PricewaterhouseCoopers report projects impact of global growth on carbon emissions

Report outlines ‘Green Growth Plus’ strategy that could curb global carbon emissions without significantly reducing long-term economic growth

NEW DELHI, 4 October 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.

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 stabilised at levels that many scientific studies suggest could reduce the risk of global warming by more than 2˚C to acceptable levels (see note 1 below for further technical details).

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 (see note 5). The new report extends PricewaterhouseCoopers long-term GDP growth model to cover primary energy consumption and carbon emissions.

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 stabilised at broadly acceptable levels of around 450 parts per million (ppm) (see note 1).

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 (see note 1).

The chart at note 2 shows how it might be possible to get from the ‘Baseline’ scenario to the preferred ‘Green Growth Plus’ scenario for global carbon emissions in three steps.

The report also indicates how carbon emissions might need to evolve by country to achieve the ‘Green Growth Plus’ scenario (summarised in the table at note 3). 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).

ENDS

Notes to Editor
1. An acceptable outcome is defined here as achieving eventual stabilisation of global atmospheric C02 levels at close to 450ppm. This is broadly in line with current scientific views as to what is required to reduce the risk of global warming by more than 2˚C (above the pre-industrial average) and associated adverse climate changes to manageable levels. Of the six scenarios discussed in detail in the report, only the ‘Green Growth + CCS’ scenario achieves this outcome. This will require a combination of the following three elements, which our detailed analysis (and that of others such as the International Panel on Climate Change [IPCC], the International Energy Agency [IEA] and leading academic researchers) suggests are challenging but potentially achievable:

• A shift to a much less carbon-intensive fuel mix through increased nuclear and/or renewables supply (more than doubling the current non-fossil-fuel primary energy share to around 30% by 2050) and reduced fossil fuel. We estimate this could reduce carbon emissions in 2050 by around a quarter relative to our Baseline scenario.
• Energy intensity reductions significantly faster than historic trends (around 2.6% per annum rather than 1.6% per annum, which would reduce carbon emissions in 2050 by around a third relative to our Baseline scenario).
• Significant investment in carbon capture and storage (CCS) technology and capacity of the order of 1.5GtC per annum by 2050, which could reduce carbon emissions by a further 20%, relative to our Green Growth scenario without CCS.

2. Global carbon emissions from fossil fuels by country in Green Growth + CCS scenario

*This is only an illustrative estimate for 2050 based on scaling up from the 17 economies in the model (i.e. the G7, the E7, plus Spain, Australia and South Korea). EU25 estimate for 2050 is scaled up from largest 5 EU countries. In both cases, 2004 data is used as a basis for the scaling. **US, China and India
Source: 2004 estimates based on data from BP Statistical Review of World Energy (2005), PwC model projections for Green Growth + CCS scenario in 2050. These are estimated carbon emissions from fossil fuels only (other emissions are included in the model only at global level).


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