There is a long way to go, but a new report showing a global slowdown in carbon emissions suggests the green economy is gathering momentum
It is time, I think we can all agree, for some good news. So thanks to the Netherlands Environmental Assessment Agency and its report today suggesting the global growth in carbon emissions faced a dramatic slowdown last year. Total emissions grew by 1.1 per cent, or 1.4 per cent when you account for the fact it was a leap year, less than half the 2.9 per cent average seen over the past decade. Maybe, just maybe, a peak in global emissions is still within our reach.
Obviously, these figures need to come with a whole bucket load of salt. It is just one report, emissions are notoriously difficult to track accurately, we've had slowdowns before that have not lasted, emissions are still rising and new records are being set each year, plus global atmospheric concentrations of greenhouse gas emissions are at their highest level in five million years. We are still on track to breach the 2C temperature goal during the second half of this century and the worst case scenarios for 2100 increasingly paint a picture that only Mad Max would be comfortable with.
But there is still plenty of cause for optimism to be found in these figures, primarily because unlike previous emissions slowdowns there is no immediate socio-economic crisis to provide an explanation. There has been no economic crash, no World War, no oil price shock, and yet the seemingly never-ending upward emissions trend has slowed, even as global GDP ticked upwards. It is easy to see why the Dutch researchers were left with no choice but to conclude that "a shift towards less fossil-fuel-intensive activities, more use of renewable energy and increased energy saving" provides the root cause of the slowdown. If that is indeed the case, they could well be proven right when they suggest "the small increase in emissions of 1.1 per cent in 2012... may be the first sign of a more permanent slowdown in the increase in global CO2 emissions, and ultimately of declining global emissions".
This is no time for complacency. An emissions peak can only be achieved if China continues to accelerate its energy efficiency and clean energy programmes, the US continues its historic shift away from coal and towards gas and renewables, the EU sorts out its emissions trading scheme and stays the course with its commitment to deep emissions reductions. Moreover, progress from these three superpowers will need to be matched by continuing improvements in the cost of clean energy, urgent and co-ordinated action on global deforestation, progress on carbon capture and storage technology, and ever tighter climate and air quality regulations.
But even as the climate sceptics and defenders of the carbon intensive status quo attempt to belittle and block this progress, evidence is mounting that these trends can accelerate. I was speaking to a senior executive at a leading institutional investor this morning and he casually declared that the coal industry was "falling apart" in response to low cost gas, air pollution rules, and "just the faintest edges of climate policy". This is no longer a fringe view, more and more investors are looking at the prospects for coal and the wider "carbon bubble" argument and concluding that cleaner investments are a better long term bet. Analysts are also looking at the policy signals coming out of the Chinese politburo and concluding that they are deadly serious about taking bold action on air pollution and carbon emissions, so much so that some are predicting a clean tech explosion could see emissions peak during the 2020s. Such action from China makes it easier for the EU to follow through with its plan for a strengthening of low carbon ambition through the 2020s, while similarly bolstering US efforts at a state and regional level.
The implications of this trend for businesses are enormous, both in terms of risks and opportunities. Most obviously, the risks faced by carbon intensive companies are only going to become more pronounced - throw a proper carbon price into the mix or a single technological breakthrough in low cost solar and stranded assets could rapidly become a very costly reality. Equally, those providing the clean technologies that will enable a global emissions peak are potentially on the brink of remarkable expansion. All business leaders need to be aware of this macro-trend and its implications.
The climate risks we face remain grave and it is clear that they can only be managed through a genuine step change in the way the global economy is powered. But the evidence that such a step change can be engineered in a way that does not jeopardise living standards is becoming more compelling by the day. That the response to this trend from some quarters is to demand the scrapping of the very technologies and policies that have brought a peak in emissions within sight just at the point when they are starting to work at scale is as bemusing as it is depressingly predictable.
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