DNV GL: Stepping Up to Drive Change

Recently, UNEP's Emissions Gap report (2016) concluded that the ambition to mitigate climate change needs to be increased rapidly through non-state actor involvement including business, and through a stronger crossover with Sustainable Development Goals. 

Sverre Alvik, Bent Erik Bakken, Anne Louise Koefoed,
DNV GL, Global Technology and Research, Climate Action Programme

The UNEP report mirrors the finding of DNV GL’s forecast - the Future of Spaceship Earth. According to this forecast, the Sustainable Development Goal (#13) on climate change will not be met. Not succeeding with a rapid energy transition will be a major barrier for achieving the other goals as well.

Our approach in the Spaceship Earth report population growth in developed countries and China, as well as declining productivity growth rates as economies mature.  Our global forecast projects GDP to only double to 2050 – while other’s typically show tripling GDPs.

Forecasting steady energy efficiency improvements world-wide, world energy demand tapers off. In 2050 it is only 25 per cent higher than today, also lower than most other forecasts. On the energy supply side, we trend forecast last decade’s capacity additions in each of eight energy carriers in respective regions – which contain the regions’ climate policies.

This can therefore be seen as a business as usual (BAU) climate prediction.  The resulting global emissions are in line with the INDC pledges under the Paris Agreement, with China and USA notably emitting far less CO2 than they pledge, while the rest of the world’s BAU will emit more than their INDCs.

The forecasts show limited improvements in LUCF and cement-related emissions. The climate impact of our most likely forecast is highly problematic, and the carbon budget is emptied already in 2037.  Though vastly more optimistic than most BAU forecasts such as IEAs CPS or IPCCs 8.5, ours still forecasts a future that will not meet the SDGs, with red, yellow and green lights distributed all over the 17 SDGs and for the 5 regions. 

 Our business colleagues in 17 large, medium and small enterprises, see the yellow and red lights on SDG achievement by 2030 as challenges that their commercial activities will help overcome. They have a solution orientated mindset, and are eager to engage to help achieving the SDGs. Bold corporate action can keep temperature rise below 2 degrees Celsius but needs supportive policy.

The Spaceship Earth partner companies have a reflected view on public policy, and points out three main issues:

Firstly, effective taxation, positive incentives and altering behaviour through pricing and regulation are crucial to achieve the SDGs. Instrumental requirements, such as carbon pricing, requires proper policies, and their absence put the scale and pace of change at risk. To some extent policy is already there, and the SDGs themselves are put forward as an example of a regulatory force already in place.

Secondly, the lack of level playing field is often used as an excuse for insufficient action, but a lot can be done also under sub-optimal conditions, and is in the best interest of business to establish a resilient business and growth model.

Thirdly, the private sector has excellent opportunities for influencing policies, to the best for both themselves and society at large. Such action can drive policy. Frontrunner companies are asking for courageous policies, and in our conclusion, we put forward that the companies being market leaders are the ones most likely to enjoy regulatory and policy support.

Business holds the resources and the global reach to propagate change in the economy.

The companies have the technological capacity and are using innovation, research and development to utilize the capacity. Increasing digitalization and connectivity is creating opportunities for innovative solutions assisting to achieve the SDGs. In addition, innovative business models are pulled forward – and demonstrated – by the companies. To unleash the potential and delivering the goals, however, can happen only if business, governments, and civil society work together. Hence transformational partnerships are needed.

In conclusion, governments need to step up to create confidence and incentivise SDG achievement and decarbonisation efforts. Stepping up entails predictability and stability in policy frameworks, and a menu of enabling conditions such as carbon pricing and ending harmful subsidies, as well as innovation incentives that also help trigger the new kinds of collaboration that can forge actions and the scaling of solutions.