A ranking of 76 economies on their progress and commitment toward building a low carbon future.

Introduction

Efforts to combat climate change have been taking shape for more than a decade, but, until now, many have largely generated empty words, loopholes, and greenwash,” in the sharp words of climate activist Greta Thunberg. Since the Paris Agreement came into force in 2016, over 120 countries have committed to hard dates to achieve net carbon zero; so too have hundreds of cities, from New York to Reykjavik, Medellin, and Cape Town, and an estimated quarter of Fortune 500 companies.

“Anywhere you look, you’re able to find pretty objective measures of bad things happening. It’s clear climate change impacts are arriving faster than anticipated and worse than anticipated,” says Julio Friedmann, senior research scholar at the Center on Global Energy Policy at Columbia University. “This means that climate change is not an acute problem like a storm you clean up after, it’s a chronic problem, like having diabetes and having to manage your health continuously.” If the planet was managing (badly) with diabetes, it took 2020’s metaphorical heart attack for the world to really grasp the state of its health. This is not to say that prior to covid there was complete inaction. The International Energy Institute estimates that energy-related CO2 emissions in 2019, at roughly 33 gigatons, were the same as 2018, and energy emissions in advanced economies (roughly a third of the world’s total) actually dropped 4% last year.

Prospect of a green recovery

Having wiped an estimated 4.4% off the world’s GDP this year,10 covid-19 has put humanity’s impact on the environment back in the spotlight. First, it showed how changes in human activity can significantly reduce carbon emissions. Analysis of electricity production, air travel,
and other fuel consumption data in the first half of 2020 found that CO2 emissions were 8.8% lower globally than the same period in 2019,11 a far greater decline than in any previous period of economic contraction. Second, policymakers realized that the massive stimulus
packages ($12.6 trillion globally12) earmarked for pandemic recovery could be directed into infrastructure, innovation, and programs that will build economic and environmental resilience for the long term. Germany, the world’s “pandemic green leader,” is spending over a third of recovery stimulus on transportation transition, renewable energy capability building, and other projects that will serve as a cornerstone of the EU’s attempt to make Europe the first carbon-neutral continent. China is using its central planning prowess to develop the world’s largest comprehensive decarbonization plan, even though less than $1.5 billion of its post-covid
recovery stimulus spending is specifically targeted at green projects. Even in the US, where the past four years have seen a systematic reversing of emission-capping regulations, $26 billion in stimulus is being aimed at sustainability and emissions reduction programs, providing a platform for President Joe Biden to “build back better” and fulfill his promise to rejoin the Paris Accord.

The Green Future Index measures and ranks nations and territories on the degree to which they are building a green future across several pillars:

• Carbon emissions: Total emissions as well as the degree of change in emissions in transportation, industry, and agriculture
• Energy transition: The contribution and growth rate of renewable energy sources
• Green society: A range of indicators covering net forestation, development of green buildings, recycling, and consumption of animal products
• Clean innovation: The relative number of green patents, investment in cross-border clean energy, investment in food technology
• Climate policy: Policy commitment toward climate targets, carbon finance programs, sustainable agriculture, and the use of covid stimulus for a green recovery

The pillars fall into two categories. The first four (carbon emissions, energy transition, green society, and clean innovation) measure the progress that countries have been making toward reducing their carbon footprint and building the foundations for a cleaner future across industry and society. These “progress pillars” account for 60% of the weighting in the index. The final pillar, climate policy, measures the level of ambition set out in climate policies around energy, agriculture, and finance, and the degree to which these economies are using covid-19 stimulus packages to channel investment into clean industries. This final pillar accounts for 40% of the index weighting.

to exceed EU targets for hydrogen-based energy with €7 billion ($8.6 billion) earmarked to create 6.5 gigawatts (GW) of electrolyzer capacity by 2030.14 Europe is also home to some of the world’s most advanced programs to promote sustainable waste management. Belgium (9th) boasts Europe’s highest rate of recycling and maintains a network of mobile “green spots” to facilitate easy disposal of electronic and chemical waste. Costa Rica and New Zealand, the non-European countries within the top 10, rely on nature for the success
of their agriculture and tourism industries. New Zealand, first place in the index’s climate policy pillar, has enacted a slate of legislation to become carbon neutral by 2050, including a pledge to source all electricity from clean sources by 2035, and reduce biological methane from agriculture by 10% within this decade, halving it by 2050 Costa Rica (7th overall) is known for its climate leadership, aiming to source electricity entirely through renewable sources by 2021, and extending the moratorium on oil extraction and exploitation from 2021 until the end of 2050.

Energy systems in transition

Energy and heat production are estimated to account for 30% to 35% of total emissions;
energy generated from all sources, including industry, construction, and transportation,
contributes over 70% of global emissions.17 Shifting to renewable sources of energy is critical for decarbonization. The first pillar of the Green Future Index ranks each country according to their relative CO2 emissions contribution, and the emissions growth rate in each country’s industry, transportation, and agriculture sectors. The second pillar, energy transition, compares the contribution and growth rate of renewable energy in overall energy production. Combined, these two pillars account for 30% of the index scores.

Coal-fired energy production decreased by 3% in 2019,19 with large decreases in the United States, the EU, and South Korea. That said, in 2018, coal-fired power plants were the world’s largest contributor to global CO2. Signs of coal’s potential decline are encouraging, but this is only the beginning of the decommissioning journey. The UN argues that two-thirds of coal-fired electricity plants must close for the world to comply with the Paris Agreement limits on global heating. China, the world’s largest emitter of greenhouse gases, still depends on coal and gas for 70% of its electricity capacity, and there are more coal plants under construction.20 More positively, China was also the world’s single largest contributor to renewable energy
additions in 2019. Combined with hydropower and biomass, renewables were on track to contribute 27% of China’s power generation by the end of 2020, according to the country’s National Energy Agency.

to India’s rapid transition to expanding wind and solar, with plans for 450 GW of clean power by 2030. The country has several of the world’s largest solar plants (including the single largest in Bhadla, in Rajasthan). As India continues to rapidly urbanize, and gets hotter, the rising use of air conditioning will be a considerable challenge. To manage the transition, says Stoner,
“India will have to mitigate the intermittency (of renewable generation) and shape the load to accord with emerging demand.” Increasing energy access, sustainably For much of the developing world, the burning energy issues are overcoming supply deficits and increasing
access. This gives governments the opportunity to build clean energy from the outset.

Industry, investment, and innovation

Compared to the energy sector where the transition to clean power is already gathering pace, the next frontier, says Jos Delbeke, chair of climate change policy at the European Investment
Bank, is manufacturing. “In the energy sector, the technologies are there. It is about rolling out
massive investment in the low-carbon solutions. In the manufacturing industry in contrast, for the coming decade, it’s all going to be innovation funding.” Delbeke envisions a decade of massive investment in the hydrogen economy and carbon capture and storage technologies,
including areas such as biochemistry and biomass R&D. The broad roll out, he expects, will occur across industry from 2030 onward.

managed to attract venture capital or have fostered technology clusters. Luxembourg, which after China has the second-fastest patent growth, is a popular cleantech investment hub, attracting innovative startups such as Clariter, a developer of chemical solutions for recycling
plastic waste into industrial ingredients. The prospect for investment and innovation to build a
green future is reflected in the index. The clean innovation pillar measures each country’s relative number of green patents, cross-border investment in clean energy, and private investment in foodtech. Many of the leaders in this pillar have made sizeable commitments to energy transformation, including Chile, Kenya, and Morocco. The leaders also include countries such as Finland that have directed R&D and venture capital toward building vibrant cleantech clusters. The laggards have demonstrated very little appetite for issuing, or deploying, cross-border clean energy investment capital, or, like Iran, not been able to access foreign sources of capital for their transition.

Green society

The green society pillar of the index measures how countries are preserving their environment and adopting sustainable practices. The indicators in this pillar include the relative number of green buildings, the proportion of waste that is recycled, efforts to increase forested land, and per capita meat and dairy consumption. This last indicator is largely culture- and income driven; however, the UN Intergovernmental Panel on Climate Change estimates that reducing meat consumption could avoid up to 8 billion tons of CO2 annually by 2050.

New Zealand, which scores eighth in the index overall, has a particular lag in the green society pillar, coming last of all 76 countries measured. The country has a particularly low recycling rate; advocacy group WasteMINZ estimates each year 750 million plastic containers end up in landfills that could have been recycled.31 The country also has a high consumption rate of meat and dairy products and has few green buildings.

Climate policy and the path ahead

The climate policy pillar, which accounts for 40% of the weighting in each country’s score,
measures:
• Climate action: The level of ambition each country is setting out in its Nationally Determined Contributions (NDCs) toward meeting the goals of the Paris Agreement, and the effectiveness of policy frameworks being used to achieve them
• Carbon pricing initiatives: The level of development and implementation of carbon taxes or carbon trading markets
• Sustainable agriculture policy: The robustness of sustainable agriculture policies and degree to which they promote private sector investment in sustainable farming
• Pandemic pivot: An assessment of how covid-19 recovery stimulus packages will accelerate each country’s decarbonization through investments in energy transition and low-carbon infrastructure

New Zealand, Denmark, and France lead the climate policy pillar. In all three countries, well-honed existing climate action policy frameworks have been bolstered by new green stimulus spending and accelerated infrastructure investments, such as France’s hydrogen strategy and government plans to provide Air France with a €10 billion ($12.3 billion) bailout with green strings attached, including introducing sustainable fuel and reducing domestic routes.34 Denmark’s recovery programs include $5 billion for energy efficiency renovations to some 72,000 public housing residences.

Carbon tax and trading Creating an effective market structure for pricing and trading carbon credits is a foundational component of climate action policy, and just over half of the countries and territories ranked in the Green Future Index have implemented either a system of tradable emission-based financial products or some form of tax on corporate carbon emissions. However, while a dozen green leaders have both an emissions trading system (ETS) market and comprehensive national carbon taxes, no country yet has managed to explicitly link their tax schemes or dispersion of “allowances” (emission credits granted to firms) to their national targets for decarbonization.

Source: MIT Technology Review