The last few years have seen a significant number of national emissions-reduction plans evolve from targeting a percentage reduction relative to 1990 levels to an absolute goal: aiming for net-zero emissions by around mid-century.
In the case of the UK and the EU, their net-zero targets are now legally binding. The UK has set five-yearly carbon budgets and created an independent body to help ensure it gets there. Other countries also joined the ‘net-zero party’ in 2020, including South Korea and Japan, which have also set a target date of 2050, and most notably China, which aims for 2060.
This marks a significant step-up from the countries’ previous emissions-intensity based pledges. In the US, newly inaugurated President Biden’s third act in office was to sign an executive order enabling the US to re-join the Paris Agreement. Biden is also planning for the US to reach net-zero by 2050.
In total, 127 countries, representing 63% of global emissions, have now adopted or are considering net-zero targets. This is welcome. Analysis from Climate Action Tracker  finds these plans now put the Paris Agreement’s 1.5C target ‘within striking distance’ (see Exhibit 1). As always, however, the devil will be in the detail.
Exhibit 1: New net-zero announcements made in 2020 have put the Paris Agreement targets within reach – this shows the estimates from 2009-2020 for ‘pledges and targets’ and ‘current policies’
Source: Climate Action Tracker
Net-zero targets represent an end point. What matters is the pathway. One of the elements of the Paris Agreement is a ratcheting-up every five years of the ambition to make up the emissions gap between countries’ official UN climate pledges (or nationally determined contributions – NDCs) and the carbon budget to meet the 1.5C or 2C cap on global warming.
This year’s COP26 meeting in Glasgow is where nations are expected to flesh out updated – and more ambitious – NDCs to reduce emissions by 2030. However, only 40 countries have submitted new NDCs and only eight of these have been ranked as more ambitious than their previous iterations. There is a lot of work to do.
Investing for a green recovery
Amid the economic turmoil created by the COVID-19 pandemic, phrases such as ‘build back better’ and ‘green recovery’  have become commonplace. As the world continues to endure disruption, one light on the horizon is the prospect that recovery plans will involve substantial investment in sustainability towards net zero, benefiting the planet and its people.
Taking South Korea, the government said in December it intends to target considerable investments in cleaner mobility. The country plans to install 20 million electric vehicle (EV) chargers at people’s homes by 2050, potentially financed via a climate-response fund. Additionally, it intends to pursue carbon-free fuel technologies for trains and ships, while looking at zero-emission solutions for the construction of new buildings.
The country is also reportedly planning to invest in the expansion of green hydrogen as a fuel source, something it has in common with European countries. Germany, for example, earmarked USD 10 billion in mid-2020 to support hydrogen as part of a COVID-19 recovery package that was also geared towards other technology supporting efforts to combat climate change.
The two nations also share a similarity when it comes to investing in more sustainable transport. In June, Germany stated it would invest about USD 567 million to grow the country’s EV-charging network. More recently, the government has said that it will amend a law to double the share of renewable energy use in the transport industry from the EU’s requirement of 14% to 28% by 2030.
Both Germany and South Korea were recently ranked in the top quartile by Bloomberg NEF analysis assessing which G20 economies are implementing policy measures consistent with the Paris Agreement.  The analysis, however, also laid out in stark terms why substantial investment is needed to meet the net-zero targets several nations have already committed to.
Around 290 million public charging points, for example, will be needed by 2040 to meet the needs of growing EV fleets. That equates to roughly USD 111 billion of investment in public charging infrastructure over the next 20 years.
Other analysis points to the high sums needed to reach climate targets. PwC, for example, estimates the UK will require GBP 40 billion a year to be invested in low-carbon and digital infrastructure over the next decade to have a chance of meeting its 2050 net-zero target. 
Hydrogen and carbon removal
More generally, as the low-hanging fruit of decarbonising electricity grids with increasingly commercial renewable energy technologies disappears, countries will have to move to less-established technologies such as hydrogen (green and blue) and carbon capture and storage to lower emissions in hard-to-decarbonise sectors.
Where countries have used carbon pricing to help implement climate policy, it’s likely technologies such as hydrogen will move to become the driver of prices and could more than double the current price of carbon by 2030. 
To limit the rise in global temperatures to 1.5C, negative emissions technologies that remove CO2 from the atmosphere may be needed.
In summary, the decarbonisation journey is off to a good start. The harder-to-decarbonise sectors are next. Significant investment in the next wave of clean energy technologies will be key to meeting the cavalcade of net-zero targets that now exist worldwide.
 See Paris Agreement turning point at https://climateactiontracker.org/documents/829/CAT_2020-12-01_Briefing_GlobalUpdate_Paris5Years_Dec2020.pdf
 Also read Positioning for a green recovery from COVID-19
 See G20 Zero-Carbon Policy Scoreboard at https://assets.bbhub.io/professional/sites/24/BNEF-G20-Zero-Carbon-Policy-Scoreboard-EXEC-SUM.pdf?utm_source=newsletter&utm_medium=email&utm_campaign=newsletter_axiosgenerate&stream=top
 See Unlocking investment for Net Zero infrastructure at https://www.pwc.co.uk/issues/real-assets/infrastructure-investment-in-net-zero.html
 Read Deep decarbonization – Green hydrogen, net zero and the future of the EU ETS (a BNP Paribas Asset Management paper) at https://www.bnpparibas-am.com.au/Institutions-Consultants/deep-decarbonization-a-new-research-paper-by-mark-lewis/
- Also read The latest on the carbon trading market and a keen appetite for offshore wind assets
- The COP that was not – Will postponing COP26 affect global climate action?
- More on sustainable investing
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