FoundationsofScience-basedTargetSettingVersion1.0April2019FoundationsofScience-basedTargetSetting1.02TableofContents1.Introduction...............................................................................................................................41.1Outline........................................................................................................................42.Background................................................................................................................................62.1Target-settingmethods................................................................................................6GHGbudgets.........................................................................................................................................7Emissionsscenarios...............................................................................................................................7Allocationapproach..............................................................................................................................8ConstructingSBTimethods...................................................................................................................8Box1.Understandingscenarios..............................................................................................9Box2.DeterminingusefulGHGbudgets...............................................................................113.MethodsandscenariostheSBTicurrentlyendorses..................................................................133.1AbsoluteContraction.................................................................................................13Determiningascenarioenvelope.......................................................................................................13Results.................................................................................................................................................213.2SectoralDecarbonizationApproach............................................................................24Overview.............................................................................................................................................24ETPscenariomodelling.......................................................................................................................24Box3.UnderstandingETPscenarios..............................................................................................25TheSDAtarget-settingmethod..........................................................................................................26Scopes.................................................................................................................................................27ComparisonofIEAemissionreductionscenariostoWB-2˚Cand1.5˚Cscenarios.............................28ChangestotheSDAmethodandtool.................................................................................................30Box4.AdjustmenttothemarketshareparameterequationintheSDAmethod........................313.3Economicintensitytargets.........................................................................................32FoundationsofScience-basedTargetSetting1.034.Scope3....................................................................................................................................335.References...............................................................................................................................346.Appendix1.Scenariosremovedateachstep.............................................................................376.11.5˚Cscenarioenvelope.............................................................................................376.2WB-2˚Cscenarioenvelope.........................................................................................377.Appendix2.ComparisonofscenarioenvelopeandSSPs............................................................408.Appendix3.ScientificAdvisoryGroup.......................................................................................439.DocumentHistory.....................................................................................................................44FoundationsofScience-basedTargetSetting1.041.IntroductionCentraltotheScienceBasedTargetsinitiative’s(SBTi)missionisensuringthatcompanieshavethetoolstheyneedtosettargetsinlinewithclimatescience,recognizingthatthescienceitselfisnuancedanddynamic.Duetothecomplexityofthescience,theSBTiplaysanimportantrolebyconductingin-depthresearchandanalysis,aswellasconsultingwithscientistsandsustainabilityprofessionals,inordertodevelopscience-basedtarget(SBT)settingmethodsthataretransparent,robust,andactionable.ThisdocumentdescribestheSBTi’sframeworkfordevelopingtarget-settingmethodsthatareinlinewithscienceandforevaluatingemissionsscenariosassociatedwiththesemethods.InthespiritoftransparencyandrecognizingthevalueofsharingafulldescriptionoftheSBTi’sapproach,thisdocumentincludesasubstantialamountofanalyticaldetailandspecifieshowadiversebodyofresearchisreflectedbymethodsendorsedbytheSBTi.Theintendedaudienceofthisdocumentincludesresearchers,sustainabilityprofessionalwhoareinvolvedwithsector-specificdevelopment,andreaderswhowishtounderstandthetechnicalunderpinningsofSBTimethods.ForpracticalguidanceonsettinganSBT,pleaserefertotheScience-basedTargetSettingManual.1.1OutlineSection2providesageneraloverviewofhowSBTsrelatetoclimatescience.AschematicofSBT-settingmethodsisdescribedinSection2.1.TherelationshipbetweenscenariosandthedeterminationofSBT-settingmethods,andtheestablishmentofkeyscenarioprinciples,isexplainedinBox1;andadiscussionofemissionsbudgets,asrelevanttotarget-setting,isfoundinBox2.Section3comprisesafullexplanationofhowtheSBTihasupdatedtwo,keytarget-settingmethods—absolutecontractionandtheSectoralDecarbonizationApproach(SDA)—toprovidecompanieswiththeopportunitytosetSBTsalignedwith1.5˚Candwellbelow2˚C(WB-2˚C);andabriefdescriptionoftheSBTi’scurrentstanceonaneconomicintensitytarget-settingmethod.InSection3.1onabsolutecontraction,anupdateableprocessthatisusedtodefineglobalemissionsscenarioenvelopesthatarealignedwithkeyprinciplesforeachlevelofwarmingisdetailed.Section3.2onSDAprovidesadescriptionofthemethod,andBox3explainsthesectoralpathwaysunderlyingit.Box4clarifiesatarget-settingadjustmenttotheSDAintheScience-basedTargetSettingTool.Section3.3providesabriefoverviewoftheGreenhouseGasEmissionsperUnitofValueAddedtarget-settingmethod(GEVA),whichiscurrentlylimitedtoscope3fordeterminingminimumtargetambition.FoundationsofScience-basedTargetSetting1.05Section4identifiesthechallengesassociatedwithscope3target-settingandexplainstherationalefortherebeingdifferentcriteriaforscope1and/orscope2targetsandscope3targets.FoundationsofScience-basedTargetSetting1.062.Background2.1Target-settingmethodsMethodsendorsedbytheSBTiareinstructiveframeworksthatmaybeusedbycompaniestosetemissionsreductiontargetsconsistentwiththebestavailableclimatescience.Thesemethodsareconstructedfromthreemainelements:agreenhousegas(GHG)budget,asetofemissionscenarios,andanallocationapproach.TheSBTi’sprocedurefordevelopingamethodbeginswithdeterminingarepresentativesetofemissionsscenariosthatareconsideredplausible,responsible,objective,andconsistentandthatarealignedwithaspecifictemperaturegoals(1.5˚CorWB-2˚Cofglobalwarming).Ingeneral,SBTiscenariosmustnotexceedtheGHGbudgetassociatedwiththetemperaturegoalpriortoreachingglobalnet-zeroemissions,inadditiontomeetingothercriteria.Anallocationapproachisusedtotranslatetheresultingglobalorsector-specificemissionspathwayintopracticalrequirementsthataligncompanyemissionswiththepathway.Figure1:Schematicoftarget-settingelements(pleasenotethattheSBTiusesGHGbudgets,insteadofcarbonbudgets,whereapplicable)FoundationsofScience-basedTargetSetting1.07GHGbudgetsAGHGbudgetisanestimateofthecumulativeCO2,methane,andotherKyotogases1thatcanbeemittedoveraperiodoftime,whilelimitingtemperaturerisetoaspecificamount.Budgetcalculationsarehighlysensitivetoassumptionsregardingclimatesensitivityandlikelihoodoftemperatureoutcome,despitetheapparentsimplicity.Fortarget-settingpurposes,thechosenGHGbudgetissecondarytoemissionsscenariosthemselves,whichprovidemorerelevantinformationsuchasreductionratesovertime;however,thetwoelementsarecloselyrelated,asmostemissionsscenariosrelyeitherdirectlyorindirectlyonaGHGbudget.TheSBTiincorporatestheconceptofaGHGbudgetintoitsassessmentcriteriafordifferentemissionsscenariosandallocationapproaches.EmissionsscenariosAlthoughitisnotpossibletopredictwhenandtowhatextentGHGswillbeemittedinthefuture,scenariosprovideuswithinsightintohowemissionsreductionscouldbeachievedunderavarietyofsocioeconomicandpoliticalconditions,whileconservinganetGHGbudget.Insomescenarios,cumulativeemissionssurpassthebudgetandmustthenbereducedbyagreateramounttomeetthedesiredtemperaturegoalby2100(emissionsand/ortemperatureovershoot).SBTiscenariosaredrawnprimarilyfromtheIntegratedAssessmentModelingConsortium(IAMC)andtheInternationalEnergyAgency(IEA).TheIAMChostsanensembleofmorethan400peer-reviewedemissionspathways,whichhavebeencompiledandassessedbytheauthorsoftheIntergovernmentalPanelonClimateChange(IPCC)SpecialReportonGlobalWarmingof1.5˚C(SR15);2andtheIEApublishesitsownscenariosregularly,whichprovideagreateramountofsectoralgranularity.3Thesescenariosvarydependingonassumptionsmadeaboutpopulation,policytrajectories,andeconomicgrowth;technologicaladvancesandtheircost-effectiveness;and,ofcourse,temperatureoutcomes.ManynewerscenarioshavebeendevelopedtoreflectfivedifferentSharedSocioeconomicPathways(SSPs),whichrepresentdiverseassumptionsrelatedtotheachievementofsustainabledevelopmentgoals(SDGs),the1GHGsrequiredbytheUNFCCC/KyotoProtocolarecurrently:carbondioxide(CO2),methane(CH4),nitrousoxide(N2O),hydrofluorocarbons(HFCs),perfluorocarbons(PFCs),sulphurhexafluoride(SF6),andnitrogentrifluoride(NF3).2Hupmanetal.,IAMC1.5°CScenarioExplorerandDatahostedbyIIASA;Rogeljetal.,Mitigationpathwayscompatiblewith1.5°Cinthecontextofsustainabledevelopment,in"SpecialReportonGlobalWarmingof1.5°C(SR15)"3IEA,FutureScenariosforClimateChange.FoundationsofScience-basedTargetSetting1.08extentoffuturefossilfuelreliance,andthedegreeofglobalcoordination.Amoredetaileddiscussionofscenarioscanbefoundinthefollowingsections.AllocationapproachAnallocationapproachreferstothewaythecarbonbudgetunderlyingagivenemissionsscenarioisallocatedamongcompanieswiththesamelevelofdisaggregation(e.g.,inaregion,inasector,orglobally).TheSBT-settingmethodsreferencedinthismanualusetwomainapproachestoallocateemissionsatacompanylevel:1.Convergence,whereallcompanieswithinagivensectorreducetheiremissionsintensitytoacommonvaluebysomefutureyearasdictatedbyaglobalemissionspathway(e.g.,theemissionsintensityofallelectricpowercompaniesconvergestoamaximumof29gCO2eperkWhofelectricityin2050).Thereductionresponsibilitiesallocatedtoacompanyvarydependingonitsinitialcarbonintensityandgrowthraterelativetothoseofthesector,aswellasthesector-wideemissionsintensitycompatiblewiththeglobalemissionspathway.Theconvergenceapproachcanonlybeusedwithsector-specificemissionsscenariosandphysicalintensitymetrics(e.g.,tonnesGHGpertonneproductorMWhgenerated).2.Contraction,whereallcompaniesreducetheirabsoluteemissionsoreconomicemissionsintensity(e.g.,tonnesGHGperunitvalue-added)atthesamerate,irrespectiveofinitialemissionsperformance,anddonothavetoconvergeuponacommonemissionsvalue.Thecontractionapproachcanbeusedwithsector-specificorglobalemissionsscenarios.TheSBTiendorsestheSectoralDecarbonizationApproach(SDA),whichemploystheIEAETPsectorbudgets,forphysicalintensitytargetsandtheabsolutecontractionapproachforabsolutetargets.Intheory,thecontractionapproachcanalsobeusedtodetermineeconomicintensitytargets.Thegreenhousegasemissionsperunitofvalueadded(GEVA)methodequatesacarbonbudgettototalGDPandacompany’sshareofemissionsisdeterminedbyitsgrossprofit,sincethesumofallcompanies’grossprofitsworldwideequatetoglobalGDP.However,applicabilityofthismethodiscurrentlyrestrictedtomodelingofscope3targets,asitmaynotconstrainglobalemissionstoaspecifiedbudgetinitscurrentformulation.ConstructingSBTimethodsFoundationsofScience-basedTargetSetting1.09Therelationshipbetweenthesethreeelementsisconceptuallystraightforward,butcomplexinpractice.Eachelementisassociatedwithdifferentassumptionsanduncertainties,whichvaryasafunctionoftemperaturegoalandneedtobeconsideredcollectively.Forexample,theWB-2°CGHGbudgetislessrelevanttolong-termwarmingthanthe1.5˚CGHGbudgetduetotheincreasedimpactanduncertaintysurroundingnon-instantaneousearthsystemfeedbacks,suchaspermafrostcarbonrelease,thatarenotreflectedbythetransientclimateresponsetoemissions(TCRE).4Additionally,theeffectivenessofanallocationapproachcandependlargelyontheshapeoftheemissionspathway:WB-2˚Cscenariosarebetterrepresentedbyalinearreductiontonet-zero,while1.5˚Cscenariosmustbeapproximatedmorecarefullyduetothesmallerremainingemissionsbudget,whichrequiresmorerapidreductionsbetween2020-2030.Theseconsiderationsarereflectedbyfiguresandcomparisonsthroughoutthisdocument.Box1.UnderstandingscenariosWhatisascenario?Ascenariodescribesahypotheticalfutureandthepathleadingtothatfuture.Thesefuturesarestorylinescreatedtoidentifyhiddenrisksandopportunities,testtheimpactofpotentialoutcomes,anddevelopstrategiesthatbuildresiliencyandframedecision-making.Scenariosarecommonlymisinterpretedasbeingpredictionsorforecasts.Infact,theconceptofscenariosisexplicitlybasedonthepremisethatthefuturecannotbepredicted.Akeyaspectoftheapproachknownas‘scenarioanalysis’,therefore,istoevaluateavarietyofalternativefutures,bothdesirableandundesirable.ReadersaredirectedtotheFinancialStabilityBoard’sTaskForceonClimate-relatedFinancialDisclosures(TCFD)’sTechnicalSupplementonScenarioAnalysisforamorein-depthdiscussionofthistopic.5HowisascenariorelevanttoSBT-setting?AdoptingascenarioforSBT-settingisconsideredtobepartofawiderscenarioanalysisapproachthatenablescompaniestoprepareforpolitical/economicuncertainty,aswellasaligningwiththeParisAgreementandtheethicalimperativetoavertthemostdevastatingeffectsofclimatechange.4Steffenetal.“TrajectoriesoftheEarthSystemintheAnthropocene.”5TCFD,“TechnicalSupplement:TheUseofScenarioAnalysisinDisclosureofClimate-relatedRisksandOpportunities.”FoundationsofScience-basedTargetSetting1.010Ultimately,globalcarbonemissionsmustdeclinetonet-zero,andscenariosshedlightonhowcompaniescancontributetowardtheachievementofthisgoal.ScenariocharacteristicsWhilescenarioanalysisacceptsaninfinitenumberofpossiblescenariosforanytemperaturegoal,thespecificpurposeofSBT-settingnarrowstherangeofpossiblescenariosavailable.Therearetworeasonsforthis:1.TheSBTimustconstrainscenariostodeterminekeybenchmarksandminimumambition.Itfollows,therefore,thatscenariosthatareconsideredmorelikelytooccurshouldtakepriority.Forexample,acompanymaywanttouseaparticularscenariototestariskcharacterizedbyhighconsequenceandlowprobabilityofoccurring.Thoughthisscenarioisusefulaspartofacomprehensivescenarioanalysisinvolvingavarietyofotherscenarios,itwouldbesuboptimaltouseitasanSBTscenario.2.TheSBTiaimstovalidatetargetsasfairlyandobjectivelyaspossible.Whileacceptingthatascenarioisnotaprediction,andthusthefuturemayberepresentedbymorethanonescenario,thefreedomtochoosefromarangeofscenariosopensupthepossibilityof‘cherrypicking’.Forexample,ascenariothatassumeslowermitigationinonesectorisselectedbyanorganizationofthatsectorbecauseitpresentslessofachallenge.Theobjectiveviewwouldbetoprioritizeresponsiblescenariosthatminimizeclimaterisk,regardlessofwhetherthisscenarioispreferabletotheorganization.Followingfromthesedistinctions,theidealSBTscenariocanbedefinedasascenariothatmaximizesthecharacteristicsofplausibilityandresponsibility.Thesecorecharacteristicsembodyanumberofspecificqualitiesandarequantifiedthroughnumerousindicators,someofwhicharesummarizedbelow:●Plausible.Aplausible6scenarioisascenariobasedonacrediblenarrative.Thedegreeofplausibilityinascenarioislinkedtotheprobabilityofitbeingrealized,i.e.ascenariowithhighplausibilitymaybeconsideredrelativelylikelytooccur.Thisscenariomaynotbethemostlikelyofallfutures.Ratheritisthemostlikelyofscenariosthatachievethegoaloflimitingwarmingto1.5˚Corstayingwellbelow2°C.6Thischaracteristicisoneofseveral,alongwith‘consistent’,outlinedbytheTCFDforthepurposeofconductingascenarioanalysis.FoundationsofScience-basedTargetSetting1.011●Atminimum,aplausiblescenarioisconsistent.Ascenarioisconsistentifithasstronginternallogicandisnotbuiltonassumptionsorparametersthatcompletelyoverturntheevidenceofcurrenttrendsandpositionswithoutlogicalexplanation.Statisticalmethodsmaybeadoptedtoassessscenarioplausibility.Forexample,amedianandrangecanbecalculatedfromasampleofscenarioswhichsatisfyagivencriteria.ThisapproachwasadoptedintheIPCCFifthAssessmentreport,andsubsequentlybytheUN,tocorrespondrangesofscenarioemissionsbudgetwithtemperaturelimits.7Thistypeofanalysiscanbetakenfurtherbydrawingfromawiderpoolofdataandanalyzingotherimportantmetricstoidentifyoutlyingassumptions.●Responsible.AresponsiblescenarioispredicatedonminimizingtheriskofnotachievingtheParisAgreement.Responsiblescenariosarealsoobjective,inthattheyareagnosticofwhatispreferabletotheorganization.Riskcanbemanagedinnumerousways.Riskcanbespreadbyavoidingdependencyonaspecificfuturedevelopmentandtakingaportfolioapproach.Riskcanalsobepreparedforandmitigatedbynotdelayingaction.Box2.DeterminingusefulGHGbudgetsThemostcommonlyusedemissionsbudgetisthetransientclimateresponsetoemissions(TCRE),whichestimatestheinstantaneousglobaltemperatureresponsetocumulativeemissions.SeveralapproacheshavebeenusedtoestimateTCRE,drawingfromearthsystemmodelsofvaryinglevelsofcomplexitybasedonbothCO2-onlyandmulti-gasandaerosolexperiments,aswellasobservationsofhistoricalwarming.Theseestimatesvarysubstantially,buthavebeenaggregatedbytheIPCCandassignedprobabilisticbinsforeachlevelofwarming.TheIPCCalsoincludesadjustmentamountsfordifferentuncertaintiesanduse-casesoftheTCRE,suchasanestimateoftheimpactofnon-instantaneousearthsystemfeedbacks,suchaspermafrostthawing,ifevaluatedto2100.7IPCC,“ClimateChange2014:MitigationofClimateChange.ContributionofWorkingGroupIIItotheFifthAssessmentReportoftheIntergovernmentalPanelonClimateChange;”UNEP,EmissionsGapReport2018.FoundationsofScience-basedTargetSetting1.012SBTimethodsarerelevanttoallwarminggasesthatareincludedintheKyotoprotocolandtemperaturegoalshavebeendefinedbasedontheParisAgreement,whichspecifieswarmingin2100.Thus,SBTiGHGbudgetsarecalculatedbyaddingtheapproximateprojectedimpactofnon-CO2emissions(320GTCO2e)totheTCRECO2budgetassociatedwithawarminglevel,andsubtracting100GT,whichreflectstheapproximateimpactofnon-instantaneousearthsystemfeedbacks.TheSBTiusesthe50thpercentileTCREfor1.5˚C,whichevaluatesto990GTCO2e(670GTCO2),andthe66thpercentileTCREassociatedwith2˚CwarmingasaWB-2˚Cbudget,8whichevaluatesto1540GTCO2e(1220GTCO2).9Table1:Theremainingcarbonbudget(IPCCSR15)8SeetheTemperatureLimitProbabilitysubsectionofthispaperforadiscussionoftheseprobabilitybins.9Bycomparison,theUNEPGapReport(2018)definesaBelow2˚CscenarioasonewheremaximumcumulativeCO2emissionsfrom2018untilthetimeofnetzeroCO2emissionstobebetween900and1,300GtCO2,andcumulative2018-2100emissionstobeatmost1,200GtCO2.TheyalsodefineBelow1.8CscenariosandBelow1.5˚Cscenariosaslimitingmaximumcumulativeemissionsbetween2018andthetimeofnetzeroCO2emissionsto600-900GTCO2andbelow600GTCO2,withtotalcumulativeemissionsof900and360GTCO2,respectively.TheSBTidefinitionofWB-2˚CisalignedwiththeUNEPBelow2˚Cdefinition,assumingmedianimpactofnon-CO2emissions,whiletheSBTidefinitionof1.5˚CisqualitativelydifferentfromtheUNEP’sBelow1.5˚Cbudget,whichisbasedona66%likelihood,butallowsforalargerCO2emissionsovershoot(i.e.thedifferencebetweenmaximumcumulativeemissionsandtotalcumulativeemissionsfrom2018-2100).FoundationsofScience-basedTargetSetting1.0133.MethodsandscenariostheSBTicurrentlyendorses3.1AbsoluteContractionTheabsolutecontractionapproachisamethodforcompaniestosetemissionsreductiontargetsthatarealignedwiththeglobal,annualemissionsreductionratethatisrequiredtomeet1.5˚CorWB-2˚C.Inordertodetermineascience-basedreductionrate,ascenarioenvelopeisconstructedandthefullrangeofslopesforarepresentativetarget-settingtimespan,specifiedas2020-2035,isconsideredvalid.ThefinalscenarioenvelopealsorepresentsabaselinethatisusedtoassessothermethodssuchastheSDA,whichrequirestheuseofadifferentpathways.TheSBTi’sapproachtodeterminingascenarioenvelopeisdetailedinthenextsubsection,andananalysisofreductionratecalculationsisdiscussedintheparagraphsthatfollow.Theresultingscenarioenvelopeiscomparedtowell-understood‘archetypescenarios’asanadditionalcheckandtoprovidemeaningfulcontextinAppendix1,andthespecificscenariosincludedineachenvelopeareindicatedinAppendix2.DeterminingascenarioenvelopeAfour-stepselectionprocessisusedtoensurethatthecombinedsetofemissionsscenariosisalignedwiththeaforementionedprinciplesofplausibility,responsibility,objectivity,andconsistency:1.Temperaturelimitprobability—scenariosareclassifiedintermsoftemperaturethresholdsandprobabilitiesbasedontheresultsofMAGICC6,areduced-complexityclimatemodel.10Inputscenariosetsarecomposedfor1.5˚CandWB-2˚Caccordingtotheseclassifications2.Emissionsbudget--theappropriateTCRE-derivedemissionsbudgetmustnotbeexceededbeforenet-zeroannualemissionsareachieved(Box2)3.Yearofpeakemissions—emissionsmustpeakinthe2020timestep.Scenarioswithanearlieryearofpeakemissions(2010or2015)areconsideredoutofdate,whilescenarioswithalateryearofpeakemissions(2025orlater)arecharacterizedbydelayedactionandleadtoanimplicitlylowerlikelihoodoflimitingwarmingtoeithertemperaturegoal4.Qualitativescreens:DelayandNear-termEmissions—anyscenariosthatdepictanannuallinearreduction(2020-2035)thatislessambitiousthanthe20thpercentileoftheenvelopeareremoved10Meinshausenetal.,"Emulatingcoupledatmosphere-oceanandcarboncyclemodelswithasimplermodel,MAGICC6:PartI–ModelDescriptionandCalibration."FoundationsofScience-basedTargetSetting1.014Step1.TemperaturelimitprobabilityTheIPCCbeganclassifyingscenariosbasedontemperaturelimitprobabilitiesusingMAGICC6inAR5andhascontinuedthisapproachinSR15.11IPCC-definedpathwayclassesaredefinedwithconsiderationofthepredictedwarmingin2100,aswellas‘peakwarming’thatmayoccurbeforethen.Table2:IPCCpathwayclassesbasedontemperaturelimitprobabilitycriteria.Pleasenotethattheseprobabilitiesspecifythelikelihoodofremainingbelowatemperaturelimitifthescenarioisachieved;theydonotreflecttheplausibilityofascenario11TheFAIRmodelisalsousedinSR15,butmainlyforcarbonbudgetadjustmentsratherthanscenarioclassification.WarmingislesssensitivetoemissionsinFAIRthaninMAGICC;however,neithermodelintheirSR15setupaccountsforpermafrostmelting.Foradiscussionofreducedcomplexityclimatemodels,pleaseseeSR15Section2.SM.1.FoundationsofScience-basedTargetSetting1.015Figure2:NumberofIAMCscenariosineachpathwayclass.Scenariosrepresentedbythegreenandbluebarspassthetemperaturelimitprobabilityfilterstepfor1.5˚CandWB-2˚C,respectivelyBecausetheParisAgreementmandatesthattheglobalaveragetemperaturemustbeheld“wellbelow2˚C”abovepre-industriallevels,aswellasaimingtolimittheincreaseto1.5˚C,thesetermsareofthemostinterest.Although“wellbelow2˚C”isnotstrictlydefinedintheParisAgreement,itiscommonlyunderstoodtobeanalogoustotheIPCC’s‘likelychance’terminology,whichisequivalenttoa66%probabilityofkeepingtemperaturerisebelowacertainlimit(inthiscase,2˚C).12Theequivalentmedianwarmingisinthevicinityof1.7˚Cduetouncertaintiesinthecarbonbudget.Additionally,holdingtemperaturesbelow2˚Cimpliesthatwarmingcannottemporarilyovershoot2˚C,soboth‘peakwarming’andwarmingat2100areconstrained(i.e.pathwayclassLower2˚C).Theinputscenariosetfor1.5˚Ciscomprisedofscenarioswithatleasta50%probabilityoflimitingwarmingin2100to1.5˚C,aswellasa50%chanceoflimitingpeakwarmingto1.5˚C.Thus,itincludesscenarioswithnoovershootandlowovershoot(i.e.pathwayclassesBelow1.5˚C,Lower1.5˚Clowovershoot,andHigher1.5˚Clowovershoot).Classifyingemissionspathwaysbasedontemperatureprobabilitylikelihoodrepresentsanimportantfirststepinthedeterminationofascenarioenvelopeandrepresentstheminimumanalysisthatisneededtoassociateascenariowithatemperaturegoal.Itmainlybearsontheplausibilityandconsistencyofa12https://www.cicero.oslo.no/en/posts/climate-news/wellbelow-2˚CFoundationsofScience-basedTargetSetting1.016scenario:thescenarioisplausiblepartiallytotheextentofitstemperaturelimitprobabilityandconsistentbasedonitsassessmentusingMAGICC.Thisstepdoesnot,however,addresstheresponsibilityorconsistencyofthemechanicsandassumptionsunderlyinganemissionspathway,otherthanthefactthatpeer-reviewandpublicationareprerequisitestoinclusionintheIAMCscenarioset.Step2.EmissionsbudgetManyscenariosthatlimitwarmingto1.5°CorWB2°Cmaybeclassifiedasnormative(orprescriptive)transformingscenariosaccordingtothetypologyforwardedbyBorheson,etal.13Thesearescenariosthatanswerthequestion“Howcanatargetbereached?”andareconstructedbystartingwithafuturestateandbackcastingscenariostothepresent;however,1.5˚CandWB-2˚Cscenariosmayalsoexhibitcharacteristicsofexploratoryscenarios,wherebychallengingassumptionsaretestedwithintheconstraintoftheendgoal.Forexample,ascenariomayexplorehowtolimitwarmingtobelow2˚Cintheabsenceofpolicyorinthecaseofdelayedaction.Whilethesescenariosshouldnotberemovedonthebasisofobjectivity,theymustbecarefullyconsideredintermsofresponsibilityandconsistency.Scenariosthatlimitwarmingto1.5˚C,inparticular,mayrelyoncontroversialassumptionstoachieveanemissionspathway.DespitethechallengesassociatedwithachievingtheParisAgreement,itisproblematictorelyonsustained,negativeglobalemissionsatthescaleofgigatonsofCO2peryeartocompensateforreducednear-termambition.Consideredseparatelyfromtheinclusionofspecifictechnologieslikecarboncaptureandstorage(CCS)andbioenergy,whichmaybeimportantoptionsintheachievementoftheParisAgreement,relyingongloballynegativeemissionsafterreachingnet-zeroisconsideredirresponsibleandpotentiallynotplausible.Itisirresponsibleformyriadreasons:over-relianceonthesetechnologiesmaydefernear-termambitionandtheassociatedsystemchangesthatareneededtoavoid‘carbonlock-in,’aswellasoverestimatingourabilitytomanageglobalcarboncycleflows.14Additionally,thebearersoftheconsequencesofapotentiallyfailedgambleonnegativeemissiontechnologies(NETs)arefuturegenerationsandtheglobalpoor,whoselackofrepresentationinsuchadecisionwouldconstituteanethicalfailure.15RelianceonNETsmaybeconsiderednotplausibledueto13Börjesonetal.,“Scenariotypesandtechniques:Towardsauser’sguide.”14Minxetal.,“Negativeemissions—Part1:Researchlandscapeandsynthesis;”AndersonKandPetersG,“Thetroublewithnegativeemissions;”SmithPetal.,“BiophysicalandeconomiclimitstonegativeCO2emissions.”15SmithPetal.,“BiophysicalandeconomiclimitstonegativeCO2emissions”FoundationsofScience-basedTargetSetting1.017thedisparitiesbetweenbothcurrentdevelopmentandestimatesoftechnicallyfeasibleimplementation,andthescaleofimplementationinmodels.16Nonetheless,itmustbereiteratedthattheSBTidoesnotremovescenariosduetotheinclusionofNETsorbioenergywithcarboncaptureandstorage(BECCS);rather,asubsetofthesescenariosareremovedduetoover-relianceongloballynegativeemissionsinthesecondhalfofthecentury.Theseareeffectivelyfilteredbystep2,asscenariosthatsurpasstherelevantTCREbudgetpriortoachievingnet-zeroemissionsareeliminated(TableX:relevantbudgets).17Figure3:HistogramofcumulativeKyotoGHGemissions(2018toyearofnet-zeroemissions)inthe1.5˚Cenvelope(left)andWB-2˚Cenvelope(right).ScenariosrepresentedbythegreybarsarefilteredoutinthisstepStep3.YearofpeakemissionsTheParisAgreementassertsthatemissionsshouldpeak‘assoonaspossible’.Asglobalemissionsarestillrising,athresholdisintroducedherewhichdefinesafuturewindowintimewithinwhichemissionsneedtopeak.GiventheearlycreationofsomescenariosintheSR15database,thisthresholdwillremovescenariosthatpredictedapeakthatisinthepast,orearlierthanthenearesttime-stepof2020.Atthe16Haszeldineetal.,“NegativeemissionstechnologiesandcarboncaptureandstoragetoachievetheParisAgreementcommitments;IEAGHG2014,CCSIndustryBuild-OutRates-ComparisonwithIndustryAnalogues”17InscenarioswhereonlyCO2dataareavailable,theaveragenon-CO2GHGcontributionofthepre-budgetfilterscenarioenvelopeisaddedtoeachscenarios’projectedCO2emissionsFoundationsofScience-basedTargetSetting1.018otherendofthethreshold,scenariosinwhichemissionspeakinthe2025time-steporlaterarealsoremoved(although,itisapparentinFigure4thatthosehavebeenremovedbypriorfilters).Figure4:Histogramofyearofpeakemissionsinthe1.5˚C(left)andWB-2˚C(right).ScenariosrepresentedbythegreybarsarefilteredoutinthisstepStep4.Qualitativescreens:DelayandNear-termEmissionsAfilterisappliedtothescenarioenvelopethatdetectspathwayscharacterizedbydelayedactionorunlikelyhistoricandnear-termemissions.Scenariosthatdepictdelayedactionarequalitativelysimilartoscenariosthatpeakin2025orlater,despitenothavingbeenfilteredoutforthatexactreason,whilescenarioswithlowestimatesofhistoricornear-termemissionsmayhavepassedtheemissionsbudgetfilter(Step2)duetothelowannualemissionsstartingpoint,ratherthanreductionsthataremorelikelyneededbetween2020-2035.Scenariosareremovediftheydepictanannuallinearreduction(2020-2035)thatislessambitiousthanthe20thpercentileoftheenvelope.Despitetheirundesirablequalities,thesescenariosmayhavepassedthroughpriorfiltersforanumberofreasons;forexample,somescenarioswithrelativelylowannualreductionratesmayhavepassedtheemissionsbudgetfilter(Step2)duetounderestimatesofhistoricalandnear-termprojectedemissions.Othersscenariosthatpeakin2020(passingStep3)arefollowedbynegligibleorrelativelyslowreductionsforthenextfivetotenyears,andrelyonrapidemissionsreductionsbeyondthetarget-settinghorizonthatarenotconsistentwiththemainscenarioenvelope.Forthepurposesofdefiningaminimumambitionrate,removingthesescenarios,whicharegenerallycharacterizedbydelayedactionorunlikelynear-termemissions,providesuswithamorerepresentativesampleofpathwaysthatarealignedwiththeenvelopeoverallandtheSBTiprinciples.FoundationsofScience-basedTargetSetting1.019Figure5:Scenariosinfinal1.5˚Cenvelopeareshownbynavy,green,andvioletlines,coloredbylinearreductionbetween2020-2035(navy:higherthanmedian;green:lowerthanmedian;violet:pre-screenmedian;wherepre-screenmedianreferstothescenarioenvelopebeforethebottom20thpercentilehasbeenremoved).Dottedorangelinesarethebottom20thpercentilescenarios,whichareremovedbythequalitativescreen.Dottedblacklineshowsahypotheticalscenariowhereemissionsarereducedatthepre-screenenvelopemedian(4.5%linear),whilesolidblacklineshowsemissionsreducedatthepost-envelopeminimum(4.2%linear)FoundationsofScience-basedTargetSetting1.020Figure6:ScenariosinfinalWB-2˚Cenvelope,coloredaccordingtothesameconventiondescribedabove.Dottedblacklineshowsahypotheticalscenariowhereemissionsarereducedatthepre-screenmedian(2.7%linear),whilesolidblacklineshowsemissionsreducedatthepost-envelopeminimum(2.5%linear)FoundationsofScience-basedTargetSetting1.021Figure7:Histogramoflinearreductionrate(2020-2035)inpre-statisticalfilter1.5˚C(left)andWB-2˚C(right)scenarioenvelopes.ScenariosrepresentedbythegreybarsarefilteredoutinthisstepResultsFromaninitialsetof177scenariosfrom25models,thestepwisefilterproducesafinal1.5˚Cenvelopeof20scenariosandafinalWB-2˚Cenvelopeof28scenarios.Thefirststep,identifyingscenarioswithtemperaturelimitprobabilitiesalignedwiththerespectivegoal,reflectstheIPCC’sowntemperaturecategorizationofpathwaysandresultsininputsetsof53and74scenariosfor1.5˚CandWB-2˚Crespectively.Thenexttwosteps,emissionsbudgetandpeakyearofemissionsfilters,reduceeachenvelopebyabout50%byeliminatingscenariosthateitherrelytooheavilyonnetnegativeemissionsbeyondthetarget-settinghorizonorareconsideredoutdatedfordepictingaglobalemissionspeakbefore2020.Thisisanimportantpairofsteps,astheyalignthescenarioenvelopewiththeprinciplesofplausibilityandresponsibilitybycomparisontogeophysical,ratherthanstatistical,thresholds.Thefourthandfinalstepeliminatesscenariosthatdepictemissionsreductionsinthebottom20thpercentile,whicharelikelycharacterizedbydelayedactionorunderestimatesofnear-termemissions.DiscussionScenarioswherewarmingislimitedto1.5˚Carecharacterizedbyimmediate,steepGHGreductionsintheshort-termthatarecriticaltoconstrainingcumulativeemissions(Figure8).Thisreflectstheextremelylimitedremainingemissionsbudgetandurgencyofnear-termreductionsthatmustbeachievedtolimitwarmingto1.5˚C,withoutrelyingonextensivecarbondioxideremovalafternet-zeroisreached.TheWB-2˚Cscenarioenvelopehasashallowerslope(Figure9)becausethepathwaytonet-zeroisnotastightlyconstrainedbytherelevantGHGbudget(Box2).Itshouldbenoted,however,thattheuncertaintyassociatedwithclimatefeedbacksandthecorrespondingriskofirreversibleclimatechangeareamplifiedaswarmingexceeds1.5˚Candapproaches2˚C;so1.5˚Cscenariosmaybeconsideredmorerobust.1.5˚Cscenariosarehighlypathwaydependentandlinearizationoveralongertimespancanresultincumulativeemissionsmorethan30%higherthanprescribed.Thus,linearreductionratesarecalculatedbasedonthetimespan2020-2035,whichalignswiththelifetimeofascience-basedtargetthatisassessedbytheSBTiandminimizesdistortion.MinimumabsolutecontractionratesFoundationsofScience-basedTargetSetting1.022Havingpassedthestepwisefilterprocess,eachremaining1.5˚CandWB-2˚Cpathwayisconsideredvalid,sotheminimumreductionratesassociatedwitheachtemperaturegoalcorrespondtotheminimumreductionrateofascenarioineachrespectiveenvelope.Theminimumannuallinearreductionratesalignedwith1.5˚CandWB-2˚Care4.2%and2.5%,respectively.Figure8:Stepwisefilteringprocessfor1.5˚C.A.Fullsetoflow/no-overshoot1.5˚CIAMCscenarios.B.Removed10scenariosduetoexceededemissionsbudgetC.Removed18scenariosduetopeakyearofemissionsD.Removed5scenariosduetoqualitativescreendelayandnear-term.20finalscenarios(AppendixI)FoundationsofScience-basedTargetSetting1.023Figure9:StepwisefilteringprocessforWB-2˚C.A.FullsetofLower2˚CIAMCscenarios.B.Removed22scenariosduetoexceededemissionsbudgetC.Removed17scenariosduetopeakyearofemissionsD.Removed7scenariosduetoqualitativescreendelayandnear-term.28finalscenarios(AppendixI)FoundationsofScience-basedTargetSetting1.0243.2SectoralDecarbonizationApproachOverviewFirstpublishedin2015inNatureClimateChange18,theSectoralDecarbonizationApproach(SDA)methodwasdevelopedbyCDP,WRIandWWFwiththetechnicalsupportofNavigant(formerlyEcofys)asaconsultancypartner.Themethodologywascreatedwithinputfromagroupoftechnicaladvisors,twopublicstakeholderworkshopsandoneonlineworkshop,andaimstoprovidebusinesseswithasector-specificandresearch-backedmethodtosettheiremissionsgoals.TheSDAusestheIEAEnergyTechnologyPerspectivesglobalsectoralscenarios,comprisingemissionsandactivityprojections,whichareusedtocomputesectoralintensitypathways.19Themethodtakessectoraldifferencesandabatementpotentialsintoaccount,whichareconsideredinthemakingofthedifferentsectorscope1scenarios.Italsoincludessector-specificscope2scenarios,whichbettertranslatethecorporateGHGaccountingpractices,anditcanbeusedtosetvalidscope3targetstotheextentthatcertainactivitypathwayscorrespondtoscope3categoriesortheemissionssourcesofacompany’sscope3inventory.Forhomogeneoussectors,theSDAmethodalsoaccommodatesdifferentiatedlevelsofhistoricalaction,asitrequiresGHGemissions-intensivecompaniestoreducetheiremissionsfasterthanthesectoralaverage;and,conversely,companieswithrelativelylowinitialemissionsintensitiesmayreducetheiremissionsmoreslowly.Newcompaniesenteringahomogeneoussectorarealsoaccommodatedandallocatedportionsofbudget.ETPscenariomodellingThelatestEnergyTechnologyPerspectives(ETP)reportpublishedbytheInternationalEnergyAgency(IEA)in2017includesthreeemissionsscenariosthatrunfrom2014anduntil2060:theReferenceTechnologyScenario(RTS),the2°CScenario(2DS)andtheBeyond2°CScenario(B2DS).Thesescenariosweredevelopedusing“backcasting”and“forecasting”analysiswiththeaimofidentifyinganeconomicpathway(cost-optimizationframework)toachieveadesiredoutcome.18Krabbeetal.,“Aligningcorporategreenhouse-gasemissionstargetswithclimategoals”19ReferencedataforIEAETPscenarioscanbeacquiredhere:https://www.iea.org/etp2017/FoundationsofScience-basedTargetSetting1.025Figure10:StructureoftheETPmodelTheETP-TIMESSupplymodelusedbytheIEAisatechnology-richbottom-upmodelthatrelatesenergysupply(energyconversionmodel)withthethreesectorswiththegreatestenergydemand(industry,transportandbuildings).TheETP2017considerspoliciesthatarealreadyimplementedanddecided,affectingshort-termpathways(short-termpathwaysdifferfromwhatwouldbeconsideredcost-effectivepathways),andconsiderslongertermnormativeanalysiswithfewerconstraintsrelatedtopoliticalobjectivesaimingforacost-effectivetransitiontoalowcarbonenergysystem.Box3.ReviewofETPscenariosETP2017offersthreescenarios:20TheReferenceTechnologyScenario(RTS)takesintoaccounttoday’scommitmentsbycountriestolimitemissionsandimproveenergyefficiency,includingtheNDCspledgedundertheParisAgreement.Byfactoringinthesecommitmentsandrecenttrends,theRTSalreadyrepresentsamajorshiftfromahistorical“businessasusual”approachwithnomeaningfulclimatepolicyresponse.TheRTSrequiressignificantchangesinpolicyandtechnologiesintheperiodto2060aswellassubstantialadditionalcutsinemissionsthereafter.Theseefforts20IEA,EnergyTechnologyPerspectives2017CatalysingEnergyTechnologyTransformationsFoundationsofScience-basedTargetSetting1.026wouldresultinanaveragetemperatureincreaseof2.7°Cby2100,atwhichpointtemperaturesareunlikelytohavestabilisedandwouldcontinuetorise.The2°CScenario(2DS)laysoutanenergysystempathwayandaCO2emissionstrajectoryconsistentwithatleasta50%chanceoflimitingtheaverageglobaltemperatureincreaseto2°Cby2100.Annualenergy-relatedCO2emissionsarereducedby70%fromtoday’slevelsby2060,withcumulativeemissionsofaround1,170gigatonnesofCO2(GtCO2)between2015and2100(includingindustrialprocessemissions).Tostaywithinthisrange,CO2emissionsfromfuelcombustionandindustrialprocessesmustcontinuetheirdeclineafter2060,andcarbonneutralityintheenergysystemmustbereachedbefore2100.The2DScontinuestobetheETP’scentralclimatemitigationscenario,recognizingthatitrepresentsahighlyambitiousandchallengingtransformationoftheglobalenergysectorthatreliesonasubstantiallystrengthenedresponsecomparedwithtoday’sefforts.TheBeyond2°CScenario(B2DS)exploreshowfardeploymentoftechnologiesthatarealreadyavailableorintheinnovationpipelinecouldtakeusbeyondthe2DS.Technologyimprovementsanddeploymentarepushedtotheirmaximumpracticablelimitsacrosstheenergysysteminordertoachievenet-zeroemissionsby2060andtostaynetzeroorbelowthereafter,withoutrequiringunforeseentechnologybreakthroughsorlimitingeconomicgrowth.This“technologypush”approachresultsincumulativeemissionsfromtheenergysectorofaround750GtCO2between2015and2100,whichisconsistentwitha50%chanceoflimitingaveragefuturetemperatureincreasesto1.75°C.Energysectoremissionsreachnetzeroaround2060,supportedbysignificantnegativeemissionsthroughdeploymentofbioenergywithCCS.TheB2DSfallswithintheParisAgreementrangeofambition,butdoesnotpurporttodefineaspecifictemperaturetargetfor“wellbelow2°C”.TheSDAtarget-settingmethodTheSDAdiffersfromotherexistingmethodsbyvirtueofitssector-levelapproachandphysicalintensityperspective.TheSDAisintendedtohelpcompaniesinhomogenousenergyintensivesectors(sectorsthatcanbedescribedwithaphysicalindicator),includingthefollowing:●Powergeneration(MWh)●Ironandsteel(metrictonsofcrudesteel)●Aluminum(metrictonsofaluminum)●Cement(metrictonsofcement)●Pulpandpaper(metrictonsofpulpandpaper)●PassengerandFreighttransport(passenger-kilometer,tons-kilometer)FoundationsofScience-basedTargetSetting1.027●Serviceandcommercialbuildings(squaremeters).Withineachsector,companiescanderivetheirscience-basedemissionreductiontargetsbasedontheirrelativecontributiontothetotalsectoractivityandtheirinitialcarbonintensityrelativetothesector’sintensity.Theallocationapproachofthemethodis“intensityconvergence”.Itisbasedontheassumptionthatthecarbonintensityofeachcompanyinahomogeneoussectorwillconvergewiththesectorcarbonintensityin2050.Asitcurrentlystands,themethoddoesnotcovercertainactivitysectors(Agriculture,forestry,andotherlanduse;Oilandgasproduction;ResidentialBuildings,andothers).Themethodsteepensintensitypathwaysoffastgrowingcompaniestoaccountfortheirincreaseinmarketshare.Ifthisisnotaccountedfor,thesectoraverageintensitywillincreaseowingtothegrowth,resultinginanexceedanceofthesector'scarbonbudget.Theoppositehappenstotheintensitypathwaysofthecompaniesthatshowadecreasingmarketshare.Althoughthismightseemunrealisticorunfair,itmakessensefromabusinessperspective,becausewhenacompany'smarketshareisdecreasing,itwillprobablyinvestlessinnew,moreefficienttechnologies,andviceversa.Intheabsenceofsector-specificdecarbonizationpathwaysforheterogeneousindustrysectors,theSDAmethodusesanabsolutecontractionapproach.Allheterogeneousindustrysectorsarepartofthe“Otherindustry”sectorintheSDAtool.TheemissionspathwayexpressedintCO2isdeterminedbysubtractingthehomogeneousenergyintensivesectors’budgetsfromthetotalindustrybudgetintheETPmodel.ForafulldescriptionoftheSDAmethodpleaserefertotheSDAReport21.ScopesThismethodofconvergenceisusedforscope1andscope2emissionsintheSDAtool,resultinginthefollowingoutputsforhomogeneoussectors:scope1carbonintensitytarget,absolutescope1emissionsreductiontarget,scope2carbonintensitytarget,absolutescope2emissionsreductiontarget.Inaddition,acompanycanusemultiplesectorpathwaysintheSDAtoalsoaddressscope3activities.Forexample,acompanymayrequireitsaluminumsupplierstosettargetsinlinewiththeSDAaluminumpathway(purchasedgoodsandservices),usethecommercialbuildingspathwayforitsleasedassets,orusetheSDATransporttooltosettargetsforitstransportationanddistributionactivitiesinitsvaluechain.21SBTi.2015“SDA:Amethodforsettingcorporateemissionreductiontargetsinlinewithclimatescience”FoundationsofScience-basedTargetSetting1.028ComparisonofIEAemissionreductionscenariostoWB-2˚Cand1.5˚CscenariosDuetotherevisedGHGbudgetsthatwereintroducedinSR15,whichmayinvalidatethetemperaturelimitprobabilitiesassociatedwith2DSandB2DSspecifiedinBox3,aswellastheSBTi’sdecisiontodefinetargetambitionbyrelationtoscenarioenvelopesalignedwitheachtemperaturegoal,itisimportanttocomparethedifferentIEAscenariostothescenarioenvelopesdeterminedinSection3.1.Basedontheresultsofthiscomparison,theambitionoftheSDAusingaspecificETPpathwaymaybeconsideredalignedwith1.5˚CorWB-2˚C.Mostimportantly,theoverallemissionsreductionsshownbyanETPpathwayshouldalignwiththereductionsdepictedbyascenarioenvelope,tobeconsideredalignedintermsofambition.Additionally,theoveralltrajectoryofannualemissionsshouldbecomparable.AkeydifferencebetweentheIEAscenariosandenvelopescenariosisthetypeofemissionscovered:ETPpathwaysarelimitedtoCO2emissionsfromenergyandindustrialactivities,whilethescenarioenvelopeswerecalculatedbasedonKyotoGHGs.Fortunately,IIASAprovidesdozensofvariablesforeachIAMCscenario,includingCO2emissionsfromenergyandindustrialactivities,enablingarelevantcomparisonbetweenETPpathwaysandestablishedscenarioenvelops.Theannuallinearemissionsreductionratesfrom2020toabenchmarkyearfor2DSandB2DSarecomparedtothoseofeachscenarioenvelopeinFigures11and12.TheseconfirmthatwhiletheB2DSscenariofallsoutsidetherangeofreductionsrequiredfora1.5Ctemperaturegoal,itfallswithintherangeofambitiondefinedfortheWB-2°Cscenarioenvelope,andthereforetargetsmodeledwiththeSDAusingtheB2DSscenariocanbeconsideredalignedwithaWB-2°Ctemperaturegoal.TocomparethetrajectoryofannualemissionsinB2DStothatofthescenarioenvelope,emissionsineachscenariowerefirstnormalizedto2018duetothebroadspreadofestimatesamongdifferentscenarios.Figure13showsthatwhilethe2DSscenariofallsoutsidetherangeoftheWB-2°Cenvelopebyaround2035,annualemissionsinB2DSarecomparabletotheenvelopemedianbythatyear.2222WhiletheveracityofnormalizingeachemissionsscenariowasconsideredtobepotentiallyproblematicforthesakeofdeterminingscenarioenvelopesinSection3.1,itisareasonableapproximationforthecomparisonexercisehere.FoundationsofScience-basedTargetSetting1.029Figure11:Rangeofannuallinearreductionrates(years2020to2035)forenergyandindustrialactivityCO2emissionsintheIEAETP2DS(solidred)andB2DS(dottedred)pathwaysandthe1.5°Cscenarioenvelope.Figure12:Rangeofannuallinearreductionrates(years2020to2035)forenergyandindustrialCO2emissionsintheIEAETP2DS(solidred)andB2DS(dottedred)pathwaysandtheWB-°2Cscenarioenvelope.FoundationsofScience-basedTargetSetting1.030Figure13:Annualemissiontrajectories(normalizedto2018)forenergyandindustrialemissionsintheIEAETPB2DSscenarioandtheWB-2°Cscenarioenvelope.ChangestotheSDAmethodandtoolTheSDAmethodusesbothsectoralGHGemissionspathwaysandsectoralactivitygrowthprojections.Bothcandeviateovertimeduetochangingdecarbonizationratesordemandrates.Thisfactrequiresthatthemethodisperiodicallyrevisedtocheckthevalidityoftheprojectionsused,includingallthecarbonbudgetassumptions.Thus,regularlyupdatingtheglobalbudgetfigureintheunderlyingpathwayswillconstituteanimportantconditionontherobustnessandintegrityofthemethod.TheSBTiisassessingthesuitabilityofotherreferencesectormodels,aswell,sinceSDAtoolupdatesarecurrentlydependentonthepublicationofETPreports.TheSDAsectorcoverageisalsoexpanding,aspartnersoftheSBTiandotherexternalorganizationsaredevelopingnewsectorpathwaysnotcoveredbythecurrentSDAtool.Externaldevelopmentsneedtopassthroughavalidationprocess,offerpublicconsultationopportunities,andalignwiththeSBTiacceptedemissionsscenariosdefinitionsandbudgets.Withregardstothecurrenttechnicalupdate,theSBTiacknowledgesthatthedevelopmentofsectoralpathwaysalignedwitha1.5˚Ctemperaturegoalmustbeprioritizedasatechnicalresourcetosupportcompaniesinsettingmoreambitioustargets.Unfortunately,IEAETPscenariosalignedwith1.5˚Carenotcurrentlyavailable,andtheSBTiisthereforeunabletoprovidea1.5˚CSDAatthistimeasnoappropriateFoundationsofScience-basedTargetSetting1.031scenariomodelwithsectoralemissionsandactivitybreakdownhasbeenidentified.TheSBTiintendstodedicateadditionaltechnicalcapacityandengagewithresearchersandotherstakeholderstoinclude1.5˚CsectoralpathwaysintheSDAExceltoolinfuturework.Box4.AdjustmenttothemarketshareparameterequationintheSDAmethodWhenapplyingtheconvergenceapproachforhomogeneoussectors,acompany’sexpectedfutureactivitylevelsarecombinedwiththesector’sexpectedactivitylevelsfromthe2DSscenariotocalculateitsmarketshareparameterforaselectedtargetyear.Thiscalculationyieldsaninverseproportionofthecompany’smarketshare,resultinginadecreasingparameterwhencompany’smarketshareisincreasing.However,duringbeta-testingthefirstSDAExceltool,stakeholdersraisedthepotentialthreatofoverallocatingthecarbonbudgetincaseswhereacompanyunderestimatedtheirgrowth.TopreservetheintegrityoftheIEAETPcarbonbudget,theSBTteamintroducedasafeguardtothemarketshareparameterwhenahomogeneouscompanyprojectedadecreaseintheiractivitylevelsleadingtoareducedmarketshare(i.e.marketshareparameteriscappedto1.0).SincethereleaseoftheSDAtooloccurredafterthepublicationoftheSDAtechnicalpaperin2014,thissafeguardwasnotfullydescribedintheSDAformulae.Therefore,whiletheactualmarketsharecalculationremainedunmodified,theex-postadjustmentintheSDAtoolisasfollows:=if(my<=1,my,1)my=(CAb/SAb)/(CAy/SAy)equation(4)inSDAreportWhere:myMarketshareparameterinyeary(%)CAbActivityofthecompanyinbaseyearbSAbActivityofthesectorinbaseyearbCAyActivityofthecompanyinyearySAyActivityofthesectorinyearyFoundationsofScience-basedTargetSetting1.0323.3EconomicintensitytargetsTheGEVAmethod,introducedbyJorgenRandersin2012,equatesacarbonbudgettototalglobalGDPandacompany’sshareofemissionsisdeterminedbyitsgrossprofit,sincethesumofallcompanies’grossprofitsworldwideequatetoglobalGDP.23Randers’highlightsthatifallnations(orcompanies)reducedtheiremissionsperunitofGDP(valueadded)by5%peryear,globalemissionswouldbe50%lowerin2050comparedto2010.Inthesixyearssincethatpaperwaspublished,boththeunderlyingGDPandemissionsassumptionshavechanged,andtheminimumreductionrateendorsedbytheSBTihasincreasedfrom5%to7%.24Importantly,theeffectivenessofthemethoditselfhasnotbeenrobustlyassessed.GEVAisfoundedonasubtlemathematicalapproximationthatcannotbeacceptedwithoutjustification;thus,wespecifythatthecurrentlyacceptedGEVAvaluedependsonidealizedconditionswhereallcompaniesaregrowingatthesamerate,equaltothatofGDP,andGDPgrowthispreciselyknown25.Futureworkwillfocusonthedeterminationofamorerobusteconomicintensitytarget-settingmethod,eitherbyaddressingthepracticalimplicationsofthisassumptionandadjustingtherateaccordinglyorbyconductingasimilarlythoroughassessmentofexistingthird-partymethods;however,intheinterim,theSBTionlyacceptseconomicintensitytargetsformulatedwithGEVAforscope3targets.23Randers,Greenhousegasemissionsperunitofvalueadded(“GEVA”)—Acorporateguidetovoluntaryclimateaction24SBTi,UpdatedGEVAcalculation(forthcoming)25TheGEVAmethodequatesasumofproducts(thesumofeachcompany’sGEVAtargetmultipliedbyitsvalueadded)totheproductofsums(globalGEVAtargetmultipliedbyglobalGDP),whichisaninvalidmathematicalapproximation--particularlyunderactualmarketconditions,inordertoachieveaglobalemissionsreductionFoundationsofScience-basedTargetSetting1.0334.Scope3Scope3emissionsarethelargestsourceofacompany’semissionsinmostsectors,oftenaccountingforseveraltimestheimpactofitsscope1and2emissions.26Fromanaccountingperspective,however,itisunclearhowtoassignresponsibilityfortheseemissions,asonecompany’semissionsinventoryoverlapswiththoseofoneormoreothercompaniesorconsumers.Moreover,thelevelofinfluencethatacompanyhasoveritsscope3emissionsvariesbyscope3categoryandmanyotherfactorssuchasthereportingcompany’spurchasingpower,operationalareas,andthenatureofitsinvestments.Whilepresentingachallengetodeterminingscope3benchmarksthatarecomparableacrosscompaniesandsectors,theoverlapalsocreatescollaborativeopportunitiestoreduceamuchgreatervolumeofemissions.TheSBTi’sValueChangeintheValueChain:BestPracticesinScope3Target-Settingdescribestheseopportunitiesandprovidespracticalguidanceonhowcompaniesindifferentsectorscanbestaddresstheirscope3emissions.Companiesareencouragedtosetscope3targetsusingthesamescience-basedmethodsthatarerequiredforscopes1and2;however,duetothecomplexitiesdescribedabove,theSBTialsoacceptsanumberoftargetformulationsthatareconsidered“ambitious,”butnotscience-basedaccordingtothesamemodels.Readersaredirectedtothe“Science-basedTargetSettingManual”andthe“SBTiCriteria”foranin-depthexplanationofscope3targetrequirements.26SBTi,ValueChangeintheValueChainFoundationsofScience-basedTargetSetting1.034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OT,C-ROADS-5.005-Ratchet-1.5-limCDR-noOS,REMIND-MAgPIE1.7-3.0-SMP_1p5C_Sust,REMIND-MAgPIE1.7-3.0-SMP_1p5C_regul,IMAGE3.0.1-IMA15-LiStCh,REMIND-MAgPIE1.7-3.0-SMP_1p5C_lifesty,IMAGE3.0.1-SSP1-19,IMAGE3.0.1-IMA15-AGInt,REMIND-MAgPIE1.7-3.0-SMP_1p5C_early,IMAGE3.0.1-IMA15-Pop,IMAGE3.0.1-IMA15-Eff,IMAGE3.0.1-IMA15-Def,MESSAGE-GLOBIOM1.0-ADVANCE_2020_1.5˚C-2100,REMIND1.5-EMC_LimSW_100$,REMIND1.5-EMC_Def_100$,REMIND1.5-EMC_lowEI_100$,REMIND1.5-EMC_NucPO_100$4.Removed5scenariosinqualitativescreendelayandnear-term:POLESEMF33-EMF33_WB-2˚C_limbio,AIM/CGE2.1-CD-LINKS_NPi2020_400,POLESEMF33-EMF33_WB-2˚C_nofuel,POLESEMF33-EMF33_WB-2˚C_cost100,POLESADVANCE-ADVANCE_2020_1.5˚C-210020finalscenarios:POLESEMF33-EMF33_WB-2˚C_nobeccs,AIM/CGE2.0-SSP1-19,REMIND1.7-CEMICS-1.5-CDR8,REMIND1.7-CEMICS-1.5-CDR12,REMIND-MAgPIE1.7-3.0-PEP_1p5C_red_eff,AIM/CGE2.1-TERL_15D_NoTransportPolicy,AIM/CGE2.0-SSP2-19,AIM/CGE2.1-TERL_15D_LowCarbonTransportPolicy,POLESEMF33-EMF33_1.5˚C_nofuel,POLESEMF33-EMF33_1.5˚C_cost100,WITCH-GLOBIOM4.4-CD-LINKS_NPi2020_400,POLESEMF33-EMF33_1.5˚C_full,POLESEMF33-EMF33_1.5˚C_limbio,MESSAGE-GLOBIOM1.0-EMF33_1.5˚C_cost100,MESSAGE-GLOBIOM1.0-EMF33_1.5˚C_full,POLESEMF33-EMF33_WB-2˚C_none,WITCH-GLOBIOM3.1-SSP1-19,WITCH-GLOBIOM3.1-SSP4-19,AIM/CGE2.0-ADVANCE_2020_1.5˚C-2100,WITCH-GLOBIOM4.2-ADVANCE_2020_1.5˚C-21006.2WB-2˚CscenarioenvelopeSeefigure9foraschematicofscenariosremovedateachstepFoundationsofScience-basedTargetSetting1.0381.FullsetofIAMClow2˚Cscenarios2.Removed22scenariosduetoemissionsbudget:MESSAGE-GLOBIOM1.0-EMF33_Med2˚C_nobeccs,MESSAGE-GLOBIOM1.0-EMF33_Med2˚C_none,REMIND-MAgPIE1.7-3.0-EMF33_WB-2˚C_nobeccs,AIM/CGE2.0-SSP1-26,AIM/CGE2.0-SSP4-26,GCAM4.2-SSP1-26,IMAGE3.0.1-CD-LINKS_NPi2020_1000,AIM/CGE2.1-TERL_2D_LowCarbonTransportPolicy,REMIND1.7-CEMICS-2.0-CDR12,WITCH-GLOBIOM4.4-CD-LINKS_NPi2020_1600,IMAGE3.0.1-SSP1-26,AIM/CGE2.0-SSP2-26,AIM/CGE2.1-TERL_2D_NoTransportPolicy,WITCH-GLOBIOM3.1-SSP1-26,MESSAGE-GLOBIOM1.0-EMF33_tax_hi_full,WITCH-GLOBIOM3.1-SSP2-26,WITCH-GLOBIOM3.1-SSP4-26,REMIND-MAgPIE1.7-3.0-EMF33_WB-2˚C_nofuel,AIM/CGE2.1-EMF33_Med2˚C_nofuel,AIM/CGE2.1-EMF33_Med2˚C_none,POLESADVANCE-ADVANCE_2020_Med2˚C,POLESADVANCE-ADVANCE_2030_Med2˚C3.Removed17scenariosduetopeakyremissions:REMIND-MAgPIE1.7-3.0-SMP_2˚C_early,REMIND-MAgPIE1.7-3.0-SMP_2˚C_Def,AIM/CGE2.0-SFCM_SSP2_Bio_1p5Degree,AIM/CGE2.0-SFCM_SSP2_EEEI_1p5Degree,AIM/CGE2.0-SFCM_SSP2_LifeStyle_1p5Degree,AIM/CGE2.0-SFCM_SSP2_Ref_1p5Degree,AIM/CGE2.0-SFCM_SSP2_ST_CCS_1p5Degree,AIM/CGE2.0-SFCM_SSP2_ST_bio_1p5Degree,AIM/CGE2.0-SFCM_SSP2_ST_nuclear_1p5Degree,AIM/CGE2.0-SFCM_SSP2_ST_solar_1p5Degree,AIM/CGE2.0-SFCM_SSP2_ST_wind_1p5Degree,AIM/CGE2.0-SFCM_SSP2_SupTech_1p5Degree,AIM/CGE2.0-SFCM_SSP2_combined_1p5Degree,MESSAGEV.3-GEA_Eff_AdvNCO2_1p5C,MESSAGEV.3-GEA_Eff_1p5C,MESSAGEV.3-GEA_Mix_1p5C_AdvNCO2_PartialDelay2020,MESSAGEV.3-GEA_Mix_1p5C_AdvTrans_PartialDelay20204.Removed7scenariosinqualitativescreendelayandnear-term:REMIND-MAgPIE1.7-3.0-PEP_2˚C_red_goodpractice,REMIND-MAgPIE1.7-3.0-PEP_2˚C_red_NDC,IMAGE3.0.1-SSP2-26,REMIND-MAgPIE1.7-3.0-PEP_2˚C_full_netzero,MESSAGEix-GLOBIOM1.0-CD-LINKS_NPi2020_1000,POLESCD-LINKS-CD-LINKS_NPi2020_1000,MESSAGE-GLOBIOM1.0-ADVANCE_2030_WB-2˚C28finalscenarios:REMIND-MAgPIE1.7-3.0-EMF33_WB-2˚C_none,POLESEMF33-EMF33_Med2˚C_nobeccs,POLESEMF33-EMF33_Med2˚C_none,IMAGE3.0.1-SSP4-26,REMIND1.7-CEMICS-2.0-CDR8,REMIND-MAgPIE1.7-3.0-PEP_2˚C_red_eff,REMIND-MAgPIE1.7-3.0-PEP_2˚C_red_netzero,REMIND-MAgPIE1.7-3.0-EMF33_WB-2˚C_limbio,AIM/CGE2.1-EMF33_WB-2˚C_full,POLESEMF33-EMF33_Med2˚C_limbio,REMIND-MAgPIE1.7-3.0-PEP_2˚C_full_eff,AIM/CGE2.1-CD-LINKS_NPi2020_1000,REMIND-MAgPIE1.7-3.0-CD-LINKS_NPi2020_1000,POLESEMF33-EMF33_Med2˚C_nofuel,POLESEMF33-EMF33_Med2˚C_cost100,POLESEMF33-EMF33_Med2˚C_full,AIM/CGE2.0-SSP5-26,IMAGE3.0.1-ADVANCE_2030_WB-2˚C,IMAGE3.0.1-ADVANCE_2020_WB-2˚C,AIM/CGE2.0-ADVANCE_2030_WB-2˚C,MESSAGE-GLOBIOM1.0-ADVANCE_2020_WB-2˚C,AIM/CGE2.0-FoundationsofScience-basedTargetSetting1.039ADVANCE_2020_WB-2˚C,AIM/CGE2.0-ADVANCE_2030_Price1.5˚C,MESSAGEV.3-GEA_Eff_1p5C_Delay2020,REMIND1.7-ADVANCE_2020_WB-2˚C,WITCH-GLOBIOM4.2-ADVANCE_2030_Price1.5˚C,WITCH-GLOBIOM4.2-ADVANCE_2030_WB-2˚C,WITCH-GLOBIOM4.2-ADVANCE_2020_WB-2˚CFoundationsofScience-basedTargetSetting1.0407.Appendix2.ComparisonofscenarioenvelopeandSSPsInthisappendix,the1.5˚CandWB-2˚CscenarioenvelopesarecomparedtoSSPstobetterunderstandthepotentialsocioeconomicandmitigationcontextofeachenvelope.ThefiveSSPs,whichwerefirstpublishedin2016,reflectbroadnarrativesabouthowthefuturemightevolve.TheSSPsthemselvesarenottiedtospecifictemperatureoutcomes,butarerunwithvariouslevelsofclimatepolicytolimitradiativeforcingtoaspecificlevel,rangingfrom1.9-8.0W/m^2asintheRadiativeConcentrationPathways(RCPs).27SSP1(Sustainability)andSSP2(MiddleoftheRoad)arethemostrelevanttotheSBTi,astheyarecharacterizedbytheco-achievementofSDGs(SSP1)ormaintenanceofthestatusquo(SSP2),aswellasrepresentinglowtomediumchallengestomitigationandadaptation,whereasSSP3(RegionalRivalry),SSP4(Inequality),andSSP5(Fossil-FueledDevelopment)arecharacterizedbyhighchallengestoadaptationand/ormitigation.28InSR15,fourarchetypepathwaysthatlimitwarmingto1.5˚CweredesignatedbasedonSSP1-RCP1.9(S1),SSP2-RCP1.9(S2),SSP5-RCP1.9(S3),andanew1.5˚Csustainability-focusedscenariocalledLowEnergyDevelopment(LED)(Figure14).29Figure14:GlobalnetCO2emissionsinBelow-1.5°C,1.5°C-low-OS,and1.5°C-high-OSpathwayswitharchetypescenarioshighlighted3027IPCC,AR528Riahietal.,“TheSharedSocioeconomicPathwaysandtheirenergy,landuse,andgreenhousegasemissionsimplications:Anoverview”29Thefollowingmodelsareused:AIM/CGE2.0(S1),MESSAGE-GLOBIOM1.0(S2),REMIND-MAgPIE1.5(S3),andMESSAGEix-GLOBIOM1.0(LED)30IPCC,SR15FoundationsofScience-basedTargetSetting1.041The1.5˚Cscenarioenvelopeiscomparedtoallfourarchetypepathwaysbetween2020-2035,whichcorrespondstothespanoftimethattheSBTiiscurrentlyassessingtargets.AsshownbyFigure15,theenvelopeismostcloselyalignedwithLEDandS1,whileS2andS3falloutsidetheenvelopeduetotheirextensiverelianceonnegativeemissionstoreturnto1.5˚Clevelsafterovershootingthecarbonbudget.Figure15:Comparisonofthe1.5˚Cscenarioenvelope(purplelines)witharchetypepathways(bold,blacklines)between2020and2035ThereareanalogousRCP2.6pathwaysforarchetypesS1,S2,andS3,buttheirrelationshiptoWB-2˚CisdifferentthanthatofRCP1.9pathwaysto1.5˚CbecauseofthehighertemperatureprobabilitythresholdassociatedwiththeSBTiWB-2˚Cclassification.Amongtheanalogousscenarios,identifiedherebythearchetypesymbolappendedbye,onlyS1e(AIM/CGE2.0SSP1-RCP2.6)hasa>66%chanceofstayingbelow2˚C(i.e.“Lower2˚C”classification),whereasS2e(MESSAGE-GLOBIOM1.0SSP2-RCP2.6)hasa50-66%chanceofstayingbelow2˚C(i.e.“Higher2˚C”classification),andS3e(REMIND-MAgPIE1.5SSP5-RCP2.6)hasa>50%chanceofexceeding2˚Cbetween2020-2100(i.e.“Above2˚C”classification).AsdescribedinChapterX(TableX),S2eandS3ewouldbefilteredoutofaWB-2˚CenvelopeinthefirststepduetotheirMAGICC-derivedtemperaturelimitprobability,sotheyaresomewhatlessrelevantforcomparison.Toprovideadditionalcontext,threeSSP2-26“Lower2˚C”pathways(runusingdifferentFoundationsofScience-basedTargetSetting1.042models)withtemperaturelimitprobabilitiesthatconformtotheinputWB-2˚Cscenariosetarealsoincludedforcomparison(Figure16).SSP2ishighlightedbecausethepathwayrepresentsatruemiddlegroundamongthesuiteofSSPsintermsofchallengestomitigationandadaptation,anditismostalignedwithhistoricalexperience,particularlyintermsofcarbonandenergyimprovementsinthebaselineRCP.31Asexpected,S3eandS2efalloutsidetheWB-2˚Cscenarioenvelopebetween2020-2035.S1eandtheotherthreeSSP2-26pathwaysfallaroundthe50thpercentileorlowerrelativetotheenvelope.Figure16:ComparisonoftheWB-2˚Cscenarioenvelope(coloredlines)withaselectionofSSP/RCP2.6pathways(bold,blacklinesandyellowlines)between2020and203531Frickoetal.,“TheMarkerQuantification”FoundationsofScience-basedTargetSetting1.0438.Appendix3.ScientificAdvisoryGroupTheScientificAdvisoryGroup(SAG),co-chairedbyChrisWeber(WWF)andPedroFaria(CDP),iscomposedofleadingclimateandenergyscientistswhoareconsultedbytheinitiativeonaquarterlybasis(Figure17).TheSAG,whichwasconvenedinSummer2018,hasbeenanimportantresourceinthedevelopmentoftheSBTi’stechnicalupdateinresponsetoSR15andhascontributedasubstantialamountoffeedbackthatisreflectedbythefinalcontentsofthisreport.TheSBTiwouldliketosincerelythankthemembersoftheSAGfortheirinvolvement.Figure17:MembersoftheScientificAdvisoryGroup(April2019)FoundationsofScience-basedTargetSetting1.0449.DocumentHistoryVersionChange/updatedescriptionDatefinalizedEffectiveDates1.0FirstpublicationApril2019Notapplicable
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