The Net Zero Tracker team presented in Bonn the latest analysis ‘The Net Zero Stocktake 2023’, the third annual stocktake of the NZT consortium, which follows those of December 2020 and June 2022.  NZT is an independent research consortium comprising The Energy & Climate Intelligence Unit (ECIU), Data-Driven EnviroLab (UNC), NewClimate Institute and Oxford Net Zero.

Through the use of advanced Artificial Intelligence and Machine Learning approaches to automatically extract data and, above all, thanks to the work of many volunteer university students, the consortium has built a database that collects almost all net zero commitments made by nations, states and regions, cities and large companies. 

In detail, the commitments of:

  • all UNFCCC member states and a selected number of territories;
  • the states and sub-national regions of the 25 largest emitting countries; 
  • all cities in the world with a population of over 500,000 inhabitants; 
  • listed companies that were included in the Forbes Global 2000 ranking in 2020.

In the Stocktakes that were carried out, both the extent to which new targets are set and the indicators of their robustness were assessed, comparing them with reports from previous years.

Net zero targets at the national level

The Stocktake Net Zero Tracker of 2023 shows that a clear consensus has been reached over the past two and a half years to reduce greenhouse gas emissions to zero at the level of national targets. The national net zero targets now collectively represent:

  • 88% of global GHG emissions (from 61% in December 2020);
  • 92% of global GDP (up from 68% in December 2020);
  • 89% of the global population (up from 52% in December 2020).

The analysis shows that in the last 12 months, many national governments have shifted their focus to formalising existing informal commitments. Notably 72 national net zero targets, including those of the US, UK, Nigeria and Japan, are either enshrined in legislation or outlined as targets in policy documents.

Net zero targets at the sub-national and corporate level

Unfortunately, the situation is far worse for sub-national and corporate-level entities.

The 37% of the world’s largest companies have not set any kind of GHG mitigation target. Of those that have declared them, the US has 49% of companies, unlike the European Union where it is 79%. 41% of the world’s states have no mitigation targets, while the G7 (80%), the EU (75%) and the US (72%) do. Only 252 large cities have set climate neutrality targets, which represent 37% of the 2.1 billion people living in large cities.

On the corporate side – whose contribution is essential – there has been remarkable growth, with the number of targets doubling in the last 2.5 years (now 929; from 417 in 2020 to 702 in 2022). But despite the progress made in setting corporate targets, NZT warns that the integrity of corporate emission reduction targets must be urgently improved if they are to be achieved on time. 

These are the critical points:

  • Only 4% of companies’ net zero commitments meet the criteria set out in June 2022 by the UN’s Race to Zero campaign. These include having a clear investment plan for the transition, having a science-based target in 2030, not lobbying against green policies, and not basing one’s strategy on offsetting. 
  • only 37% of the targets fully cover indirect emissions related to the value chain (e.g. use of products sold or production of raw materials), which generally constitute the largest share of total emissions;
  • only 13% of the analysed companies state quality criteria for carbon credits that would be used.

Fossil fuel companies 

Stocktake also assessed one of the key policy issues ahead of the COP28 hosted by the United Arab Emirates, namely the decarbonisation commitments of fossil fuel companies.

The number of the 114 largest oil and gas companies analysed with net zero targets rose sharply to 75 in May 2023, from 51 in June 2022.

However, the sector’s climate targets have the following credibility gaps.

  • most of the 75 net zero targets of oil and gas companies do not fully cover or clarify the coverage of scope 3 emissions, i.e. emissions related to the value chain (to be distinguished from scope 1 and 2, which are direct emissions). This makes them essentially irrelevant since, for example, emissions from the use of fuels sold would fall right into scope 3;
  • none of these 114 companies has committed to a target of a complete phase-out of fossil fuel activities.

Recalling that a report commissioned by UN Secretary-General António Guterres, entitled ‘Integrity Matters: Net Zero Commitments by Businesses, Financial Institutions, Cities and Regions’, which we have discussed here, was presented at COP27 in Sharm El Sheik. According to the report, to be credible, a net zero commitment must include short-term intermediate targets, strict conditions on the use of offset credits, a planned halt in the use of fossil fuels, and a transition to renewable energies. In short, fossil fuel phase-out is a mandatory part of any credible net zero plan.

Voluntary standards

The NZT also assessed the evolution of the voluntary standards landscape. The report concludes that, in principle, accountability standards converge at a high level, but further convergence is needed in specific areas, including detailed criteria and requirements regarding 

  • setting emission reduction targets in line with the 1.5°C temperature limit;
  • the use of offset declarations;
  • financing fossil fuels as part of a net zero strategy;
  • setting fair targets for communities affected by net-zero transitions;
  • alignment of climate action with lobbying and advocacy through trade associations.

Stocktake reiterated, therefore, the substantial gap in climate regulation, which is currently limited to disclosure, that needs to be filled to hold non-state entities accountable.

“We have recently seen a promising convergence on higher-level principles on what constitutes a good net zero in all available guidelines,” commented Frederic Hans, Senior Climate Policy Analyst at the NewClimate Institute. “The focus must now shift to achieving convergence on more specific criteria and translating them into practice.

Article by Elisa Terenghi, ICN Volunteer

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