The long-term increase in temperature the world is on course for has now fallen for three consecutive quarters as carbon prices and the sale of electric vehicles (EVs) continue to increase according to data from Schroders Climate Progress Dashboard.
Current activity indicates a global rise in temperature of 3.4°C as of 30 June 2021, down from 3.6°C recorded at the end of March. This is the lowest reading since Schroders launched this the dashboard in 2017.
When this was first launched the dashboard was tracking a 4.2°C temperature rise above pre-industrial levels in Q1 of 2017.
The latest dashboard findings come shortly after the United Nations’ Intergovernmental Panel on Climate Change (IPCC) issued a ‘code red for humanity’ with its landmark report. It forecast that, even in the best case scenario, temperatures will rise by more than 1.5°C in the next 20 years.
Launched in 2017, the Climate Progress Dashboard provides Schroders analysts, fund managers and clients with an insight into the progress governments and industries across the world are making towards meeting the 2°C temperature rise limit set by the Paris Agreement.
Continued increases in carbon prices were the biggest driver of change over the last quarter, with carbon prices on the European Union’s Emissions Trading Scheme – the world’s largest exchange – reaching new highs in July, approaching €60 a tonne.
Furthermore, demand for EVs remained strong through lockdowns, even as the wider automotive industry suffered. Schroders analysis indicates that year-to-date sales are over 150 per cent higher than in the same period last year. Earlier this year, electric car sales reached 11 per cent of all new car sales in China, the world’s largest market.
Andy Howard, Schroders global head of sustainable investment, says: “The IPCC report is a stark reminder that we face an existential threat which requires national commitments and action to ratchet up. We expect to see social, political and corporate momentum to do so further strengthened at COP26 later this year.
“Positively, the doubling in European carbon prices over the last year has pushed the economic equation in favour of clean investments in many markets. With industrial output set to strengthen as lockdowns ease, prompting more demand for the credits needed to deliver that rising output, the prospects for that market look robust.
“The other change that stands out is the remarkable strength in electric car sales in recent months. Passenger vehicles represent half of all emissions from transport, and around 11 per cent of all global carbon emissions. Decarbonising that market will be key to delivering a low carbon transition.”