The Network for Greening the Financial System (NGFS) Workstream on Scenario Design and Analysis has released the first vintage of NGFS Short-Term Scenarios, a publicly available scenario set intended to help central banks and supervisors assess the near-term macro-financial effects of climate policy and climate change over the next five years. The scenarios complement the NGFS long-term scenarios by combining transition risk, acute physical risk and macro-financial feedbacks to support applications such as stress testing and risk assessment. The release covers four narratives: two transition pathways (Highway to Paris and Sudden Wake-Up Call), a physical risk pathway built around compound extreme weather events in 2026 and 2027 (Disasters and Policy Stagnation, with six regional variants), and a combined transition and physical risk pathway with supply chain disruptions in critical raw materials (Diverging Realities). Headline results include global output losses limited to 0.5% in 2030 under an orderly, coordinated transition with gradual carbon price increases and recycling of carbon revenues into green investment, versus 1.3% output losses and a 1.3 percentage point rise in unemployment under a delayed and abrupt transition, alongside higher default probabilities in high-polluting sectors including coal (+35 percentage points) and oil (+12 percentage points). For physical shocks, regional GDP losses peak at 12.5% in Africa, and default probabilities rise by more than 10 percentage points in the power supply sector; under Diverging Realities, global GDP losses reach up to 2.8% and unemployment increases up to 1.7 percentage points in 2028. Scenario outputs from the GEM-E3, EIRIN and CLIMACRED models are available via the NGFS IIASA Scenario Explorer (online workspaces, bulk downloads and an API), with the NGFS EnTry toolkit supporting code-based access; technical documentation and further explanatory materials accompany the dataset, and future refinements are expected to be informed by user feedback.
Network for Greening the Financial System 2025-05-07
Network for Greening the Financial System publishes first five-year short-term climate scenarios for central banks and supervisors
The Network for Greening the Financial System released the first vintage of NGFS Short-Term Scenarios to aid central banks and supervisors in assessing near-term macro-financial effects of climate policy and change over the next five years. The scenarios, which include transition and physical risk pathways, highlight potential global output losses and unemployment impacts, with detailed results accessible via the NGFS IIASA Scenario Explorer.