Low Carbon Competitiveness Spotlight Report

Sep 14, 2009 - 10:00am

Countries differ in the extent to which they are preparing to make the economic changes required to achieve the stabilisation of greenhouse gases at below 450 ppm and the limitation of warming to 2°C. To assess their performance, The Climate Institute and the European think tank, E3G commissioned the leading London based economics group Vivid Economics to measure the low carbon competitiveness of G20 countries, the first time this has been done.

The G20 Carbon Competitiveness Report uses “carbon productivity”, the level of GDP per tonne of carbon pollution, as the starting point for assessing a country‘s low carbon competitiveness, but develops three key metrics:

  1. The low carbon competitiveness index: current capacity of countries to generate material prosperity for its residents in a low carbon future
  2. The low carbon improvement index: the rate at which countries are increasing their carbon productivity
  3. The low-carbon gap index: whether countries are increasing their carbon productivity quickly enough towards the IPCC 450 ppm scenario that sees global emissions peak by 2020.

Only two G20 countries – Mexico and Argentina – are currently improving carbon competitiveness fast enough to be on track to a 450 ppm outcome. Australia is 16th, with only Turkey, Russia and Saudi Arabia requiring bigger turnarounds to meet this target.

In a world that limits carbon, the countries that are currently best placed to offer economic prosperity to their citizens are France, Japan, UK, South Korea and Germany. Australia is ranked 15th – the weakest position of any industrialised country within the G20.

There have, however, been some significant improvements since 1990. Almost all G20 countries, except Brazil and Saudi Arabia, have recently grown their economies while improving their carbon productivity. Australia is ranked seventh on the improvement index behind countries as diverse as Germany, Mexico and South Africa.

Other important findings include:

  •  China has shown a strong improvement in its carbon productivity over the last fifteen years and is well placed to play a leading role globally in the future, although performance has recently lagged. Returning to the rates of carbon productivity growth of the 1990s would see it help achieve the 450 ppm scenario. The report acknowledges this would take a concerted effort.
  • Developed countries generally face larger carbon productivity gaps than developing countries but Germany and the UK provide optimism that developed countries can deliver economic growth and emission reductions consistent with the 450 ppm scenario as they are close to achieving the required improvements.
  • Brazil and South Korea are also well placed, needing to improve their rate of carbon productivity growth by less than one per cent to meet their implied targets. If the recent acceleration in South Korea‘s rate of carbon productivity growth is sustained, then this is likely to be achieved.
  • Australia, along with Turkey, Russia, Saudi Arabia and Canada, is currently falling well short of the required improvement in carbon productivity to help achieve the 450ppm scenario. Australia needs to more than double its rate of carbon productivity improvement. This will require significant turnarounds in performance and strong near-term policies and measures. The report concludes: “The longer these countries take to achieve these turnarounds, the more costly the eventual transition will be.”
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