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The world needs to cut carbon intensity five times faster to hit the 1.5°C Paris Agreement target

The world needs to cut carbon intensity five times faster to hit the 1.5°C Paris Agreement target

PwC Net Zero Economy Index

  • Decarbonisation rate of 11.7% needed to stay consistent with the 1.5°C trajectory in the Paris Agreement.
  • Global energy-related carbon emissions increased by 0.5% going into 2020.
  • The 2020s is set to be the decisive decade: as global temperature rise edges closer to the 1.5°C threshold year by year, unprecedented decarbonisation across all industries and regions is required, year after year. 

 

Pivotal decade

Tracking a complete year of energy and economic data from 2019 (the most recent available), this year’s Index shows that progress has slowed in decoupling energy-related CO2 emissions growth from economic growth and fossil fuels continued to dominate the energy mix. In 2019, global energy-related CO2 emissions increased by 0.5% with economic growth of 2.9%. Carbon intensity fell by 2.4% which is above the long term average decarbonisation rate of 1.5% per year, but falls way short of the progress required to keep global temperature rise below 1.5°C (11.7% per year).

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Going into 2020, across the world, fossil fuels continued to dominate, with 57% of the increase in energy consumption met by natural gas and oil alone. Global energy consumption increased by 1.3%, although 2019 saw a decline in coal consumption for the first time since 2016 (0.6% decline). There were steady increases in the consumption of oil (0.8% growth) and natural gas (2.0% growth). On renewables, despite record growth rates in wind (12.1%) and solar (23.8%), overall they accounted for just 11% of global energy consumption.

Marc Daelman, Partner at PwC Belgium said: “Every year we underachieve on cutting carbon. The task gets tougher and the transition required is more radical. We now need decarbonisation and ultimately transformation of organisations, industries and geographies at an unprecedented scale and speed. The pandemic-related dip in global emissions this year will rebound quickly as economies emerge and fully open up. Swift action is needed to rebuild with the clean infrastructure, technologies, and solutions that are fit for the future. The wave of businesses, investors, and governments committing to ambitious net zero targets in 2020, is a promising sign that a shared sense of urgency is emerging. We have just over two business cycles to transform every sector of the global economy to halve global emissions. Put simply, we are in the pivotal decade.”  

Emissions and energy consumption

The EU has made good progress in decarbonising power systems through renewable energy technologies, notably offshore wind and solar. Meeting enhanced targets under the European Green Deal and Paris Agreement will require more significant transformation. For the second year in a row, Germany recorded the highest decarbonisation rate of the G20 (6.6%), well above the 5.2% EU average. However, this rate would still need to be nearly doubled to meet the global average required (11.7%) to be consistent with a global 1.5°C trajectory.

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Globally, Korea, the US and the UK also succeeded in reducing their energy-related CO2 emissions while growing their economies - but fell far behind the decarbonisation rate needed to limit warming to 1.5°C. South Africa and Indonesia reported an increase in carbon intensity for consecutive years. With GDP growth of 6.1% in 2019, energy-related CO2 emissions in China grew by 3.2%, while carbon intensity fell by 2.8%. China is growing across all energy sources. Solar and wind output in China makes up 29% of the overall global share, growing tenfold since 2010.Structural shifts in natural gas and renewable energy costs in the US drove a decarbonisation rate of 4.7%.

Looking ahead, Reinout De Clercq, Director at PwC Belgium concludes: “Even with temporary reductions in greenhouse gas emissions due to COVID-19, climate change continues to be one of the most important political and business issues of our time. As we implement stimulus packages and plans, what we really need is for the net zero transition to be mainstreamed into green spending, for example on clean energy or transport infrastructure. The EU has already confirmed that the COVID-19 crisis won’t stop Europe from developing bolder 2030 climate targets and that green finance will be a key focus of the post-recovery phase.

Download the full report and global ranking here.

 

About the Net Zero Economy Index:


The PwC Net Zero Economy Index tracks the decarbonisation of energy-related CO2 emissions worldwide. The analysis is underpinned by the BP Statistical Review of World Energy, which reflects carbon emissions based on the consumption of oil, gas and coal for combustion related activities. Data used in this report is the latest full year data available (2019). The analysis does not consider emissions from other sectors (e.g. AFOLU) or from any other greenhouse gases, and does not allow for any carbon that is sequestered. As a result, this data cannot be compared directly with national emissions inventories.  This year’s report - the Net Zero Economy Index - replaces the Low Carbon Economy Index. It’s a recognition of both the ultimate goal business and society needs to achieve, and the growing focus and momentum behind commitments from business, governments, and investors' commitments to Net Zero.

  1. We use the Intergovernmental Panel on Climate Change global estimated carbon budget data on fossil fuel emissions taken from the IPCC Special Report on Global Warming of 1.5°C, to estimate the energy-related emissions associated with limiting warming to 1.5°C and 2°C by 2100.
  2. The UN Emissions Gap Report (Dec 2020) reported that a “green pandemic recovery could cut up to 25 per cent off the emissions we would expect to see in 2030 based on policies in place before COVID-19. This far outstrips emissions savings that would be delivered under unconditional NDCs, although more will be needed to achieve the 1.5°C goal.”

PwC’s Global Net Zero commitment:

In September, the PwC global network announced a worldwide science-based commitment to achieve net zero greenhouse gas emissions by 2030.

●       We will halve our total operational greenhouse gas emissions within a decade, and invest in carbon removal projects to compensate for all remaining emissions. We will also work with key suppliers and support them to tackle their climate impact.

●       With our global reach across 155 countries, the PwC network has a huge opportunity to accelerate the transition to a net zero future in collaboration with our clients – we work with 84% of the Global Fortune 500 companies and more than 100,000 entrepreneurial and private businesses.

●       A big area of focus for us will be non-financial reporting and integrating climate-related and other environmental, social and governance (ESG) related factors into mainstream corporate disclosures and governance.

Contact

Maïté Oreglia

maite.oreglia@pwc.com
0485 07 67 17

www.pwc.com

 

 

 

 

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