Pace of decarbonisation of world GDP Is still far too slow

An article on the Fitches Rates website raises concerns that decarbonisation is simply too slow. Fitches Ratings Inc. is an American credit rating agency and one of the “Big Three credit rating agencies:, the other two being Moody’s and Standard & Poor’s. How do we get this message across to countries and leaders who want to delay or stop any decarbonisation actions?

Decarbonisation of World Economy Is Progressing Far Too Slowly

Little progress was made in 2023 in accelerating the pace of decarbonisation of world GDP, despite a sharp improvement in the major advanced economies. Emerging markets in aggregate failed to make any reductions in the carbon intensity of GDP, while their share of world energy consumption rose, as highlighted in Fitch Ratings’ latest economics dashboard.

World CO2 emissions expanded by 1.8% compared to world GDP growth of 2.9%. The ratio of emissions-to-GDP fell by just over 1%, broadly in line with the average annual decline of the previous 25 years and massively short of the 8% annual decline needed in 2020-2030 to achieve net-zero by 2050.

This lack of progress was despite impressive gains in the pace of decarbonisation made by advanced economies, where the CO2/GDP ratio fell by 6%. CO2 emissions from the Fitch10 developed economies (DM10) dropped by 4.2% while GDP grew by 1.8%. DM10 emissions fell to their lowest level since 1970. Most of this improvement was due to gains in the energy efficiency of GDP although steady progress was also made in reducing the carbon intensity of energy consumption.

But emerging markets as a whole failed to make any progress in decarbonisation, with both CO2 emissions and GDP of the Fitch ‘EM10’ increasing by 4.7% last year. Neither energy efficiency nor the carbon intensity of energy showed any improvement, the worst performance in a decade.

The lack of progress in decarbonisation in emerging markets is particularly concerning, given their faster GDP growth and rising share of global energy consumption. The carbon intensity of energy (CO2/energy consumption) is much higher in emerging markets than in advanced economies; the share of EM10 in global energy consumption rose to 64% in 2023, up by 25pp since 2000.

One of the reasons for emerging markets’ poor performance is underinvestment in clean energy projects, especially in emerging markets excluding China. Most of the recent growth in global clean energy investment has been in advanced economies and in China.

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