PwC's Net Zero Economy Index 2022 reveals the Asia-Pacific region achieved a decarbonisation rate of 1.2 per cent on average in 2021. This indicates its energy-related CO₂ emissions per unit of GDP generated are falling. In the same period, the world’s overall decarbonisation effort was 0.5 per cent, a massive gap towards the 15.2 per cent rate required to limit global warming to 1.5 degrees Celsius above pre-industrial levels.

PwC’s Net Zero Economy Index tracks the progress that countries have made to reduce energy-related CO₂ emissions and decarbonise their economies. This is done by measuring levels of energy consumption relative to GDP and the carbon content of that energy.

The index shows that nine out of the 13 Asia-Pacific economies reduced their carbon intensity in 2021, however, only two – New Zealand and Vietnam – exceeded the decarbonisation rate targets implied by their nationally determined contributions. New Zealand reduced its carbon intensity the most at 6.7 per cent in 2021, followed by Malaysia (4.0 per cent), Vietnam (3.4 per cent), and Australia (3.3 per cent).

Global and national targets need to be translated into policy actions. Encouragingly, Asia-Pacific governments are putting some of these in place. However, for Asia-Pacific to keep to the 1.5 degrees target, decisive action is required on the policy front.

This includes pairing renewable energy targets with coal phase-out plans, promoting energy efficiency with electrification, integrating carbon pricing policies with innovation, as well as scaling up clean tech and ensuring a just transition.

Energy intensity, fuel factor, and carbon intensity of Asia-Pacific economies for 2001, 2011, and 2021. The colours show the different pathways Asia-Pacific economies have taken to deliver emissions reductions

While policymakers are under pressure to ensure a secure and affordable energy supply, there is an opportunity to use innovation to strengthen the business case for net-zero investment. The rise in energy prices and threats to supply have created a rush to fossil fuels in the short term but strengthened the case for investment in renewable energy capacity over the long term.

Similarly, the financial case for energy efficiency has strengthened, especially in energy-consuming and hard-to-abate sectors. Businesses will be looking at ways to consume less and to do it more efficiently, signalling a possible turning point in how they think about energy.

The decarbonisation narrative is shifting from ambition to action. However, this year’s index shows significant gaps in both areas that must be acknowledged and addressed at COP27 and beyond. Closing the gaps would be a turning point for Asia-Pacific to gain a competitive advantage in the global race to net-zero.