Despite progress in scaling up low-carbon energy production and industrial technologies, significant barriers remain to the global ambition to achieve net zero emissions by 2050 and limit temperature increase to 1.5°C, while the Current initiatives are insufficient to achieve these climate goals, according to a new report from global professional services firm KPMG.
Key challenges holding back progress include increased public debt, the relatively high costs of alternative clean energy technologies and growing energy needs, as well as conflicting environmental needs arising from the energy transition.
The study, KPMG’s Net Zero Readiness Report 2023, was based on conversations with national climate change experts across 24 markets and 6 economic sectors, examining the steps taken by each to reduce greenhouse gas emissions , and their willingness to achieve net zero emissions by 2050.
One of the main barriers to achieving the national climate targets highlighted in the report is the high level of public debt in many economies, due to increased spending by governments on initiatives such as COVID relief and subsidized energy spending after the Russian invasion of Ukraine, as well as higher interest rates, limiting governments’ ability to pursue green investments. Yael Selfin, chief economist at KPMG in the UK, pointing to the impact on governments of the rise in global public debt from 84% in 2019 to 92% of GDP in 2022, and rising interest rates. spend on achieving net zero targets.”
The report also identified the high cost of decarbonising the economy as a challenge that needs to be addressed, highlighting issues such as emerging resistance to plans in countries such as Britain and Germany to require homeowners to switch from heating to fossil fuels. fuels to low-emission alternatives, such as heat pumps, relaxing or delaying these mandates. On the industrial side, while the report highlights the early success of some sectors, such as automotive, in scaling up EV adoption, the high cost and low availability of green fuels are slowing the pace of adoption in sectors with high emissions, such as aviation and shipping.
On the energy front, while the report notes a major shift in investment trends in recent years, with global spending on low-carbon energy development now significantly higher than on fossil fuels, the report also notes that this has not yet changed much delivered. impact on the total mix of energy sources. The report highlights a variety of challenges holding back a shift in the energy mix, including the increasing energy needs of fast-growing countries such as China and India, pushing them towards both renewable and fossil fuel generation, and the need to significantly restructure energy production. electricity grid infrastructure to handle more widespread sources of energy generation and more of the intermittent production typical of renewable energy.
One of the challenges identified in the report was the rise of “green on green” conflicts, or clashes between the creation of new low-carbon energy projects and the local environment, such as the impact of new generation and infrastructure projects on local wildlife , and biodiversity, which has led to local opposition to the projects in some areas.
Mike Hayes, climate change and decarbonization leader and Global Head of Renewable Energy at KPMG International, said:
“Governments, businesses and society must continue to take action to tackle climate change. Further divisions between local communities and global interests are to be expected, but if we really want to take meaningful steps towards net zero, at the necessary pace, while ensuring a stable energy supply, much more focus is needed. This includes areas such as the policy environment (both the carrot and the stick), technical innovation and educating society on the transformational changes needed in our consumption and investment behaviour.”
click here to access the report.