UK and China lead on clean growth, but limited progress in some countries

●       PwC analysis shows that carbon intensity of the global economy fell by 2.6% in 2016 a clear step change from business as usual

●       Country progress on average falls a long way short of the 6.3% reductions needed every year to limit warming to two degrees

●       UK and China lead the G20 on clean growth, decarbonising their economies by 7.7% and 6.5% respectively in 2016 - the result tackling coal consumption and improving energy efficiency while growing their economies.

●       Countries at the bottom of the Index, including Indonesia, Argentina, Turkey and South Africa all had emissions growth which exceeded their GDP growth.

Global emissions growth slowed in 2016, rising only 0.4% while global GDP growth was 3.1%. Carbon intensity has been falling at around 2.6% for the past three years.  This is a clear change from the historical rate which averaged 1% per year up to 2014. This year’s decarbonisation rate of 2.6% is almost double the average rate since 2000 (1.4%) but less than half of what is required to limit global warming to well below two degrees.

Now in its ninth year, the Low Carbon Economy Index tracks G20 countries’ progress in reducing the carbon intensity of their economy – i.e. energy-related greenhouse gas emissions per million dollars of GDP. 

Jayne Mammatt, Director of Sustainability and Climate Change at PwC South Africa, commented: “There’s a large gap between national action on climate change and the two degrees goal.  Business needs to navigate the differences between rhetoric about two degrees and the reality of climate action.  Companies and their stakeholders need to prepare for both the risks of more ambitious climate policy and the risks of climate impacts should those policies prove inadequate. 

“Companies may assess two degrees scenarios but they’re not forecasting or planning on a two degrees outcome, because the signals from governments just aren’t there right now.  Despite the increase in carbon pricing regulation in countries around the world, the price signal is often too feeble to prompt significant low carbon investment.

“Countries head to the next round of climate talks in Bonn next week, to discuss the process for raising the ambition of their national targets.  This report shows that the Paris Agreement will only be possible if countries accelerate action and close the gap between current progress and what’s need for two degrees. ”

In South Africa, this situation is keenly felt, with the much-spoken about carbon tax on the horizon, various GHG reporting requirements and pollution prevention plans in place, and communities reeling from the impacts of extreme weather events and an average levels of resilience to such shocks.

South Africa’s position

When looking at South Africa’s results in the PwC LCEI over the last 8 years, there is evidence of progress in transitioning to a less carbon intensive economy as there has been a decrease in intensity since 2009.  However, this progress was halted after an increase in carbon intensity from 2015 to 2016, coupled with limited economic growth. This resulted in South Africa taking the last position this year for performance in changing its carbon intensity. South Africa also still has the highest carbon intensity per GDP.  It is likely that the country will experience a combination of physical (e.g. extreme weather events), policy (e.g. for a low carbon transition) and markets and technology (e.g. emerging technologies and new business models) risks.  There is a clear need for society to brace for disruption – look out for further discussion on climate change adaptation and innovation to build resilience, in the lead up to the COP 2017.

Notes to editors

  1. Carbon budget: The annual 6.3% decarbonisation rate is an estimate of how rapidly countries need to reduce their energy related emissions by, while growing their economies, in order to limit global warming to 2°C. 
  2. Under the UN climate negotiations process, countries have made emissions pledges (Nationally Determined Contributions or NDCs) and have the collective aim of limiting warming to 2°C by 2100. 
  3. About the Low Carbon Economy Index (LCEI): The LCEI model combines energy-related carbon dioxide emissions with historic and projected GDP data, and the IPCC’s carbon budgets.  The model covers energy and macroeconomic data from individual G20 economies, as well as world totals. Details of our model structure are available the Appendix of the LCEI report. The analyses of the Paris targets are based estimates of the decarbonisation rates implied by the NDCs submitted to UNFCCC and include the full national inventory of emissions (i.e. emissions from energy as well as land use change, forestry, and industrial process).

 

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