Can rapid global growth be reconciled with moving to a low-carbon economy?
This analysis updates our report The world in 2050: Impact of global growth on carbon emissions and climate change policy, originally published in September 2006.
Our updated analysis re-emphasises the scale of the challenge posed by global warming, which actually now seems even greater than at the time of our original report two years ago, due in particular to higher projected economic growth in China and India.
The other key development has been the sharp rise in oil and gas prices, which has raised questions regarding whether the current global energy model will be sustainable in the long term.
Cut carbon emissions
In our report we conclude that global carbon emissions from energy use in a "business as usual" scenario would more than double by 2050—whereas what is required to reduce the risks of adverse climate change to acceptable levels in fact is a reduction in global carbon emissions, to only around half of current levels by that date.
For the advanced G7 economies, this means a reduction in carbon emissions of around 80% relative to current levels by 2050 (see chart at right). For the E7 emerging economies, it involves mitigating the growth of emissions up to around 2020 and then aiming for reductions in emissions after that date, initially at a gradual rate but ultimately at a more rapid rate as lower-cost green technologies are introduced in these countries.
Greener growth scenario
Our analysis continues to reject the hypothesis that resource constraints and environmental concerns will derail global economic growth in a major way. We have outlined a "greener growth + CCS (carbon capture and storage)" scenario which we consider to be highly challenging politically, but which appears to be technologically feasible without excessive economic costs, provided that action is taken early enough across a broad range of fronts.
Such action needs to encompass:
- Increased energy efficiency.
- Greater use of renewables and nuclear power, carbon capture and storage, and other low-carbon technologies and techniques.
- A reduction in the rate of deforestation.
Higher oil and gas prices should help to catalyse the move to greater energy efficiency and use of renewables, although they have also highlighted other issues such as the trade-off between increased biofuels production and affordable food.
All sectors of the economy need to achieve major emissions reductions as part of this process. We estimate that the costs of achieving the emissions reductions would be broadly equivalent to sacrificing only around a year of global GDP growth between now and 2050 (i.e. reaching the same level of GDP in 2051 as might otherwise have happened in 2050).
Demonstrate political will
Says report author John Hawksworth, head of macroeconomics at PricewaterhouseCoopers LLP: “The key requirement now is for governments in all of the major economies to demonstrate their joint political will to establish a policy framework that aims to put a global price on carbon emissions, and so send the economic signals to private sector investors and consumers needed to deliver the new technologies and changes in behaviour required to combat global warming.
“Progress on this agenda needs to speed up considerably if the challenge of global warming is to be met," added Hawksworth. "Given the long time lags inherent both in introducing low-carbon technologies and infrastructure and in changes in carbon emissions feeding through into climate change, there is no room for further delay in taking co-ordinated global action on this issue.”
