Global carbon intensity falls, but still falls short of global target

Global efforts to curb greenhouse gas emissions have improved significantly last year, relative to the prevailing average, with carbon intensity falling by -2.8%. To meet the target of the Paris Agreement, however, the world will need to step up its efforts to reduce emissions. China, the UK and the US are forerunners in reducing the carbon intensity.

The recent ratification of the Paris Agreement is the first step towards tackling an issue of global proportions. The scientific consensus behind the phenomenon of human induced climate change, has finally breached the unsustainable delusion of the political- and segments of the business worlds – even if recent events in the US risk taking a step back from any further strides.

In a new report from PwC, titled ‘The Paris Agreement: A turning point? The Low Carbon Economy Index 2016’, the accounting and consulting firm explores the transition to a low carbon economy globally. The report is based on the firm’s carbon intensity model, as well as various sources for key economic data, including the Word Bank and the Intergovernmental Panel on Climate Change.

Paris Agreement targets

The global economy remains heavily focused on generating GDP from carbon production. The cycle is being uncoupled, however, as new technologies open up pathways away from damaging and polluting forms of energy generation. Carbon intensity, which reflects the carbon intensity in relation to GDP, has been on the decline – averaging a decrease of -1.3% annually between 2000 and 2015.

The most recent result reflect falls in coal consumption, down by -2.8%, with a switch to lower carbon gas (+1.7%) as well as oil (+1.9%). Renewable energy sources, such as wind and solar energy output grew by 17.4% and 32.6% respectively last year, on a relatively low base with respect to the energy system as a whole.

The progress continues to significantly lag behind what is deemed necessary, however, and even falls behind the policy plans of most major economies. With respect to keeping within the Paris Agreement’s 2 degrees celsius limit, annual decarbonisation of -6.5% is required – while the collective Intended Nationally Determined Contributions (INDCs) of G20 countries currently stands at -3% annually, which is well below target.

Global Carbon Intensity Index

As part of the research, the consultancy firm considers the top performers in reducing carbon intensity in the G20 between 2014 and 2015. While globally the G20 are on average 0.2% behind their INDC targets, the G7 and E7 both managed to outperform their target (which are at -3.4% and -2.5% annually respectively) at -3.6% and -4% respectively, last year.

In terms of individual countries, the UK took second spot with -6% carbon intensity – well outperforming the INDC target of -3.1%. China took the top spot, however, with a -6.4% change in carbon intensity, as the country sought to reduce its dependence on coal as well as deal with air pollution. The US, took the number three spot with on -4.7% – well above its INDC target of -4.1% but still short of the -6.5% target required globally to meet the Paris Agreement. South Africa and Mexico round off the top five.

A number of countries saw their energy intensity increase, including Indonesia, up 0.6%, Brazil, up 0.8%, Saudi Arabia, up 1.1% and Italy, up 4.7%.

UK trends

In the UK there is a trend away from coal, which fell more than 20% for the second year running, cementing the UK’s position as a leader in the Index. Other carbon energy sources remain key to generating the UK’s energy, with oil and gas generating the lion’s share in 2015. The research finds that renewable energy sources, such as wind and solar have picked up since 2010, generating around 9% of the country’s need – in line with nuclear.

Jonathan Grant, Sustainability and Climate Change Director at PwC, says, “In 2015 the world economy decarbonised at record levels but it still falls far short of the rapid reductions needed to achieve the two degrees goal. With each passing year, the global challenge gets tougher. To stay within the two degrees carbon budget the annual reduction in carbon intensity now needs to reach 6.5%, up from 5.1% four years ago. On business as usual trends we’ll use up the two degrees global carbon budget for this century by 2036.  But our Index shows that national targets set in the Paris Agreement only buy another four years. If governments want to hit the global goal of ‘well below two degrees’ they will need to raise the ambition of their targets immediately and do much more to accelerate low carbon investment.”