Three years left to limit warming to 1.5C, top scientists warn

A new study from leading climate scientists warns that at current emission rates, the Earth is on track to breach the 1.5C warming limit set by the Paris agreement in approximately three years, potentially around 2030. The shrinking "carbon budget" is driven by continued record emissions and improved scientific estimates, with the rate of heating in the Earth's climate system more than doubling since the 1970s and 1980s. While emissions increases may be slowing due to clean technologies, the study emphasizes the critical need for rapid and stringent emissions cuts to mitigate increasingly severe weather extremes, ice melt, and sea-level rise.

Analysis

A cohort of over 60 leading climate scientists has issued a stark warning: the Earth's remaining carbon budget for a 50% chance of limiting global warming to 1.5°C above pre-industrial levels is projected to be exhausted in approximately three years at current emission rates. This budget has shrunk from an estimated 500 billion tonnes of CO2 at the beginning of 2020 to just 130 billion tonnes by the start of 2025, primarily due to sustained record-high global CO2 emissions (around 40 billion tonnes annually) and refined scientific estimates. Human-caused warming has already reached 1.36°C above pre-industrial levels, with the current warming rate at an unprecedented 0.27°C per decade. This accelerated heating is evident in the Earth's energy imbalance, which has more than doubled in the last decade compared to the 1970s and 1980s, with approximately 90% of this excess heat absorbed by oceans, consequently doubling the rate of global sea-level rise since the 1990s. While there are indications that the rate of emissions *increases* may be slowing due to the deployment of clean technologies, the report underscores the critical and immediate need for "rapid and stringent" emissions cuts to avert more severe climate impacts, as every fraction of a degree of warming escalates risks.

Key Decisions for Investors

• Investors should intensify due diligence on assets with high carbon footprints or significant exposure to physical climate risks, as the shrinking carbon budget and accelerating warming trends may precipitate regulatory interventions and asset devaluations.
• Consider increasing allocations to sectors and companies central to the low-carbon transition, including renewable energy, energy efficiency, sustainable agriculture, and carbon capture technologies, which are poised for growth given the urgent scientific imperative for emissions reductions.
• Monitor evolving climate policies, international agreements, and technological advancements closely, as these factors will significantly influence market dynamics, create new investment opportunities in climate solutions, and pose transition risks for unprepared incumbents.