The Race to Sustainability

A recent analysis by the management-consulting firm PricewaterhouseCoopers (PwC) assessed the achievement and future success of countries in moving toward green economies. The report found that two emerging economies, Brazil and India, may outpace the efforts of developed nations in sustainability efforts..

The basis of PwC’s finding was the PwC Low Carbon Economy Index, which analyzes the G20 members (which includes 19 countries and the European Union) against a low- carbon economy model that combines both gross domestic product (GDP) and emissions growth rates. PwC’s Low Carbon Economy Index is based on carbon intensity (the ratio of emissions to GDP) against a fixed carbon budget that would meet greenhouse-gas stabilization targets outlined by the International Panel on Climate Change. A 50-year “carbon budget” was estimated for each nation, within an overall global carbon budget to meet the greenhouse gas stabilization targets outlined by the Intergovernmental Panel on Climate Change.

PwC has estimated a country allocation of the global carbon budget for the G20 economies, which collectively make up over 80% of global carbon emissions, based on assumptions in several areas. These assumptions led to country-level projections of energy-related emissions, with some common features among countries but also some variations to reflect differing starting points, stages of economic development, and energy-resource endowments. The analysis assessed G20 achievements to date in reducing their carbon intensity levels, the ratio of emissions to GDP since 2000, and individual nations’ distances to go to meet their carbon-reduction targets to 2050. The report found that annual global decarbonization challenge to 2020 has almost doubled from 2% per annum in 2000 to 3.8% per annum to 2020. Overall, the analysis found that based on current trends in carbon intensity, the world will have used up an estimated global carbon budget for the first half of this century by 2034, 16 years ahead of schedule.

Brazil stood out as a good performer among developing countries that showed a pronounced decline in their carbon-reduction performances. A 5.4% reduction in carbon intensity meant that the country retained its top place in the PwC Low Carbon Challenge Index, measuring the level of decarbonization necessary per annum to 2050. The country has the least distance to go in terms of carbon-intensity reduction according to the PwC analysis, but this would still mean a 79% reduction by 2050. According to a Dec. 9, 2010, press release analyzing the results, Brazil experienced higher-than-forecasted economic growth while developing a stronger portfolio of renewable energy to  pave the way for further improvements in decarbonization. Within the G20, Brazil is also one of the closest to the 2050 low-carbon economy goal although challenges around deforestation and land use remain.

India also showed favorable results, according to the PwC release. The country has low-carbon emissions level per capita relative to other emerging economies, and so comes out relatively well when comparing carbon intensity among countries. However, facing a rapidly growing economy, both in terms of the economy and population, the Indian government has announced in 2009 a target of reducing its carbon intensity by 20–25% by 2020. For example, national missions have been developed to improve energy efficiency, scale up renewable energy, and transform land use and forestry practices, according to the PwC report.

 “The climate change agenda has started to shift, from global political cooperation to national economic competition, and from a focus on cost sharing to a focus on value creation,” said Leo Johnson, partner in the PwC sustainability and climate change practice in the PwC release.” What a number of countries have woken up to is the potential for low carbon growth, and the risks to economic competitiveness of falling behind.”

To meet climate goals by 2050, on an overall global basis, countries need to emit around one-tenth of carbon emissions for every unit of GDP currently produced at today’s levels. Certain countries, such as Brazil, are ahead of that goal; for example, Brazil needs to cut its emission by only one-fifth of current levels. Overall in 2009, the G20 reduced its total carbon emissions by 1.3% compared to 1.8% growth in 2008. This means global carbon intensity has fallen by 0.7%, a fraction of the 3.5% reduction per annum required to 2020, according to the PwC analysis. The estimated global carbon budget in the report implies that annual emissions of global total greenhouse gases will need to fall to below 20 gigatonnes of carbon dioxide equivalent by 2050, half the global annual emissions today, while sustaining a global economy nearly four times larger and global population one and a half times bigger. By 2050, for every unit of GDP produced, the world economy can only emit one tenth of the carbon emissions compared to today. It is estimated that, in order to have a likely and cost-effective chance of pegging temperatures to 2 degrees Celsius or below over the course of the 21st century, global emissions will need to have peaked within the next 10 years and be around 44 gigatonnes of carbon dioxide equivalent by 2020.