PwC warns of emissions relapse as decarbonisation slows

As millions of people across the globe participate in a worldwide climate strike, new research has found that decarbonisation is slowing at a dramatic rate. This means that if the world is to meet the targets set by the Paris Climate Agreement, efforts may need to be increased by as much as seven times in the coming years, while governments may need to ask questions that compromise the profitability of certain industries. 

With millions of people, young and old, taking part in a week-long ‘climate strike’ around the world, thousands of people have already joined rallies in British cities including Glasgow, Manchester and London, urging "climate justice.” Around 4,638 events were slated to take place in 139 countries, as pupils abandoned schools and workers downed tools as part of an initial day of action on September 20th, all with the goal of making it clear they are unhappy with the perceived inaction on the carbon emissions which are linked to the rapid heating of the earth. 

While public awareness of the issue seems to have gone through a rapid renaissance in the last year, however, a new report has found that global governments and corporations are still dragging their feet on the matter, with dire consequences. According to the latest Low Carbon Economy Index from auditing and advisory firm PwC, decarbonisation has stalled worldwide, as fossil fuel energy continues to be used to meet rising energy demand, leaving businesses and states facing huge challenges to manage the escalating risk of disruption from extreme weather. 

The findings led PwC to warn of an “emissions relapse,” as after four years of moderate progress, 2018 saw the pace of low carbon transition fall back to its long term average seen since 2000. Despite significant increases in renewable energy, then, the gap between the Paris Agreement’s most ambitious goal – the bare minimum if the world is to stand a fair chance of limiting global warming to 1.5C – and the current pathway continues to grow. 

According to PwC, in order to meet the Paris Accord’s top goal of preventing global warming beyond 1.5C, decarbonisation rates would need to reach 11.3% annually. That is seven times greater than the current rate of 1.6%, which is its lowest level since 2011. That means the world is currently witnessing less than half of the decarbonisation rate of 2015, which was 3.3%, when over 190 governments first  committed to the Paris Agreement. At this rate countries won’t even achieve their own national targets, let alone the much more ambitious global goal in that Agreement. 

Commenting on the findings, Jonathan Grant, Director, PwC, said, “It’s worrying that progress on climate seems to have stalled. There’s a huge gap between the rhetoric of the ‘climate emergency’ and the reality of an inadequate global response. This is increasingly challenging for companies to manage, as they deal with both extreme weather impacts and growing climate policy risk. They are having to balance continued demand for business as usual and urgent calls for disruptive change.” 

Indeed, the findings present a key conundrum for governments, which is that by adhering more strictly to decarbonisation, they fear they may damage their prospects of economic growth. While in the earlier phases of decarbonisation, it was possible to make gains by offering private interests areas they could move into and commoditise. As those areas have become populated, however, efforts to decarbonise have hit a wall, and one which businesses and governments seem reluctant to hurdle, even for the sake of tomorrow’s world. 

For example, deforestation and over-fishing have both been linked to tax havens, with some 68% of the investments tracked in the Amazon came from companies based in countries where no tax is paid, and around 70% of illegal fishing vessels being similarly registered in tax havens. However, tax havens help corporate interests maximise their profits, while many countries seek to become more like havens to attract wealthy individuals. Top accounting firms like the Big Four are even tied up in assisting companies and governments access and maintain these havens, further complicating the matter.