Climate change scenarios enable us to explore different possible evolutions of human societies and their implications for the climate (and vice versa). The purpose is not to predict the future – no probability is associated with the different scenarios – but to consider the uncertainty and support our decision making. The scenarios represent a series of potential climate outcomes and anticipated consequences flowing from these. This allows us to test the resilience of our strategy and our business model.
We use best-practice climate change scenario analysis to help identify our climate-related risks and opportunities, and to enable a better understanding of the resilience of our business model and strategy. We have developed three climate change scenarios utilising our Whakamana i Te Mauri Hiko work to assess transition risks, and the Intergovernmental Panel for Climate Change (IPCC) data linked to assess physical risks:
- Transition risks are linked to the ability of Aotearoa New Zealand to decarbonise and electrify. The decarbonisation of our economy will rely on our ability to enable the growing electricity demand as the country moves away from fossil fuels.
- Physical risks are directly dependent on the intensity of global warming. We have used data provided by the IPCC in their 5th and 6th assessment report as input for the climate component of our climate change scenarios, with the Shared Socio-economic Pathways (SSP) they developed to incorporate the global socio-economic context.
The scenarios below includes global and local narratives, and data-based implications for each climate change scenario in terms of global and New Zealand climate, based on analysis and datasets from the National Institute of Weather and Atmospheric research (NIWA). For more detail on the scenarios, open the document below.
1.5° Scenario Narrative
Global narrative
The world shifts gradually, but pervasively, toward a more sustainable path, emphasizing more inclusive development that respects perceived environmental boundaries. Management of the global commons slowly improves, educational and health investments accelerate the demographic transition, and the emphasis on economic growth shifts toward a broader emphasis on human well-being.
Driven by an increasing commitment to achieving development goals, inequality is reduced both across and within countries. Consumption is oriented toward low material growth and lower resource and energy intensity. Technology is rapidly advancing and shared around the globe. Energy technology is moving away from fossil fuels, towards renewables in combination with higher energy efficiency. Environmental conditions are improving over time, and strong regulations avoid making environmental trade-offs.
Despite these efforts, global temperatures rise by on average 1.7 degrees by mid-century, then slowly dropping to end at 1.4 degrees above the global benchmark of 1900. Direct and second order impacts of climate change grow accordingly, but humanity avoids disruptive climate change.
New Zealand narrative
NZ’s Climate Change Response (Zero Carbon) Amendment Act 2019 provided a critical platform for change. Delivering on this promise became a guiding principle of post-COVID 19 economic recovery, as the Government employed the greatest fiscal stimulus package in the nation’s history to kick-start a zero-carbon transition.
Though challenging for many sectors, the transformation resulted in one of the world’s most sustainable economies with high levels of energy efficiency across industries, robust trade in innovative environmental goods and services, and primary products sought by customers around the world as a direct result of NZ’s ‘clean and green’ reputation.
Because of its location in a temperate zone, NZ’s climate is warming up by 0.6 to 0.7 degrees, significantly less than the global average. Still, this increase is paired with a rapid rise in the number of hot days around the country (between 20% and 70%) compared to the 2018 benchmark.
New Zealand sector narrative
Higher demand for electricity is driven by significant and rapid efforts to integrate climate change after years of limited action.
Gross demand is forecast to rise to around 70TWh by mid-century, significantly up from ~42TWh in 2019.
The level of investment associated with this steep growth puts challenges on the electricity sector, exacerbated by enduring global resource shortages and ongoing supply chain issues. It is estimated that by around 2035 the sector needs to fill around 7,500 additional roles to enable the level of change required, on top of another 6,000 roles required to replace workers who are about to retire.
2.5° Scenario Narrative
Global narrative
The world follows a path in which social, economic, and technological trends do not shift markedly from historical patterns. Development and income growth proceeds unevenly, with some countries making relatively good progress while others fall short of expectations. Global and national institutions work toward but make slow progress in achieving sustainable development goals. Environmental systems experience degradation, although there are some improvements and overall the intensity of resource and energy use declines. Global population growth is moderate and levels off in the second half of the century. Income inequality persists or improves only slowly and challenges to reducing vulnerability to societal and environmental changes remain. The global climate continues to heat up, with mid-century global temperatures increasing by around 2 degrees, resulting in an approximately 2.7 degree increase by 2100 (compared to 1900 global average). Global mean sea level rise likely to exceed 0.5m, causing frequent flooding of low-lying areas in particular in South-East Asia.
New Zealand narrative
NZ’s economy continues to grow as the country takes a strong pathway to mitigate climate risk by electrifying transport and industrial heat. Industry development is less coordinated. Climate change threats motivate stronger policies to reduce climate-changing activities. NZ’s climate is warming up by approximately 0.8 degrees by 2050 and 1.3 to 1.4 degrees by the turn of the century. Sea levels gradually rise to reach just about half a meter above the 1900 benchmark by 2100. The average number of hot days double within that timeframe, with some areas in the country heating up at a significantly higher rate.
New Zealand sector narrative
Higher demand for electricity driven by efforts to reduce reliance on fossil fuels. Gross demand is forecast to rise to 54.5TWh by 2035/40 and around 65TWh by 2050, up from ~42TWh in 2019. Rising demand will require an equivalent rise in generation capacity, which in turn will see a level of investment the nation is likely to struggle with.
3.5° Scenario Narrative
Global narrative
A resurgent nationalism, concerns about competitiveness and security, and regional conflicts push countries to increasingly focus on domestic or, at most, regional issues. Policies shift over time to become increasingly oriented toward national and regional security issues. Countries focus on achieving energy and food security goals within their own regions at the expense of broader-based development. Investments in education and technological development decline. Economic development is slow, consumption is material-intensive, and inequalities persist or worsen over time. Population growth is low in industrialised and high in developing countries. A low international priority for addressing environmental concerns leads to strong environmental degradation in some regions. Global temperatures are predicted to rise by up to 2.5 degrees by mid-century and 3.5 by 2100. Global mean sea level rises by approximately 27cm by 2050 and 60cm by the end of the century. The expected impacts of sea level rise on coastal ecosystems over the course of the century include habitat contraction, loss of functionality and biodiversity, and lateral and inland migration. Areas most affected are China, Bangladesh, India, Vietnam, Indonesia, Thailand and Japan.
New Zealand narrative
NZ has been less hard hit by climate change than its neighbours, but it is still ill-prepared for what lies ahead. With short-term thinking continuing to dominate, both public and private sector adaptation is predominantly reactive and predicated on short-term benefit calculations. Average temperature in NZ rises by around one degree by 2050, compared to 1900 levels. By the end of the century average temperatures could rise to between 2.8 and 3.1 degrees. Significant regional and seasonal differences could lead to average temperatures in regions like Auckland, Bay of Plenty, Taranaki and Nelson/Tasman about 4 degrees higher than in 1900. NZ sea level is predicted to rise by around 0.3m by 2050 and 0.7m by 2100, which is between 5 and 10% more than the global average. This will require alternative strategies rather than incremental ones to mitigate the impact on the land and its people.
New Zealand sector narrative
Demand for electricity is expected to rise steadily until 2050 by around 20%. Peak demand is largely following a similar trajectory. This level of growth is similar to growth levels over the past 20 years (about 1% per year), when total demand increased from around 35TWh to around 42TWh. Installed capacity grew at a slightly lower rate, reaching 14.7GW by 2050.