “Flaring Emissions.” IEA. 2021. https://www.iea.org/reports/flaring-emissions.

IEA. 2021b. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: IEA. https://www.iea.org/reports/net-zero-by-2050.

IEA. 2022. “Global Methane Tracker 2022.” IEA. 2022.

IPCC. 2021. Climate Change 2021: The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Edited by Valérie Masson-Delmotte, Panmao Zhai, Anna Pirani, Sarah L. Connors, Clotilde Péan, Sophie Berger, Nada Caud, et al. Cambridge, UK and New York, NY, USA: Cambridge University Press. https://www.ipcc.ch/report/ar6/wg1/.

IPCC. 2022. “Climate Change 2022 - Mitigation of Climate Change.” Geneva: IPCC. https://report.ipcc.ch/ar6wg3/pdf/IPCC_AR6_WGIII_FinalDraft_FullReport.pdf.

Mission Possible Partnership (MPP). 2022. Making Net-Zero Steel Possible: An Industry-backed, 1.5°C-aligned Transition Strategy. https://missionpossiblepartnership.org/wp-content/uploads/2022/09/Making-Net-Zero-Steel-possible.pdf,

Technological Carbon Removal

Selection of Shifts

Significantly reducing greenhouse gas (GHG) emissions is essential to reaching net-zero CO2 emissions by around mid-century, and should remain the top global priority, but emissions reductions alone will not be enough to meet the global goal of limiting global warming to 1.5°C. All modelled pathways that limit warming to 1.5°C rely on carbon dioxide (CO2) removal (referred to hereafter as carbon removal) as a complement to deep emissions reductions (IPCC 2022a). Carbon removal includes a range of nature-based approaches as well as technologies that can pull CO2 directly from the atmosphere.

Carbon removal is needed to remove excess CO2 in the atmosphere to stay within the limited carbon budget available for keeping temperature rise to 1.5°C. In the near term, it can counterbalance residual GHG emissions for which abatement technologies do not become available or are not cost-effective at scale (e.g., long-haul aviation, some heavy industry, non-CO2 emissions from agriculture) (Honegger et al. 2021; IPCC 2022a). In the longer term, carbon removal will be needed to bring atmospheric CO2 concentrations closer to pre-industrial levels by achieving net-negative emissions, or removing more than is emitted. This reduction can be achieved by scaling up a range of carbon removal approaches and technologies, including strategies generally considered natural or land-based (e.g., reforestation, agricultural soil management, and coastal wetland restoration) and those considered more technological (e.g., direct air capture and enhanced mineralization).

Developing a robust portfolio of carbon removal approaches will be critical to reducing costs, minimizing risks, and balancing the tradeoffs associated with any one approach (Mulligan et al. 2020). A portfolio that includes only nature-based approaches could face uncertainty around permanence and land area constraints, while a technology-specific portfolio would be more costly and lack many of the co-benefits that natural approaches can provide for resilience and biodiversity. For example, a technology-based approach like direct air capture (DAC) is energy intensive, but uses comparatively little land and, when coupled with geologic sequestration, results in permanent storage. On the other hand, tree planting provides many co-benefits but requires comparatively more land (which can be used for other purposes) and can be reversible (e.g., through wildfires). Some ocean-based approaches have large theoretical potential but carry many ecological and governance uncertainties.

In the Technological Carbon Removal system, we only include one shift: scale up technological carbon removal. Shifts related to approaches generally considered to be natural carbon removal can be found in the Land and Ocean systems.

Within this shift, we chose one key indicator to track progress on carbon removal: how many tonnes of CO2 have been captured from the air through technological carbon removal approaches and stored permanently. To meet this definition of technological carbon removal, CO2 must be captured from the atmosphere, rather than at a point source like a cement plant (this would be emissions reduction rather than carbon removal since it is preventing emissions from entering the atmosphere). Then it must be permanently sequestered through injection into deep, underground geological formations, through the creation of stable carbonate minerals, or use in durable products.

This indicator is focused primarily on our goal of limiting global temperature rise to 1.5°C, but the Systems Change Lab’s other goals of protecting biodiversity and improving equity are key considerations when assessing progress in carbon removal.

As technological carbon removal is a relatively new industry, there is an opportunity, and imperative, to scale it in a way that prioritizes equity and sustainability. Deep emissions reductions will be needed to reduce new emissions into the atmosphere, but carbon removal is necessary to reduce atmospheric concentrations of carbon dioxide, which will help reduce the worst impacts of climate change that are disproportionately affecting vulnerable communities today. At a project level, focusing on equity is important in the selection of carbon removal technology or approach and determining where the project will be sited. Such decisions need to be made in consultation with and with the consent of potential host communities (Lebling et al. 2022). Communities must have access to clear and transparent information about the project and opportunities to negotiate project parameters to the extent possible (including the option to reject the project), and to negotiate benefits – either from the project directly or from other investment by the project developer. This approach can help build public acceptance and create a foundation for further carbon removal deployment.

Selection of Targets and Indicator

The 2030 and 2050 targets for this indicator are based on the range of modelled pathways that limit global temperature rise to 1.5°C (with no or limited overshoot), as presented in (IPCC 2018). These pathways were filtered to identify a subset of 20 pathways that meet sustainability criteria, based on Fuss et al. 2018, for biomass cultivation for carbon removal outlined in the IPCC’s Special Report on 1.5°C. We use the median values for the 2030 and 2050 levels of technological carbon removal (i.e., from bioenergy with carbon capture and storage, direct air capture, and mineralization, which are the technologies incorporated into climate models) as 2030 and 2050 targets.

While we use the IPCC (2018) to establish 2030 and 2050 targets, we note that the more recent IPCC (2022a) report includes additional scenarios that can provide a more nuanced understanding of carbon removal needs and how different scenarios for near-term emissions reduction can impact those needs. The IPCC (2022a) indicates a wide range of estimates for technological carbon removal needs at the time at which net zero CO2 and GHGs is achieved in each scenario and over the whole century, in pathways that limit warming to 1.5°C with no or limited overshoot (IPCC 2022a).

The IPCC (2022a) also notes several pathways that demonstrate the potential for less reliance on carbon removal technologies – to a level lower than this report’s 2050 target level – through greater emissions reduction in the near term. This reduction, the IPCC notes, can be achieved through increased resource efficiency, a shift toward more sustainable development (e.g., through reductions in inequality and poverty, as well as more sustainable consumption patterns), or a faster and deeper transition to renewables. For example, a high renewables pathway points to the need for 2,400 MtCO2/year of technological carbon removal in 2050 (IPCC 2022a). While we have not yet completed a comprehensive assessment of the new AR6 scenarios, an initial look suggests that, once filtered for sustainability constraints, they may show less reliance on carbon removal technologies than our target for 2050. We will revisit this in updates to the Systems Change Lab platform.

Along these lines, other estimation methodologies can also result in lower expected dependence on carbon removal technologies. The IPCC uses top-down climate models that optimize based on cost, which can result in an over-reliance on future carbon removal, due to assumed technology cost declines and costs of alternative technologies declining too slowly. An alternative, bottom-up methodology can also be used to estimate the amount of residual emissions that will need to be addressed with carbon removal. One estimate points to 1,500-3,100 MtCO2/year of carbon removal needed in the second half of the century to address portions of emissions from agriculture, aviation, shipping, and building heating (Bergman and Rinberg 2021). This estimate roughly aligns with the IPCC’s pathways with more ambitious near-term action, also indicating the potential for lower amounts of CDR need than this report’s target.

Design of Technological Carbon Removal Indicator and Targets

Indicator	Target(s)	Target Source	Additional information
Shift 1: Scale up technological carbon removal
Scale up technological carbon removal at a rate that puts us on track for multi-gigaton scale removal by 2050 (MtCO2/year)	75 (2030) 4,500 (2050)	IPCC 2018; Fuss et al. 2018	Described above.

Indicator

Target(s)

Target Source

Additional information

Shift 1: Scale up technological carbon removal

Scale up technological carbon removal at a rate that puts us on track for multi-gigaton scale removal by 2050 (MtCO2/year)

75 (2030)

4,500 (2050)

IPCC 2018; Fuss et al. 2018

Described above.

Exponential Categorizations

Exponential possible

Indicator	Explanation
Scale up technological carbon removal at a rate that puts us on track for multi-gigaton scale removal by 2050 (MtCO2/year)	The indicator is classified as “exponential possible” because while it tracks a bundle of new technologies, which may have the potential for nonlinear progress, it is also a public good that is dependent on support by policy. Natural market forces that can propel growth in other clean technologies like solar PV and electric vehicles may not apply to carbon removal technologies because they are not replacing incumbent technologies or products.

Indicator

Explanation

Scale up technological carbon removal at a rate that puts us on track for multi-gigaton scale removal by 2050 (MtCO2/year)

The indicator is classified as “exponential possible” because while it tracks a bundle of new technologies, which may have the potential for nonlinear progress, it is also a public good that is dependent on support by policy. Natural market forces that can propel growth in other clean technologies like solar PV and electric vehicles may not apply to carbon removal technologies because they are not replacing incumbent technologies or products.

Works Cited

Bergman, Andrew, and Anatoly Rinberg. 2021. “The Case for Carbon Removal: From Science to Justice | CDR Primer.” Carbon Dioxide Removal Primer. 2021. https://cdrprimer.org/read/chapter-1.

Fuss, Sabine, William F. Lamb, Max W. Callaghan, Jérôme Hilaire, Felix Creutzig, Thorben Amann, Tim Beringer, et al. 2018. “Negative Emissions—Part 2: Costs, Potentials and Side Effects.” Environmental Research Letters 13 (6). IOP Publishing:063002. doi:10.1088/1748-9326/aabf9f.

Honegger, Matthias, Matthias Poralla, Alex Michaelowa, and Hanna-Mari Ahonen. 2021. “Who Is Paying for Carbon Dioxide Removal? Designing Policy Instruments for Mobilizing Negative Emissions Technologies.” Frontiers in Climate 3. https://www.frontiersin.org/article/10.3389/fclim.2021.672996.

IPCC. 2018. “Special Report: Global Warming of 1.5C.” Intergovernmental Panel on Climate Change. https://www.ipcc.ch/sr15/chapter/chapter-2/.

IPCC. 2022a. “Climate Change 2022: Mitigation of Climate Change.” https://www.ipcc.ch/report/ar6/wg3/.

IPCC. 2022b. Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Edited by P.R. Shukla, J. Skea, R. Slade, A. Al Khourdajie, R. van Diemen, D. McCollum, M. Pathak, et al. Cambridge, UK and New York, NY, USA: Cambridge University Press. https://www.ipcc.ch/report/ar6/wg3/.

Lebling, Katie, Haley Leslie-Bole, Peter Psarras, Liz Bridgwater, Zachary Byrum, and Hélène Pilorgé. 2022. “Direct Air Capture: Assessing Impacts to Enable Responsible Scaling,” April. https://www.wri.org/research/direct-air-capture-impacts.

Mulligan, Jamey, Alex Rudee, Katie Lebling, Kelly Levin, James Anderson, and Ben Christensen. 2020. “CarbonShot: Federal Policy Options for Carbon Removal in the United States.” Washington, D.C.: WRI. https://www.wri.org/publication/carbonshot-federal-policy-options-for-carbon-removal-in-the-united-states.

Photo by Roberto García Ruiz

Technical Note

System Background Information

Power

Selection of Shifts

Selection of Targets and Indicators

Design of Power Indicators and Targets

Exponential Categorizations

Exponential likely

Exponential possible

Works Cited

Selection of Shifts

Selection of Targets and Indicators

Design of Transport Indicators and Targets

Exponential Categorizations

Exponential likely

Works Cited

Selection of Shifts

Selection of Targets and Indicators

Design of Finance Indicators and Targets

Exponential Categorizations

Works Cited

Selection of Shifts

Selection of Targets and Indicators

Design of Industry Indicators and Targets

Exponential Categorizations

Exponential likely

Exponential possible

Works Cited

Technological Carbon Removal

Selection of Shifts

Selection of Targets and Indicator

Design of Technological Carbon Removal Indicator and Targets

Exponential Categorizations

Exponential possible

Works Cited

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