Last year’s Low Carbon Economy Index (LCEI) had the title ‘Too late for two degrees?’. In other words, the jury was still out. This year the question mark looks harder to justify.
For the fifth year running we have examined the rate of decarbonisation in the G20. And it’s not good reading.
In 2008, when we first started the LCEI, we calculated that to maintain growth without exceeding two degrees of warming, the G20 needed to reduce its carbon intensity at 3.5% per year. Over the next four years the rate of decarbonisation failed to exceed 0.7%. By 2012, to make up for lost ground, the rate had risen to 5.1%, requiring a rate of decarbonisation never achieved in a single year to be sustained for the rest of the century.
This year the challenge has again increased. Our model shows we now need to reduce carbon intensity by 6% every year from now till 2100. This is over eight times our current rate of decarbonisation. Even doubling the current 0.7% rate of decarbonisation puts us on a path consistent with the most extreme scenario presented by the IPCC, and potential warming of around 4°C by 2100. On current trends we will use up this century’s carbon budget by 2034 – sixty six years early. Put simply, we are busting the carbon budget.
There are three factors that add grounds for pessimism. First the IPCC’s Fifth Assessment Report has further strengthened the scientific consensus linking anthropogenic carbon emissions to climate change. The World Bank, second, with its report ‘Turn Down the Heat’ has highlighted the social and economic costs of four degrees of warming. Third, a number of the technological silver bullets – the big bets banked on for heavy duty decarbonisation – appear to be failing.
Nuclear power, despite the UK’s announcement of its first new plant in twenty years, is in retreat in Japan and Germany. The deployment of carbon capture and storage appears to have stalled, with no commercial scale projects integrating CCS with power generation. Shale gas has displaced coal in the US, but cheaper coal contributed to higher coal consumption in Europe last year. Our model shows that 92% of the small reduction in carbon intensity achieved last year is primarily down to one factor, improvements in energy efficiency. While this is positive, there is the possibility that incremental efficiency improvements will tail off once the low hanging fruit has been picked.
But there are also grounds for optimism. At the national level, countries like Brazil, France and Argentina present examples of economies with significantly lower carbon emissions per unit of GDP. China provides the example of using carbon pricing to underwrite risk and stimulate innovation in clean tech sectors. At the level of the city, a number of cities and councils globally have delivered high levels of decarbonisation while enhancing liveability. At the level of technology, finally, the costs of renewables continue to decrease and at an accelerating rate.
What would be a game-changer? One would be this. Six years after Copenhagen’s COP-15, with renewables proving their capacity to reach cost parity, a global climate deal in 2015 could provide the regulatory framework and financial stimulus to catalyse a low carbon transition.
Partner Sustainability and Climate Change, PwC