An annual study of the world’s progress on decarbonisation by global consulting firm PricewaterhouseCoopers (PwC) has found that 2023 recorded the slowest decrease in carbon intensity in over a decade.
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The global decarbonisation rate last year stood at just 1.02 per cent, less than half of what it was the year before (2.5 per cent), PwC’s recent Net Zero Economy Index found. This is the smallest reduction in carbon intensity since 2011, where the world needs to decarbonise twenty times faster in order to limit global warming to 1.5°C.
“The slow progress comes as global temperatures edge dangerously close to the 1.5°C threshold, with temperatures in 2023 averaging 1.43°C above pre-industrial levels,” it said, adding that even to limit global warming to 2°C – the lowest end of the Paris Agreement’s ambition – the world requires a decarbonisation rate of 6.9 per cent annually.
The Net Zero Economy Index is an annual indicator that tracks progress made in reducing energy-related carbon emissions and decarbonising economies by PwC.
Findings from the latest index revealed that fossil fuels remain the dominant source of energy despite a significant increase in renewable energy capacity last year.
In 2023, the total installed capacity of renewables went up by 14 per cent from 2022 levels to 3,870 gigawatts (GW) with the help of supportive government policies and cost reductions of solar and wind technologies across the world.
However, fossil fuels consumption remained dominant, growing by 1.5 per cent to 16,007 GW.
The graph shows global decarbonisation rates required for 1.5ºC and 2ºC levels of warming. Image: Net Zero Economy Index 2024 / PwC
“This trend is reflected in our findings that the global fuel factor – the emissions released per unit of energy consumed – also increased slightly by 0.07 per cent in 2023, indicating a small rise in the proportion of fossil fuels relative to renewables in the energy mix,” it said.
The surge in energy demand globally continued to outpace the adoption of renewables, with the shift away from fossil fuels further complicated by economic challenges including inflation, geopolitical tensions, and rising interest rates.
Although electrification and digitisation are typically less energy-intensive, rising energy demand in emerging economies, transportation systems, artificial intelligence, data centers, and climate adaptation efforts, such as enhanced cooling and water desalination are also contributing to increased overall energy consumption, it said.
The index added that despite an agreement at COP28 to triple global renewable energy generation capacity to at least 11,000 GW by 2030 and to double the annual rate of energy efficiency improvements from 2 per cent to over 4 per cent until 2030, “the world continues to rely heavily on fossil fuels”.
This is evident in the way coal, oil, and gas dominate the global energy mix, with oil accounting for 32 per cent, gas at 23 per cent, and coal making up 26 per cent of global energy consumption.
Last year’s global energy intensity also fell by only 1.09 per cent, which is far below the International Energy Agency’s 2050 net-zero roadmap of 4.2 per cent annual reduction in energy intensity needed through to 2030.
Although the world’s richest G7 countries managed a 5.31 per cent reduction in carbon intensity, the largest deveoping economies, known as the E7, saw a slight increase of 0.04 per cent. The index noted that developing countries face significant challenges in “balancing emissions reductions with economic growth and climate adaptation.”
The G7 countries consist of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, while the E7 group includes Brazil, China, India, Indonesia, Mexico, Russia and Turkey.
The findings concluded that financial and technological support play a critical role in ensuring a just transition across the globe.
“Developed countries must lead in reducing emissions and provide financial and technological support to help developing nations transition away from fossil fuels.”
“COP29 will be crucial in finalising the New Collective Quantified Goal (NCQG) on Finance, setting financial targets for developed countries to aid developing nations in their climate action,” it said.
