PwC's Net Zero Economy Index (NZEI), an indicator of the progress G20 members have made in reducing energy-related CO2 emissions and decarbonising their economies, shows that at just 0.5%, the global rate of decarbonisation in 2021 was at its lowest level in over a decade. With further economic headwinds and energy price challenges ahead, countries – and businesses – have important decisions to make if they are to place decarbonisation efforts at the heart of their economic futures.
The lifting of pandemic restrictions in 2021 has given way to a much needed resurgence in economic activity, but with this, we have seen a rebound in emissions. The 2021 data has been skewed by the ramping up of economic activity, and appears to show the recovery from COVID-19 has not – at least in the short term – been a green one. This continues to take us further away from what we need to do in order to limit warming to 1.5°C above pre-industrial levels.
In 2021 we moved further away from limiting warming to 1.5°C above pre-industrial levels. At just 0.5%, the global rate of decarbonisation in 2021 – the reduction in carbon intensity, or energy-related CO2 emissions per GDP – was at its lowest level in over ten years. While skewed by the rebound in economic activity from the pandemic, the recovery has not – at least in the short term – been green.
Looking ahead, the current geopolitical and economic context presents a real risk to future progress. The IPCC’s 2030 deadline to reduce emissions by 43% is fast approaching, and our analysis shows that countries now need to work even harder to meet this figure. When looking at global carbon intensity, which accounts for the projected rise in GDP until 2030, we need to see a 77% reduction over this period.
Each country and sector will have its own route to decarbonisation, focusing on changes to its own unique energy mix and efficiency gains, as well as other actions outside of our core energy analysis, for example, naturebased solutions and use of technology. Businesses, governments and investors will need to focus on the quick wins with the highest impacts to put us on track to 2030, while at the same time investing in longer term interventions that will deliver on agreed goals for 2050. In parallel, they will need to adapt to the impacts of climate change that are already being experienced, and those that are increasingly inevitable in the shorter term. Businesses are continuing to drive forward the climate agenda, particularly at a sector level. Motivated by shifts in the regulatory and consumer environment, and an increased recognition by investors of the importance of a low carbon transition.
