now loading...
Wealth Asia Connect Treasury & Capital Markets Europe ESG Forum TechTalk
Understanding ESG
Near pre-Covid C02 emissions back by end-2021
Emissions in 2022 to hit record high as fossil fuels meet energy demand, pre-Covid parity in 2023
The Asset 20 Dec 2021

Global direct carbon-dioxide (CO2) emissions in 2021 will reach 98.3% of pre-Covid levels, driven by greater-than-expected demand for coal and gas for baseload power generation and industrial fuel, even as mobility metrics have remained impaired, according to recent projection.

In 2022, global GDP growth of 4.2% and a continued normalization of activity metrics should stimulate an increase in emissions of 2.5%, pushing total CO2 emissions from combustion to record highs as fossil fuels meet 76% of incremental energy demand, predicts S&P Global Platts Analytics. The transportation sector is forecast to account for 66% of emissions growth next year.

The projection will return global emissions to parity with the pre-Covid CO2 outlook, though, over the long run, the firm’s reference case projects a 1.3 gigatonne (Gt) CO2 net decline in 2050 versus previous outlooks, driven by the lengthening list of national-level commitments to net zero.

Despite the anticipated surge, the emissions outlook will essentially return to parity with the pre-Covid outlook by 2023, S&P Global Platts Analytics foresees. This is largely due to stronger-than-expected coal demand over the course of 2021 as a baseload generating fuel, and an additional 0.1 Gt of CO2 emissions from coal are expected in 2022.

The firm’s emissions outlook also includes a plateau in global emissions by the decade's end based on anticipated non-fossil capacity growth, while the 2-degree outlook would require emissions to begin declining after next year's record high.

“On a percentage basis, the eventual return to pre-Covid levels of transport activity across road, air, and marine could deliver a second consecutive year of more than 5% growth in emissions from oil combustion,” says Mark Mozur, manager, future energy outlooks, analytics, S&P Global Platts. “There are downside risks to this view correlated with the emergence of the omicron variant of the coronavirus, as well as the potential for inflationary headwinds to slow the 4.2% GDP growth expected for 2022. But the current forecast of over 4.6 million barrels per day of year-on-year oil demand growth would result in incremental emissions of 0.5 Gt across air and marine, passenger cars, and commercial road transport.”

Advertisement

“This growth in emissions will come despite the lengthening list of countries that have committed to long-term net-zero targets,” explains Roman Kramarchuk, head of future energy analytics, S&P Global Platts. “The fact that most of these targets are set in 2050 points to the potential for medium-term economic growth to drive higher emissions levels, and there are significant risks to environmental policy agendas that could arise from elections scheduled in 2022, including mid-term elections in the United States.”

Most of the near-term reductions remain isolated in the Organization for Economic Cooperation and Development nations, as slower total demand growth and relatively more supportive policies for clean energy reduce emissions there.

Conversation
Andy Suen
Andy Suen
portfolio manager and head of Asia ex-Japan credit research
PineBridge Investments
- JOINED THE EVENT -
17th Asia Bond Markets Summit - China Edition
Rebalancing in the transition journey
View Highlights
Conversation
Surasak Ritthongpitak
Surasak Ritthongpitak
director of the market supervision department
Securities and Exchange Commission Thailand
- JOINED THE EVENT -
Asset Servicing Leadership Series
How digital assets are transforming Asia's investment landscape
View Highlights

Advertisement

Advertisement

Advertisement