A Global Challenge To Accelerate Sector . - Race To Zero

A global challenge to accelerate sector breakthroughsfor COP26 – and beyond#RaceToZeroFor any further questions, please contact:RaceToZero@unfccc.int1

The Race to Zero is onTogether we are racing towards ahealthier, more resilient, zero carbonworld. Now that 63% of globalemissions are covered by a net zerogoal, countries must translate nationalcommitments into credible policies,while every sector must undergo anexponential transformation.Solving the decarbonization challenge will create economic and societal advantages for thecountries, cities and companies who emerge as leaders. Within this decade, upgrading toa zero carbon future can create 35 million more jobs and USD 26 trillion more in economicbenefits, compared with attempting to resuscitate the high-carbon status quo.There is clear public support for a green recovery because people see what’s in it for them:cleaner air; a just transition for their children; and the protection of nature that in turnprotects their health, homes and livelihoods.Even in the face of COVID-19, net zero commitments roughly doubled in 2020. Corporatecommitments alone under the Race to Zero campaign now cover over 12% of the globaleconomy and USD 9.81 trillion in revenue. At a national level, new countries have alsostepped up, with Japan, South Korea, and China – and now the US – joining the EU, UK,South Africa, Chile and others mobilizing around the shared guiding star of net zeroemissions.This is the Race to Zero.2

The next hurdle: achieving sector breakthroughs to deliveron the ambitionWhile significant change is already underway, it must accelerate in all areas of the economyand society in order to deliver a resilient zero carbon world in time.To win the race to zero emissions by 2050 at the very latest, the world must achievenear-term breakthroughs across every sector of the global economy.Achieving these transformations at the pace and scale required will not be possiblewithout alignment and collaboration. The individual efforts of regions, cities, businessesand investors taking climate action is critical – but racing in their tracks alone will only getus part of the way. We need coordinated action from different players across economicsystems to achieve a genuine step-change in progress.To help catalyze action, the ‘Race to Zero Breakthroughs’ pinpoint specific tippingpoints for every sector.Collectively, they articulate what key actors must do, and by when, to deliver the systemschange we need to achieve a resilient, zero carbon world. This creates a shared vision forhow all the different players in a system can contribute to the whole.The Race to Zero Breakthroughs are derived from the Climate Action Pathways, a setof comprehensive roadmaps to achieve the Paris Agreement in line with 1.5 C acrossall sectors, which were developed by the UN High-Level Champions and the MarrakechPartnership – a vast coalition from across the climate action ecosystem. The Breakthroughsadd specificity as to what different actors can and must contribute to drive progress alongthese pathways.They are lighting the way.3

The challengeTo deliver the transformation that we need, across the more than 20 sectors thatmake up the global economy, the UN High-Level Champions call on all leaders towork in partnership and commit their skills, ingenuity, and resources to achievingthese Breakthroughs.Our immediate challenge is for 20% of key actors within each sector to commit to playingtheir part to transform the sector, consistent with the Climate Action Pathways. We callthis attaining Breakthrough Ambition: where sufficient momentum is generated amonga critical mass of key actors, enabling them to break away from the business as usualpath and together deliver breakthrough outcomes at pace. We see 20% as a tipping pointbecause systemic change is not linear, but rather tends to be exponential, meaning thatby the time 20% of the market is moving, the rate of growth is accelerating, and there is noturning back.ACCELERATETRANSFORMNORMALIZERace to ZeroFINISHSECTORGoalPROGRESSTOWARDSGOALThe resilient,zero carbonworldTipping pointin the RaceBREAKTHROUGHOutcomeBREAKTHROUGHAmbitionRace to ZeroSTARTTIMEBy COP26 we aim to reach Breakthrough Ambition (20% of key actors committed) for atleast 10 sectors.By 2023 and the Global Stocktake, we aim to attain this level of ambition for all sectors.On the way, we will track the progress of these key sectors as ambition is translated intoaction, and as more actors join and accelerate progress along the Climate Action Pathways.The race is on.4

Measuring Breakthrough AmbitionBreakthroughs cannot happen if individual entities work in isolation. The challenges ofcompetition and inertia often deter ambition, where individual actors cannot make thefirst move without putting themselves at a distinct disadvantage in the near term.Rather, Breakthroughs happen when different actors – across a sector – move insynchronisation to support the transition. While every sector is unique and complex, thekey actors needed to drive a Breakthrough can be thought of as falling into 5 cers,supply chainsDemand-sideFinance actorscompaniese.g. investors,e.g. retailers,asset managers,service providers,asset owners,distributorsbanks, publicfundsPolicy makerse.g. countries,cities, states,regionsCivil societye.g. customers,voters,universities,sportsteams, localorganizationsWhen each of these groups of actors can see each other working towards a common goal,their actions and progress are mutually reinforcing and it becomes possible to overcomeobstacles. Owing to the fact that sector transformation requires various parts of the systemto all move together, we propose that 20% adoption by key actors in just one of thesegroups is a good indication that the whole system is accelerating towards the achievementof a Breakthrough.In this paper, we use the supply-side actor as our proxy indicator for measuring if the sectorhas attained Breakthrough Ambition. But make no mistake: in order for a sector to besuccessful, these suppliers will need buyers, investors, supportive policy, and customeracceptance working in unison.Our sectoral decarbonization work this year will focus on engaging leaders and influencersfrom all corners of society and working with them to catalyze systemic change.5

Race to Zero Breakthroughs: Sector-specific target of 20% keyactors joining the Race to ZeroSector-specific tipping pointSector-specificindicating system transformation net zero worldis inevitablestate followingthe systemTargets are consistent with the transformationGCA Pathways and are to bedelivered by 2025, or 2030 at the To belatestdelivered by2050 (at thevery latest) Targets are set for the 2023Global Stocktake, although weaim to deliver 10 before COP26 Targets are consistent with theGCA Pathways and the Race toZero approach SECTORGoal 6

Race to Zero BreakthroughsOn the following pages, you will find the full list of Race to Zero Breakthroughs foreach sector of the global economy. Throughout, Breakthrough Ambition has beendefined by one actor type: the supply-side actor. But as discussed in this paper, sectoraltransformations require different players across a system to be working together.To illustrate this more holistic picture, we have mapped out one Race to Zero Breakthrough– Clean power – in full to demonstrate the ambition needed for each actor type in a sector.Example of wholesale systems transformation: Clean SECTORGoalClean PowerSupply-side20% of global utilities by totalindustry revenue commit tojoining Race to Zero30% share of global electricitygeneration from solar and windpower by 2030, and 60% from tem in 2040sDemand-sideMajor power users commit tosourcing 100% of their electricityfrom renewables e.g. throughRE100FinanceInvestors representing 20%of energy finance commit todecarbonizing power sectorportfolios e.g. through Net ZeroAsset Owners Alliance and theNet Zero Asset Managers AlliancePolicyCities and regions commit to100% clean power and coalphaseout e.g. through thePowering Past Coal AllianceCivil SocietyCustomers and voters askcompanies, investors andgovernments to prioritize theprovision of 100% renewableenergy e.g. through Count Us In7

SECTORBREAKTHROUGHAmbitionAluminium20% of major aluminiumproducing companies by annualproduction volume20% zero carbon aluminiumproduction as a percent of totalglobal production100% by 2050Apparel20% of major apparel companiesby revenue30% reduction in GHG emissionsby 2030 for all Fashion ChartersignatoriesNet Zeroemissions by2050 for allFashion ChartersignatoriesAviation20% of major airlines by revenue10% SAF globally by 2030100% by 2050Builtenvironment20% of major real estate andinfrastructure companies/investment managers by value100% of projects due to becompleted in 2030 or after arenet zero carbon in operationwith at least 40% less embodiedcarbon compared to currentpracticeBy 2050, 100%of projects (newand existing)are net zerocarbon acrossthe whole lifecycleCement/Concrete20% of major cement/ concreteproducers by annual productionvolume25% of carbon neutral concreteas percentage of total globalproduction100% by 2050Chemicals20% of major chemicalcompanies by total revenue60% of global chemicals sectorelectricity use from renewablesources by 2030100% by 2050Clean Power20% of major utilities by totalrevenue30% share of global electricitygeneration from solar and windpower by 2030, and 60% from tem in 2040sSAF Sustainable Aviation FuelsGHG Greenhouse GasesBREAKTHROUGHOutcomeSECTORGoal8

RGoalCooling20% of major residential ACmanufacturers by total revenue20% of global AC manufacturers Net zerobring to market affordableresidentialresidential AC units that have 5x AC by 2050lower climate impact that today’sunits by 2025End of ICE –Buses20% of major automakersby total revenue175% of BEV and FCEV sales as a100% in leadingpercentage of global bus sales by markets2 by2025320303End of ICE –Heavy goodsvehicles20% of major automakersby total revenue18% of BEV and FCEV sales as a100% in leadingpercentage of global MHDV sales markets2 byby 2025320403End of ICE –Passengervehicles &vans20% of major automakersby total revenue115% ZEV sales as percentage of100% in leadingtotal global passenger vehicles & markets2 byvans sales by 2025320353Finance –Banks20% of systemically importantbanksSystemically important banks set All activities netand achieve 2030 targets for net zero by 2050zero emissions from all activitiesand portfolios by 2050Finance– AssetManagers20% of major asset managersby assets under managementMajor asset managers set andachieve targets for assets undermanagement aligned with netzero by 2050, with commitmentto interim targets and at leasthalve emissions by 2030Fully net zeroemissions clientportfolios by2050AC Air ConditioningICE Internal Combustion EngineZEV Zero Emissions VehicleBEV Battery Electric VehicleFCEV Fuel Cell Electric VehicleHDVs Heavy Duty VehicleMHDV Medium Heavy Duty Vehicle1. Revenue of relevant segment (e.g. bus sales for “End of ICE – buses” campaign); 2. China, EU, Japan, US; 3. Excludes hybrids9