Module 2: Transition Risks
Activity
Activity
This activity involves using data to formulate observations and conclusions regarding an economic sector’s exposure to transition risks under various socioeconomic scenarios. Below are the tasks required:
- Read the overview and descriptions of the five Shared Socioeconomic Pathways (SSPs). The SSPs will be combined with RCPs (Representative Concentration Pathways, used in Activity 1) to generate the scenarios we’ll use in this activity.
- Choose a climate policy relevant sector of the economy that interests you.
- Open the SSP database and go to the IAM Scenarios tab (IAM stands for Integrated Assessment Model)
- In the menu for Model/Scenarios choose SSP1 – 1.9, SSP2 – 1.9 and SSP5 – 1.9. (Review the SSP storylines to understand the underlying assumptions of the three models; the number refer to the RCP scenario for RCP1.9—the pathway consistent with a global warming target of 1.5C.)
- In the Menu for Variable, choose Climate/Temperature/Global Mean and note the projected warming trend over time.
- In the menu for Variable, choose Economic Indicators/Price|Carbon. Notice the different carbon price trajectory for the three SSP scenarios
- Consider the transition risk exposure of the economic sector you chose in Step 1 in each of the three scenarios. Answer the following questions:
- Which scenario poses the greatest transition risk and which the least?
- What are the implications of each scenario for investors in your sector?
- Referring back to the storylines, what are the socioeconomic conditions that generate the lowest transition risks?
- Post your observations and conclusions to the Module 2 discussion forum.
- Read observations posted by others and comment on at least two.