Many organizations face challenges in measuring and managing climate change risks, often due to inconsistent data and the lack of reliable analytical tools. We’ll explain how En-ROADS can be used to help overcome these challenges, before turning to two use cases: interactive climate education, and tailored scenario development and analysis.
Katherine Markova
En-ROADS is a global climate model based on system dynamics principles, co-developed by Climate Interactive and MIT Sloan. Grounded in the latest climate science and energy data, it allows users to explore various solutions to address climate change and develop tailored scenarios. The simulator is freely available on Climate Interactive's website and regularly updated with new features. Corporate users of the simulator include professionals in learning and development, sustainability, climate risk, and sustainable investment.
En-ROADS enables users to examine a wide range of assumptions and actions as they create their own scenarios. For example, users can move sliders to explore the impact that electrifying equipment, improving energy efficiency, increasing procurement of renewable energy, and reducing waste have on hundreds of factors such as energy prices, global temperature increase, air quality, sea level rise, and wildfire risk. Figure 1 shows the effect of these changes on wildfire danger days and greenhouse gas emissions.
Figure 1. Impact of Building Decarbonization Solutions on Wildfire Danger Days and Greenhouse Gas Emissions
It is also possible to explore co-benefits and environmental equity considerations of corporate actions. For example, actions to transition away from fossil fuels almost immediately reduce high concentrations of certain air pollutants, such as PM2.5, and improve air quality. On the other hand, policies that put a price on pollution increase energy costs, which disproportionately impact low-income households (see Figure 2).
Figure 2. Co-Benefits and Equity Considerations of Putting a Price on Pollution
Let’s now turn to the first use case.
Setting and meeting net-zero targets demand alignment and collaboration across an entire organization, in addition to engagement with external stakeholders such as suppliers. Traditional climate education often relies on static content filled with complex science and jargon that can leave people uninspired. Using interactive simulations can be more engaging, enabling participants to explore firsthand the range of decarbonization pathways available.
En-ROADS can be used in an interactive group exercise where people work together to test available solutions for addressing climate change. Climate Interactive offers a team of trained facilitators to guide these sessions, which typically last an hour and can be done online or in person. Since the launch of En-ROADS in December 2019, more than 290,000 people in 158 nations have participated in interactive workshops or role-play simulations, including over 10,000 business leaders (such as C-suite executives).
Different versions of these exercises are possible. For instance, participants can take on the roles of climate negotiators representing various interest groups. This approach is great at promoting team building and cross-team collaboration. It also builds empathy by immersing people in the perspectives and challenges of different stakeholders involved in decarbonization work.
By stepping into someone else’s shoes, users develop a deeper understanding of how climate action — or inaction — affects different groups in diverse ways. Below is an example of the before-and-after poll results in response to the question, “How do you feel about climate change?” (see Figure 3)
Figure 3. Participants’ Feeling About Climate Change Before and After a Workshop
This is backed up by research to be published in a forthcoming paper. Professor Juliette Rooney-Varga at UMass Lowell led a research team that surveyed workshop participants and found that the simulation experience convinced half of them to take new actions, and, six months later, over 70% of those people actually did.
HSBC has used En-ROADS to improve employee understanding of the risks of climate change and catalyze action at senior levels. To date, more than 2,600 HSBC employees across different organizational levels and regions have experienced En-ROADS through workshops and as part of risk management training. They found that En-ROADS stimulated dialogue on sustainability and fostered collaboration on climate solutions with partners and across industries.
““When the facilitator and participants are debriefing their En-ROADS session, there is a real feeling of possibility… En-ROADS has power!”
—Andrew Greenspan, VP Climate Risk, HSBC USA
In response to requests from investors, customers, and regulators, companies increasingly conduct scenario analysis to test the resilience of their business models to climate change impacts and use the results for strategic decision-making.
Many companies take a compliance-driven approach, limiting their risk assessments and scenario analysis to company-specific risks. Others, like asset manager AllianceBernstein, seek to understand broader system-wide risks. En-ROADS helped the Australian equities team at AllianceBernstein design tailored scenarios to assess the potential loss of global GDP from chronic climate impacts (which could be up to 25% by the end of the century, according to the baseline scenario in En-ROADS).
Companies that seek to avoid using overly simplistic "bookend" scenarios — such as one where there is an orderly transition to 1.5°C of warming and another that results in a hothouse world with an increase of more than 3°C — can use En-ROADS to develop tailored scenarios that reflect the unique circumstances of their business and industry. Because regulators require companies to disclose the inputs and assumptions, En-ROADS can be a valuable tool since its assumptions and inputs are transparent.
In addition to building customized scenarios based on their own assumptions and inputs, users can take commonly used scenarios (such as NGFS) and modify them. This allows companies to tailor scenarios to their needs.
En-ROADS is designed to simulate the impact of various climate policies over different time horizons. The model allows users to adjust variables and assumptions to explore outcomes, from global GDP growth and the loss of biodiversity — to health impacts and impact on crops, market prices for conventional fuels, and their carbon intensity.
Financial quantification of transition risks remains a significant challenge for companies. For example, what is the marginal cost of electricity production by 2030 in a scenario in which the global population reaches 8.5 billion, the average global carbon price is $50/ton CO2, and no new fossil fuel infrastructure is permitted? Figure 4 shows the result, where the marginal cost of renewable electricity production falls to $0.05/kWh.
Figure 4. Marginal Cost of Electricity Production graph in EN-ROADS
Combining rigorous climate science with experiential simulations is a highly effective way to build capacity, both for those familiar with climate solutions and those new to the field. En-ROADS helps to ground employees and supply chain partners in the best available science.
For example, the parameters in the model are estimated using information in published papers, and for many parameters the user gets to choose which (peer reviewed) assumptions to use; and the model outputs are compared against what is happening in the real world. In-house sustainability and climate risk teams can then build on this foundational knowledge to assess climate risks and develop decarbonization strategies, so that their companies can effectively mitigate climate change and adapt to its effects.
Katherine Markova leads partnerships at Climate Interactive, a climate tech organization. Prior to Climate Interactive, Katherine was a Director at KPMG and Climate Consultant at 3Degrees.