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 per cent 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 per cent. Even doubling our rate of decarbonisation, would still lead to emissions consistent with six degrees of warming. To give ourselves a more than 50 per cent chance of avoiding two degrees will require a six-fold improvement in our rate of decarbonisation.
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.