Climate Change and Economic Transition Scenarios

Economic → Scenario Analysis
RAI Insights | 2025-11-03 00:28:35

Introduction Slide – Climate Change and Economic Transition Scenarios

Understanding the Intersection of Climate Change and Economic Transition

Overview

An introduction to how climate change impacts economic growth and development trajectories globally.
The importance of exploring multiple transition and physical risk scenarios to inform policy and investment decisions.
Coverage includes scenario types, economic impacts, energy transition pathways, and adaptation challenges.
Key insights on risks, opportunities, and strategic implications for businesses and governments.

Key Discussion Points – Climate Change and Economic Transition Scenarios

Core Drivers and Implications of Transition Scenarios

Main Points

Economic growth can be disrupted by physical climate risks and transition policy impacts, with potential GDP losses up to 3% by 2030 under severe scenarios.
Transition pathways differ: some prioritize rapid decarbonization (Net Zero), others emphasize adaptation and slower tech progress (Adaptation scenario).
Fossil fuels maintain a significant role in many scenarios, especially where economic growth is prioritized over strict emissions cuts.
Policy uncertainty and the pace of technological change critically influence investment, energy demand, and risk exposure.

Analytical Summary & Table – Climate Change and Economic Transition Scenarios

Key Scenario Metrics and Economic Impacts

Key Discussion Points

Scenarios show varying emissions trajectories, renewable energy shares, and GDP impact estimates under different climate policies.
Economic damages are more severe in fragmented or delayed transitions versus coordinated Net Zero approaches.
Energy demand grows with technology shifts but fossil fuel share declines unevenly depending on scenario assumptions.
Assumptions include technological progress rates, climate policy stringency, and resilience of economic systems.

Illustrative Data Table

General comparison of scenario outcomes by 2050 and 2060.

Scenario	CO₂ Emissions Change (%)	Renewable Energy Share (%)	Projected GDP Impact (%)
Net Zero 2050	-80	65	-1.5
Adaptation	-20	30	-3.0
Fragmented World	-15	28	-4.5
Delayed Transition	-40	45	-3.5

Graphical Analysis – Climate Change and Economic Transition Scenarios

Projected Emissions and Renewable Energy Uptake

Context and Interpretation

This line graph shows emissions trajectories under four different transition scenarios from 2025 to 2060.
It highlights a steep decline in emissions for the Net Zero scenario, moderate changes for Adaptation, and slower declines for Fragmented World.
Trends underscore the critical role of policy ambition and technology adoption rates in climate outcomes.
Risks include persistent fossil fuel use and economic vulnerabilities under weaker transition policies.

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  "description": "Emissions trajectories for different economic transition scenarios.",
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  "height": 250,
  "data": {
    "values": [
      {"year": 2025, "NetZero": 100, "Adaptation": 100, "Fragmented": 100, "Delayed": 100}
    ]
  },
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        "y": {"field": "emissions", "type": "quantitative", "title": "Relative Emissions (%)"},
        "color": {"value": "#1f77b4"}
      },
      "transform": [
        {
          "filter": "datum.scenario === 'NetZero'"
        }
      ]
    }
  ],
  "transform": [
    {
      "fold": ["NetZero", "Adaptation", "Fragmented", "Delayed"],
      "as": ["scenario", "emissions"]
    },
    {
      "calculate": "datum.year + seq_length*5",
      "as": "year"
    },
    {
      "sequence": {
        "start": 2025,
        "stop": 2060,
        "step": 5
      },
      "as": ["year"]
    },
    {
      "calculate": "switch(datum.scenario, 'NetZero', 100 - (datum.year - 2025) * 2.5, 'Adaptation', 100 - (datum.year - 2025) * 0.5, 'Fragmented', 100 - (datum.year - 2025) * 0.3, 'Delayed', 100 - (datum.year - 2025) * 1.0, 100)",
      "as": "emissions"
    }
  ]
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Graphical Analysis – Climate Change and Economic Transition Scenarios

Context and Interpretation

This bar chart compares renewable energy share projections across scenarios in 2050.
The Net Zero scenario shows dominant renewables penetration, while Fragmented World lags significantly.
The data reflect differences in investment, technological adoption, and policy effectiveness.
Results highlight the risk of lock-in to fossil fuels and missed climate targets under weaker scenarios.

vega-lite
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  "description": "Renewable energy shares by scenario in 2050.",
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  "height": 250,
  "data": {
    "values": [
      {"scenario": "Net Zero 2050", "renewables": 65},
      {"scenario": "Adaptation", "renewables": 30},
      {"scenario": "Fragmented World", "renewables": 28},
      {"scenario": "Delayed Transition", "renewables": 45}
    ]
  },
  "mark": "bar",
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    "y": {"field": "renewables", "type": "quantitative", "title": "Renewable Energy Share (%)"},
    "color": {"field": "scenario", "type": "nominal"}
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Graphical Analysis – Climate Change and Economic Transition Scenarios

Economic Growth Impact Under Climate Scenarios

Context and Interpretation

This line chart illustrates projected annual GDP growth impacts from 2025 to 2050 under various climate scenarios.
The 'Fragmented World' scenario results in the most severe growth reductions, followed by Adaptation and Delayed Transition scenarios.
Net Zero scenario has the least negative immediate growth impact but requires significant investment and transformation.
Highlights the trade-offs between immediate economic effects and long-term climate risk mitigation.

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    "values": [
      {"year": 2025, "NetZero": -0.2, "Adaptation": -0.7, "Fragmented": -1.2, "Delayed": -0.9}
    ]
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        "color": {"field": "scenario", "type": "nominal"}
      }
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  ],
  "transform": [
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      "fold": ["NetZero", "Adaptation", "Fragmented", "Delayed"],
      "as": ["scenario", "growth_impact"]
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        "stop": 2050,
        "step": 5
      },
      "as": ["year"]
    },
    {
      "calculate": "datum.scenario == 'NetZero' ? -0.2 - (datum.year - 2025)*0.02 : datum.scenario == 'Adaptation' ? -0.7 - (datum.year - 2025)*0.03 : datum.scenario == 'Fragmented' ? -1.2 - (datum.year - 2025)*0.04 : -0.9 - (datum.year - 2025)*0.025",
      "as": "growth_impact"
    }
  ]
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Analytical Explanation & Formula – Climate Change and Economic Transition Scenarios

Modeling Economic and Emissions Impacts Under Transition Scenarios

Concept Overview

Core concepts combine economic output, emissions levels, and policy actions within integrated assessment and energy-economy models.
The main formula represents how emissions and economic growth respond to policy parameters and technological changes.
Key parameters include carbon pricing ($ \theta_1 $), technology adoption rates ($ \theta_2 $), and investment in adaptation ($ \theta_3 $).
Understanding this relationship helps quantify trade-offs and predict scenario outcomes for effective decision-making.

General Formula Representation

The relationship can be expressed as:

$$ GDP(t), Emissions(t) = f(Policy(t), Technology(t), Investment(t)) = g(\theta_1, \theta_2, \theta_3) $$

Where:

$ GDP(t) $ = Economic output at time $ t $
$ Emissions(t) $ = Greenhouse gas emissions at time $ t $
$ Policy(t) $ = Climate policies implemented, e.g., carbon tax
$ Technology(t) $ = Rate of technology adoption and efficiency gains
$ Investment(t) $ = Capital directed to adaptation and mitigation efforts
$ \theta_i $ = Parameters quantifying sensitivity of outcomes to inputs

This model underpins scenario generation for economic growth and emissions trajectories used in risk assessments.

Conclusion

Summary and Strategic Takeaways

Climate scenarios reveal critical trade-offs between economic growth, emissions reductions, and risk exposure.
Adaptive strategies and technology deployment pace are key levers for managing future uncertainties.
Cross-sector coordination and effective policy frameworks are essential to mitigate transition and physical risks.
Future analyses should integrate updated data, monitor adaptation progress, and refine scenario assumptions to inform resilient decision-making.

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Explore the details behind: Climate Change and Economic Transition Scenarios

Climate Change and Economic Transition Scenarios

Introduction Slide – Climate Change and Economic Transition Scenarios

Overview

Key Discussion Points – Climate Change and Economic Transition Scenarios

Main Points

Analytical Summary & Table – Climate Change and Economic Transition Scenarios

Key Discussion Points

Illustrative Data Table

Graphical Analysis – Climate Change and Economic Transition Scenarios

Context and Interpretation

Graphical Analysis – Climate Change and Economic Transition Scenarios

Context and Interpretation

Graphical Analysis – Climate Change and Economic Transition Scenarios

Context and Interpretation

Analytical Explanation & Formula – Climate Change and Economic Transition Scenarios

Concept Overview

General Formula Representation

Conclusion