This report, developed by the Network for Greening the Financial System (NGFS), presents the fifth phase of the NGFS climate scenarios, offering updated projections for central banks and supervisors to assess climate-related risks in financial systems. The 2024 version includes enhancements in climate risk modeling, featuring a new damage function that better captures the economic impacts of chronic and acute climate risks. The scenarios consider a range of futures, including orderly, disorderly, and "hot house" world scenarios, each reflecting different trajectories for policy implementation and climate impacts. With insights into the macroeconomic and financial consequences of climate inaction versus proactive transition efforts, this report emphasizes the urgency of coordinated climate policies to mitigate economic disruption. Scenario data is accessible through the NGFS online portal, supporting informed policy and risk management in financial sectors worldwide.
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- France
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
