How Tech Can Decarbonize Major Industries

At PwC, we recently released the 15th Net Zero Economy Index, our annual indicator of progress towards reducing energy-related CO2 emissions and decarbonising economies. In this article, we report on the current state and rate of decarbonisation in Asia Pacific, as well as the unique challenges and opportunities ahead. Asia Pacific is the world’s fastest growing region, with an economic growth rate of 3.9%1 (ahead of the global rate of 3.5%)2. However, it is also at the epicentre of the climate crisis both in terms of contributing to carbon emissions (representing almost half of global emissions) and, as with the rest of the world, in terms of physical impacts from climate change.

Developing Asia Pacific economies are the growth engine for the region and are located in the areas most threatened by the impacts of climate change. In the absence of climate action, under the high emissions scenario, they could lose a staggering 24% of gross domestic product (GDP) due to the effects of climate change by 2100.3 While Asia Pacific continued to decarbonise in 2022, the rate of decarbonisation is nowhere near fast enough. The region reduced its carbon intensity in 2022 by 2.8% more than doubling the 2021 rate of 1.2% this rate falls short of the 17.2% required if we hope to limit global.

Introduction to Decarbonization Technologies

Warming to 1.5°C above pre-industrial levels. This figure is stark. The Asia Pacific economies need to accelerate a policy and market-led transition, particularly as attention shifts from renewable energy and electric vehicles (EVs), to a broader range of mitigation actions addressing agriculture, the built environment and industry. The energy crisis has changed socio-political priorities, and in many economies, market liberalisation efforts have stalled while energy security has dominated the agenda. Energy supply disruptions, soaring energy prices and a spike in energy demand post-pandemic coupled with high summer.

Temperatures in 2022 have caused unplanned outages and higher energy bills, putting pressure on the public and governments to turn back toward cheaper, dirtier forms of energy such as coal.5 6 Shortfall in renewable energy investments. Although Asia accounted for around 60% of the world’s newly installed capacity and 48% of global renewable energy capacity in 20227, its annual clean energy investments need to more than double from US$62.3 billion in 2022 to US$138.6 billion during the years 2026–2030 and US$165.8 billion during the years 2031–2035 to meet net zero pledges by 2050.

Example of Decarbonization Technologies in Energy

According to the International Energy Agency (IEA). The IEA added that excluding China, the rest of Asia will need six to eight times more annual investment than the 2022 level by 2031–2035.8 Finally, the region's economies have more than doubled in size since 2000, and energy supply has increased at a compound average growth rate of 3.7% over the past two decades9. Developing Asia Pacific economies are expected to account for almost two-thirds of global energy demand growth by 2040, and these economies will increasingly rely on energy imports, especially oil and gas, to sustain economic growth.

Recent global events have undoubtedly created significant challenges for Asia Pacific governments, but the inescapable reality is that a continued slowing of decarbonisation will hasten the arrival of climate tipping points. Already this year, we’ve had a glimpse of what this may entail, while further analysis shows what else may be at stake. In 2023, the region was hit by a number of well documented weather events; the ripple effect of which could create much larger problems. For example, the supply of rice Asia’s staple food is under threat by drought in India, and the hottest winter on record has Australians on tenterhooks over the likelihood of summer bushfires.

Carbon Capture and Storage (CCS) Technologies

Moreover, Asia’s highly populated low-lying coastal zones make the region the most exposed globally to sea level rise, storm surges, floods, and land subsidence. About 70% of the global population affected by sea level rise will be in the region. More than 62% of transport infrastructure assets are highly exposed to inland flooding, and many of the region’s megacities are at risk from sea level rise and storm surgesThe figure above shows that none of the Asia Pacific economies' decarbonisation rate in 2022 came close to the rate required to align with a 1.5oC target, although five economies exceeded the decarbonisation rate needed to meet their respective nationally determined contributions (NDCs).

The common factor between these economies is they are net importers of energy and most of them experienced a drop in their fuel factors (i.e. became less reliant on fossil fuels in their energy production). The exception was Pakistan, because it faced a severe energy crisis amidst rising global energy prices in 2022, which led to a shortfall in energy production and fossil fuel imports.15 Although this had a positive impact on emissions, it had negative economic and social repercussions, with frequent power cuts leaving nearly 220 million people without electricity. This highlights the need to address energy security and a just energy transition as economies in Asia Pacific transition to net zero

Conclusion

Excluding Pakistan, the economies with the highest decarbonisation rates include Singapore (10.8%), followed by New Zealand (8.5%), Vietnam (6.5%) and South Korea (4.4%). Despite these tentatively positive signs in some nations, other economies’ rate of decarbonisation has slowed in 2022 compared to 2021, with some experiencing an increase in carbon intensity. There has been a notable increase in Indonesia’s carbon intensity, estimated to be in the range of 15%-21%.17 This is partly driven by the rebound of energy consumption, which fell significantly in 2020 and 2021.

As a result of the COVID-19 pandemic, then rebounded to exceed pre-COVID levels in 2022 as the economy recovered. In particular, the country's coal consumption for energy rose with the expansion of in-country mineral processing, particularly nickel for the steel and battery sectors, together with the general rebound in industrial activity. Coal consumption in 2022 was 222 million tonnes, compared to 162 million tonnes in 2019.18 Other economies have lagged behind in their decarbonisation ambitions, with negligible change from 2021. Chief among them: the Philippines and India, with decarbonisation rates of 0.1% and 0.8%, respectively, where we've seen sustained reliance on fossil fuels in energy production.

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