PricewaterhouseCoopers Report Projects Impact of Global Growth on Carbon Emissions

GreenBiz

LONDON, Oct. 3 2006 - The rapid economic growth of emerging countries such as China and India, together with continued more moderate growth in today's advanced economies, could have serious long-term consequences for global energy consumption and carbon emissions, according to a new report from PricewaterhouseCoopers.

The projections demonstrate that if countries adopt a 'business as usual' approach, the result could be a more than doubling of global carbon emissions by 2050. As many scientific studies suggest, this could have potentially serious longer-term implications for global warming and related climate change.

But the adoption of a 'Green Growth Plus’ strategy, outlined in the report, could allow for continued healthy growth while controlling carbon emissions. A strategy made up of three strands - a broad range of energy efficiency measures, fuel mix changes and new carbon capture and storage technologies - could enable atmospheric CO2 concentrations to be stabilized at levels that many scientific studies suggest could reduce the risk of global warming by more than 2°C to acceptable levels.

The analysis also suggests that there could be significant costs to delay, given the time required to develop and implement the necessary technologies and policies. As emissions from the faster-growing emerging economies will almost certainly continue to rise over the next few decades, the G7 economies may need to take the lead in reducing their carbon emissions.

These are just some of the points highlighted in a new PricewaterhouseCoopers LLP report, entitled The World in 2050: implications of global growth for carbon emissions and climate change policy. It follows a PricewaterhouseCoopers report published in March this year, which highlighted the rapid growth potential of the so-called ‘E7’ emerging economies: China, India, Brazil, Russia, Mexico, Indonesia and Turkey. The new report extends PricewaterhouseCoopers long-term GDP growth model to cover primary energy consumption and carbon emissions.

John Hawksworth, head of Macroeconomics at PricewaterhouseCoopers and the author of both reports, said: "As they increase in relative size to overtake the current G7 countries, the emerging ‘E7’ economies will increasingly provide the motor for global growth and could account for almost half of global carbon emissions by 2050, according to our model. But can the world sustain such rapid growth without serious adverse effects on its climate? This new report provides one possible answer to how this might be achieved."

The report considers six possible scenarios for the future evolution of global energy consumption and global carbon emissions, but ultimately focuses most attention on two key scenarios:

* A 'Baseline' scenario in which energy efficiency improves in line with trends of the past 25 years, with no change in fuel mix by country; this ‘business as usual’ scenario acts as a benchmark against which to assess the need for change, rather than as a forecast of the most likely outcome; and

* a scenario called 'Green Growth + CCS', which incorporates possible emission reductions due to a greener fuel mix (with a 30% global share of primary energy consumption for nuclear and renewables by 2050), 1% annual energy efficiency gains over and above the historic trend, and widespread use of carbon capture and storage (CCS) technologies. This ‘Green Growth Plus’ strategy should eventually enable atmospheric CO2 levels to be stabilized at broadly acceptable levels of around 450 parts per million (ppm).


The report concludes that the baseline ‘business as usual’ scenario would lead to increases in carbon emissions to more than double current levels by 2050, with consequent high risks of adverse climate change (with global warming of more than 2°C) and severe negative socio-economic effects in the long run.

It discusses in detail how the 'Green Growth Plus' scenario might be achieved through a combination of energy efficiency increases (which might range from vehicle fuel efficiency and building design to ‘smart meters’ that allow households to monitor and adjust their domestic energy use much more easily), fuel mix changes, technological developments, carbon taxes and carbon trading. Given the scale of the problem, all of these measures are likely to be needed, though the exact mix chosen is flexible and might vary by country and region.

The report also indicates how carbon emissions might need to evolve by country to achieve the ‘Green Growth Plus’ scenario. It can be seen that the G7 economies will need to reduce their current level of emissions by around half by 2050 to achieve this scenario, whereas the E7 economies would still be able to increase their emissions by around 30% from current levels. But this would vary considerably across the E7, with India able to more than double its emissions from current relatively low levels, while Russia would need to almost halve its emissions from current relatively high levels (compared in each case to their respective GDP levels).

According to the model, China is set to overtake the US as the leading carbon emitter by 2010, while total E7 emissions would be more than double total G7 emissions by 2050. Together the ‘Big 3’ economies (China, US and India) are projected to account for just over half of global emissions by 2050 in both our ‘Baseline’ and ‘Green Growth Plus’ scenarios (though the absolute levels of emissions are much lower in the latter case), up from around 45% today. The European Union’s share of global emissions is set to decline from around 15% now to just under 9% by 2050. The UK’s share is set to fall from around 2% now to just over 1% by 2050.

"Our analysis suggests that there are technologically feasible and relatively low-cost options for controlling carbon emissions to the atmosphere," said Hawksworth. “Estimates suggest that the level of GDP might be reduced by no more than around 2-3% in 2050 if this strategy was followed, equivalent to sacrificing only around a year of economic growth for the sake of reducing carbon emissions in 2050 by around 60% compared to our baseline scenario.

“If this is to be achieved, it will take further concerted action by governments, businesses and individuals over a broad range of measures to boost energy efficiency, adopt a greener fuel mix and introduce carbon capture and storage technologies in power plants and other major industrial facilities.”