NGFS Long-Term Scenarios for Central Banks and Supervisors - 2024 Update

Table of Contents

• NGFS long-term scenarios for central banks and supervisors 1
• Joint foreword 2
• Acknowledgements 3
• Key messages 4
• What is new in the NGFS scenarios 4
• Main results of the NGFS scenarios 4
• Contents 5
• NGFS scenarios Overview 6
• What are the NGFS scenarios 7
• The NGFS developed climate scenarios to inform analysis and guide policy worldwide. 7
• Objectives and framework 8
• The NGFS scenarios explore the impacts of climate change and the transition with the aim of providing a common reference framework. 8
• Scenario narratives 9
• Scenarios at a glance 12 10
• Scenarios are characterised by their overall level of physical and transition risk. This is driven by the level of policy ambition policy timing coordination and technology levers. 10
• Scenarios at a glance 22 11
• Climate risks 12
• Climate risks could affect the economy and financial system through a range of transmission channels. 12
• NGFS modelling framework 13
• NGFS modelling framework 14
• The NGFS scenarios consist of a set of climate-related and macro-financial variables available for each model scenario and geography. 14
• Whats new in Phase V of the NGFS scenarios 15
• Physical risk new damage function 16
• An updated version of the SSPs 17
• Shared Socioeconomic Pathways SSP2 version 3.0. 17
• New models and updated policy commitments 18
• Higher peak temperatures 19
• Main results of the NGFS scenarios 20
• Carbon prices 21
• Emissions and primary energy consumption 22
• Energy prices 23
• Main results of the NGFS Scenarios 24
• There are no updates of individual hazards modelling in Phase V. 25
• Acute physical risk individual hazards modelling 25
• Chronic physical risk higher impact 26
• Chronic physical risk new dynamics 27
• Interpreting and using physical risk results 28
• As part of the Phase V release we drafted an explanatory note on the implementation of the new damage function. The key arguments of the note are also reflected in two VoxEU columns. 29
• More on chronic physical risk modelling 29
• Part 1 Measuring economic losses caused by climate change 29
• Part 2 Economic losses from climate change are probably larger than you think new NGFS scenarios 29
• Main results of the NGFS Scenarios 30
• The NGFS scenarios show that inaction or delayed transition will generate higher costs in the longer term. Economic impacts differ significantly across scenarios time and countries. 31
• Gross Domestic Product 31
• Inflation and unemployment 32
• Interest rates 33
• Net Zero 2050 is an ambitious scenario that limits global warming to 1.5 C through stringent and forcefully impact the economy. 34
• Phase V vs Phase IV Net Zero 2050 scenario 34
• The level of commitments of countries depend on currently implemented policies leading to heterogeneity at the global level. 35
• Phase V vs Phase IV Delayed Transition scenario 35
• Phase V vs Phase IV Current Policies scenario 36
• Data access tools and resources 37
• Accessing NGFS scenario data 38
• Updated technical documentation 39
• Overview of resources on NGFS scenarios 40
• What is next 41
• NGFS long-term scenarios to be further enhanced 42
• First vintage of the NGFS short-term scenarios 42
• NGFS scenarios improvement innovation 42