A Proposed Method for Measuring Paris Alignment of New Investment

The paper introduces a science-based approach to assess the Paris alignment of new investments by comparing the carbon intensity of new assets against thresholds required to meet specific temperature goals, accounting for locked-in emissions from existing assets. Unlike portfolio-based methods that focus on current ownership, this method attributes responsibility to the original finance providers at the time of asset creation. The authors detail the application of this methodology to the global power sector and the U.S. light road vehicle transport sector, utilizing data from the IEA and other technical sources to establish carbon intensity benchmarks and evaluate financial commitments.

• The proposed method differs from existing portfolio-based approaches by focusing on new investments made at a specific point in time rather than existing assets, thereby holding investors responsible for the emissions of newly commissioned assets and their impact on the real economy.
• A critical feature of the method is the inclusion of 'locked-in' emissions from existing assets, meaning new investments must be sufficiently ambitious to compensate for emissions already present in the system to meet carbon budgets.
• The approach allows for geographic granularity, enabling assessments based on country- or region-specific temperature pathways, which accounts for local economic development needs and resource constraints.
• In the power sector application, the authors used IEA 2019 World Energy Outlook scenarios to define four temperature pathways: <1.8°C (Paris-aligned), <3.2°C, >3.2°C, and >>3.2°C.
• For the transport sector, the methodology was applied specifically to U.S. light road vehicles, using vehicle-miles traveled (VMT) as the activity metric and Well-To-Wheel (WTW) CO2 emissions to calculate carbon intensity.
• The authors suggest that the methodology could be expanded to other emission-intensive sectors such as oil and gas, coal mining, aviation, shipping, chemicals, cement, and steel, provided that decarbonization scenarios and investment data are available.

APA

Micale, V., Wetherbee, C., Macquarie, R., & Rosane, P. (2020). A Proposed Method for Measuring Paris Alignment of New Investment. Climate Policy Initiative. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/12/2.-A-Proposed-Method-for-Measuring-Paris-Alignment-of-New-Investment-3.pdf

Chicago

Micale, Valerio, Cooper Wetherbee, Rob Macquarie, and Paul Rosane. A Proposed Method for Measuring Paris Alignment of New Investment. Climate Policy Initiative, 2020. https://www.climatepolicyinitiative.org/wp-content/uploads/2020/12/2.-A-Proposed-Method-for-Measuring-Paris-Alignment-of-New-Investment-3.pdf.

Wikipedia

{{cite report |last1=Micale |first1=Valerio |last2=Wetherbee |first2=Cooper |last3=Macquarie |first3=Rob |last4=Rosane |first4=Paul |title=A Proposed Method for Measuring Paris Alignment of New Investment |publisher=Climate Policy Initiative |date=December 2020 |url=https://www.climatepolicyinitiative.org/wp-content/uploads/2020/12/2.-A-Proposed-Method-for-Measuring-Paris-Alignment-of-New-Investment-3.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{micale2020proposed, author = {Micale, Valerio and Wetherbee, Cooper and Macquarie, Rob and Rosane, Paul}, title = {{A Proposed Method for Measuring Paris Alignment of New Investment}}, institution = {Climate Policy Initiative}, year = {2020}, month = dec, url = {https://www.climatepolicyinitiative.org/wp-content/uploads/2020/12/2.-A-Proposed-Method-for-Measuring-Paris-Alignment-of-New-Investment-3.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }