Getting to net zero - PwC's UK Low Carbon Economy Index

Nov 19, 2019

 

  • UK leads the G20 having the most rapid decarbonisation rate since 2000, at 3.7%

  • Achieving the UK’s commitment to achieve net zero emissions by 2050 will require an annual decarbonisation rate of 9.7%

  • A coherent policy response that catalyses action to deliver emissions reductions across all sectors is required

This year the UK became the first major economy to set a legally binding commitment to reach net zero emissions by 2050. To achieve this it will require an annual reduction in carbon intensity of 9.7%, according to PwC latest Low Carbon Economy Index (LCEI).

The UK still leads the G20 in having the most rapid decarbonisation rate since 2000, at 3.7%. However, the rate of progress has slowed and the gap to meet climate targets is widening. 

If the UK is able to achieve the required 9.7% decarbonisation rate it will demonstrate that delivering net zero emissions is possible and create a pathway to carbon neutrality that other countries can follow.  However, it needs to act fast and match its stated ambition with a robust and broad roadmap for change. 

Emission reductions and what’s next

The majority of the UK’s recent emissions reductions have come from the phase-out of coal. But this trend of decarbonisation is neither sustainable or sufficient. The emissions reductions achieved through the phase-out of coal can only be banked once. Between 2012 and 2016, peak coal phase-out years, the UK achieved an annual average rate of decarbonisation of 6.9%. It was only in 2014 that the UK achieved the 9.7% required decarbonisation rate for net zero.

Achieving net zero will require action and a transition of every sector of the UK economy. The electrification of sectors such as transport and heating needs to be met by the scaling up of renewables and increased investment in clean energy sources, advanced storage solutions, and smart grids. Negative emissions technologies such as carbon capture and storage will need to be scaled, and improved agriculture and land use practices will be critical for removing carbon from the atmosphere and restoring carbon sinks.

Currently the UK is making limited progress outside of the power and industry sectors. Businesses are increasingly adopting ambitious climate commitments and demonstrating climate leadership. Over 1000 leading companies have signed up to initiatives such Science Based Targets and RE100, while nearly 100 companies have committed to more ambitious decarbonisation to reach net zero by 2050, showing their willingness to both align with, and drive, the low carbon transition.  

Commenting on what businesses need from government to enable the net zero transition Dr Celine Herweijer, partner at PwC UK and Global Climate Change Leader at PwC, said:

“Achieving net zero will require companies across all sectors to transform, drive innovation and grow whilst managing transition risks. This needs to happen at scale and speed over the coming two to three business cycles. It’s one thing for leading companies to set ambitious targets, but the ability to meet these will need strong government action to stimulate new market solutions.  

“Regulatory intervention will be key to helping many technologies and business models reach critical lift-off point. From R&D and clean infrastructure investment, to carbon pricing, tax incentives, and redirecting of subsidies; policy ambition in the UK needs to go hand in hand with business ambition.” 

Commenting on the UK’s commitment and ambition to meet the net zero target Kiran Sura, Assistant Director in the Sustainability & Climate Change team at PwC UK, said:

“With COP25 on the horizon, the UK has an opportunity to demonstrate real climate leadership and use this to raise a global call for more ambitious action. However, it needs to act fast. It’s clear that current efforts are not sufficient to deliver the net zero ambition. A more coherent and more ambitious policy response is required across all sectors of the economy. 

“With the UK hosting COP26 in Glasgow in 2020, the country’s actions will be under close scrutiny and there will be nowhere to hide if we fall short of doing our part.”

PwC says the UK’s announcement of its net zero commitment back in June was an important first step. But it must be followed by ambitious policies and increased investment that supports action across all sectors of the economy to achieve the required 9.7% rate of decarbonisation.  

Ends.

Notes to editors:

About the Low Carbon Economy Index (LCEI): 

The LCEI model combines energy-related CO2 emissions with historic and projected GDP data, and the IPCC’s carbon budgets. The model covers energy and macroeconomic data from individual G20 economies, as well as world totals. 

PwC UK’s commitment to the low carbon and circular economy:

With concern about the climate and ecological crisis at an all time high, our commitment to the low carbon and circular economy is more important than ever.  We’ve slashed the carbon emissions associated with our offices by a further 37% this year, bringing the total reduction since 2007 to 90%, while continuing to grow our business. In that time we’ve also reduced our energy consumption by 57%, and 73% of the energy we use in our offices is now renewable. We continue to pioneer ‘circular economy’ initiatives in our offices, holding our recycling rate at 90%, and reducing our plastic consumption by a third this year. While business travel has increased our overall emissions by 2% this year, we continue to offset all residual impacts, through accredited projects that focus on forestry in recognised biodiversity hotspots around the world, making us carbon neutral for the 12th year in a row.   

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