Extreme weather events and their devastating impact in every continent in recent years have demonstrated the urgency of addressing the climate crisis. Making sure there is little or no overshoot of the 1.5°C target is essential to minimise climate risks. To achieve net zero ambitions, systemic transformations are needed. This means focusing policies on an entire system rather than individual components, for example working to reduce emissions and energy intensity across the transport system by rethinking mobility and reducing dependency on cars, rather than simply replacing every petrol-driven vehicle with an electric one.
Climate mitigation and net-zero transition
While the window for keeping the global temperature increase below 1.5°C is rapidly closing, achieving this goal remains possible and is essential. The OECD is working to identify and evaluate economically efficient and socially responsible pathways to achieve net-zero emissions at the global, national and regional level covering a broad range of economic sectors and working across all government departments.
Key messages
Decarbonising industry is an essential part of reaching the objectives of the Paris Agreement, yet industries will need to overcome some significant challenges to advance on this front. Putting CO2 emissions from industry on a pathway to net zero requires a major scaling-up of low-carbon technology deployment and related investments. Most of the necessary technologies are at demonstration phase or early stages of commercialisation, however, and many are capital-intensive. Uncertainty or fragmentation in policy efforts and regulatory regimes can also be a barrier to decarbonisation. Building common standards and definitions, for instance on low-emission steel, can reduce these barriers to improved policies. Offering more clarity and confidence to markets can also help to attract the investments needed to commercialise and expand low-carbon industrial technologies.
The transition towards a green economy can help to address existing inequalities in our societies. Vulnerable groups and households are more exposed to the impact of environmental degradation, such as climate change and air pollution, and more vulnerable to its consequences. At the same time, climate-friendly policies may negatively affect economic activities in certain regions or increase the prices of basic services like energy with negative implications especially for lower income households.
With the right policy packages, the net-zero transition can benefit all and ensure that no one is left behind. The OECD assesses the impact of the net-zero transition on labour markets and provides analysis on strengthening education and skills systems to drive sectoral transformations. We also look at the distributional impacts and outcomes of climate policies and public attitudes to climate policies with the aim to better understand how to build public trust and support.
OECD work on trade and the net-zero transition includes facilitating trade in environmental goods and services, including identifying environmental goods and trade measures that affect them, and developing a Green Services Trade Restrictiveness Index. OECD also monitors export restrictions and explores other trade measures affecting critical raw materials. Extensive OECD work on subsidies includes looking at the impact of subsidies on the environment, and the effective design of any necessary support for the net-zero transition.
Context
Overshooting 1.5°C may push the earth over several tipping points, leading to irreversible and severe changes in the climate system
If triggered, tipping point impacts will rapidly cascade through socio-economic and ecological systems, leading to severe effects on human and natural systems and imposing important challenges for human adaptation.
OECD analysis sheds light on the need for a shift in how tipping points are treated in climate policy and provides recommendations on how climate risk management strategies can better reflect the risks of tipping points in the areas of mitigation, adaptation and technological innovation.
Note: Global map of candidate tipping elements of the climate systems and potential tipping cascades. Arrows show the potential interactions among the tipping elements that could generate tipping cascades, based on expert elicitation.
Current greenhouse gas emission targets are not in line with the 1.5°C Paris Agreement temperature goal
Countries’ mitigation commitments according to their Nationally Determined Contributions (NDCs) fall below those need to meet Paris Agreement targets. The IPCC estimates that a global GHG emissions reduction of 43% by 2030 (from 2019) is necessary to be on track to achieve the Paris Agreement goal of limiting temperature to 1.5°C by the end of this century. However, OECD countries have committed to an estimated emissions reduction of 28% and OECD partner countries to an emissions reduction of 5% compared to their 2020 emissions. OECD and OECD partner countries need to increase their emissions reduction targets by, at least, an additional 30% in aggregate to achieve the projected reductions estimated by the IPCC necessary to reach the Paris Agreement goal and fill the “ambition gap”.
Manufacturing industries account for as much as 40% of total global carbon dioxide emissions or around 16 gigatonnes annually
Industrial decarbonisation involves the transition of energy-intensive industry sectors such as steel, cement, chemicals, and shipbuilding from their current high levels of emissions to a pathway aligned with net zero by around this mid-century. This is far from the current reality: emissions from the global steel industry alone account for 7%-9% of total global CO2 emissions. Policymakers are increasingly aware that without accelerating the decarbonisation of industry, the Paris Agreement targets will not be met.
