Climate Progress Dashboard update: EU reforms reduce global temperature rises

Sustainable Investment Team

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Our latest analysis of progress toward long-term climate goals shows a marginal move in the right direction, boosted by rising carbon prices. Much more change is needed to come close to the commitments global leaders made in Paris two years ago.

We introduced the Climate Progress Dashboard to track the pace and scale of change across a spectrum of levers, all of which need to move to limit long-term temperature rises. Climate change poses two questions for investors:

  1. How much change is likely in policies, clean technology use, energy production etc.?
  2. How would those changes affect the profitability and value of companies and portfolios?

The Climate Progress Dashboard is designed to help address the first of those questions, bringing together the disparate signals and data points that can confuse more than they resolve, on a consistent basis. Please see here for further details as well as an overview of our other climate change tools and analysis

Our latest quarterly update shows a marginal headline improvement. The average temperature rise implied by the range of indicators we examine has dropped from 4.1 to 4.0°C. Practically, the difference is a rounding error in the scheme of change needed, but it is at least rounding down rather than drifting further away from the 2°C safety line. 

Two elements of the dashboard show meaningful change in Q1. On the one hand, public concern over climate change has softened, particularly in the US. On the other, carbon prices in Europe have risen sharply in recent months, albeit still a long way from levels high enough to incentivise change on the scale needed.

Public concern drops back in the US

Our analysis looks at national surveys tracking public concern in the largest emitting economies.  At the end of March, Gallup released an update to its survey of attitudes in the US, showing a small drop in concern. 63% of American adults expressed “a fair amount” or “a great deal” of worry about climate change, down from 66% last year and reversing toughening attitudes in all of the previous three years.

The conclusion is consistent with falling public interest in the issue. The chart above plots google searches for climate change, compared to terrorism searches as a comparison. Interest in the subject has fallen to close to half the highs reached 18 months ago.

There are no obvious catalysts looming that will reverse that waning interest. With social attitudes a vital driver of policy priorities, as well as consumer behaviour, the trend does not bode well for concerted action and strengthened political commitment.  

Carbon prices rise in Europe

On the other hand, spurred in part by reforms to European Union allowances, agreed last autumn, carbon prices have risen sharply in recent months.

EU ETS carbon prices


By the end of March, exchange prices reached over $15/tonne (EUR12.3/t) for the first time since 2010. The increase marks a sharp contrast to the US, where prices on the country’s largest carbon trading scheme, the Regional Greenhouse Gas Initiative (RGGI), remain flat at under $4/tonne.

Carbon prices have been a key element of national policies around the world and are likely to remain so. We have estimated that prices will have to reach close to $100/tonne to incentivise emissions reductions on the scale needed to limit temperature rises to 2°C. On that basis, carbon prices have much further to rise, and their effects would be far more disruptive, to meet climate goals.

Conclusion: tiny steps in the right direction

The last quarter marked the first drop in the temperature rise implied by the Climate Progress Dashboard, but the improvement is marginal relative to the reductions still needed to limit the increase to safe levels.  

The image below sets out some of the progression of some of the factors. For full explanations on each factor, see our interactive Climate Change Dashboard.

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