Net zero has been receiving a lot of attention recently and countries all over the world are putting such great effort in reducing their carbon emissions. But what is net zero? Net zero primarily focuses on reducing greenhouse gas emissions caused by humans as close as possible to zero, with remaining emissions balanced by an equivalent amount of carbon removal from the atmosphere.
This Net Zero Readiness Index (NZRI) is KPMG's first report of its kind. It analyses the progress of 32 countries in reducing the greenhouse gas emissions that cause climate change, and assesses their preparedness and ability to achieve net zero emissions of these gases by 2050. While the main greenhouse gas is carbon dioxide, which makes work towards net zero carbon the central task, the Index also includes emissions of methane and nitrous oxide.
The NZRI top countries
The 32 participating countries in the NZRI have been grouped into two categories: the top-performing 25 countries in the race to net zero and seven countries to watch where there are significant opportunities to advance their decarbonisation efforts. Out of the 25 top-performing countries, six European countries – Norway, the UK, Sweden, Denmark, Germany and France – are the clear leaders. Each of these countries has already significantly cut emissions and each has announced a net zero target date. They are exploring innovative ways to solve their net zero problems and achieve their goals.
Australia's net zero target
Australia has not yet confirmed a national target date to achieve net zero and still relies heavily on coal. However, state governments, the private sector and the public are pushing to accelerate the transition with heavy investment in the development of clean hydrogen. In April 2021, Prime Minister Scott Morrison said the country would move to net zero “as quickly as possible and preferably by 2050,” but has not committed to this.1
“The interjection of climate policy into many other elements of foreign policy – including free trade agreements with the EU, the proliferation of proposed carbon border adjustment mechanisms or critical mineral cooperation strategies with the US – has raised the pressure on Canberra to make deeper, more credible climate commitments,” says Henning Gloystein, Director, Energy, Climate and Resources, Eurasia Group. “2021 will prove to be a pivotal year to understand if the EU, as well as countries like the US and UK, will use carrots or sticks to exhort further emission reductions from Australia.”
Agriculture, land use and forestry is currently the country’s second-largest sector for emissions. Meat and Livestock Australia, a trade body, has said that red meat production can be carbon neutral as early as 2030 through changes including feed and farm management.2 It has collaborated with the national science agency CSIRO and James Cook University to develop FutureFeed, a seaweed-based dietary supplement that could greatly reduce methane emissions from cows and other ruminants.3
All of Australia’s states plan to get at least half their electricity from renewables by 2030 as part of the targets each has set to reach Net Zero by 2050. New South Wales plans five renewable energy zones in rural areas that will use wind, solar, battery storage and high-voltage grids to replace capacity ahead of the closure of thermal power stations.4 Victoria’s recently-announced emissions target to halve emissions by 2030 incorporated the outcome of the negotiated closure of a major coal-fired power station. South Australia and Tasmania plan to generate all the electricity they need from renewables and sell surpluses.6
More key insights
Setting a net zero target is only the beginning
It is also critical for governments to clearly set out strategies and actions through which they intend to deliver their net zero ambitions. These include economy-wide mechanisms such as carbon taxes and emissions trading.
Harnessing the power of the financial markets
Government support for investors and banks increasingly factoring climate risk into their investment and planning decisions is key. Certain government measures, such as carbon pricing, have been proven effective.
Building public support is paramount
Governments sould continue gathering public support as opposition remains. Policy makers need to focus on avoiding unfairly disadvantaging low- and middle-income consumers and supporting workers in high carbon sectors.
Contact us
Contact KPMG climate change and sustainability leaders to learn more about the Net Zero Readiness Index.
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