Roads to Paris: Target Pathways

Ever since the Climate Summit held in the French capital in 2015 and the ground-breaking commitment from over 190 countries to keep global warming to ‘well below 2°C’ above pre-industrial levels, the joint focus for governments and economies across the globe has been clear: destination Paris.

However, just as it is in traveling, different roads may lead to the same destination. And a path that is easy to navigate for one may be a real challenge for another, depending on their starting conditions, which in this example could be sturdy walking shoes or a train ticket. To understand the following approaches, it helps to keep this simple analogy in mind.

To keep global warming to well below 2°C, there is a set ‘budget’ of emissions which we can still use up – and we are burning through it at top speed, as the Climate Clock impressively demonstrates. One approach here would be to divide this carbon budget equally among all industries and require equal rates of reduction across the board. In practice, assigning the same reduction targets to aviation as we do to software development seems unrealistic.

Organisations such as the International Energy Agency (IEA) have published mitigation scenarios, such as the ‘Beyond 2 Degrees Scenario’ (B2DS), which aims at limiting global warming to max. 1.75°C compared to pre-industrial times. These scenarios divide the remaining emission budget among sectors, considering their intrinsic differences in emission intensity and cost-optimised capacity to reduce it.

Our XDC Model draws on these mitigation scenarios to map out the “Economic Emission Intensity” (EEI) pathway that each sector needs to follow, in order to contribute its share to achieving the Paris Goal (read more about the calculation process here). This pathway is calculated for the sector median, representing a ‘typical’ company within the sector. Next, the XDC Model translates the EEI pathway into °C – showing the temperature trajectory and, most importantly, the target temperature this ‘typical’ company will arrive at in 2050 if it follows the reduction pathway: the Target XDC.

Each company in a sector starts out in the base year with an EEI that is either above the sector median or below it, i.e. some companies need to accelerate their reduction efforts while others are frontrunners within their sector.

An ‘Accelerator’ pathway to reaching the same Paris-aligned °C value in 2050 as the sector median might look like this:

Accelerator Ltd. (shown in red) starts out with an EEI that is significantly above the sector median (shown in green). As a result, the company’s temperature trajectory rises quickly in the years just after the base year. But with a sharp reduction in emission intensity, the temperature curve begins to level off and finally even reduce enough to allow Accelerator Ltd. to hit the Target XDC in 2050 (in °C). In this particular example, the company’s initial EEI is so high, that it must even reach negative emissions in the final years before 2050, in order to reach its sector-specific temperature target.

By contrast, if Accelerator Ltd. followed an alternative ‘route to Paris’, the reduction pathway might look like this:

Here, Accelerator Ltd. is aiming for the same target EEI in 2050 as the sector median. The required emissions reduction is much less extreme, and no negative emissions are needed to reach the goal. As a result, the temperature curve continues to rise until 2050, although the increase does slow down. Accelerator Ltd. ends up with a temperature alignment that is above the sector median Target XDC in 2050.
So why consider the target EEI at all?

Let’s look at the opposite example: Frontrunner Inc. (shown in blue below) is not yet Paris-aligned in the base year. But it is already doing better than the sector median (shown in green). To reach the Target XDC in 2050, this company hardly needs to make any changes at all. In fact, it could even increase its EEI to reach the target.

Naturally, this goes against the whole idea of keeping global warming to a minimum. And it is not what customers who reach out to us are looking for. If Frontrunner Inc. aims for the Paris-aligned target EEI instead, the picture would look more like this:

Instead of increasing emission intensity to reach the same °C value as the sector median by 2050, the company keeps on reducing its carbon footprint. As a result, its temperature trajectory leads to a target °C value in 2050 that is below that of the sector median. If Frontrunner Inc. wishes to maintain its status as a climate outperformer and follow an ambitious reduction pathway, it might therefore opt for the Frontrunner Target XDC.

In XDC Model 2.1, which we are releasing in May 2021, we will be introducing the Frontrunner Target XDC in addition to the previously established approach, now dubbed the Accelerator Target XDC. Customers using the XDC Scenario Explorer will be able to switch between the two approaches to see which is best suited to their company. In other products, such as the XDC Climate Impact Report, the Frontrunner Target XDC will be used, unless otherwise specified.

The global community wants to meet in Paris – that is, in a below 2°C world. As explained above, everyone starts with different conditions, the only important thing is that we arrive together – whether we start out as Frontrunners or Accelerators.