The latest PwC Net Zero Economy Index report can be summarised as “progress made but must move faster”. The report reveals that if the world is to achieve the Paris Agreement target of limiting global warming to 1.5°C above pre-industrial levels, it will need to decarbonise at a rate of 20.4 per cent every year. That’s up from 17.2 per cent last year and is 20 times faster than the current rate of decarbonisation.
“We produce the report every year and this is the 16th edition,” says PwC Ireland ESG leader David McGee. “It tracks economic growth and energy-related CO2 emissions against the rates required to achieve the aims of the Paris Agreement.
“The maths is simple. If you’re trying to get somewhere and you’re going too slow, you have to go faster every year to get there on time. Unfortunately, everyone now agrees that we won’t be able to hold to the 1.5°C limit, but we need to keep it as close to that as possible.”
That’s all the more important as the precise impact of exceeding the target is difficult to predict.
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“All we know is that each additional half of one degree is not the same as the previous one,” McGee explains. “There is a cumulative multiplier effect. It is not exponential, but we know that the impact gets more severe. Look at La Niña in Africa and its effect on the cocoa crop and the recent tragic floods in Valencia, for example. The impact of the next half a degree will be a lot more severe than one-third of the 1.5-degree rise.”
In Ireland, the latest EPA report comes to much the same conclusion. While Ireland did achieve an emissions reduction of 6.8 per cent during 2023, bringing the total below the 1990 level for the first time, the country is still set to miss its 2030 target by a wide margin.
“Although based on a slightly different methodology to our report, it says decarbonisation is not happening quickly enough,” he notes. “We need to make progress in all areas of the economy. We need a form of mobility that doesn’t depend on fossil fuels, for example. We need to move to hydrogen fuel and EVs. But both depend on increased renewables capacity.”
However, he expresses frustration at the sluggish pace of deployment of offshore wind. “There is an absolute gold mine out there. Ireland could be a net exporter of wind energy with all the benefits that this would bring. We’ve got to figure out how to speed up the process to get wind power up and running.”
Increasing the rate of progress won’t be simple or easy. “Nobody is successfully decarbonising at the required rate,” he points out. “There is no country or region we can point to as a model to base ourselves on.”
Climate-tech is part of the solution
It’s not all gloom though. “I do take hope. We are making some progress on the energy transition. For the second year in a row, the world has seen a record rise in renewables capacity. Broadly speaking, we know how to solve the energy problem. We have the technologies in wind, solar and nuclear that are both low emissions and can safely and reliably generate the power we need. But we don’t yet have the resources to build those things quickly enough.”
Technological innovation has to be part of the solution as well, McGee contends. “Even with everything we are doing, we will still need a technological leap forward. We need to look at the steps needed to solve the problem and climate tech is part of that solution.”
The costs involved will be vast. “It is estimated that it will cost US$75 trillion to fix energy and most of it needs to be spent south of the equator. The capital is in the wrong place at the moment. Some progress is being made but we are not in a good place. We are not going fast enough, and the prize is moving further away.”
Energy is not the only driver of increasing emissions, of course. Food production for a growing global population is another major source.
“There are eight billion people on the planet and 800 million of them live in hunger every day,” McGee explains. “A further 1.5 billion live in danger of hunger. More than two billion people around the world are living in hunger or at risk of it. By 2050 the global population will reach 10 billion people and we will need to feed the extra two billion people as well as those we are not feeding at the moment. That will require a massive increase in food output. About 49 per cent of the world’s surface is currently used for agriculture but we can’t afford to cut down more trees to increase output. In essence, we need a 50 per cent increase in agricultural productivity if we are to feed the world’s population in 2050. Achieving that will present a massive challenge.”
Opportunities
There are opportunities for Ireland in these challenges, he believes. One of those is in offshore wind. “The establishment of the Maritime Area Regulatory Authority (Mara) last year was a really positive development,” he says. “The Government is behind the development of offshore wind, both from the climate perspective and the economy. We can sell the excess energy produced abroad. Those energy exports could be great for us. There is also real potential for green hydrogen production and storage at the old Kinsale Head gas field.”
Sustainable food production is another area of opportunity. “Our food sector can be at the forefront of solving the problem of feeding the growing global population. Bord Bia is doing something genuinely world-leading and exemplary with its Origin Green Programme. Tirlán has a programme to clean up the Slaney River. The company is investing heavily to ensure there is no leakage of nutrients into the river and demonstrating that you can have high grass yields and keep water quality up. And the Carbery Group in West Cork has its Farm Zero C programme. They are working with UCD, TCD, Teagasc and others to come up with a low-carbon dairy farming model.”
Climate tech is another area where Ireland could play a part. “In September, we published a report in association with SustainabilityWorks to identify gaps that must be addressed for the transition to the net-zero economy,” he continues. “Climate tech can be part of the solution to ramp up the decarbonisation of our economy. The report identified a large number of firms at the start-up or scale-up stage of creating unique solutions to address the impact of climate change. These companies could form the nucleus of a world-leading industry cluster here in Ireland. We have done that with fintech and we need to replicate that with climate tech. That means recognising it as a sector and devoting resources to it. Denmark has successfully done that. This is a real opportunity for Ireland, and we must not let it pass.”