Commodities are on a >3.0°C heating pathway this decade

The commodity markets covered in the CRU Emission Analysis Tool (EAT) and Market Outlooks – accounting for ~85% of industrial emissions – are on a pathway to end-decade that is consistent with >+3.0°C global heating over the preindustrial average by 2100. Forecast emission reductions to 2050 are only marginally better, suggesting that it is 'likely’ (i.e. >67% probability) that we will keep global warming to <+3.0°C at best.

A near-term >3.0°C trajectory will elicit a more extensive policy response and likely stronger long-term reductions

The IPCC Sixth Assessment Report (AR6) set out a series of greenhouse gas (GHG) emission pathways that lead to peak climate warming of 1.5°C, 2.0°C, 2.5°C and 3.0°C. Applying the carbon budgets implied by these emission pathways, we have assessed the trajectory of individual commodity and energy sectors based on emission forecasts in the CRU Emission Analysis Tool and CRU Market Outlooks. Total emissions covered amount to ~23 bn tCO₂e/y in 2023.

This analysis suggests that the power and commodity sectors covered by CRU are only on track to achieve a >3.0°C global heating emissions trajectory by end-decade. We expect that such a performance will lead to more extensive policy responses, such as greater take-up and coverage of carbon pricing, higher carbon pricing and more onerous requirements for companies to set emission targets, as well as report on and demonstrate progress beyond that currently required. Companies need to prepare for this. This analysis also suggests that the carbon budget for 1.5°C heating will be breached by end-decade, meaning this heating target will be unachievable without more severe emission cuts than those currently forecast.

If you are interested in CRU’s Sustainability & Emissions Service or in learning how the CRU Emissions Analysis Tool can help you to understand how emission trajectories will develop and their implications on policy and company strategy. To enquire about CRU services or to discuss this topic in detail, get in touch with us.