PwC Low Carbon Economy Index 2012

Too late for two degrees?

The annual PwC Low Carbon Economy Index centres on one core statistic: the rate of change of global carbon intensity. This year we estimated that the required improvement in global carbon intensity to meet a 2ºC warming target has risen to 5.1% a year, from now to 2050.

We have passed a critical threshold – not once since 1950 has the world achieved that rate of decarbonisation in a single year, but the task now confronting us is to achieve it for 39 consecutive years.

The 2011 rate of improvement in carbon intensity was 0.8%. Even doubling our rate of decarbonisation, would still lead to emissions consistent with six degrees of warming. To give ourselves a more than 50% chance of avoiding two degrees will require a six-fold improvement in our rate of decarbonisation.

Chart: PwC's Low Carbon Economy Index - Global

Chart: The link between GDP per capita and net forest carbon emissions

In the Emerging Markets, where the E7 now emit more than the G7, improvements in carbon intensity have largely stalled, with strong GDP growth closely coupled with rapid emissions growth.

Meanwhile the policy context for Carbon Capture and Storage (CCS) and nuclear, critical technologies for low carbon energy generation, remains uncertain.

As negotiators convene every year to attempt to agree a global deal, carbon emissions continue to rise in most parts of the world. The urgency for a global binding and meaningful policy commitments has reached a tipping point.

Business leaders have been asking for clarity in political ambition on climate change. Now one thing is clear: businesses, governments and communities across the world need to plan for a warming world – not just 2ºC, but 4ºC and, at our current rates, 6ºC.

Time to plan for a warmer world?
Businesses need to be prepared for unpredictability. Whether that’s policy, climate or consumer change. And it needs tools to help to analyse the impact of significant policy or market uncertainty on a decision. Extreme weather events look set to become more common as well, and business continuity will be a key challenge in future.
Low Carbon Economy Index - Planning for a warming world

Leo Johnson, Andrew Sentance and Jonathan Grant discuss the Low Carbon Economy Index, how much of the global carbon budget has been spent and how much companies must reduce their emissions to hit the 2 degrees centrigade target.