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RMI - Rocky Mountain Institute

It’s the IRA’s First Birthday. Here Are Five Areas Where Progress Is Piling Up.

The Inflation Reduction Act promised an unprecedented wave of clean energy investment. One year in, here’s where we’re seeing progress.

Originally published on August 16, 2023 at RMI.org: https://rmi.org/its-the-iras-first-birthday-here-are-five-areas-where-progress-is-piling-up/

By  Hannah Perkins,  Adam Aston,  Vindhya Tripathi

“Unprecedented.”  “A landmark.” “The Super Bowl of clean energy.”

Those are just a few of the superlatives that hit the headlines when the Inflation Reduction Act (IRA) was signed into law on August 16, 2022.

The act’s passage came as a surprise both politically — emphasizing lower energy costs helped the bill clear years of oppositional brinksmanship — and for its unprecedented scale. Toward the goal of shifting the US grid to 80 percent clean electricity and cutting climate pollution by 40 percent by 2030, the act mobilized an estimated $370 billion in federal incentives.

A year in, the early fanfare has resolved into unprecedented progress. Twelve months after passage, the IRA’s impact — in industrial investment, new jobs, and other economic activity — already exceeds early estimates. To date, we have seen:

  • $278 billion announced in new private clean energy investments.
  • Projects announced accounting for 170,000 new jobs.
  • The availability of $70 billion was announced in grants, rebates, and other non-loan funding.

And while politics could yet alter its trajectory, the impact to date has been weighted towards traditionally Republican-leaning regions, a bias which may ensure its longevity in years to come. Given the rapid uptake, Goldman Sachs earlier this year upped their estimate of public IRA investment over the next decade to more than $1 trillion, with private sector spending potentially a multiple of that.

By design, incentives are drawing this investment widely across the United States, with a focus on disadvantaged, low-income, and energy communities. RMI estimates that, if they take full advantage of the IRA and adopt clean energy at the pace and scale needed to meet national climate targets, by 2030, each state could see:

  • Cumulative investment of from $1 billion (for smaller states) up to $130 billion (for the largest beneficiaries).
  • Per capita new investment of $1,500 to $12,000.
  • The creation of 2,000 to 100,000 new jobs.
  • Lower healthcare costs and impacts by avoiding 4,000 to 300,000 negative health outcomes avoided.

On the ground, IRA incentives have already translated into a rush of announcements and projects spanning regions and industries, including both legacy and cleantech sectors. On the advent of the IRA’s first birthday, here’s a rundown highlighting the breadth of this progress.

Manufacturing boom

Nourished by the IRA, manufacturing announcements have mushroomed across the country. While heavy on electric vehicles (EVs) and batteries, the greenfield factories and upgrades also include wind and solar sites, along with semiconductors, electronics, and others. The new capacity promises to boost US energy security and independence by reshoring key supply chains and strengthening US competitiveness as global leader in clean energy technologies. To date, 272 new clean energy projects have been announced, including:

  • 91 new battery manufacturing sites.
  • 65 new or expanded EV manufacturing facilities.
  • 84 wind and solar manufacturing announcements.
Electrifying transportation

Globally, sales of internal combustion vehicles peaked in 2017, and are now in long-term decline, according to Bloomberg NEF. As older cars and trucks are retired, the world’s combustion vehicle fleet will start to shrink after 2025. In the United States, the IRA is supercharging this shift, with incentives that span from electric school buses to battery factories and new charging infrastructure:

  • For consumers, the IRA offers rebates on new and used electric vehicles, peaking at $7,500. Juiced by this incentive, US sales of new EV passenger cars are expected to surge by 50 percent in 2023 to over 1.5 million, the White House estimates. The incentives will help heavier vehicle classes electrify more quickly too. By 2032, RMI estimates that the share of EV sales using IRA credits will be close to 100 percent for Class 1–3 commercial fleets, and 84 percent for medium- and heavy-duty trucks.
  • To supply incentive-amped demand, global automakers such as GM and Ford and their battery partners are leveraging the act’s $45-per-kilowatt battery production tax credit to turbocharge construction of new plants across a “battery belt,” stretching from Michigan to Georgia (see map, in above section). Increased output of US-made batteries is, in turn, helping carmakers boost output of popular EVs, such as Ford’s F-150 Lighting electric pickup (image, top of page).
  • IRA also provides funding for the federal government to lead by example. The US Postal Service(USPS) received $3 billion for clean vehicles. And starting in 2026 the post office will buy only EVs.
  • RMI analysis shows IRA credits will help electric passenger cars and light-duty trucks achieve total cost of ownership (TCO) parity with ICE vehicles between 2023 and 2025. Without the IRA credits, EVs would have reached TCO parity with ICE vehicles between 2024 and 2027.
Total Cost of Ownership parity for EVs and ICE passenger cars chart
Greening buildings

Buildings account for around a third of US emissions, making it one of our largest, most complex sectors to decarbonize given the age, diversity, and costs to retrofit America’s stock of millions of buildings. The IRA is tackling this challenge on multiple fronts:

  • Guidance on funding for the Home Energy Rebate programs is being rolled out and has generous carve-outs for low-income households. States are currently designing programs based on this guidance to help consumers save money and live more comfortably. The first state programs could be rolled out as early as the end of this year.
  • Appliance efficiency standard programs like CEE and ENERGY STAR, which some IRA incentive programs rely upon, continue to align with decarbonization efforts that ensure the most efficient HVAC systems and appliances are installed in homes across the country.
  • New HUD programs prioritize healthy, efficient, electrified retrofits for affordable housing HVAC and appliances; more than $800 million is available and funding from these programs can’t go towards in-unit fossil fuel appliances.
  • The General Services Administration (GSA) — which oversees the federal government’s vast portfolio of buildings and properties — is using $1 billion of IRA funding to shift federal facilities towards electrification, with near-term plans to electrify over 100 buildings, including one of their largest, the Ronald Reagan Building in DC.
Decarbonizing electricity

Clean electricity is essential to decarbonize the wider US economy, whether to charge EVs and power greening buildings (see above), or to decarbonize industry (below). The shift is advancing steadily. In the first five months of 2023, wind and solar produced more power than coal, a first for the US. The IRA is continuing this shift:

  • Commercial solar is on pace to grow by 12 percent in 2023, and over the next seven years, we expect twice as much wind, solar, and battery deployment as there would have been absent the IRA.
  • The IRA-linked credits reinforce renewable powers’ long-standing price edge over gas- and coal-fired generation, an advantage which endures despite some demand-led inflation in the price for new solar and wind.
  • With IRA funding, USDA is making the largest investment in rural electrification since the New Deal — nearly $11 billion for rural electric co-ops. In particular, the Empowering Rural America (New ERA) program gives rural electric cooperatives an unprecedented opportunity to modernize aging grid infrastructure to maintain reliability, lowering costs for members and reduce emissions.
  • Michigan’s largest investor-owned utility, DTE, filed the first resource plan in the country that attempts to demonstrate the IRA’s intended changes to the economics of clean energy, projecting $500 million in savings for customers over 20 years. The proposal includes building 15 gigawatts (GW) of new solar and wind, improving DTE’s exploration of battery pilots, and moving up the retirement of the Monroe Power Plant – the fourth largest coal plant in the US.
  • Energy Infrastructure Reinvestment announced funding for solar and storage in Puerto Rico, replacing a retired coal power plant.
Transforming industry

Steel, cement, petrochemicals, and other hard-to-abate heavy industries pose a special challenge to decarbonize. For now, many rely on raw materials and/or high temperatures that only fossil fuels can affordably deliver at scale. The IRA aims to scale up affordable alternatives — such as hydrogen which, if implemented cleanly, offers a clean alternative — along with greener raw materials and recycling options:

  • Incentives for industry and hydrogen have had a big impact on economic analyses. Many projects have been announced, focused on advancing US global competitiveness. Policies are meant to drive applications and interest in first-of-a-kind projects and hubs demonstrating industrial decarbonization opportunities.
  • From the IRA and Bipartisan Infrastructure Law, the Office of Clean Energy Demonstrations (OCED) has been allocated $6.3 billion for Industrial Demo Grants. OCED funds will de-risk technologies that are not yet demonstrated on a commercial scale.
  • A range of tax credits is being clarified that will spark investment. For hydrogen, guidance on the Hydrogen Production Tax Credit (45V) is forthcoming. And the  Advanced Manufacturing Production Credit (45X) will unlock a major buildout of the lithium-ion battery supply chain, stationary storage manufacturing, and solar and wind supply chains.
  • Likewise, guidance has been released and the first round of applications reviewed for the Advanced Energy Project Credit (48C), which offers $4 billion for projects that expand clean energy manufacturing and recycling, expand critical minerals refining, processing, and recycling, and reduce emissions at industrial facilities. The U.S. Energy Department’s roster of funding opportunities, among other things, prioritizes heat pump manufacturing, signaling a clear shift towards supporting beneficial electrification.
Finance

The act has also unlocked financing via the reform of tax credits and innovative financing that prioritizes climate-friendly investment in historically disadvantaged communities:

  • For the first time, the IRA widens access to investment and production tax credits (ITCs and PTCs) for non-taxable entities, such as states, local governments, coops, and non-profits that in the past had little or no way to use the credits to finance new renewables. Historically, constrained demand for tax credits has limited the scale of ITC and PTC financing. For instance, RMI analysis of 2019 financial disclosures found that US investor-owned utilities had aggregate tax liabilities sufficient to build less than 4 GW of new solar and storage per year, barely enough capacity to replace one or two coal plants. Later this year, Treasury will release final guidance for organizations to tap into these direct pay and transferability options.
  • The Notices of Funding Opportunity (NOFOR) for the Greenhouse Gas Reduction Fund’s three grant competitions are now live, with deadlines in September and October. These grants will be disbursed in 2024, capitalizing a national network of clean energy financiers who will be focused on mobilizing private capital at scale to fund emissions-reducing projects, especially in low-income and historically disadvantaged communities.
Looking ahead

The IRA is not only the most ambitious climate bill in US history. It is one of the most ambitious and complex efforts at economic and industrial reinvestment ever. By these standards, the progress the act has already made is enormous, but years of work — and meaningful obstacles — remain to fully deploy the IRA at the pace and scale needed to reach climate targets.

Chief among these obstacles is permitting. As project timelines stretch into the years — whether to connect renewables projects onto the grid, or site new critical mining and industrial facilities — streamlining the thicket of overlapping regulatory and administrative approvals is emerging as a make-or-break challenge for the US energy transition.

Despite challenges in implementation, the hundreds of announced projects and hundreds of billions of dollars in investment show the energy transition is out of the starting gate and gaining speed.

The challenge is increasingly shifting to subnational players — such as states and cities as well as businesses and non-profits — to mobilize the funding the IRA has unlocked. Ultimately, the IRA’s full potential will be limited only by our own ambition to realize a clean energy future.

CPP Investments, Research reports, Thought leadership, White papers

The future of climate change transition reporting | CPP Investments

A white paper on behalf of Thinking Ahead, a thought leadership platform at CPP Investments, a Canadian pension fund.

Challenge: Make the case for more sophisticated tools to assess and compare companies’ ability to transition to net-zero .

Solution: Contextualize and explain an evolving financial framework to help guide investors and business leaders through the evaluation process.

My roles: Research, SME interview and review, data composition, chart design/recommendation, writing and editing, design/visual editing.

View the full report at CPP Investments or download here:

CPP – The Future of Climate Change Transition Reporting 2021-11Download

GreenBiz

The challenges of building electrification — or, the parable of flameless wok hei | GreenBiz

By Adam Aston

Consider the humble wok. Little more than a wide metal bowl, a good wok can transmute high heat and simple ingredients into sublime flavors. Peek in the back of your favorite Chinese hole-in-the-wall and you may spy a chef calmly working the mix as flames engulf the wok and powerful jet burners roar below. A chef can spend years perfecting this fusion of fire and heat, oil and spice — or wok hei, the “breath of the wok.” 

Elemental as they may be to Chinese cuisine, gas-fired woks are wildly inefficient. More of their heat is wasted than is used. Harmful combustion byproducts, such as carbon monoxide, can spike to levels far higher than allowed by safety codes. And much of the excess cooking heat radiates beyond the kitchen, boosting costs to cool and vent neighboring spaces.

The tension between gas-fired woks’ unique capabilities and the challenge of finding a good substitute given their outsize climate footprint is evocative of the wider challenges to decarbonize commercial buildings. And the urgency to find workable solutions is rising. 

More regions are advancing plans to curtail natural gas, a powerful greenhouse gas. Since 2019, when Berkeley, California, became the first U.S. city to pass a ban to discourage the use of natural gas in new homes and buildings, big cities including Denver, New York, Seattle and San Francisco either have introduced or approved similar rules. 

Homes and businesses account for about 13 percent of U.S. greenhouse gas emissions, with a large share of that coming directly from the combustion of natural gas to cook food, fire furnaces and heat water, as well as to wash and dry laundry. Methane — the main ingredient in natural gas which frequently leaks — traps 80 times more heat than carbon dioxide in the atmosphere. Curtailing the installation of new natural gas capacity, let alone retrofitting the millions of buildings that rely on it today, amounts to a monumental challenge. 

But the consensus view from a group of building professionals who gathered virtually for VERGE Electrify last month reflected progress for electrification. Efforts are advancing, whether for new construction (easier), retrofits (harder) or even restaurant electrification (among the hardest) — including, yes, those woks. Here are some highlights:

Bigger, taller, better buildings. Just five or 10 years ago, green building pros frequently faced fundamental doubts about electrification, those “Can it be done?” sorts of questions. “We’ve passed that,” said Shawn Hesse, business development director at the International Living Future Institute (ILFI), a nonprofit that established the Living Building Challenge in 2007. “Today we get questions about scale and complexity.” From tens of thousands of square feet a few years ago, “We’re seeing projects come through that are a million square feet or more today.” 

Advancing ambitions. In that earlier era, advanced buildings often were at the bleeding edge of technology. Milestone net-zero energy projects helped to prove viability, refine learning and inspire further advances. “We’re not being guinea pigs anymore,” said Calina Ferraro, a principal at Integral Group’s San Diego office, “we’re building taller and more challenging facilities.” At one pioneering project, Seattle’s self-powered Bullitt Center, “Our main goal was to be a replicable model,” so others could follow in its footsteps, said Jim Hanford, a principal at Miller Hull, which designed the building. To boost its solar potential in cloudy Seattle, the center’s distinctive solar canopy cantilevers out beyond the building’s edges. 

Integration drives innovation. Early successes opened the door to more ambitious building system integration and higher overall performance goals, said John Elliott, chief sustainability officer at Lawrence Berkeley National Laboratory (LBNL). By setting whole-building performance targets — instead of just trying to beat energy codes — LBNL’s newest high-performance building achieves deep efficiency, using a little less than a third of the energy of the facility it replaced. “We integrate the building to a campus-wide operating system and build applications on top of that,” Elliott said. “We’re seeing a drastic increase in our ability to scale energy management and be much more innovative.”

Good enough can still be great. Keep in mind that not every project can hit the high bar of complete electrification — and that’s OK. Whether to score certification or hit a standard, a “kind of tunnel vision” can take over on some projects, Ferraro noted. “Some feel that if we can’t hit that, then we’re going to scrap it.” Such perfectionism can derail good-enough approaches that take a step in the right direction and set the stage for greater impact later. For example, quicker upgrades that reduce demand — such as lighting improvements — cut overall building demand load, making electrification easier when it happens.

Incrementalism accelerates retrofits. In fact, step-by-step incrementalism is often the only way existing facilities can be electrified. At San Francisco International Airport (SFO), the challenge of financing upfront conversion costs, questions about technology maturity and the staggered timeline of tenant lease renewals are just a few variables influencing the rollout of the airport’s complex electrification plans across a campus of 103 buildings, according to Amy Nagengast, energy program manager at SFO. 

An audit of its menagerie of hangers, mechanical facilities and passenger spaces is giving SFO a deeper understanding of the challenge ahead. Most of the airport’s energy (56 percent) already comes from electricity; natural gas supplies 44 percent. And of all the buildings using natural gas, four-fifths are tenant-occupied. “We’re really trying to figure out what equipment uses that natural gas,” said Nagengast, along with where it’s located, what electric alternatives are available and how best to finance a conversion. The audit is helping SFO sequence a conversion plan for both its own facilities and those occupied by tenants.

Electrifying restaurants is getting easier. SFO found that among its food and beverage tenants, natural gas consumption was concentrated in a short list of kitchen equipment: deep fryers, ovens and ranges. Swaying those restaurants to electrify is as much about education as it is about picking the best alternative gear. 

Once chefs start using electric induction ranges, they tend to like them, said Christopher Galarza, a pro chef who has electrified commercial kitchens and now runs Forward Dining Solutions. But preconceived beliefs can make conversion tough: “Chefs are, by nature, stubborn. We don’t like change.” Some of those doubts are founded on past experience, from underpowered ’50s-era electric coil stoves to vendors that can’t yet support the latest induction cooktops. 

But today, commercial kitchen suppliers have rolled out a full range of like-sized electric induction gear, which by many measures are better than their gas counterparts. Since electric induction cooktops are so efficient, much less energy is wasted. Food can cook more quickly and more consistently, thanks to more precise temperature control. And because kitchens are cooler overall, staff are less stressed and diners can be brought in closer to the cooking experience. Even skeptical kitchen vets are often “blown away by how this equipment can improve the restaurant experience,” Galarza said.

A CookTek commercial induction range. Via Cooktek.com.

About those woks

For all the advantages electric induction offers, development of new cooking equipment has followed a familiar arc. Early commercial induction stovetops and ovens arrived at high prices, beset with occasional performance glitches. Increasing scale is helping suppliers to work out those kinks, improve reliability and drive down costs.

Today, you’ll still find more natural gas cookers in supplier catalogs, but electric induction options are multiplying as prices fall and more chefs and restaurant managers discover their sometimes surprising advantages. Electric induction deep fryers, for example, use about half the oil of gas-heated versions, and the oil can last days longer. 

Woks have been trickier to convert but are tracing a similar path. When placed on a flat induction surface, too little of the wok heats up. The solution? A design that nestles the wok in a concave induction cavity delivers all of the heat — if none of the flame — using a fraction of the energy.

A quick scan of commercial kitchen supply houses shows induction woks remain costly but the price tags are coming down — lately to around $2,000 per station, about twice the price of a conventional pro rig. 

What’s next?

Don’t worry — your favorite stir fry isn’t going away. The parable of the wok illuminates an uneven path ahead for wider electrification. Change is hard and will take time, but it is underway. The technology is increasingly ready, but it will be pricey at first, which can make convincing skeptical stakeholders — from wok hei masters to big property developers — that much tougher. 

For their part, property developers are finding that as the barriers to electrification shrink, priorities are changing. “I would frame it as: What’s the cost of not electrifying?” said Becca Rushin, vice president of sustainability and social responsibility at Jamestown, a global real estate investment and management company. “In the grand scheme, the increased costs of electrification ends up being incremental. And you’re insulating yourself from the transition risk of being unprepared when legislation is passed.”

Published at GreenBiz.com on June 7, 2021. See the original here: https://www.greenbiz.com/article/challenges-building-electrification-or-parable-flameless-wok-hei

GreenBiz

Jigar Shah Is Making the DOE’s loans office mighty again. Here’s how | GreenBiz

By Adam Aston

Maybe you first knew him as chief executive of the Carbon War Room or as the co-founder of Generate Capital. Or maybe you came across him as a LinkedIn mega-influencer, GreenBiz contributor or even as a former co-host of The Energy Gang podcast — he’s the one with the ready laugh and the sharp takes.

Chances are, you already know Jigar Shah. He’s spent the past two decades making a compelling case for the climate-fixing, profit-generating potential of clean energy, all the while batting down ill-informed skeptics and bad business models.

Now, as part of the Biden administration’s effort to jump-start economy-wide decarbonization, Shah has been granted more capital — and a bigger platform — than he might ever have thought possible. 

The total: $46 billion, according to Shah. That’s the lending capacity he can mobilize at the Department of Energy’s Loan Programs Office (LPO), which he was appointed to oversee in March. 

To make the “once-mighty” office — as his boss, Energy Secretary Jennifer Granholm, put it — mighty again, Shah faces big challenges. The office has been all but dormant for much of the past decade, due in part to Trump-era deprioritization but also hampered by a lingering reputation for bureaucratic dysfunction. 

Barely three months into his new role, Shah joined this week’s VERGE Electrify virtual event to kick off the conference and share his plans to get the loans flowing once again, in a keynote conversation with GreenBiz Group’s Senior Transportation Analyst Katie Fehrenbacher, who co-chaired the event. 

Re-booting the LPO. Following a decade of dormancy, the office has moved into a fast-forward mode, fueled by Biden’s climate agenda and Shah’s contacts — he’s reached out to over 100 CEOs since he joined. “People are starting to realize that we’re open for business,” he said. “If we got maybe three applications all of last year, we’ve gotten three a week recently. That comes from people trusting the program will be there for them.” 

A catalytic role. Deep as LPO’s loan pool may be, Shah sees his office’s role as narrowly targeted — providing catalytic funding at a key stage, before companies are able to access commercial debt. Consider the example of nuclear energy innovators such as Oklo, NuScale or Holtect. “Small modular reactors are going to be built across the country,” said Shah. But they’re not likely to be able to raise commercial debt until the technology is de-risked. Shah sees LPO’s role as building a bridge to bankability: “Then, we’re done.”

Streamlining the process. By pushing an easier, more user-friendly approach, Shah is tackling head-on the office’s lingering reputation for being too costly, too complex and too long-odds. “We’ve dropped all the application fees,” he said. “And we don’t charge any of the other fees that we used to until you’ve received the loan and started to draw it down.”

Energizing climate justice. Shah sees a space where the LPO has the potential to both modernize the grid and benefit historically disenfranchised communities. Virtual power plants offer an opportunity to advance grid-scale energy services while helping cities and communities upgrade energy infrastructure and cut energy costs. That could mean building solar with storage on low-income housing or affordably financing grid-responsive smart air conditioners or water heaters. Models such as these promise to “not only get essential appliances affordably into the hands of people who need them,” said Shah, “you’re also able to get higher utilization rates from the existing distribution infrastructure.” 

Swings at bat. To the vexing question of how to pick winners from among emerging technologies, Shah brings the perspective of a seasoned climate tech entrepreneur. “We have to take a lot of swings at bat,” said Shah, “and we are going to have misses.” But misses — with a nod to the failure of Solyndra, a Obama-era solar startup — can be offset by towering successes, such as Tesla, to which the DOE lent $465 million in 2010, a moment when the then-nascent EV maker was far closer to failure than world domination. Today, it’s the world’s most valuable carmaker and has sparked a competitive race to electrify the automotive industry. “That’s what the president has talked about,” said Shah. “We want to make sure from a technology standpoint, we’re leading the pack worldwide.”

Tips for loan candidates. “Don’t be scared! Come in early,” advised Shah. To be sure: There will be many forms, but Shah’s team is working to ensure that the process is easier to navigate than before. Over the past month, the office has added more than 10 people to escort applicants through the loan process. “We want every person who thinks they have a good idea that deserves funding to have a shot.”

If you’re one of those people, the initial review process takes six weeks, typically. Once qualified, getting the approval stage takes four to five months of diligence.

By that timeline, Shah’s office will announce the first batch of new loans under the Biden administration by autumn, if not sooner. 

Published May 28, 2021 at https://www.greenbiz.com/article/how-jigar-shah-sees-making-energy-departments-loans-office-mighty-again.

GARP

Hotter, sooner: A landmark effort refines — and raises — the warming outlook | GARP

Improved climate model narrows prediction uncertainty and raises the odds of serious climate impacts from global warming

Risk managers and climate scientists share a fundamental challenge: How to identify, weigh, and process a dizzying mix of signals to better model a range of possible future outcomes. Accordingly, the complex mathematical methods underlying both disciplines tend to advance slowly. It’s rare to see big improvements in the precision of their forecasts.

Yet this past July, climate scientists achieved just such a leap, with the publication of an outlook — conducted under the World Climate Research Programme (WCRP) and published in the Review of Geophysics — for global warming that, for the first time, merges three disparate data sets and methodologies. Important as the technical improvements are, however, the conclusions have broader bearing for both climate science and risk managers.

The improved model predicts more warming in a world where CO2 levels hit twice their pre-industrial level, a threshold anticipated to hit mid-century, rather than closer to 2100. The findings thus boost the probability of serious climate impacts to energy operations, financial markets, human health, and the environment.

How much more warming by when?

To better understand the recalibration of this forecast, it’s helpful to revisit its predecessor. Since a landmark study published in 1979, scientists have expressed their outlook for temperature increase as a range — given a doubling of CO2 to pre-industrial levels — from a lower bound of 1.5°C to an upper limit of 4.5°C. From regulators to boardroom executives, planners have used this range as a reference for policy and business strategy over the past 40-odd years.

The new study narrows the bounds of this forecast range. It raises the lower limit of the estimate to 2.6°C while slightly reducing the upper bound, to 3.9°C by 2100. (See chart, via Science.)

“Narrowing the uncertainty is relevant not only for climate science but also for society that is responsible for solid decision making,” said Masahiro Watanabe, a professor at the University of Tokyo’s atmosphere and ocean research institute and one of the report’s authors, in an interview with The New York Times.

The study underscores a rising sense of certainty that the rate of warming is increasing. Today, global temperatures are already 1.2°C higher than their pre-industrial average.

The goal of the 1.5°C target was enshrined in the 2015 Paris climate accords, and has galvanized policy, business and public attention in part because it also represents what many scientists believe may be a critical threshold, a temperature gain beyond which the destabilizing effects of warming could accelerate sharply.

How is this study different?

For the first time, the new assessment unifies findings from three previously independent fields of climate research and analysis spanning vastly different eras.

The oldest numbers were taken from records of prehistoric temperatures preserved in sediment layers and tree rings. The next youngest come from direct measurement of temperatures taken since the start of the industrial revolution in the 1800s. And the most recent set of inputs was drawn from satellite measurements and computer models beginning in the 1980s.

On their own, none of these data sets could help refine the range of the temperature outlook. Simply synthesizing the disparate data sets was a challenge without precedent. The researchers were also able to enhance the precision of how feedback loops shape the outlook — for instance, how the loss of highly reflective white sea ice accelerates how quickly polar waters absorb heat. By merging and refining each vintage of findings, the meta-analysis delivered precision greater than the sum of its parts.

What’s more, the data proved to be more convergent than researchers anticipated. Co-author Gabriele Hegerl, a professor of climate system science at the University of Edinburgh, told The New York Times that she was surprised by the way the models converged. “We don’t expect these three lines of evidence to agree completely,” she said, but they did.

Data from the refined forecast will be used by the U.N.’s Intergovernmental Panel on Climate Change (IPCC) for its next major assessment in 2021 or 2022, Science magazine reports. From there, the data is likely to ripple into other national, academic, and private-sector models and inform projections for sea-level rise, economic damage, and other climate impacts.

Implications for risk managers

When offered equally probable good and bad outcomes, most folks tend to be too optimistic. Human nature is biased to think the good outcome is more likely; conversely, people tend to spend too little time thinking through the implications of the bad outcome. Put plainly, a lot of us tend to translate uncertainty as things should be okay.

Yet as risk professionals know all too well, uncertainty is always a double-edged sword. In the realm of climate change the risks vary from less severe and arriving more slowly to more intense and happening faster. To date, evidence is mounting that the outlook is tilted towards the bad, with disruptive changes happening faster and sooner than prior models anticipated. This has much to do with the complexity of the science behind modeling planet-sized physical systems. It also stems from science’s conservative culture: scientists tend to err on the side of caution when forecasting.

In the here and now, energy risk planners are already reckoning with climate phenomenon that are hitting energy markets and operations harder and faster than anticipated:

  • Wildfires are happening earlier, growing larger and impacting wider areas, in Australia, Russia, and the western U.S., damaging facilities and disrupting the extraction, processing, generation, and distribution of energy.
  • The intensity of hurricanes and tropical storms is rising at unseen speeds in the warming waters of the Atlantic Ocean and Gulf of Mexico, imperiling petrochemical plants.
  • Heat and heat-related illnesses kill more Americans each year than any other form of severe weather, according to the National Weather Service. Worldwide, similar patterns are likely, as heat stress raises physical and liability risks for workers and customers.

For business leaders, the challenge is growing more urgent. While the new scientific study shifts up the long-term temperature forecast, it remains in many ways a pure abstraction — an estimate off in the future.

And for risk managers, the challenge is to take these multi-decadal temperature forecasts and translate them into material risk recommendations. How will another degree — or more — of warming change business conditions? Over the next five years, the next decade, or by mid-century? Where and in what ways could the increase manifest?

Further reading: For a deeper look at the science behind the revised assessment, see Paul Voosen’s “After 40 years, researchers finally see Earth’s climate destiny more clearly” at sciencemag.org.

—

Originally published at garp.com on 2020-09-09, https://climate.garp.org/insight/hotter-sooner-a-landmark-effort-refines-and-raises-the-warming-outlook/