What does a transition scenario model predict?

A transition scenario model is designed to predict the impacts of various pathways to decarbonization, which often involves significant changes in policies aimed at mitigating climate change. This includes anticipating the effects of regulations, incentives, and legislation that drive the shift toward a low-carbon economy. Such models help stakeholders, including businesses and governments, understand the potential outcomes and strategies for adaptation as policies evolve to enforce emissions reductions.

This focus on policy-driven changes distinguishes the correct answer from other options. While physical changes in asset performance and technology upgrades in urban areas can certainly be consequences of a transition to a decarbonized economy, they are more specific outcomes rather than the broader predictive function of transition scenario models. Additionally, the aspect of increased financial investments is just one potential component of a wider transition scenario; investments may or may not increase depending on various external factors, but the model's primary aim is to represent potential policy impacts on the overall transition process.