KPMG’s 2023 Net Zero Readiness report
About the report:
In 2021, KPMG released the Net Zero Readiness Index ahead of the COP26 conference. COP26 saw 153 countries presenting new emissions targets, covering over 90% of global output and emissions through net zero agreements. Despite aspirations to phase out coal, the final agreement settled for weaker language. COP26's chairman expressed concerns about the conference's strength.
Looking ahead, many companies globally will start reporting on their climate change risks and plans. Renewable energy production is surging worldwide, impacting local environments. The Net Zero Readiness Report explores the readiness of 24 countries, based on insights from local KPMG specialists. The report aims to assist organizations in accelerating their journey towards net zero.
Key insights and observations:
1. Several of the world’s biggest emitting countries have increased their net zero ambitions.
United States: Rejoined Paris Agreement, allocating $370 billion for climate programs.
China: Aiming for peak carbon emissions before 2030, investing heavily in renewables.
Australia: Enacted federal policies with a 2050 net-zero target.
Canada: Budgeted billions for 'clean economy' incentives.
Brazil: Considering a regulated carbon market, building on emission reduction progress.
European Union: Strengthened renewables push via REPowerEU plan post Ukraine crisis.
2. Net zero is becoming ingrained in the global economy:
Emissions Trading Systems: The EU, China, and South Korea are expanding emissions trading systems to cover more sectors.
Carbon Border Adjustment Mechanism (CBAM): The EU's CBAM, starting in October 2023, makes importers pay for emissions, influencing low carbon production globally.
Climate Reporting Standards: New global and regional standards, such as those from the International Sustainability Standards Board and the EU, will soon guide companies in disclosing climate change risks and plans.
3. Production of low carbon energy is growing rapidly.
4. Increasing electric vehicle sales show how rapidly some sectors can decarbonize.
5. Impacts of low carbon power projects on local environments are causing ‘green on green’ conflicts.
6. Net zero backlashes occur when people fear costs and bans rather than new opportunities.