Carbon dioxide (CO2) emissions account for 70% of greenhouse gases (GHGs) in the atmosphere. Since these have a profound effect on global warming, governments, companies and investors are looking to net-zero policies to speed up decarbonisation.
Most CO2 emissions come from burning fossil fuels, but technological innovation and energy efficiency can reduce major sources of emissions from four sectors: power generation, transport, buildings and industrials. These 'decarbonisation pathways' have the potential to reduce total emissions by 81% by 2050.
A high proportion of carbon is currently created by power generation, so using decarbonisation technology in this sector can lead to significant change.
With more alternatives to petrol being developed, and increasingly stringent regulations, the transportation sector is quickly evolving.
Source: International Energy Agency (IEA), HSBC
Fossil fuels heat and cool structures around the world. However, new technologies like hydrogen gas, as well as new building codes, will make a big difference.
Source: IEA, The World Resources Institute, HSBC
Mining, metal processing, and the production of gas and oil can be carbon intensive. Electrifying these industries could make them much cleaner.
Energy efficiency and renewable alternatives play critical roles in the drive towards net zero. Investments in specific technologies can speed up this effort. Watch emerging developments aimed at lowering emissions, as they will be key to limiting global warming.
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There is no guarantee that an investment approach which considers environmental, social and governance ("ESG") or impact investment factors will produce returns similar to those which don't consider these factors. Investments which consider ESG or impact investment factors may diverge from traditional benchmarks, returns and risk. Regulations about what constitutes ESG or impact investment are evolving. There is no standard definition of, or measurement criteria for ESG or impact investment. ESG and impact investment measurement criteria are subjective and may vary significantly across and within sectors.
