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Ethical Corporation

Ethical Corporation

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Since: 01.01.2014
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Urgent need to end coal underlined by alarming reports ahead of Climate Week New York

30.09.2019 Share

Participants at Climate Week New York don’t need to look far for proof of the need to take urgent action: the cyclone Dorian devastated the northern Bahamas earlier this month; the drought currently affecting the Horn of Africa (leaving 27 million in need of food aid); the hottest month in recorded history (achieved this July, at 1.71C above the average for the last century). And the list goes on. On the same page was Greta Thunberg, the Swedish climate-change activist and recent winner of the Ambassador of Conscience Award (Amnesty International’s highest honour). “I don’t want you to listen to me,” the teenager told the US House of Congress last week, “Listen to the scientists”.

Framing the discussions this week is the 2015 Paris Agreement, which seeks to limit temperature rise to “well below” 2C (and ideally 1.5C or lower). To achieve such a goal, signatories must (among other steps) become carbon-neutral by 2050. However countries' climate commitments made in 2015 have put the world on track for at least 3C of warming by the end of the century.. 

That is why the United Nations secretary general Antonio Guterres has demanded that countries attending this week's summit stop building new coal power stations, reduce fossil fuel subsidies, and commit to net zero emissions by 2050 - conditions that reportedly mean the US, Brazil, and Japan will be prevented from taking the podium, though India and China have been invited to speak, according to The Financial Times.

The latest version of PwC’s annual Low Carbon Economy Index, released earlier this month, shows the cost of a decade of foot-dragging on climate action. Back in 2009, a 2C pathway could have been achieved with an annual reduction in carbon emissions (or carbon intensity) of 3-4% per year.

A decade on and the necessary decarbonisation rate now stands at 7.5% (or 11.3% for a 1.5C scenario). Complicating the problem is the gradual increase in energy use. So, while consumption of renewables went up by 7.2% last year (albeit 4.8 percentage points less than the previous year), the world’s total energy consumption also rose (by 2.9%, year-on-year). The bulk of this additional demand was met by fossil fuels; hence, a jump in gross hydrocarbon emissions of 2% in 2018 (the fastest rise since 2011).

Even if every business sector were to cut its emissions radically from today, the effects of climate change are already being felt

Of course, increases in energy consumption don’t happen without cause. Chief responsibility lies with the engines of ever-upward economic growth: namely, industrial production, international commerce, and global trade. (Note: more extreme temperatures also contribute, given the increased use of domestic heating and cooling systems). With respect to economic growth, PwC points a finger at carbon-intense heavy industries, such as steel and construction, which are growing fast in countries such as China, India and Indonesia. With many developed markets growing only slowly (excepting the US, which is projected to grow 3.2% this year), the success of these industrialising economies goes a long way to explaining how global GDP hit 3.7% last year.

While businesses as a rule welcome a growing economy, the planet – at present – does not. So how best to decouple economic growth from emissions? Alongside the transition to renewables, the second preferred approach has been energy efficiency. Here, the story is positive(ish). According to PwC’s research, the carbon intensity of the global economy fell by 1.6% in 2018. As a trend, the trajectory is welcome, yet, once again, progress is simply too slow (in 2015, for example, the percentage decrease was more than twice as fast).

A glimmer of hope arises from the performance of individual nations. Take Germany. Among the G20, the EU’s largest national economy achieved a decarbonisation rate of 6.5% last year (largely down to its transition from coal to solar and wind energy, which collectively grew by 8.7%). Other countries posting solid reductions in the carbon intensity of their economies include Mexico (-5.2%), France (-4.2%), and Italy (-4%). The UK achieved a more modest decline of -3.5%, fractionally above the G20 average of -3%. Decarbonisation in the US, in contrast, stood at a paltry 0.3% in 2018.

Carbon-intense industries like steel are growing fast in China, India and Indonesia. (Credit: Norenko Andrey)
 
But even if every business sector were to cut its emissions radically from today, the effects of climate change are already being felt. Without wanting to sound defeatist, companies need to face that reality and start adapting their strategies and operations accordingly. That’s the message from the World Business Council for Sustainable Development (WBCSD), at least. In a short report, the business-backed coalition calls on companies to “build resilience by developing enhanced adaptive capacity to the impacts of climate change”. In doing so, they will be in a stronger position to manage associated risks and seize opportunities, the authors argue.

The report cites calculations by the World Bank that suggest an investment in more resilient infrastructure in low and middle-income countries would return $4 in benefits for every $1 invested. On the flipside, inaction by business could see 215 of the world’s 500 largest companies facing $1 trillion in potential costs over the coming decades.

The WBCSD report picks up on a major, 90-page study by the Global Commission on Adaptation, which claims that investing $1.8trn globally in five areas could generate $7.1trn in total net benefits. (The priority areas comprise early-warning systems, climate-resilient infrastructure, improved dryland agriculture, mangrove protection, and investments in making water resources more resilient.) The high-level commission, which is led by former UN Secretary-General Ban Ki-moon, predicts that climate change could – if unchecked – depress growth in global agriculture yields up to 30% and leave more than 5 billion people without sufficient water by 2050, among other disastrous impacts.