Chapter

The Climate and Energy indicators assess trends in national efforts to reduce carbon emission intensity over time.

Overview

 

What it measures:

These indicators measure nations’ abilities to reduce carbon emissions per unit GDP and kWh electricity generation. The indicators are sensitive to varying national policy obligations and take into consideration economic and industrial development. A country’s Trend in Carbon Intensity is benchmarked against relevant economic peers (GDP Purchasing Power Parity or PPP per capita) and given a score based on whether a country is underperforming (lower score) or overperforming (higher score) relative to peers. A Trend in CO2 Emissions per kWh evaluates countries’ performance in decarbonizing the electricity and heat generation sector.

Least Developed Countries (LDCs) and Small Island Developing States (SIDS) are not scored on the suite of carbon intensity indicators, but are instead given a score for Access to Electricity. This metric is the most relevant measure to indicate national progress to provide energy infrastructure that moves vulnerable populations away from burning solid fuel indoors for cooking and heating (see Air Quality Issue Profile).

Why we include it:

Climate change impacts essentially all of the Earth’s physical and biological systems. Little progress has been made to understand which countries’ efforts to mitigate greenhouse gas (GHG) emissions are successful and whether efforts to decarbonize economic growth are working. The EPI’s Climate and Energy indicators rank progress in reducing carbon emission intensity in the period from 2002 to 2012. See Climate and Energy Infographic.

Where the data come from:

Carbon dioxide (CO2) Emissions per kWh of electricity emissions data come from the Climate Analysis Indicators Tool (CAIT) 2.0 database provided by the World Resources Institute.[footnote 1] The Trend in CO2 Emissions per kWh of electricity generation indicator is developed from data provided by WRI-CAIT. GDP data are from the International Energy Agency (IEA).[footnote 2] The contributions of oil and mineral rents to each country’s GDP from the World Bank’s World Development Indicators dataset have been removed so that countries that mainly trade, rather than consume these commodities to produce their GDP, are not unfairly penalized.

Data for the Access to Electricity indicator are from the Sustainable Energy for All Initiative, a joint effort by the World Bank and the IEA.[footnote 3] For more information, see 2016 EPI Metadata.

What are the targets:

Because there are no globally agreed-upon targets for CO2 reduction, the data are used to show relative performance for these indicators. The highest performing countries are those that demonstrate the greatest negative trends in carbon intensity, relative to its economic peers.

Description

Coming in the last month of the hottest year in recorded history,[footnote 4] the 2015 Paris Climate Change Agreement was a landmark step towards global recognition that all countries, developed and developing, contribute to and suffer from the effects of climate change. For the first time, countries both rich and poor agreed to take actions to mitigate climate change emissions in line with their respective capacities. The Agreement, signed by 196 countries, proposes an international framework to keep global temperature rise from reaching a 2 degrees C increase and achieve net-zero emissions by the second half of the 21st century.[footnote 5][footnote 6]

The Paris Agreement secured buy-in and Intended Nationally Determined Contributions (INDCs) from all countries,[footnote 7] and produced a range of plans reflecting various national strategies. To monitor countries’ individual adherence to their targets and assess the potential mitigation impact that results from these goals is extremely difficult without a framework that ensures countries report a consistent set of metrics.

Several organizations have put forth various methods to grasp and interpret climate change performance, and each has its advantages and trade-offs.[footnote 8] The Climate Change Performance Index combines countries’ greenhouse gas emissions statistics with qualitative data from climate policy experts to hone in on climate policies’ role in driving emission reductions.[footnote 9] The Climate Action Tracker assesses whether or not national policies are consistent with the action needed to prevent global temperature rise of 2 degrees C.[footnote 10] The World Resources Institute’s CAIT Data Explorer, which EPI uses for its Climate and Energy indicators, allows users to delve into the equity of climate targets and illuminates data gaps within and between country pledges for climate action.[footnote 1]

Evaluating and ranking climate policies’ measurable impact is a difficult challenge. Carbon dioxide (CO2) emissions and temperature rise exhibit a nearly linear association, so that CO2 emissions is the ubiquitous metric used to benchmark the world’s advance towards dangerous warming thresholds. In May 2015, average atmospheric CO2 concentrations reached 400 parts per million (ppm) for the first time in more than 400,000 years, enough CO2 to raise global temperatures by 1.6 degrees C from a pre-industrial baseline.[footnote 11][footnote 12] Seeking a comprehensive signal of global environmental change, researchers look beyond atmospheric conditions, incorporating the oceans, which have absorbed the vast majority of the greenhouse effect’s excess heat and half of the anthropogenic CO2.

Carbon is as much a metric of a country’s economic development as it is an indicator of climate. Commonly referred to as a development problem, climate change is primarily the result of industrialization through the burning of fossil fuels. Developed countries, referred to as United Nations Framework Convention on Climate Change (UNFCCC) Annex I countries in Figure 20 below, are historically responsible for the majority of global CO2 emissions, however in 2007, developing countries’ (UNFCCC Non-Annex I Parties) emissions, driven primarily by China’s growth, surpassed developed nations’ annual contributions for the first time. Because economic growth is powered by fossil fuels, CO2 emissions are indicators of trends other than and in addition to climate change policy performance. Low CO2 emissions could mean that a nation is underdeveloped (e.g., a Sub-Saharan African country), an economy is in decline, or it could mean that a country has made concerted efforts to reduce emissions through a policy intervention that, for example, replaces fossil fuel combustion with renewable energy production.

Measuring Climate Change Performance According to Development Status

The 2016 EPI evaluates national climate change performance based on trends in carbon intensity, taking into consideration a nation’s level of economic development (Figure 21). The United States, for instance, has committed to reduce emissions by 26-28 percent of 2005 levels by the year 2025.[footnote 10] The EPI’s Trend in Carbon Intensity indicator evaluates whether the United States is successful in achieving these CO2 reductions, relative to other wealthy countries.

 

Metrics that track climate commitments over time are important for gauging a nation’s long-term climate mitigation efforts, as political regimes can change and political will often wanes with election cycles. Canada, for instance, submitted an INDC with a 30 percent emissions reduction goal by 2030 based on 2005 levels, an unambitious pledge compared with its peer countries.[footnote 13] Interim elections brought a more progressive political party into power at the federal level and in Alberta –the home of Canada's oil industry and its main source of emissions growth. This political change shifted momentum for the country’s climate policies to support the Paris Agreement. Prime Minister Justin Trudeau, elected a month before the Paris Climate negotiations, pledged to implement a carbon pricing plan, increase investments in clean energy, and raise the aims of the country’s commitments.[footnote 14] An ambitious INDC is expected after the new federal officials meet with the provincial governments and set national targets.

 

Policy commitments must be paired with hard data to demonstrate positive performance. Brazil has pledged to eliminate illegal deforestation in the Amazon rainforest by 2030 and reduce emissions by 43 percent based on 2005 levels. Despite these lofty intentions, deforestation rates in Brazil rose by 16 percent last year, according to the Brazil’s Environment Ministry.[footnote 15] These statistics, released prior to the Paris climate negotiations, confirmed concerns over Brazil’s updated, and weakened, 2011 forestry code. The 2011 policies counter efforts implemented in the previous decade to curb deforestation, which had included strong monitoring, reporting, and use of satellite data[footnote 16] (see Forests Issue Profile).

Climate Change Performance in Developing and Emerging Economies

The majority of emissions growth is expected to be generated by middle-income and emerging economies, making climate mitigation in these countries a critical issue for the world. Recognizing the need to develop clean-energy infrastructure, 69, or nearly half of the world’s developing countries have adopted national renewable energy and energy efficiency policies (Figure 22).

 

 

Within this group of emerging and growing economies, Costa Rica has undertaken ambitious efforts to reduce its fossil fuel consumption. The Central American country achieved 99 percent renewable energy generation in 2015[footnote 17] – a milestone in the country’s 2008 plan to go carbon neutral by 2021. With 80 percent of its electricity generated from hydropower, however, the country will be challenged to sustain its momentum in a changing climate that brought record droughts this past year.

China has recognized its status as the world’s largest emitter of carbon emissions and has taken recent efforts to reduce its carbon intensity of economic growth. Its government has made investments to reduce both carbon and energy intensity through nationally-binding reduction targets in its 12th Five-Year Plan,[footnote 18] actions that achieved a 19.1 percent reduction in energy intensity from 2006 to 2010. China is also on track to meet its 2009 Copenhagen climate commitment to reduce carbon intensity 40 to 45 percent from 2005 levels by 2020.[footnote 19] China’s historic bilateral agreement with the United States, announced at a meeting between Presidents Obama and Xi in November 2014, was cited as a major driver behind the 2015 Paris Climate Summit’s success.[footnote 20]

Because Least Developed Countries (LDCs) and Small Island Developing States (SIDS) bear the smallest amount of the global climate mitigation burden, they are not scored in the EPI’s Climate and Energy category. Instead, they are given an indicator that assesses the percentage of the country’s population with access to electricity as the more relevant policy goal. Many countries with large portions of their populations lacking access to electricity currently rely on high-polluting, unsustainable forms of fuel, including animal dung, wood, and charcoal. Switching to less-polluting fuels has beneficial climate and household air pollution impacts (see Air Quality Issue Profile). Increasing access to electricity also provides clear social and economic benefits for citizens (see Box 17: Rwanda Turns to Renewable Energy). The 2016 EPI website gives an indicator of Access to Electricity for LDCs, but it does not include the measure when calculating the total EPI score for these countries.

Box 17: Rwanda Turns to Renewable Energy

As the pressure on traditional energy sources grows, renewable energy offers a path towards cleaner, more reliable power for Rwanda. The country’s next challenge: figuring out the finance.

Expanding and diversifying Rwanda’s energy profile will be crucial to continuing the country’s development gains. Rwanda expanded energy access from 2 to 18 percent of its population between 1990 and 2012.[footnote 21] Most citizens, however, still rely on biofuels. Fuel sources like charcoal and firewood accounted for 75 percent of the country’s 2012 energy consumption, a rate higher than the 63 percent average across Sub-Saharan Africa.[footnote 21] Consuming biofuels at this rate puts pressure on the nation’s forests and endangers the health of those who rely on solid fuels for cooking and heating (see Air Pollution Issue Profile).[Footnote 22] If these trends continue, the country estimates that its current 0.9-megaton biofuel shortfall will grow to 5.9 megatons by 2030.[footnote 23]

Renewable energy is poised to play a key role in addressing this shortage. By 2030, Rwanda hopes to bring electricity to 100 percent of both its urban and rural populations and to derive 59 to 73 percent of this energy from renewable sources.[footnote 24] The recent construction of the Agahozo-Shalom Youth Village solar power plant demonstrates the country’s progress towards this goal. Is it the first large-scale power plant in East Africa, and the facility currently produces 15,000 megawatts per year, with capacity to deliver 8.5 megawatts (approximately 6 percent of Rwanda’s current capacity).[footnote 25] It will save an estimated 7,500 – 8,400 tons of carbon dioxide equivalent each year, compared to traditional energy sources, while providing 15,000 – 18,000 homes with electricity.[footnote 26] Other efforts, including a pilot project to capture 3.6 megawatts of power from the methane gas generated by Lake Kiva[footnote 27] – and a 445-megawatt expansion of hydropower[footnote 28] – are also helping to diversify Rwanda’s energy portfolio.

Using renewable energy to meet 73 percent of Rwanda’s 2030 energy needs would cost $7.5 billion USD over 15 years, requiring more upfront capital than the $6.7 billion USD required to fund business-as-usual.[footnote 24] The Government of Rwanda calculates, however, that reduced operating and fuel costs would “more than compensate for” the upfront investment needed to develop renewable energy resources.[footnote 24] Leveraging public-private partnerships, and taking advantage of support from programs like the Green Climate Fund, could help close this funding gap.[footnote 29]

Financing for renewable energy will begin to edge out funding for fossil fuels, as renewables are projected to grab two-thirds of the finance dedicated to new power sources by 2030.[footnote 30] Investment in renewable energy in developing countries increased 36 percent between 2013 and 2014, reaching $131.3 billion USD, an amount nearly equal to the $138.9 billion USD invested in renewable energy in developed countries.[footnote 31] To avoid the most dangerous impacts of climate change, and to meet the urgent demand for energy access in developing countries, overall investments will need to rise further and faster, to $730 billion USD per year by 2035.[footnote 32]

This box is based on a case study of Rwanda’s Agahozo-Shalom Youth Village solar power plant, included in the 1 Gigaton Coalition report, Narrowing the Emissions Gap: Contributions from renewable energy and energy efficiency activities.[footnote 31]

Challenges in Disentangling Performance

Because carbon emissions are linked to many factors, including economic growth, decline, and energy structure, the EPI’s indicators cannot distinguish between mitigation trends that are the result of concerted policy efforts and those that are due simply to economic decline. This shortcoming is one of the reasons why measuring climate change performance is so challenging. Regardless, the EPI’s Climate and Energy indicators evaluate declines in carbon intensity, with an overall global goal of decarbonization. Spain, for instance, was downgraded in the 2016 Climate Change Performance Index (CCPI) rankings, falling by 8 places to 41st place. Germanwatch, a thinktank who produces the rankings, cite “Politically retroactive measures […] have ruined the dynamics in the renewables sector [… and] the country is opposing progressive measures on an international scale.”[footnote 33] Economic recession – and not policy actions – are primarily driving Spain’s negative Carbon Intensity Trend, rewarding the country in the EPI for achieving reductions without deliberate efforts. Because of this anomaly, the EPI only uses Spain’s data from 2002 to 2008 to gauge its Trend in Carbon Intensity. Indices like the CCPI demonstrate why qualitative data are necessary to contextualize performance and its underlying drivers. They further point to the limitations of quantitative measures that seek to characterize all countries similarly.

Future Climate Metrics

In an ideal world, data would be available to benchmark climate change performance in all sectors of an economy, providing a level of detail that would reveal which countries’ economies are truly improving energy efficiency and moving towards decarbonization. The only sector-level carbon emissions data, however, are available for the power sector, responsible for a quarter of all global greenhouse gas emissions in 2010.[footnote 34] The electricity and heat generation sector is relatively comparable country to country and gives an impetus for the EPI’s third indicator in the Climate category, Trend in CO2 Emissions per kWh. This indicator measures the carbon intensity of countries’ electricity and heat generation sector.

Iceland tops the rankings in the Trend in CO2 emissions per kWh indicator, with nearly all of its electricity and heat generation derived from renewable energy sources, including geothermal and hydropower. Geothermal energy provides more than 87 percent of the country’s heat and hot water demand, and hydropower supplies 75 percent of its electricity.[footnote 35] Developing countries in Latin America and Africa comprise the bottom of the Trend in CO2 per kWh rankings, reflecting their place at the bottom of the typical “energy ladder” in electrification; countries begin with carbon-intensive electricity generation and move gradually towards cleaner energy sources as their economies develop.

Achieving the Paris Climate Agreement’s goal of net zero carbon in the second half of the 21st Century will require gradual elimination of all fossil fuel consumption. Fossil fuels remain the least-cost energy option for many countries, but not necessarily due to the high cost of clean energy alternatives. Government subsidies for fossil fuels, which G-20 countries have committed to reduce each year since 2009, are increasing in some countries (see Figure 23).[footnote 36] The United States, for example, has increased fossil fuel subsidies 35 percent since 2009, contributing $20.5 billion USD for oil, coal, and gas production from both federal and state-level subsidies. Only Russia spends more to facilitate the mining and processing of fossil fuels, at $22.8 billion USD a year (see Box 18: Phasing Out Fossil Fuel Subsidies).[footnote 36] Achieving global climate goals to contain temperature rise and reach carbon neutrality will require national governments to shift away from policies that finance and encourage fossil fuel consumption.

Encouragingly, national governments are not the only actors contributing towards a low and zero-carbon future. As atmospheric carbon concentrations exceed dangerous thresholds and average global temperatures break records, the global climate policy community has sought actors to propose and implement climate programs in the void left by national governments’ inaction. Sub-national actors – cities, states and regions – and non-state actors – private businesses, investors, and civil society organizations – were central to the process in Paris, as these groups have committed to take climate actions that contribute towards and could exceed national pledges.

Climate change, in the words of UN Secretary-General Ban-Ki Moon, is the “defining issue of our era,”[footnote 37] and will require coordinated global action from actors at all levels. To reach new global climate goals agreed to in Paris, robust metrics to track progress are critical. While the EPI’s Climate and Energy indicators are preliminary signals of which countries are working towards decarbonizing their economies, more timely data and monitoring are needed to better target and fine-tune policy interventions.  

Box 18: Phasing Out Fossil Fuel Subsidies

Government support for fossil fuel production has continued to rise, skewing the global market and slowing the expansion of renewable energy. Can more transparent data hold political leaders accountable to their promises to phase out subsidies? 

Despite a 2009 pledge to phase out fossil fuel subsidies, the world’s 20 largest economies spent over $400 billion USD on oil, gas, and coal subsidies in 2013 and 2014. Subsidies include any government action that lowers the cost of fossil fuel energy production, raises the price energy producers receive, or lowers the price consumers pay.[footnote 38] They materialize as tax breaks, exemptions from government regulations, financing from state-owned financial institutions, purchase requirements, and a host of other options.[footnote 39][footnote 38]

Support for fossil fuel production distorts their market signal, separating it from industry costs and performance on the ground. The support for fossil fuels from these 20 economies alone dwarfs the total global support for renewable energy, exceeding it four times over.[footnote 40] This distortion makes it harder for clean energy to compete on a level playing field, and to attract investment needed to expand.

Investing in fossil fuels, even in the face of falling oil, coal and gas prices,[footnote 40] puts countries at risk of energy price shocks[footnote 41] and stranded assets.[footnote 42] The world’s 20 largest economies nearly double the private sector’s $10 billion USD annual investment, outspending the top 20 private coal-mining companies. The returns on this investment largely bypass both wealthy and poor nations.[footnote 41]

Continued reliance on fossil fuels carries immediate risks from the pollution generated by combusting fossil fuels for electricity and transportation. The International Monetary Fund estimates that the combined social and environmental consequences of relying heavily subsidized fossil fuels would drain more than $5 trillion USD from the world’s governments each year.[footnote 41] To reach the global goal of capping temperature rise at 2 degrees Celsius, three-quarters of the remaining fossil fuel reserves must remain in the ground.[footnote 40] Even as countries take historic new strides toward tackling climate change,[footnote 43] fossil fuel subsidies jeopardize their ability to live up to their commitments.

The world’s largest energy consumers pay out the largest fossil fuel subsidies. Together, China and the United States accounted for a projected $3 trillion USD in 2015 energy subsidies, trailed by India, the European Union, Russia and Japan.[footnote 41] Charting a different path, Germany has pledged to end coal subsidies by 2018, and Canada has begun to phase out a number of oil, gas and mining subsidies.[footnote 44] India has halted its diesel subsidies,[footnote 45] and in January 2015, Indonesia pledged to eliminate $16 billion USD in gasoline subsidies,[footnote 46] increasing these countries’ revenues without destabilizing energy markets.[footnote 41]

Other countries across the globe would benefit from following their lead. The International Monetary Fund estimates that eliminating post-tax subsidies for the most-polluting energy fuels could increase aggregate government revenue by $2.9 trillion USD, while cutting premature deaths from pollution-related diseases by more than half.[footnote 41] Reflecting the true cost of energy in fossil fuel prices could drive down greenhouse gas emissions by as much as 24 percent, with the largest percentage reductions in emissions occurring in Asia, the Middle East and North Africa.[footnote 41]

Despite a consensus on the need to reform fossil fuel subsidies and the examples set by leading countries, it has been politically difficult to execute. Attempts to reduce subsidies in the United States, for instance, have failed to make headway in Congress.[footnote 44] Additionally, governments and companies alike often hide subsidies,[footnote 40] further obscuring the issue and thwarting action. Future EPI reports may include a new metric to assess countries’ progress on transforming their growth trajectories to low carbon pathways. Continuing to track countries’ progress relative to each other and to their own commitments could help to generate the political will needed to phase subsidies out.

Infographic

Show footnotes

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