Sustainability and Climate Change

Australia’s silent storm – heatwaves

Analysis by PwC Australia in 2011, found that heatwaves kill more Australians than any other natural disasters in the history of the state. Roger Beale and John Tomac reflect on the findings as Australia faces new heat records again.

In a land which is known for its extremes, the current heat wave in Australia has broken all records yet again.

The Australian Bureau of Meteorology reported this week that Monday 7^th January broke the average maximum daily temperature record for the country at 40.33°C. The previous record, 40.17°C, was held for 40 years. The daily average maximum temperature this week was 40.11°C. For seven consecutive days, the national average maximum daily temperature exceeded 39°C, almost doubling the previous record of four consecutive days in 1973.

It is another indicator of clear warming trends driving extreme weather. When linked with an exceptionally dry spring across most of southern Australia, the risk of brushfires has risen sharply. This heat wave has followed on two La Niña wet seasons of unusual intensity, leading to severe flooding in Queensland and across vast areas of the Murray Darling river basin, and a build up of vegetation which is providing fuel for the fires.

Australia's Climate Commission has linked the heavy rain associated with these La Nina events with very high sea temperatures off the Australian coast. It’s also consistent with the expected impacts of global warming.

Amidst the extremes of heat, planning ahead can undoubtedly have a real impact in addressing the risks to human health, public infrastructure, and electricity supply for example.

In 2011, prompted by the loss of life and property from record temperatures recorded across southern Australia in 2009, we worked with the Commonwealth Government and the Bureau of Meteorology to model the potential impacts of extreme heat on human life. At the time, Australia had no national heatwave plan.

The report sought to support thinking and planning at national, state and local government level, as well as for citizens themselves. Two years on, the analysis is fresh in our minds as the records break yet again.

Heatwaves are Australia’s silent killer. During the 2009 bushfires in Victoria, South Australia, 173 people perished as a direct result of the bushfires. The events grabbed headlines worldwide. In the same week, 374 people lost their lives to extreme heat.

Climate projections show heat events are expected to occur more often and with greater intensity in the future. In Melbourne, for instance, the number of heatwave days could more than triple by 2050 and the overall heat effect of these events could increase by a factor of five, having even more devastating impacts than those heat events previously experienced. Those who are affected come disproportionately from the vulnerable groups in our community.

The economic and social costs of extreme heat events are significant and potentially avoidable. Changing demographic and climatic trends suggest the impact of these events will increase but an effective framework with low cost strategies can reduce both the risk and cost.

Our analysis examined the experiences of other countries that have experienced extreme weather including experiences from France and Shanghai. Much is being done, but there is much more we can do to make our cities, our homes and businesses, our infrastructure and our citizens more resilient.  Early warnings, intelligent use of conventional and social media, emergency services, social and health workers, families and carers will be in a much better position to respond.The ability to analyse and use data like that in our research to predict the likelihood of danger to people in a specific location at a specific time, acts as an early warning system. It will undoubtedly have a real impact on saving lives.

Doha Climate Gateway – a modest deal with plenty to be modest about

PwC analysis of COP18, Doha

12th December 2012

The Doha climate summit was no landmark event, but governments adopted an extension of the Kyoto Protocol, set milestones in the lead up to a 2015 agreement and did some institutional tidying up. In other words, Doha achieved what was expected and kept the process on the rails.  As is now typical, the negotiations stretched well beyond the Friday deadline into Saturday evening when the Qatari COP President gavelled through the agreement ignoring the objections from some countries.  While there is always brinkmanship in these talks, the difficulty in reaching such a modest deal does not bode well for a truly ambitious global treaty in 2015. 

Kyoto lives on

The most significant outcome from Doha was the adoption of the second commitment period of the Kyoto Protocol.  Europe, Australia and a handful of others, amounting to less than 15% of global emissions, effectively put their existing national targets under the Kyoto framework.  In doing so, they maintain the institutions and mechanisms established by the Protocol through to the end of 2020.  However, only those developed countries which have taken on targets are eligible to use credits from Clean Development Mechanism (CDM) projects after 2012.

The thorny issue of the use of ‘hot air’ was settled by the end of the summit.  Russia, the Ukraine and some others have Kyoto targets that are well above their current emissions.  This is because Kyoto’s baseline year is 1990 and emissions from industrial activity in these countries collapsed in the 1990s following the breakup of the Soviet Union.  These countries can keep their ‘sovereign wealth’ in a surplus reserve account, so their economic growth is not constrained by emissions targets, but they are not allowed to sell this KP1 surplus thus retaining some integrity in the KP2 targets.  Ukraine, whose annual energy-related emissions were roughly 320m tCO2 2011 took on a second Kyoto target equivalent to around 570m.  After the President gavelled through the Kyoto deal, Australia, Japan, Norway, Switzerland and the EU all made statements saying that they would not buy hot air.

Institutional housekeeping

In addition to concluding the Kyoto working group, the Long-term Cooperative Action group was wrapped up in Doha, which will help to simplify the process going forwards.  But the issues themselves – financing, targets, technology, markets etc – were unresolved, and these will now be addressed by the Durban Platform group or the technical bodies.  Tidying up the institutional arrangements of the UNFCCC will ease the pressure on negotiators as the major issues will at least be discussed in the same room.  It could even facilitate the talks by allowing for clearer trade-offs to be made on some of the major sticking points.

Finance was perhaps the most heated part of the negotiations. Many developing countries called for developed countries to ramp up their climate funding from the $10bn per year currently (so-called Fast Start Finance) to $100bn per year in 2020.  There was no formal agreement on finance, but countries should submit plans on how they plan to reach the $100bn target. The UK, Norway and a handful of others made funding commitments.   While not sufficient to satisfy vulnerable developing countries, it was enough to avoid a de-railing of the meeting. Next year we can expect developing countries to demand more.

Loss & damage

One outcome from Doha which took many by surprise was the agreement to establish a mechanism (or institutional arrangements) to address loss and damage associated with the impacts of climate change in vulnerable developing countries.  Some suggest that this raises the threat of liability for extreme weather events and compensation.  However, in practical terms such a mechanism could form part of the Green Climate Fund or climate finance more generally, for example, by way of a climate risk insurance facility.  For the talks to make progress on this issue, the discussion needs to consider this simply as another form of climate finance.

The inescapable logic of a 2 degrees carbon budget

The Durban Platform group (ADP) aims to develop a new legal agreement by 2015 which would bind all countries to more ambitious commitments to climate change mitigation from 2020. This was loosely divided into two sub-groups which discussed the principles of a new 2015 agreement and how to raise ambition in the short and long-term.  These meetings were interesting and wide-ranging but directionless, unstructured and rarely insightful.  By the conclusion of the summit, countries had agreed a very high level timeline for the discussions in the lead up to the 2015 COP. 

In previous analysis, we quantified what ambitious targets might look like to keep to the two degree goal.  The inescapable logic of a 2 degrees carbon budget is that developing countries will need to take significant action to reduce emissions rapidly enough in the 2020’s and beyond.  This is the case even if developed countries follow a pathway from 2020 to achieve 80% reductions by 2050.  Lord Stern referred to this as ‘brutal arithmetic’. In Doha, equity and historical responsibility dominated the ADP discussions rather than targets and timelines.  This does not inspire confidence in the ambition of the deal that the group should agree in 2015. 

An ambitious global deal in 2015 seems ambitious

Our Low Carbon Economy Index suggested that governments’ 2°C target appears highly unrealistic.  The Doha summit showed just how difficult it will be to achieve a meaningful global treaty in 2015 with ambitious targets for all developed and emerging economies.  This is particularly the case if countries continue to look in the rear-view mirror rather than consider what truly ambitious targets look like and how they might realistically be achieved.  

Neither governments nor business can wait for or rely on a ‘clear signal’ from an agreement in 2015.  So businesses face a much more challenging future in terms of planning and financing new investments as well as maintaining continuity of supply chains and existing operations.   They will need the tools to manage uncertainty and build resilience to both climate shocks and policy shocks.

UN Climate Summit – halfway report from Doha

At the halfway point of the UN Climate Summit in Doha, Jonathan Grant, PwC sustainability & climate change rounds up the key issues and what to watch out for in the week ahead including Kyoto Protocol, Long Term Cooperate Action, pledges and ambition & what might Week 2 actually achieve?

An intricate web

In the middle of the Qatar National Convention Centre (QNCC) stands a gigantic bronze and steel spider, by Louise Bourgeois, that once occupied the turbine hall at the Tate Modern in London.  The sculpture provides a useful landmark for delegates scuttling between meetings - ‘meet you at the spider.’  The other multi-legged beast in the QNCC is the UN Convention on Climate Change.  With so many subsidiary bodies and ad-hoc working groups covering such a wide range of issues, the climate negotiations are hard for governments and observers to tackle.

The main strands of the negotiations aim to:

1. Agree on the duration and ambition of the second commitment period of the Kyoto Protocol – ie, confirming who is going to take what target, and when it will expire.
2. Wrap up the work on long-term cooperative action (LCA), started in Bali, by agreeing what has been completed and what will be discussed in the Durban Platform group.
3. Continue the discussions by the working group on the Durban Platform which aims to develop a new legal agreement by 2015 which would bind all countries to more ambitious commitments to climate change mitigation.

In addition to this, the subsidiary bodies have been meeting to discuss a host of technical issues including CCS, forestry, technology transfer, IPR, and reporting.

KP RIP?

Reports before Durban, including our own, of the early death of the Kyoto Protocol were exaggerated.  But with countries representing only 15% of global emissions proposing to take on targets, Kyoto is on life-support.  Australia, the EU and a few other European countries have offered to place their existing emissions targets under the legal framework of the Protocol.  Many developing countries would like to see much greater ambition but there is little likelihood of this and it is probable that the second commitment period will run to the end of 2020.  Two further vexing issues for negotiators, on the carry-over of surplus credits from the first commitment period and whether non-Kyoto countries are eligible to use CDM credits, are unlikely to worry many outside the QNCC.

Action but no cooperation in LCA

The working group on Long-term Cooperative Action was launched in Bali in 2007 with the aim of reaching an agreement in Copenhagen.  If the talks in Doha unravel it will be because of a failure to conclude the work of this group.  The LCA group is addressing a range of issues including: REDD+, developed and developing country pledges, new market mechanisms, adaptation, technology and capacity building.  There are concerns that the drafting of the consolidated texts by the co-chairs of the LCA group doesn’t reflect the views of all countries and we’ve seen tactical blocking.  These procedural issues should be resolved in the next week with the arrival of ministers.

But the stumbling block is likely to be financing.  With fast-start funding coming to an end in 2012, developing countries want developed countries to increase their financial pledges, with an eye to the goal of mobilising $100bn a year for adaptation and mitigation by 2020.  Though some developing countries at least recognise that the debt crisis in Europe, the fiscal cliff in the US, and reconstruction in Japan after the tsunami last year mean that these countries are unlikely to make major financial pledges at this COP.

Principles and ambition

The Durban Platform group (ADP) is loosely divided into two sub-groups discussing the principles of a new 2015 agreement and how to raise ambition in the short and long-term.  These meetings are interesting and wide-ranging but directionless, unstructured and rarely insightful.  Equity and the interpretation of ‘common but differentiated responsibility’ dominate these discussions and always threaten to poison the negotiations.  India and China want to permanently keep the hard divide between developed and developing countries.  Although developed countries accept the principle of CBDR, they do not see it in black and white terms, but rather as a continuum with all countries taking action which is proportionate to their national circumstances now, in 2020 and beyond.

While these principles are important and hugely contentious they are being overtaken by facts on the ground. The emerging economies of China, India and Brazil are some of the biggest markets for new renewable generation and they are making ambitious pledges to limit emissions growth.  An example of these success stories was given by Brazil at the start of the COP which announced that it had reduced the deforestation rate by a further 27% compared to last year.

Knowing that there are no exams until 2015, the students of these ADP negotiations have little incentive to study late into the night.  A positive outcome from Doha would be agreement on a well structured process for further talks in 2013 and beyond.  This should clearly delineate the agenda items that need be addressed, separating ambition of targets from principles and financing.

Weaving the strands of the web together – a highly realistic outcome

One senior negotiator commented last night that the consequences of failure in Doha are much greater than the rewards of success.  If the talks collapse, Doha will haunt delegates like Copenhagen; if successful, Doha will only be remembered as a house-keeping or administrative COP.  A relatively simple agreement is within reach, though some other delegations are contriving to make the deal more complex than necessary.  A neat solution seems likely as none of the career climate negotiators want to completely derail the process. 

Our expectation at this point is that the KP and LCA working groups will wrap up, cutting two limbs from the UNFCCC beast, and making the negotiations simpler for governments and observers alike.  The Kyoto targets will not be more ambitious but simply enshrine existing national pledges up to 2020.  As with Durban last year, the outcome will not surprise the market and so is unlikely to affect the price of EU allowances or CDM credits. 

On LCA the substantive issues of targets and financing will be handed over to the Durban Platform group and the more technical issues to the subsidiary bodies.  Finally the Durban Platform group will make progress in UNFCCC terms which will be imperceptible to the outside world.  At best it will agree a workplan or agenda for 2013, but with no agreement anticipated before 2015, there is no expectation that Doha will deliver.

Post script

It was confirmed earlier in the week that the next COP will be in Warsaw, Poland.  This left the more sensible delegates booking hotels and the conspiracy theorists searching for meaning.  There are many theories bouncing around the QNCC. Although the cynics amongst us would note that there does appear to be a strongly positive correlation between the amount of progress made at a COP and the outside air temperature at the venue. 

Follow the team's updates on Twitter @pwcclimateready

Show me the road from Doha

With no deadline to agree anything before 2015, the discussions are interesting but directionless. Richard Gledhill, Jonathan Grant and Dan Hamza Goodacre report from Doha.

Much of COP18 is following a familiar rhythm. Opening presentations - three minutes each for delegates to bang their particular drums. Then meetings along the twin tracks of the Kyoto Protocol (KP) and Long-term Cooperative Action (LCA) as well as the newer Ad Hoc Working Group on the Durban Platform (ADP). The expectation is that work under KP and LCA could be wrapped up at the end of the COP with the EU, Australia and a few others confirming their targets.  The Kyoto Protocol would then apply to countries totalling only 15% of global emissions. 

Talk in the corridors suggest that all the action is in the LCA meetings, with divergent views on long term financing which could undermine the rest of the COP.

In ADP the re-emergence of the historic firewall between developed and developing nations threatens to undermine discussion of increasing ambition (link to http://pwc.blogs.com/sustainability/2012/11/ambitious-targets-lets-start-talking-numbers.html).  And there is no deadline to agree anything before 2015 so the discussions are interesting but directionless.

On Sunday negotiators get a short break, and Forest Day takes centre stage. The main business events kick off at the weekend too, with a business conference, and the WBCSD Business Day next Monday. Agriculture is a bigger agenda item this year and will be the focus on Tuesday.

Petrol Head?
In his week one dialogue with civil society the COP President HE Abdullah bin Hamad Al-Attiyah showed refreshing honesty about the mitigation challenge in Qatar -  "I love my car!" he exclaimed. Qatar said today that it isn't ready yet to make its own pledge towards the Durban Platform, but will be shaping its strategy during 2013 and hopes make a pledge at the next COP.

This year, though, many negotiators here will be hoping that their host will use the opportunity of Doha to commit more of its 'patient capital' towards climate action.

Virtual COP:
This year the UN climate negotiations have gone paper free, which at least relieves negotiators and observers at Doha of one burden. Recycling, though, is not yet the norm in Qatar. So there is a small opportunity here to 'walk the talk' after the COP.

Pole position:
The award of 'Fossil of the Day' by ECO, the environmental NGO news-sheet, was probably not the accolade Poland was seeking, following the selection of Warsaw as the venue for COP19. ECO was challenging Poland's stance on its "huge surplus" of AAUs.

Next week
The COP finishes next Friday, probably very late, or more likely some time on Saturday. We hear that the Qataris will be very strict on timings, expecting talks not to go over or else leave for discussions at the next COP. Money will be a big issue for Ministers, with lots of closed door meetings next week, trying to thrash out new commitments to climate finance - the initial Fast Start period runs out next month, and many less developed countries are saying "Show me the money". Let's hope ministers unlock some progress in Week two.

The big outcome that most are pushing for is a second commitment period for the KP. But much more is needed if we want to stay on track for a global deal by 2015.   Watch out for our half time report at the weekend.

Ambitious targets? Let’s start talking numbers

By Jonathan Grant

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The most frequently cited number in the negotiations in Doha is 2°C.  But discussion of the emissions targets that countries might adopt to achieve 2°C then becomes much more vague and qualitative.  There is talk of ‘increasing ambition’, ‘equity’, and ‘common but differentiated responsibility’ (CBDR if you want another acronym).  Our LCEI model provides a more quantitative picture of the reductions countries need to adopt from 2020 to achieve the 2°C goal:

1. Countries currently classified as ‘developed’ will need to reduce emissions by 50% on 2005 levels by 2030 to stay on a pathway taking them to 80% reductions by 2050.
2. This means that emissions reductions by these developed countries should be about 5-6% every year from 2020.  This compares with total reductions of around 5% over five years in the first commitment period under the Kyoto Protocol.
3. The current group of developed countries accounted for 50% of global emissions in 2005.  The share of emissions from that same group of countries should account for only 25% of emissions in 2050 (by which time most countries will hope to be ‘developed’).
4. Emissions in developing countries are growing at 6% per year and following a Cancun pathway will be 55% above 2005 levels in 2020.
5. In aggregate, developing countries will need to limit their emissions to just 11% above 2005 levels by 2030.  Though this would require a 30% reduction on projected 2020 levels.
6. Given current emissions (and economic) growth rates in developing countries as set out in the Cancun pledges, emissions should peak by 2020 and decline at 3-4% every year in the 2020’s.
7. Globally, emissions will need to be 20% below 2005 levels by 2030, and nearly 65% below 2005 levels by 2050.

We need to provide the usual caveats with these numbers: they are high level approximations and are based on the LCEI model which makes a series of assumptions.  The numbers also depend on the sharing of the carbon budget between nations and groups of nations – a critical issue in the negotiations.  But the inescapable logic of these numbers is that, because developed countries have a smaller global share of emissions in future, developing countries will need to take significant action to reduce emissions rapidly enough in the 2020s and beyond to keep within the 2 degrees budget.

We probably face at least two more years of largely qualitative discussions. But by COP 21 countries should be discussing quantified targets.  Whether they will still be talking about 2°C remains to be seen.

The 2°C scenario assuming Cancun pledges to 2020 are achieved

[Click image to enlarge]

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Contact:

Jonathan Grant |  Tel: +44 (0)20 780 40693

Our view of the World Business Council for Sustainable Development annual council meeting

There was a buzz among delegates to this month’s World Business Council for Sustainable Development (WBCSD) annual council meeting and the topic was resilience, planetary boundaries, and the urgent actions businesses must take now to set the world on a more likely path towards a sustainable future.

Each year the approximately 200 global CEO’s who make up the WBCSD Council meet to review and plan the activities of the organisation. The Council meetings this year were in Seoul, South Korea, a fitting location given Korea’s attention to green growth. Korea is hosting the Global Green Growth Institute (GGGI) and the Green Climate Fund (GCF), its own Green Technology Centre (GTC), a range of international sustainability meetings in coming years (i.e. the UN Convention on Biological Diversity’s 11th Conference of Parties in 2014 and the 8^th World Water Forum in 2015) and there are Korean nationals at the helm of both the UN and the World Bank. This green growth focus was also reflected in comments made to the assembled delegates by the Korean Prime Minister, the Mayor of Seoul, and numerous senior Korean business and policy leaders at the WBCSD meetings.

In the weeks before the UN FCCC Climate Summit in Doha (COP 18) UN Secretary-General H.E. Ban Ki-Moon spoke to the delegates, over 400 senior sustainability executives from member companies, sharing that sustainability is his “top priority”. Both at, and since Rio+20 it has become increasingly clear that collaboration with business is essential to “spur a revolution in sustainability,” he continued. South Korean Prime Minister H.E. Kim Hwang-sik, echoed his sentiments, underlining that “green growth is no longer a choice, but is the only path” to a sustainable future.

The Council’s Vision 2050 provided a starting point for many of the discussions at the meeting. The Council is now working with its business members and  a broad range of external stakeholders on ‘refreshing’ the Vision 2050, to make more explicit the links between the Vision and science-based planetary limits on indicators like climate change, biodiversity loss, global freshwater usage, ocean acidification and other essential earth systems.

WBCSD’s Changing Pace work tied together the 2050 Vision with recommendations to regional, national, and international policymakers on how to best enable movement towards the 2050 sustainable vision. With the ‘refresh’ now in the works however, the focus has shifted back onto businesses and the actions they can and must take before 2020 to show leadership in supporting this transformation.

Keep an eye out for more to come from WBCSD, including at the Sustainable Innovation Forum at COP18 in Doha. Under new President Peter Bakker’s leadership, the Council is becoming more action-oriented, working more closely with scientific communities, and working hard to align its activities across its numerous programme areas with the pathways to a sustainable world as outlined in the 2050 Vision. Hopefully these developments can spur broader action to support us all in these “turbulent teens.”

Geoff Lane
Email: Geoff Lane
Tel: +44 (0)20 7213 4378

Gary Sharkey
Email: Gary Sharkey
Tel: +44 (0) 20 7213 4658

COP 18 in Doha: what can we expect?

Dan Hamza-Goodacre previews the UN Climate Summit in Doha.

The 18th meeting of the United Nations Framework Convention on Climate Change, Conference of the Parties (aka COP18) starts on Monday. Approximately 200 nations will head to Doha, Qatar, for two weeks of talks about how to save the planet from dangerous climate change. Or will they? Last year's talks in Durban were hailed as a success, at least for saving the UNFCCC process itself. Parties agreed to agree to a 'legally binding' deal by 2015 that would take effect by 2020. So what can we expect from this year's talks and what would we like to see?

Committing to Kyoto

First up is the Kyoto Protocol. This was agreed in 1997, came into force in 2005 and has been the main UN mechanism through which 37 industrialised countries plus the European Community have reduced emissions – by an average of 5% on 1990 levels between 2008-2012. On the table in Doha is the need to agree the second commitment period. So far only European countries and Australia have sent a clear signal they will commit. Others, notably Canada, have already 'jumped ship', having failed to meet pledged Kyoto emissions reduction targets. Others, e.g. Japan and New Zealand, haven't jumped ship yet but don't appear ready to commit to another period. The Doha talks will focus on the length of the commitment period and the carryover of surplus allowances for those opting in. Will it be 5 years with high ambition (as most developing countries are calling for) or 8 years and lower ambition (as the EU and Australia are advocating).

What would we like to see? Simple - as many Annex I countries as possible signing up to a second commitment period with ambition commensurate with a maximum warming of 2 degrees. In addition, high emitting countries not making Kyoto commitments also need to act. Voluntary pledges were made in Copenhagen and confirmed in Cancun but approximately 15 countries have yet to make such emissions reduction commitments, including some of the richest and highest emitting countries in the world. 

Durban to the rescue?

Second key issue – the Durban Platform. This is the negotiating track that is supposed to take the world to a legally binding deal. What is at stake is the level of emissions reductions and how they will be shared (ie ambition and equity). The problem is that it is hard to know what to aim for if you don't know how to share it. And it is hard to know how to share something if you don't know what you are aiming for. Parties will air their positions. A timetable for agreeing specific points is likely to emerge rather than an actual agreement on ambition and equity, which is not expected until 2015.

So what would we like to see? Three recent reports have highlighted the extent of the climate problem we face. The World Bank's ‘Turn down the heat’ report showed us why we need more ambition - because a 4 degree world would be a ‘doomsday scenario’. PwC's Low Carbon Economy Index showed us that the rate of decarbonisation needed to limit temperature rises to 2 degrees is unprecedented and 'highly unlikely'. And UNEP’s latest ‘Emissions Gap’ report revealed that global emissions in 2011 were the highest ever and are 14% above where they need to be in 2020 to avoid  dangerous climate change. All three report stress that ambition is possible and the most desirable future pathway. What we need to see in Doha in the context of the Durban Platform talks is ambition across the spectrum. Higher emitting and richer countries need to lead the way, but lower emitting and poorer countries should also think about what they can do. A high emission outcome will hurt us all, but it is likely to hurt the poorest and most climate vulnerable the most.

Institutional rationalisation

Discussion will also focus on a wide variety of institutional issues including technology (where will the Technology Centre be located) and the Green Climate Fund (including endorsing the selection of South Korea as host country"). Parties will talk about: the importance of agriculture; the meaning of ‘loss and damage’; how to measure REDD+; how to help vulnerable countries adapt to climate change; and how to reform the CDM. Parties will decide if they have done enough on the Bali Action Plan to warrant closing discussions in the LCA negotiating track or if discussions (including on mitigation, adaptation and finance) need to be carried over into the Durban Platform. Closing the LCA track and the Kyoto Protocol track and making them just one track (the Durban platform) is a welcome move. The UNFCCC talks are the most complex international negotiations and at times are at risk of being overtaken by process rather than substance. Rationalising the talks into fewer tracks should help.

Who’s paying?

Finance does not seem to feature prominently in expectations for Doha, even though the ‘Fast Start’ pledges made at Copenhagen are set to run out at the end of this year. The majority of the $30billion 2010-2012 funds appear to have been committed, for which donors should be applauded. But what now? The Green Climate Fund has been set up but as yet has no money. Discussions on mid-term finance are part of the LCA negotiation track to be wrapped up in Doha. However it is not clear what this will amount to. Some warm words about the GCF perhaps? Will we see some voluntary announcements for further climate finance? We may, although these are likely to fall well short of the ambition of the original Fast Start.

So what would we like to see? A sense of urgency on the GCF. Hosting the fund will be a challenging task for South Korea, but also a privilege. It will require strong leadership of the like South Korea has already shown in making green growth a pillar of their economy and society. They now need to make bold moves to capitalise the GCF and bring others along with them. The old divide of developed and developing should not get in the way. Richer and high emitting countries should help poorer low emitting countries to address climate change, especially adaptation to the impacts that are increasingly being felt.  Such concessional finance needs to leverage private sector investment if the scale of overall finance is to be achieved. This task would be greatly helped by a robust carbon market. Reform of the CDM and interventions to increase demand would thus be welcomed.

How to build consensus

Overall the talks are likely to be polarised. Only a few days ago the BASIC countries called for developed countries to ‘scale up ambition’ and made it clear that the traditional divide of Annex I and non Annex I (developed and developing) is not up for negotiation in the Durban Platform. This position has been opposed by some developed countries, such as the US, who think that emerging economies also need to do more. For the climate talks to save the planet progress is needed on a number of levels – in the substance of the negotiations themselves, in the relationships of the groups doing the negotiating and in the enabling environment within which the talks take place. Currently there is no shortage of substance, although some argue that the focus of the talks should be more on opportunities and technology rather than burdens and costs.

When it comes to the UNFCCC groups, these are currently configured mostly along geographical and political lines rather than on ambition, however this appears to be shifting (note the newly formed ‘Like Minded Developing Country Group’ and the alliance between the EU, least developed countries, small islands and progressive Latins). Regarding the enabling environment, there is currently a lack of societal and political will to create pressure for a deal within the UNFCCC. This needs to change. Without such will, groups within the UNFCCC will continue to be configured on traditional lines and negotiating Parties will have weak mandates from back home which prevent them from tabling the ambitious commitments needed to create a meaningful global deal. 

Saving the planet?

A good outcome from Doha would include firstly, ambition in the second commitment period of the Kyoto Protocol and from the higher emitting richer countries not covered by Kyoto (especially those that never formalised pledges in Cancun). Secondly, a sense of urgency is needed with regards climate finance, so as to give impetus to the capitalisation of the Green Climate Fund. Thirdly, discussions about which countries need to take ambitious action in the context of the Durban Platform need to transcend the Annex I / non-Annex I divide, so that 2015 can be a success. Fourthly, action at the national level must be integrated into the COP process. Countries across the world, rich and poor, are making progress on climate compatible development. They must share lessons and opportunities to engender a sense of positivity and trust in the negotiations. This year it is most likely that UNFCCC success will mean saving the Kyoto Protocol. International climate change talks need to focus on what scientists say is needed to save the planet from dangerous climate change and the opportunities that can be created in doing so.

Who'd want to bank on 4C?

The latest World Bank report on climate change, Turn Down the Heat, sets out a stark vision of the future says Richard Gledhill, partner, PwC sustainability and climate change.

The World Bank's latest report on climate change is not so much a wake up call, as the coffee and buffet breakfast for all arriving at the Doha negotiators' door at the same time. No matter which way you turn the new World Bank report, ‘Turn Down the Heat: Why a 4C warmer world must be avoided', lays out in quite unemotional terms the realities that could face us in a warming world, and presents a compelling business case for why negotiators at next week’s Doha climate summit must work to avoid it.

I've been a regular attendee at UN climate summits in recent years. Each year we bang on about the need for greater urgency and greater ambition in the talks - almost to the point of sounding like a broken record. Now we're days away from Doha, and we are rehearsing the same lines. This year is different though. Because we've all done too little, too late, the political goal of staying within 2^oC now appears highly unrealistic. According to the recent PwC Low Carbon Economy Index, since 2000 the carbon intensity of the global economy has reduced by an average of just 0.8% per annum. The annual reduction in carbon intensity through to 2050 now required to stay within 2°C of warming is 5.1% a year, more than has ever been achieved in the past.  Even to have a 50% chance of staying within 4°C would require a fourfold increase in the average annual rate of decarbonisation through to 2050. So we now need to plan for a warmer world - perhaps 4 ^oC or even 6 ^oC.

In that context, the World Bank report provides a snapshot of what a 4 ^oC world might be like, as early as the 2060s - that's hopefully within the lifetimes of at least half of the world's population. World Bank Group President, Dr Kim, sums these scenarios up in a single word – “devastating”. We simply can't afford to let them happen.

Even the subheadings in the report are arresting: "Rising CO₂ concentration and ocean acidification; Rising sea levels, costal inundation and loss; Risks to human support systems; Risks of disruptions and displacements." The report pictures a world where sea levels rise by up to a metre, and possibly more, by 2100. In the tropics sea level rise is likely to be 15 – 20% larger than that global mean. We’ll see substantial increases in aridity, and drought in tropical and subtropical areas. The largest warming will occur over land, in the region of 4 ^oC – 10 ^oC, and is expected in larger regions of the world like North Africa, US, Middle East. Summers like that experienced in Russia in 2010, that caused global wheat commodity shortages, will be the new normal. "Coral reefs - that protect against coastal floods, wave damage and storm surges - could stop growing if warming reaches 1.4C by the 2030s. Food, income, tourism and shoreline protection will all be affected. Overall, “the poor will suffer the most.”

The message to negotiators en route to Doha is clear. Don't give in to 4 ^oC.

The heat is on the climate talks, and business as usual just isn't an option.

PwC Low Carbon Economy Index: your comments

This year’s PwC Low Carbon Economy Index (LCEI) has generated plenty of comments and questions.  Here's a selection of them.

From Christiana Figueres “Ahead of COP18, PwC points to urgent need to raise global level of ambition to curb GHG emissions”

Using our LCEI model, we will estimate the absolute emissions targets consistent with 2 degrees C, that countries will need to agree at COP21 and implement in the 2020’s.  We will publish this in advance of COP18 in Doha. 

How did you do the numbers? 

The LCEI model is relatively simple.  For the G20 economies, we use energy data from BP’s Statistical Review and GDP data from the World Bank.  We make projections about changes in primary energy intensity, the fuel mix and GDP growth for each country.  We have made assumptions about emissions from other countries (not in the G20) and non-energy sectors (land use change etc).   We take the IPCC estimates of atmospheric stabilisation levels to meet 2, 4 and 6 degrees, and from that derive the respective global carbon budget allowed. We can then calculate the annual change in carbon intensity that is needed to stay within those carbon budgets. Although we don’t audit the underlying data from BP or the World Bank, we do check the numbers in our model.

“Is it reasonable to assume that the changes in the next 20 years will be the same as between 2080 and 2100?”

Although the report focuses on the period to 2050 (the LCEI model is based on PwC’s ‘World in 2050’ economic model), we assume constant rates of decarbonisation from now to 2100.  Our current rate of decarbonisation averages 0.8% per year.  The table on page 9 of the report shows four different decarbonisation rates, from now to 2100, and the resulting implied concentration levels.  We believe that this is simpler to communicate than a scenario analysis which might assume particular energy or economic transformations in the decades to come.

“Your comment 'Sectors dependent on food, water, energy or ecosystem services need to scrutinise the resilience and viability of their supply chain'  would seem to me to include the entire physical world...?"

Yes quite! But stating the obvious is sometimes necessary. Also some sectors will be more exposed than others, so they will be the first and hardest hit by the effects of climate change.

If you’ve other questions or comments, please tweet us @pwcclimateready.
Read the PwC Low Carbon Economy Index or watch the webcast here

PwC Low Carbon Economy Index - Behind the numbers

For four years, Lit Ping Low, an economist in PwC’s sustainability and climate change team in London, has crunched the numbers with colleagues for the PwC’s Low Carbon Economy Index. She reflects on the latest results and analysis.

When we started the first Low Carbon Economy Index (LCEI) in 2009, it felt like sending a wake-up call to politicians, governments and businesses. We set out to examine the challenge for each major economy in the G20 in the journey towards to a low carbon economy, and argued for the benefits that this will bring.

The theory is that the low carbon revolution would deliver the economic recovery that much of the developed world was facing, and provide the opportunity for developing economies to leapfrog to cleaner, more efficient technologies. In practice, when I revisit the figures with my colleagues every year, we find that neither has happened.

For four years, the world hit repeatedly at the snooze button. But every time you do that, it means a greater hurry when you do eventually act. You might afford the first snooze if you get a little quicker. Perhaps by the second one, the morning routine becomes a frantic rush. By the third, you’ll miss breakfast and go hungry. At some point, you’re late altogether, regardless of how quickly you move.

It seems that we’ve reached that point. Our estimates this year suggest that the global economy will need to reduce its carbon intensity (carbon emission per unit of GDP) at a rate it has never achieved before since records began in mid-20th century. This rate is needed to achieve the atmospheric concentration levels scientist say is required to limit global warming to 2oC. We now need to achieve that not just for one year, but for at least 39 years until 2050.

The reason we compared our numbers to historical achievements was not about shock tactics; the extreme weather events in 2011 and 2012 (more extreme, unpredictable floods and hurricanes and famines in many parts of the world) were apt at demonstrating the effects and costs of failing to act on climate change. By comparing against history, we can ask whether we’ve reached the limits of feasibility.

The optimists amongst us will argue that never having done it does not mean it’s impossible – the technologies are there, we just need to deploy them, fast and at scale. There may still be hope, but the reality is that it’s time to plan for a much warmer world than we’d anticipated four years ago, and work out the implications for individuals, businesses and governments.

Let’s  hope the negotiators flying in to Doha get a good long rest on the plane, because the numbers suggest it’s time to wake up.

http://www.pwc.co.uk/lowcarboneconomy

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Contact details
Email: Lit Ping Low
Tel:  +44 (0) 20 7804 0345