Financing a 1.5˚C-Aligned Transition
Insights from energy scenarios for financial institutions
This briefing builds on the analysis of the most influential modeled pathways consistent with limiting warming to 1.5°C, including scenarios published by the International Energy Agency and the Intergovernmental Panel on Climate Change, to provide financial institutions with Paris-aligned investment criteria and strategies. It translates scientific evidence into investment policies and offers steps to manage the transition and physical climate risks related to a 1.5°C-aligned future.
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The International Energy Agency's Net Zero scenario is not an outlier—all major energy scenarios agree, developing any new oil and gas fields is incompatible 1.5°C. Using less ambitious scenarios may increase both transition and physical risk for financial institutions.
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Energy security and gas shortages in Europe cannot be solved with new oil and gas fields—these take years to come online. Meanwhile, demand-reduction measures combined with increased wind and solar would provide longer-term energy security and reduce stranded-asset risk.
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Investors should urge governments to stop issuing new oil and gas licenses and to create enabling environments to redirect public and private capital flows toward the clean energy transition.
Participating experts
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