We are following a path that will ultimately take us to a 4C-warmer world. A hot state where it is unlikely that we can generate food, water and shelter for all citizens, where sea level rise will ultimately exceed 10 metres, and where social insecurity and widespread disease will very likely be universal.

Along the way we will reach several critical tipping points. One such is at 2C – a scenario that may prompt the Earth system to shift from self-cooling by means of buffering emissions to self-warming, thereby putting us on a path to a “hothouse Earth”. At 3C we reach a point where extreme floods and droughts will force people to leave their homes; more powerful hurricanes will destroy urban infrastructure.

In order to keep climate change in check, the Paris agreement committed countries to limit the increase of global mean temperature to well below 2C above pre-industrial levels, with the aim of reaching 1.5C. We are currently at about 1C.

To explore the feasibility of this target, UN member states commissioned the Intergovernmental Panel on Climate Change (IPCC) to produce a new 1.5C report. This report, seen by many as a concession to the grave threats low-lying island states face due to severe climate risks, has now gained more traction than previously anticipated, mainly because of mounting evidence that droughts, floods, heatwaves and storms strike earlier with higher frequency and severity than initially predicted.

The latest science indicates that already at a range of global warming of 1-2C, humankind is at risk of triggering an irreversible loss of Arctic sea ice, losing all tropical coral reefs, and destabilising the Greenland ice sheet.

The IPCC report not only assessed the climate risks but also the economic and technical challenges of stabilising global warming at 1.5C. The challenges are enormous. They include decarbonising all sectors of the global economy in their entirety by 2050, rapidly phasing out fossil fuels in the power sector and channelling large-scale investments into technologies that allow us to absorb carbon from the atmosphere.

A key number in the new report regards the estimates of the remaining carbon budget, ie how much more greenhouse gas emissions can be allowed in order to have a chance of keeping global warming at 1.5C. The IPCC calculates a slightly higher remaining carbon budget compared with its previous calculations. These estimates are complex and depend on many assumptions, such as the trajectories of other greenhouse gases and cooling pollutants and the recalibration of the historical reference temperature on Earth before the industrial era.

The slightly wider range of carbon budgets in this report compared with earlier reports – adding a few hundred gigatonnes of CO2, or three to seven years of emissions – is a reflection of the complexities involved. But rest assured, the conclusion is crystal-clear. However we twist and turn our data, at current rates of emissions the world has less than 10 years left to remain within the limits of a carbon budget to stand any chance of halting global warming at 1.5C.

It would therefore be a mistake to construe the report as implying that credible climate action can be postponed even longer owing to a higher carbon budget.

Countries like Pakistan, Bangladesh, Egypt, Philippines, Indonesia and Vietnam are still investing heavily in coal-fired plants. Even Germany, once touted as a leader in combating climate change, has invested in new coal-fired plants over the last decade. Japan, too, has decided to invest significantly in coal since the Fukushima nuclear event. The already existing and planned coal-fired plants would roughly emit 330 gigatonnes of CO2 over their economic lifetime, which always exceeds 15 years. They alone would exhaust almost the whole available carbon budget for the 1.5C scenario.

Investment decisions have to be reversed now, otherwise the world economy will be locked in to a carbon-intensive pathway. To avert this, the right policies must be put in place immediately.

The climate summit in Katowice, Poland, in December will conclude that the voluntary contributions of the governments are currently insufficient to put the world on a 2C, let alone 1.5C, trajectory. Policies to intensify efforts are necessary. All nations need to revise their mitigation targets to accommodate the more rapid emission reductions required to truly stay well below 2C.

New global policies are needed. One such policy would be a carbon price starting around €30 per tonne of CO2, which would very likely render investments in coal-fired plants unprofitable. Zero-carbon mobility, such as electric cars, could then become an attractive option as consumers would expect an increasing carbon price, and the internal combustion engine would gradually be phased out.

Admittedly, there is a significant gap between actual carbon prices and those required to achieve ambitious climate change mitigation. The gap can be closed, however, by enhancing the legitimacy and popularity of carbon pricing by using its revenues to fund research and development for zero-carbon solutions, cutting taxes or propping up the welfare state. These revenues could, moreover, be used in developing countries for low-carbon infrastructure investments.

Carbon pricing would be a credible signal to investors that governments are willing to act now. Governments, policymakers and civil society should heed the warnings of the IPCC report and take action immediately.

• Ottmar Edenhofer and Johan Rockström are the directors of the Potsdam Institute for Climate Impact Research.