PWC report says “Business as usual is not an option” as current rates of CO2 reduction point to 6C of global warming
PwC – not an organisation normally thought to be a key advocate of limiting carbon emissions – has published its annual Low Carbon Economy Index report, which examined the progress of developed and emerging economies towards reducing their “carbon intensity”, or their emissions per unit of gross domestic product. It says that current rates of reduction of carbon intensity in major economies shows we’re heading for at least 6C degrees of warming rather than 2C by 2100. Even doubling our current annual rates of decarbonisation globally every year to 2050, would still lead to a 6C temperature rise. Global carbon intensity now needs to fall by an average of 5.1% a year for the next 39 years up to 2050 – a performance never achieved before. By contrast, only a 0.7% reduction in carbon intensity was achieved globally in 2011. and global carbon emissions went up over 3% in 2011 – which was a record high, according to the IEA. The PWC report warns that “governments and businesses can no longer assume that a 2C warming world is the default scenario.” With less than 4 weeks to the UN Climate Summit in Doha, the analysis illustrates the scale of the challenge facing negotiations.
LONDON (Reuters) – The world will have to cut the rate of carbon emissions by an unprecedented rate to 2050 to stop global temperatures from rising more than 2 degrees this century, a report released by PwC on Monday showed.
PwC’s annual Low Carbon Economy Index report examined the progress of developed and emerging economies towards reducing their carbon intensity, or their emissions per unit of gross domestic product.
Global temperatures have already risen by about 0.8 degrees Celsius above pre-industrial times. Almost 200 nations agreed in 2010 at United Nations climate talks to limit the rise to below 2 degrees C (3.6 Fahrenheit) to avoid dangerous impacts from climate change.
Carbon intensity will have to be cut by over 5 % a year to achieve that goal, the study said. That compares with an annual rate of 0.8 percent from 2000 to 2011.
“Because of this slow start, global carbon intensity now needs to be cut by an average of 5.1 percent a year from now to 2050. This rate of reduction has not been achieved in any of the past 50 years,” it added.
Climate scientists have warned that the chance of limiting the rise to below 2C is getting smaller.
Global carbon emissions went up over 3 percent in 2011 to a record high, according to the International Energy Agency.
Even if the 5 percent rate is achievable in the long term, decarbonisation will not be ramped up immediately, meaning that future cuts would have to be far more.
“Even doubling our current rate of decarbonisation would still lead to emissions consistent with 6C warming by the end of the century,” said Leo Johnson, PwC partner for sustainability and climate change.
“To give ourselves a more than 50 percent chance of avoiding 2C will require a six-fold improvement in our rate of decarbonisation.”
According to the study, European Union countries had the highest rates of decarbonisation, with Britain, France and Germany all cutting carbon intensity by over 6 percent in 2010-2011.
“The irony is that a key reason for lower energy use was the milder winter in the region. Both the UK and France also witnessed increased generation in low-emissions nuclear power, whereas Germany’s exit from nuclear is reflected in its relatively lesser decline in emissions,” PwC said.
The United States experienced a 3.5 percent decrease in carbon intensity in 2011, mostly due to a shift to shale gas from coal in its fuel mix and more efficient vehicles.
Decarbonisation in China and India in the last decade seems to have stalled, while Australia’s carbon intensity grew by 6.7 percent last year and Japan’s was up 0.8 percent.
Although major economies have promised to cut carbon dioxide emissions, the pledges combined are insufficient to meet the 2C target, PwC said.
It questioned whether some of the pledges can be met due to economic pressures.
Nations will meet in Qatar at the end of this month for the next round of U.N. climate talks when they are supposed to discuss ways of ramping up their climate targets.
The analysis in the PwC Low Carbon Economy Index, measuring developed and emerging economies progress towards reducing emissions linked to economic output. It demonstrates that at current rates of emissions growth at least 6oC degrees of warming could be possible by the end of the century. Download file [
5 Nov 2012 (PWC press release)
- Current rates of reduction of carbon emissions per unit of GDP in major economies (“carbon intensity”) shows we’re heading for at least 6C degrees of warming rather than 2C.
- Global carbon intensity now needs to fall by an average of 5.1% a year for the next 39 years – a performance never achieved before
The annual rate of reduction of carbon emissions per unit of GDP needed to limit global warming to 2oC, has passed a critical threshold according to new analysis from PwC. The rate of reduction now required has never been achieved before.
The analysis in the PwC Low Carbon Economy Index, measuring developed and emerging economies progress towards reducing emissions linked to economic output. It demonstrates that at current rates of emissions growth at least 6C degrees of warming could be possible by the end of the century.
The report shows that while the increase in emissions intensity in 2010 has been reversed, with only a 0.7% reduction globally in 2011, it’s a fraction what is required against the international commitment to limit global warming to 2oC. To limit global warming to 2oC would now mean reducing global carbon intensity by an average of 5.1% a year – a performance never achieved since 1950, when these records began.
The report warns that “governments and businesses can no longer assume that a 2oC warming world is the default scenario.”
It adds that any investments in long term assets or infrastructure, particularly in coastal or low-lying regions need to address far more pessimistic scenarios.
With less than four weeks to the UN Climate Summit in Doha, the analysis illustrates the scale of the challenge facing negotiations. The issue is further complicated by a slow market recovery in developed nations, but sustained growth in E7 economies which could lock economic growth into high carbon assets.
Emerging markets’ previous trends on carbon emissions reductions linked to growth and productivity have stalled, and their total emissions grew by 7.4%.
By contrast, the UK, France and Germany achieved record levels of annual carbon emissions intensity reductions, but were helped on by milder winters.
Jonathan Grant, director, sustainability and climate change, PwC said:
“The risk to business is that it faces more unpredictable and extreme weather, and disruptions to market and supply chains. Resilience will become a watch word in the boardroom – to policy responses as well as to the climate. More radical and disruptive policy reactions in the medium term could lead to high carbon assets being stranded.
“The new reality is a much more challenging future in terms of planning, financing and predictability. Even doubling our current annual rates of decarbonisation globally every year to 2050, would still lead to 6C, making governments’ ambitions to limit warming to 2oC appear highly unrealistic.”
The pace of reducing global carbon intensity has been slow despite growing international focus on climate change. The financial crisis has dampened progress further, with carbon intensity falling less than 1% in the four years since it began.
Leo Johnson, partner, PwC said:
“While we’ve reversed the increase in emissions intensity reported last year, we’re still seeing results that are simply too little too late. We’ve now got to achieve, for the next 39 years running, a target we’ve never achieved before.”
“This isn’t about shock tactics, it’s simple maths. We’re heading into uncharted territory for the scale of transformation and technical innovations required. Whatever the scenario, or the response, business as usual is not an option.”
Jonathan Grant, director, sustainability and climate change, PwC said:
“The challenge now is to implement gigatonne scale reductions across the economy, in power generation, energy efficiency, transport and industry, as well as REDD+ in forested nations.”
Examining the role of shale gas, PwC’s report suggests that at current rates of consumption, replacing 10% of global oil and coal consumption with gas could deliver emissions savings of around 3% a year (1gt C02e per annum). However the report warns that while it may “buy some time”, it reduces the incentive for investment in lower carbon technologies such as nuclear and renewables, and could lock in emerging economies with high energy demand to a dependence on fossil fuels.
Notes to Editors:
1. Carbon intensity is our preferred metric for analysing countries’ movements towards a low carbon economy, as it accounts for expected economic growth, and can generate comparable targets.
2. The carbon intensity of an economy is the emissions per unit of GDP and is affected by a country’s fuel mix, energy efficiency and the proportion of industrial versus service sectors.
3. Despite achieving its highest levels of carbon intensity reduction annually, the UK still needs to reduce carbon emissions intensity 5.2% per year. Staying within the UK’s pledge of 34% reduction on 1990 emissions levels would require action on the scale of equivalent of shutting down all the UK’s coal – fired power plants.
4. View a discussion of the key findings with Leo Johnson, partner, PwC: Andrew Sentance, chief economic advisor, and Jonathan Grant, policy and carbon specialist, PwC sustainability and climate change.
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Temperatures may rise 6c by 2100, says study
by Steve Connor, (Independent)
The world is destined for dangerous climate change this century – with global temperatures possibly rising by as much as 6C – because of the failure of governments to find alternatives to fossil fuels, a report by a group of economists has concluded.
It will now be almost impossible to keep the increase in global average temperatures up to 2100 within the 2C target that scientists believe might avert dangerous and unpredictable climate change, according to a study by the accountancy giant PricewaterhouseCoopers (PwC).
An analysis of how fast the major world economies are reducing their emissions of carbon dioxide from fossil fuels suggests that it may already be too late to stay within the 2C target of the UN’s Intergovernmental Panel on Climate Change, it found.
To keep within the 2C target, the global economy would have to reach a “decarbonisation” rate of at least 5.1% per year for the next 39 years. This has not happened since records began at the end of the Second World War, according to Leo Johnson, a PwC partner in sustainability and climate change.
“Even doubling our current rate of decarbonisation would still lead to emissions consistent with 6C of warming by the end of the century. To give ourselves a more than 50% chance of avoiding 2C will require a sixfold improvement in our rate of decarbonisation,” he said.
“It’s time to plan for a warmer world … We have passed a critical threshold,” he said.
“This isn’t shock tactics, it’s simple maths. We’re heading into uncharted territory for the scale of transformation and technical innovations required. Whatever the scenario, or response, business as usual is not an option.”