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IEA welcomes recommendations of the Task Force on Climate-related Financial Disclosures

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Hydrocarbon Engineering,

The International Energy Agency (IEA) has welcomed the recommendations of the Task Force on Climate-related Financial Disclosures that aim to help businesses disclose the risks and opportunities presented by climate change.

The recommendations include a framework for companies to examine the risks that may arise during efforts to limit climate change to 2°C. The IEA provided input to the Task Force during the development of its recommendations on the importance of examining a range of future scenarios for energy markets, and how scenario analysis can best be conducted and used most effectively.

The Task Force on Climate-related Financial Disclosures, chaired by Michael Bloomberg, was established last year after the G20 asked for an examination of risks related to climate change. It was set up by the Financial Stability Board, an international body chaired by Bank of England Governor Mark Carney that monitors the global financial system.

The Task Force recognised the IEA as the 'most well-known, widely used and reviewed' provider of scenarios. It recommended that the IEA’s 2°C scenarios, including the 450 Scenario in its World Energy Outlook (WEO) publication and the 2DS scenario in its Energy Technology Perspectives publication, be used by companies when assessing risks to their businesses that may arise from the transition to a low-carbon economy.

Each year, the WEO provides multiple scenarios to map out how the energy system might evolve over the next three decades. The central case in WEO-2016, published last month, is the New Policies Scenario, which looks at the impact of existing government policies and commitments on energy demand, supplies, and investments. This is contrasted with the Current Policies Scenario, which includes only policies that have been firmly enacted, and provides a benchmark for measuring the impact of new policies when they are announced.

WEO-2016 also explores multiple decarbonisation scenarios including an analysis of the implications for the energy sector of limiting the rise in average global temperatures to 2°C, the basis of the 450 Scenario.

The IEA stands ready to help businesses and industries understand its scenarios and engage with them on how to assess the transition risks associated with tackling climate change.

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