Net Zero Economy Index 2022

In 2021 we moved further away from limiting warming to 1.5°C above pre-industrial levels. At just 0.5%, the global rate of decarbonisation in 2021 – the reduction in carbon intensity, or energy-related CO₂ emissions per GDP – was at its lowest level in over ten years. While skewed by the rebound in economic activity from the pandemic, the recovery has not – at least in the short term – been green.

To get back on track, collective action is needed. An average year-on-year global decarbonisation rate of 15.2% is now required, up from 12.9% in last year’s analysis. The pace of change is 11 times faster than the global average achieved over the past two decades, and far out-strips what’s been achieved by any country to date.

The current geopolitical and economic context presents a real risk to future progress. The IPCC’s 2030 deadline to reduce emissions by 43% is fast approaching, and our analysis shows that nations now need to work even harder to meet this figure. When looking at global carbon intensity, which accounts for the projected rise in GDP until 2030, we need to see a 77% reduction over this period.

Each country and sector will have its own route to take to achieve net zero. Businesses, governments and investors will need to focus on the quick wins with the highest impacts to put us on track to 2030, while at the same time investing in longer term interventions that will deliver on agreed goals. In parallel, they will need to adapt to the impacts of climate change that are already being experienced, and those that are increasingly likely in the shorter term.

Businesses are continuing to drive forward the climate agenda, motivated by shifts in the regulatory and consumer environment, and an increased recognition by investors of the importance of a low carbon transition.

International campaigns, such as the 2030 Breakthroughs and the Glasgow Breakthroughs, have rallied leaders to set goals to accelerate the innovation and deployment of clean technologies across power, road transport, steel, hydrogen and agriculture, as well as individual sectors within the real economy.

In addition, the Glasgow Financial Alliance for Net Zero (GFANZ), set up in conjunction with the UN-backed Race to Zero campaign, has more than 450 member firms from across the global financial sector, representing more than $130 trillion in assets under management and advice.

Cross-sector initiatives continue to increase business and investment action, with more than 3,000 businesses and financial institutions now working with the Science Based Targets initiative (SBTi) to reduce their emissions by setting science-based targets.

More than ever before, there is an urgent imperative for strategic collaboration - between countries, and between businesses and investors at a global and national level.