The Climate Target Gap Is Widening. Can We Close It by Including Climate Finance in SSPs?

Abstract

The IPCC Special Report finds that current policies are not sufficient to limit global warming to well below 1.5°C, and that the gap between the actions on the ground and the required changes in order to meet the global goal is widening rapidly. One reason is that scientific assessments based on mitigation scenarios have so far focused on the required measures and investments rather than the role of the finance sector in mobilising the resources needed. The lack of consideration of climate-related financial risks and opportunities makes the current generation of climate scenarios less useful for implementation and in many cases also unrealistic. We propose thus a novel research agenda to integrate the role of the financial sector and its climate sentiments into the scenarios and models used by the climate research community, including the Shared Socioeconomic Pathways. These innovations should help align policies, economy and society with the climate goals.

Keywords: Climate Finance, Climate Change, Socio-Economic Shared Pathways, Integrated Assessment Model, Climate Finance Risk Metrics

JEL Classification: G11 G18, Q51, Q54, Q58