Key Impact Points:
- Slow Progress: Global CO2 emissions grew by 1.8% in 2023, with a minimal 1% decline in the emissions-to-GDP ratio, far short of the 8% annual reduction needed to achieve net-zero by 2050.
- Emerging Markets Stumble: Emerging markets failed to reduce carbon intensity, with CO2 emissions rising by 4.7% in 2023, largely due to underinvestment in clean energy.
- Advanced Economies Lead: Developed economies saw a 6% drop in CO2/GDP ratio, reflecting significant gains in energy efficiency and clean energy investment.
Global Decarbonisation Slows
Fitch Ratings’ latest report reveals that despite progress in advanced economies, the overall pace of global decarbonisation remains alarmingly slow. World CO2 emissions rose by 1.8%, while GDP grew by 2.9%, leading to a minor 1% drop in the emissions-to-GDP ratio—far below the 8% annual decline required to reach net-zero by 2050.
“Emerging markets made no headway in reducing carbon intensity, posing a serious threat to global decarbonisation goals,” Fitch highlighted.
Emerging Markets: A Major Concern
The report identifies emerging markets as a critical obstacle. Both CO2 emissions and GDP in the EM10 group rose by 4.7% in 2023, marking the worst decarbonisation performance in a decade. The energy efficiency and carbon intensity of these economies remained stagnant, with emerging markets now accounting for 64% of global energy consumption—up 25 percentage points since 2000.
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“Underinvestment in clean energy projects, especially outside of China, has contributed to the poor decarbonisation performance in emerging markets,” Fitch notes.
Developed Economies: A Bright Spot
In contrast, advanced economies demonstrated meaningful progress, with the CO2/GDP ratio in Fitch’s DM10 group falling by 6%. CO2 emissions dropped by 4.2%, while GDP grew by 1.8%, with emissions reaching their lowest levels since 1970. This improvement was largely driven by increased energy efficiency and reductions in carbon intensity.
“Most of the gains in developed markets come from energy efficiency improvements, a trend that must accelerate globally to meet decarbonisation targets,” Fitch emphasized.
Conclusion
The path to net-zero remains precarious, with advanced economies leading the charge but emerging markets lagging behind. Without significant investment in clean energy across all regions, the world risks missing critical climate targets.