Ongoing increases in global greenhouse gas (GHG) emissions mean the world’s largest economies will have to work that much harder and pick up the pace of energy-sector GHG emissions reductions in order to avoid the risks and impacts of runaway climate change, according to an analysis of economic growth rates and GHG emissions for G20 economies produced by PwC.
Home to the world’s largest economies, G20 countries will have to reduce carbon emissions in the energy sector 6.2 percent for every dollar of GDP — every year from now to 2100 — in order to keep global warming within the 2 degrees Celsius (1.8 degrees Fahrenheit) limit agreed to by nearly 200 nations as part of the U.N. Framework Convention on Climate Change’s (UNFCCC) Copenhagen Accord. That’s more than five times the current pace, PwC analysts highlight in the sixth annual Low Carbon Economy Index, 2 degrees of separation – ambition & reality report.
“After a decade of carbon inertia, we are way behind, and now need to decarbonise at more than five times our current rate to avoid 2 degrees Celsius … Making up for the inadequacy to date will be technologically harder, financially costlier, and climactically riskier in the future.” Leo Johnson, a partner in PwC’s sustainability and climate change unit, stated.
Carbon emissions gap widens
At current rates of energy-sector carbon intensity, the amount of carbon we can emit this century will be used up in 20 years if we are to keep global mean temperature rise within the 2 degrees Celsius limit, according to PwC’s analysis.
Globally, annual energy-sector GHG emissions now total just over 30 billion metric tons (Gt), and that’s rising with GDP growth of 3.1 percent. The reduction in the carbon intensity of the energy sector was just 1.2 percent. That means that the gap separating what needs to be achieved and what is actually being achieved in terms of energy-sector carbon emissions reductions is widening, PwC analysts highlight.
Analyzing the data across countries, PwC found “an unexpected champion” in terms of how quickly nations are decarbonizing their economies. Australia’s decarbonization rate increased 7.2 percent year-over-year in 2014, the second consecutive year Australia has led the G20 in carbon emissions reductions.
The U.K., Italy and China ranked second, third and fourth, respectively, with decarbonization rates of between 4-5 percent. On the flip side of the coin, 2014 carbon intensity rates increased year-over-year in the U.S. as well as four other G20 countries: France, India, Germany and Brazil.
Global mean temperature rise between 3.7 and 4.8 degrees Celsius expected
Overall, atmospheric carbon dioxide (CO2) levels are at their highest in 40 years, acccording to the U.N. Intergovernmental Panel on Climate Change (IPCC), whose scientists established 1.8 degrees Celsius as the tipping point that could trigger runaway climate change.
The current rate of carbon emissions has set the stage for an increase in global mean temperature of between 3.7 and 4.8 degrees Celsius (2.96 to 3.84 degrees Fahrenheit) this century, according to the IPCC. That raises the specter of “severe adverse impacts … on people and ecosystems through water stress, food security threats, coastal inundation, extreme weather events, ecosystem shifts and species extinction on land and sea.”
Some reasons for optimism
There is cause for optimism despite the ongoing increases in global GHG emissions, however, according to PwC. Reductions in carbon intensity on the part of emerging E7 nations with rapidly industrializing economies are particularly encouraging. The E7 is made up of China, India, Brazil, Mexico, Russia, Indonesia and Turkey. According to PwC’s 2014 Low Carbon Economy Index:
- The E7 outperformed the G7 in carbon reduction (1.7 percent vs. 0.2 percent) for the first time in six years, indicating how it can be possible to maintain economic growth while slowing the rate of growth in emissions;
- Renewable electricity generation, excluding hydroelectricity, grew at 16 percent — a continuing trend for last decade with double-digit growth every year. Renewables now account for nearly 10 percent of total energy mix in six of the G20 economies.
Removing direct and indirect government fossil fuel subsidies and instituting stronger, more persistent incentives that can spur greater deployment of renewable energy are critical to closing the carbon emissions gap. The world political and business stage is being set to accomplish that, Johnson said.
“The E7 has woken up to the business logic of green growth, decarbonizing faster than the G7 for the first recorded time. And globally renewables are emerging fast. As they approach cost parity the stage is set for a policy framework that shifts subsidies away from fossil fuels and accelerates the renewables rollout.”
Keeping within the 2 degrees C limit
Annual GHG emissions across the global energy sector need to drop by one-third by 2030 and just over one-half by 2050 to keep global mean temperature within the 2 degrees Celsius cap. The timeline, PwC states, “is unforgiving.”
- Collectively, the G7 group needs to almost double its decarbonization to 4.2 percent per year between 2014 and 2020. They have achieved an average decarbonization rate of 2.2 percent between 2010 and 2013. Absolute carbon emissions (i.e., not just those related to energy) need to fall by 44 percent by 2030 and 75 percent by 2050 compared to 2010 levels;
- For the E7, a carbon intensity reduction of 8.5 percent per annum is required from 2020, followed by further reductions of 5.3 percent a year from 2030 to 2050 to stay within the 2 degrees Celsius budget – a five-fold increase on current levels of decarbonization.
PwC’s research highlights, “The disconnect between the global climate negotiations aiming for a 2 degrees Celsius limit on global warming, but national pledges may only manage to limit it to 3 degrees Celsius, and current trajectory is actually on course for 4 degrees Celsius.”
Global climate negotiations
Stronger commitments on the part of world leaders to achiever greater reductions in energy-sector GHG emissions is crucial if global mean temperature rise is to be kept within bounds. PwC’s latest Low Carbon Economy Index report arrived as world leaders prepare for the U.N. Climate Summit 2014 convened by Secretary General Ban Ki-Moon at U.N. headquarters in New York on Sept. 23. There, the U.N. Secretary General and staff are aiming to hammer out an increase in member nations’ GHG reduction pledges.
“What we’ve seen over the past twelve months is a subtle change in the carbon rhetoric. The costs of climate inaction – from flooding to energy costs to commodity pricing, to food insecurity – appear to be growing stronger,” Jonathan Grant, PwC sustainability and climate change director, stated.
“A broader recognition is needed by both business and political leaders that taking decisive action to avoid the extremes of climate change is a pre-condition for sustained economic growth.” How broadly and deeply that belief is shared by political and business leaders, particularly in the global energy sector, remains to be seen.
Image credits: PwC