From least-cost to SDG-optimal sectoral allocation of Paris Agreement-compatible mitigation efforts

Abstract: Limiting global warming to well below 2 °C necessitates profound decarbonization, but how to distribute mitigation efforts over sectors remains a widely debated issue. Although integrated assessment models traditionally rely on ‘least-cost’ optimization to answer this question, the resulting sectoral allocations vary widely and ignore impacts on other potential policy objectives. Here we connect an integrated assessment models with a portfolio analysis to evaluate how sector-specific mitigation actions impact key indicators from Sustainable Development Goals (SDGs) related to poverty, health, water, economy and land, and to identify Pareto-optimal and Paris-compliant mitigation portfolios that reveal the trade-offs between other sustainable development priorities. Furthermore, we define ‘SDG-balanced’ portfolios that, in most cases, outperform standard least-cost scenarios across all five SDG indicators for an equivalent carbon budget. Our findings demonstrate that the simultaneous evaluation of a broader set of policy priorities is crucial to provide truly policy-relevant guidance for the climate transition.