Counting the cost of carbon: Low carbon economy index 2011
For the first time since 2000, no improvement has been made in reducing the carbon intensity of the G20, despite modest economic recovery globally.
The results of the PwC Low Carbon Economy Index 2011 call into question the likelihood of global decarbonisation happening rapidly enough to limit global warming to 2 degrees Celsius, as agreed at the Cancun summit. Globally, carbon intensity now needs to reduce by 4.8% a year, over twice the rate required in 2000.
During the recession, many countries saw carbon emissions rates fall faster than GDP due to a reduction in manufacturing output. But that trend was reversed in 2010, when global GDP growth was 5.1%, compared to emissions growth of 5.8%. The main contributors to the emissions growth were rapid growth of carbon-intensive, emerging economies; colder winters at the beginning and end of the year; the fall in the price of coal relative to gas; and a drop in energy renewable deployment.
Not only did six of the G7 countries increase their carbon intensity, but the one that did reduce its carbon intensity - Canada - still increased its total emissions by a significant amount (2.6%). There were more encouraging signs in the E7. India made some progress with decoupling carbon from economic growth (achieving a 0.5% reduction in carbon intensity) and China's emissions roughly kept pace with their economic growth. Australia, on the other hand, showed remarkable progress, with solid economic growth (3%) accompanied by a record fall in tonnes of carbon emitted (8.2%).
The two main challenges in increasing low carbon generation are the cost and getting capital to flow to low carbon options instead of towards conventional technology. The report details three areas where countries can focus their attention to address these challenges:
During the recession, many countries saw carbon emissions rates fall faster than GDP due to a reduction in manufacturing output. But that trend was reversed in 2010, when global GDP growth was 5.1%, compared to emissions growth of 5.8%. The main contributors to the emissions growth were rapid growth of carbon-intensive, emerging economies; colder winters at the beginning and end of the year; the fall in the price of coal relative to gas; and a drop in energy renewable deployment.
Not only did six of the G7 countries increase their carbon intensity, but the one that did reduce its carbon intensity - Canada - still increased its total emissions by a significant amount (2.6%). There were more encouraging signs in the E7. India made some progress with decoupling carbon from economic growth (achieving a 0.5% reduction in carbon intensity) and China's emissions roughly kept pace with their economic growth. Australia, on the other hand, showed remarkable progress, with solid economic growth (3%) accompanied by a record fall in tonnes of carbon emitted (8.2%).
The two main challenges in increasing low carbon generation are the cost and getting capital to flow to low carbon options instead of towards conventional technology. The report details three areas where countries can focus their attention to address these challenges:
- 'Win-win' opportunities, typically in off-grid situations where conventional generation is higher cost
- Removing regulatory and infrastructure barriers to profitable low carbon business
- Using innovative models of finance to attract capital to low carbon business
Please contact
- Liza Maimone
- Consulting Sustainability & Climate Change Leader
- Tel: +61 3 8603 4446
- John Tomac
- Partner, Sydney
- Tel: +61 2 8266 1330
