Net Zero Economy Index 2023

The world is falling dangerously short of the ambition that is needed to secure a safe future climate, according to new analysis by PwC, and as a result we need to fight to prevent every fraction of a degree of warming.

PwC’s latest Net Zero Economy Index shows that a year-on-year decarbonisation rate of 17.2% (up from 15.2% last year) is now required to limit global warming to 1.5°C above pre-industrial levels - seven times greater than what was achieved over the last year (2.5%) and 12 times faster than the global average (1.4%) over the past two decades. 

To put this into perspective, since 2000, no G20 country has achieved a decarbonisation rate of more than 11% in a single year - the highest level was achieved by the UK in 2014 (-10.9%).

The Index provides a stark illustration of the growing divergence between the global ambition to tackle climate change and the reality of current progress. 

Our analysis shows that all nations including Ireland need to work harder to reduce emissions to stand any chance of meeting the IPCC's 2030 deadline to reduce emissions by 43%, with a 78% reduction in carbon intensity now required in under seven years.

David McGee, PwC Ireland ESG Leader, said: 

“The fact the world needs to decarbonise seven times faster is a spur to action, not a counsel of despair. While the overall pace has to pick up rapidly, dramatic change is possible when business and policy makers align. The rapid acceleration of the deployment of wind and solar in several regions shows change can happen. The world is decoupling growth from carbon emissions, now we need that trend to become a surge.”

Now in its 15th year, PwC’s Net Zero Economy Index tracks economic growth and energy-related CO2 emissions data, against the rates required to achieve the aims of the Paris Agreement. It tracks how economies are progressing in breaking the link between economic growth and increases in energy-related carbon emissions.

Surge in renewable energy adoption

More positively, our analysis shows that last year saw a surge in renewable energy adoption, which shows hope for an accelerated and market-led transition, with solar energy experiencing its highest growth ever recorded at 24.4% and wind energy increasing by 13.1%. The significant growth of renewables is primarily concentrated in Asia (particularly China), the USA, and Europe. This accelerated action needs to be echoed in wider economic sector transitions, infrastructure, and coupled with increased support to developing countries.

Ireland faces significant challenges but opportunities beckon

Ireland faces significant challenges. The most recent emissions inventory and projections published by the Environmental Protection Agency (EPA) show that Irish national greenhouse gas emissions fell by just ~ 2% in 2022. Ireland faces significant challenges in meeting its short-term and medium-term climate targets. Based on current trends and full implementation of planned climate policies and measures, the EPA projects that Ireland will only achieve a 29% reduction by 2030 compared to a 51% reduction enshrined in the Climate Act.

The 2023 PwC report on the Business in the Community Ireland Ireland (BITCI) found that while 80% of companies are on track to setting science-based targets for decarbonisation, there is an urgency on some to be more proactive in setting their targets and reducing their emissions, particularly around scope 3 emissions. 

Commenting on Ireland, David McGee, said: “As society continues to grapple with how to reduce emissions, more investment is needed with better spread across sectors and solutions.  There are opportunities to be had from climate change particularly in the area of climate tech. This includes nurturing development opportunities in offshore renewable energy and the decarbonisation of heat as well as transition technologies, such as carbon capture ready to scale up.”

“A near term focus on climate transition plans is essential in helping an organisation navigate the complex shift to a low-carbon economy.  An effective transition plan can provide an organisation with a roadmap for driving sustained business outcomes as market dynamics change and society’s expectations shift.”

The Net Zero Economy Index also reveals that:

• Economic growth and energy consumption are decoupling - but not fast enough.

• Decarbonisation trajectories are progressing at different rates between G7 and E7 economies. The G7 achieved a 1.2% reduction in carbon intensity in 2022, compared to the annual average of 2.3% achieved since 2019. By contrast, E7 nations achieved a 2.8% decarbonisation rate in 2022, relative to a 1.7% annualised decrease since 2019.

• The UK has had the highest long term level of decarbonisation in the analysis, maintaining a decarbonisation rate of 3.7% over the duration of the 21st century.

David McGee concluded: 

“The world's collective failure to get to grips with climate change leaves us on the cusp of an unpredictable and economically destructive time. We must now bend the curve on emissions growth and urgently seize the opportunity to realign our global economy and net zero pathway with a 1.5°C future climate.”

“To achieve our global ambition, and starting this year, it is time to embrace a bold, commercial and disruptive phase of global redevelopment that is driven by mass deployment of clean technologies, accelerated by practical innovation, and scaled with sustainable finance. The result of our choices now will be definitive for future generations who neither chose nor deserve a flawed inheritance.”

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