Net Zero
Readiness
Report 2023
KPMG ESG

kpmg.com/NZRRContents

Quick reader guide

03

Foreword 

05

Key insights and observations

06

Global sector summaries

10

Economy11
Electricity14
Transport16
Industry20
Agriculture25

Country profiles
Australia 
Brazil 
Canada 
China Denmark 
France Germany 

2 | Net Zero Readiness Report 2023

28
29
32
34
37
40
43
45

India Ireland 
Italy Japan Mexico 
Netherlands 
New Zealand 
Norway 
Singapore South Africa South Korea Spain Sweden 
Switzerland 
United Arab Emirates 
United Kingdom United States of America 

48
51
54
57
60
62
64
67
70
73
76
78
80
82
84
87
90

About KPMG ESG93

KPMG contacts

94© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

Country profiles

About KPMG ESG

KPMG contacts

Quick reader

guide
The 2050 target date was proposed by a 2018
report of the United Nations Intergovernmental
Panel on Climate Change (UN IPCC), which said
that cutting net emissions by about 45 percent
from 2010 to 2030 then 100 percent by 2050
would limit temperature rises to 1.5 degrees
Celsius. It added that doing this would lessen thestill-substantial damage that global warming willcause over the coming decades.1

The Net Zero Readiness Report (NZRR) examines steps
taken by 24 countries as well as key economic sectors to
reduce the greenhouse gas emissions that cause climatechange. It also discusses their preparedness and ability toachieve net zero emissions of these gases by 2050.

3 | Net Zero Readiness Report 2023

Humanity has already caused warming ofapproximately 1.1 degrees Celsius. In a reportpublished in March 2023, UN IPCC said thatthe “pace and scale of what has been done sofar, and current plans, are insufficient to tackle
climate change”. Keeping warming to 1.5 degrees
Celsius will require “deep, rapid and sustained
greenhouse gas emissions reductions in all

sectors”. Global emissions should already befalling and will need to drop by nearly 50 percent
by 2030 to achieve this.2 While total global
emissions fell in 2020 because of the COVID-19
pandemic, they rebounded in 2021 to about thesame level as in 2019. Figures for carbon dioxide
only in 2022 suggest the year may have set a
new record high for emissions.3
Carbon dioxide, the most important greenhousegas, is released when fossil fuels are burnt
and work towards net zero is often called‘decarbonization’ to reflect this. Carbon dioxide
generated 74 percent of human-caused climatechange in 2016. Emissions of methane, which
contributed 17 percent, and nitrous oxide’s
6 percent are also included in the data used inthis report.4© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

QuickQuick reader
reader guide
guide

Foreword

Key insights and observations

The NZRR uses the World Resources Institute definition of
net zero. Primarily, this involves reducing greenhouse gas
emissions caused by humans as close as possible to zero.
Remaining emissions are balanced by an equivalent amount ofcarbon removal from the atmosphere, effectively neutralizing
humanity’s future impact on the world’s climate.5

About the NZRR
This report is based on interviews with KPMG national climatechange specialists in 24 countries as well as global KPMG
experts in a range of economic sectors. As well as providing
specific insights on countries and sectors, the report identifies
insights that are critical to understanding and overcoming thechallenges of the transition to net zero at a global level.
The national profiles include graphs showing how much
sectors contribute to national greenhouse gas emissions andhow much these emissions changed between 2005 and 2022,
both by sector and across the economy. The nationaland sector emissions data comes from the European
Commission’s Emissions Database for Global AtmosphericResearch (EDGAR).6

Global sector summaries

Country profiles

About KPMG ESG

They are mapped to the following EDGAR sectors, which are
based on UN IPCC greenhouse gas emissions categories:
energy excluding electricity (fuels sector); electricity;transport; buildings (small-scale non-industrial combustion);
industry (industrial combustion and industrial processes);
agriculture (livestock, agricultural soils and burning of crop
residues); and waste.7 Emissions data for France also
includes data for Monaco, while the data for Spain also
includes Andorra and Switzerland’s also includes data
for Liechtenstein.
The graphs on changes in emissions intensity are produced
using national gross domestic product for the economy
overall and for the transport, buildings and waste sectors.
Emissions intensity data for agriculture and industry isbased on the national outputs of those specific sectors.
Emissions intensity for energy except electricity is derived
from kilograms of carbon dioxide or equivalent per gigajouleof energy produced and for electricity from kilograms ofcarbon dioxide or equivalent per kilowatt hour. The graphs
exclude sectors that occupy small shares of respective

KPMG contacts

national emissions inventories. This threshold has been
considered as 3 percent. In addition, intensities for thefuels sector are excluded for countries that do not produce
significant amounts of fossil fuels. Ultimately countries canonly progress towards net zero by cutting their absoluteemissions but emissions intensity is included to recognize
progress on decarbonization of processes, particularly in fastgrowing economies.
The following abbreviations are used throughout the text: CO2(carbon dioxide); ESG (environmental, social and governance);
GDP (gross domestic product); GW (gigawatt); and ktCO2e,
MtCO2e or GtCO2e kilotonnes, (megatonnes or gigatonnesof CO2 equivalent, used to measure total greenhouse gas
emissions with scaling based on impact over a century forgases other than carbon dioxide). US dollar equivalents forother currencies are correct as of October 2023.

	‘Global Warming of 1.5°C: summary for policymakers’, Intergovernmental Panel on Climate Change, October 2018. h­t ­t­p­s://w­w ­w.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Headline-statements.pdf

1	‘Urgent climate action can secure a liveable future for all’, Intergovernmental Panel on Climate Change, 20 March 2023. h­t ­t­p­s://w­w ­w.ipcc.ch/2023/03/20/press-release-ar6-synthesis-report/2	‘CO2 emissions in 2022’, International Energy Agency, March 2023. h­t ­t­p­s://w­w ­w.iea.org/reports/co2-emissions-in-20223

	Hannah Ritchie and Max Roser, ‘By gas: how much does each contribute to total greenhouse gas emissions?’, Our World in Data. h­t ­t­p­s://ourworldindata.org/greenhouse-gas-emissions#by-gas-how-much-does-each-contribute-to-total-greenhouse-gas-emissions

4	Kelly Levin, Taryn Fransen, Clea Schumer, Chantal Davis and Sophie Boehm, ‘What does ‘net zero emissions’ mean? 8 common questions, answered’, World Resources Institute, updated March 2023. h­t ­t­p­s://w­w ­w.wri.org/insights/net-zero-ghg-emissionsquestions-answered

5	‘EDGAR — Emissions Database for Global Atmospheric Research’, European Commission Directorate-General for Joint Research Centre. h­t ­t­ps://e­d­g­ar.j­r­c.e­c.europa.eu/

6	Table 3 on p29, ‘GHG emissions of all world countries 2023’, European Commission Directorate-General for Joint Research Centre. h­t ­t­p­s://e­d­g­ar.jrc.ec.europa.eu/booklet/GHG_emissions_of_all_world_countries_booklet_2023report.pdf

7

4 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

Country profiles

About KPMG ESG

KPMG contacts

Foreword
KPMG published the Net Zero Readiness Index in 2021,1 a few
weeks before the COP26 UN climate change conference inGlasgow. The event resulted in 153 countries putting forward
new emissions targets for 2030 and more than 90 percent ofworld economic output and global emissions being coveredby net zero agreements. Attempts to phase out the useof coal, the single biggest contributor to climate change,
failed with weaker language to ‘phase down’ its use in the
final agreement. COP26’s chairman Alok Sharma said thatthe conference had kept alive the hope of keeping global
temperature increases within 1.5 degrees Celsius this century
but added “its pulse is weak.”
The last two years have seen many countries taking steps in
the right direction towards net zero, even if most have a long
way to go. Some have announced significant new policies tosupport decarbonization, including the REPowerEU in Europe.
Emissions trading schemes are expanding in several countries
and the EU is phasing in its Carbon Border Adjustment
Mechanism, an idea that other countries look likely to adopt.
The bloc is also introducing regulations to block the importof products linked to deforestation, showing how somejurisdictions plan to go further faster to meet net zero pledges.
Next year will likely see companies in many countries starting toreport on their climate change risks and plans.

Renewable energy production continues to expand rapidly
around the world, investment is rising fast and there areindications that it is becoming harder to raise funding for somefossil fuel projects. Renewable production and the reshaped
electricity grids it requires will inevitably impact on some local
environments, their biodiversity and communities. We aregoing to see more conflicts between the local and the global,
but if we want to reach net zero while keeping the lights on,
we have to build new power infrastructure somewhere.
These issues are among those discussed in this Net Zero
Readiness Report. It explores the readiness of 24 countries
based on interviews with local KPMG specialists. This
report also examines global trends in sectors that are key totackling climate change: the economy, electricity, transport,
manufacturing, buildings, infrastructure, oil and gas, agriculture
and the blue economy.

Mike Hayes
Climate Change andDecarbonization Leader, Global
Head of Renewable Energy
KPMG International

David Greenall
Global Managing Director,
Climate Risk,
Decarbonization & Resilience
KPMG International

Across these countries and sectors we can see plenty ofexamples of progress on decarbonization, including growthin electric vehicle sales, although from a low level in mostcountries. On behalf of all the KPMG specialists involved, we
hope this report can contribute to helping organizations quicken
their pace on the long walk towards net zero.

	‘Net Zero Readiness Index 2021’, KPMG International, October 2021. https://kpmg.com/xx/en/home/insights/2021/09/net-zero-readiness-index.html

1

5 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

Country profiles

About KPMG ESG

KPMG contacts

Key insights andobservations

6 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Key insights and observations
The Net Zero Readiness Report 2023 draws on
the expertise of KPMG specialists working at aninternational level as well as in each of the countries
covered. The following insights are based on theirobservations, with more details in the sector andcountry profiles.

of the world’s biggest emitting
1 	Several
countries have increased their net zeroambitions.
In February 2021 the US, the world’s second-largest producerof greenhouse gases by volume, formally rejoined the UN Paris
Agreement on climate change, and the Inflation Reduction Act
introduced major tax incentives and benefits for decarbonization
work with US$370 billion allocated to energy security andclimate programs.
China’s President Xi Jinping said in September 2020 that thecountry, the largest producer of greenhouse gases by volume,
would aim to reach peak carbon emissions before 2030.1 The
government has since published more detail on how it hopes toachieve this, including coal consumption starting to fall by 2030
and energy produced without fossil fuels rising to 20 percent
by 2025 and 25 percent by 2030. For the next few years China
sees electricity from coal as providing energy security, but
massive investments in renewable energy and infrastructure
indicate that it is looking beyond coal for the long term.

7 | Net Zero Readiness Report 2023

Global sector summaries

Country profiles

About KPMG ESG

Australia, which has among the highest levels of greenhousegas emissions per person, introduced new federal policies
that amount to a quantum leap in the country’s legislativearchitecture following a change of government in May 2022.
These include enshrining a 2050 net zero target date in law,
increasing interim reduction targets and supporting laws,
targets, regulations and initiatives. Canada, which has similarlyhigh per person emissions, included billions of dollars of
incentives for ‘clean economy’ investments in its 2023 federal
budget. Brazil, where per person emissions have fallen over thelast two decades but remain higher than the global average, isdiscussing the introduction of a regulated carbon market thatwould build on the progress the country has made to reduce
emissions from electricity production and road vehicles.
The EU includes some of the world’s most climate-conscious
countries which as a group have already made significant
progress on decarbonization. However, Russia’s invasion of
Ukraine in February 2022 and the resulting loss of Russian
natural gas from European markets caused the bloc to increase
its ambitions through the REPowerEU plan, which aims toaccelerate the implementation of renewable energy.

zero is weaving itself into the world’s
2 	Neteconomic systems.
Jurisdictions around the world have introduced emissions
trading systems that require those producing greenhouse gas
emissions to buy tradable allowances or permits, althoughmany apply only to some sectors. The EU, which establishedthe first such scheme in 2005, is in the process of extending it
to new sectors, including maritime shipping as well as reducing
the number of allowances and phasing out free allocations.
China is planning to extend its scheme, which covers only

KPMG contacts

power generation, to eight major industries and South Korea
will move to the next phase of its system in 2026, similarly
extending its coverage.
The EU is introducing its Carbon Border Adjustment
Mechanism from October 2023, which will eventually require
those importing some goods to pay an equivalent price for theiremissions to manufacturers based in the bloc. Australia andthe UK, which both have emissions trading, are considering
similar mechanisms. India may challenge the EU mechanismand South Africa is considering how it should respond, but overtime border adjustments look likely to reinforce the importanceof low carbon production as a source of competitive advantage.
Companies in many countries may soon provide more
information on climate change risks and plans under a rangeof new standards. These include a global baseline drawn
up by the International Sustainability Standards Board,which countries including the UK plan to implement. Other
jurisdictions are introducing regimes that build on this, including
the EU’s European Sustainability Reporting Standards, while
new disclosure rules are expected from the US Securities andExchange Commission and the Australian authorities.

of low carbon energy is growing
3 	Production
rapidly.
At present, fossil fuels — coal, natural gas and oil — provide
82 percent of the world’s primary energy but many of thedecarbonization policy initiatives of the last two years havefocused on extending low carbon energy. While China and India
are adding both fossil fuel and low carbon generation to meet
rapidly increasing demand, the International Energy Agency
predicts that clean energy will receive US$1.8 trillion (in prediction© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

Country profiles

About KPMG ESG

for spending on clean energy) of investment globally in 2023,
encouraged by incentives from jurisdictions including the US andthe EU, compared with US$1 trillion for coal, oil and gas.2
Countries can choose from a wide range of low carbon
technologies. Those with large areas of territorial waters areturning to offshore wind, which at present means fixed turbines
in shallow waters. New floating platforms under development
will allow wind power production in deeper seas, a particular
opportunity for Japan given the depths of many of its territorial
waters. Denmark is developing an artificial energy island as aconnection and maintenance point for offshore wind while Ireland
recently auctioned rights to construct turbines in its waters.

Nuclear power, which
while not a renewableenergy source produces
low carbon electricity
reliably, remains politicallyunacceptable in several
countries. Some havereconsidered this and areplanning new capacity,
given the way in which
nuclear power contributes
towards decarbonizationin countries such as
France.

8 | Net Zero Readiness Report 2023

India is developing significant amounts of solar generation fordomestic use. Some countries with plentiful sunlight and land arelooking to export it through interconnectors or pipelines for greenhydrogen made with solar energy, with plans for a 3,300 kilometerhydrogen-ready pipeline project between Italy and northern Africa
while Singapore has approved an interconnector involving morethan 1,000 kilometers of subsea cables to import renewableelectricity from Cambodia. There is renewed interest in nuclear
power, with the United Arab Emirates due to put the fourth andfinal unit of its new Barakah plant live shortly.
Scaling up production of renewable energy is regarded as one of
the most critical actions required to achieve the Paris Agreementtarget of limiting global temperature rises to 1.5 degrees Celsius.
However, at present most renewable energy developers face
several serious challenges that endanger the rapid growth ofrenewables this decade the target requires. These include
shortages of critical minerals, grid infrastructure, energy storage
facilities and skilled workers along with policy inhibitors andplanning bottlenecks. Tackling these requires the immediate

KPMG contacts

adoption of innovative approaches, given that not doing so will
have significant consequences for the global climate.
KPMG believes that a greater understanding of the practicalchallenges involved in scaling up renewable production isneeded if global climate ambitions for 2030 and beyond are to beachieved. In response, KPMG is undertaking a comprehensive
study to identify and understand the global, regional and practicalchallenges that hinder rapid deployment of renewable energy,
outline potential solutions and make specific recommendations
as to how to overcome the challenges.3

4

Increasing electric vehicle sales show how
rapidly some sectors can decarbonize.

The global sales share of electric cars tripled from 4.2 percent in2020 to 14 percent in 2022. It rose fivefold in China to 29 percent
while nearly 9 in 10 cars sold in Norway in 2022 were electric.4
Although from a low base and at levels that vary greatly bycountry, road transport is increasingly powered by electricity or,in the case of Brazil, ethanol biofuels produced from sugarcane orcorn. Other road vehicles, including commercial vehicles, buses
and trucks, are increasingly moving to batteries or green fuels.
Other forms of transport such as shipping and aviation are starting
to decarbonize by adopting green fuels, but the poor availability
and high cost of such fuels as well as much longer lifespans ofvessels and aircraft means change is taking place more slowly.
The growth in electric road vehicles is creating capacity issues
with several countries having problems increasing vehicle
charger numbers and local electricity grid capacity quickly
enough to support growing electric fleets. Charger shortages
could be addressed by ‘dynamic charging’ that recharges
vehicles in motion, which Sweden is planning to introduce
on thousands of kilometers of road. In many cases growth© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

in electric vehicles has required high levels of government
subsidy, which in Norway has involved tax breaks and priceincentives, although this has also helped the country develop
an ecosystem of start-ups in this field.

of low carbon power projects on local
5 	 Impacts
environments are causing ‘green on green’
conflicts.
Most kinds of power production have a local impact and thiscan be amplified for renewable generation sites in remoterural locations. Linking large numbers of remote sites while
distributing more power for vehicle charging, heating andother applications means increasing the scope and capacityof power grids. Both generation and infrastructure projects
can have significant impacts on local wildlife, biodiversity
and communities, leading to opposition and in some cases
work being blocked. National environmental rules can cause
similar clashes, with nitrogen emission permits required in the
Netherlands hindering the construction of green hydrogen andbiofuel plants in Rotterdam. However, several countries are
devoting considerable effort to reforming systems to addressthese concerns proactively, including through better siteplanning, community consultation and benefit sharing.

Global sector summaries

Country profiles

About KPMG ESG

Nuclear power, which while not a renewable energy source
produces low carbon electricity reliably, remains politicallyunacceptable in several countries. Some have reconsidered
this and are planning new capacity, given the way in which
nuclear power contributes towards decarbonization in countries
such as France.

6

Net zero backlashes occur when people
fear costs and bans rather than newopportunities.

While many people support work towards net zero in principle,
they may oppose measures that cost a lot of money orstop them doing something, particularly if it involves theirlivelihoods. The UK is struggling to move some of Europe’s
least efficient homes from natural gas heating to low carbon
alternatives, with few homeowners choosing to install heatpumps given the costs and difficulties involved, and its
government recently delayed its planned date to end sales of
new gas boilers. An attempt by the German government toban replacement natural gas boilers was significantly modified
after it ran into opposition. Switzerland is providing significant
financial support to help owners replace fossil fuel heatingin buildings, which are already of relatively high quality byinternational standards.

KPMG contacts

Agriculture is experiencing acute conflicts over how to reduce
emissions, with some countries flagging the need for livestock
farming to share in decarbonization efforts. Attempts in
New Zealand to agree a way to manage and reduce on-farmemissions between government and representatives of farmers
and growers, which would be a powerful way to incentivize
innovation, are yet to succeed. There are ways in which
agriculture can reduce emissions, such as supplementing
livestock diets to reduce methane, turning effluent into biofuels
and sequestering carbon. The last also represents a ‘blue
economy’ opportunity for coastal areas, including small island
economies that are particularly threatened by climate change,
through expanding areas of mangroves and other carbon-richecosystems.

	China national profile, ‘Net Zero Readiness Index 2021’, KPMG International.
	‘Executive summary, ‘Net Zero Roadmap: A Global Pathway to Keep the 1.5°C Goal in Reach’, International Energy Agency, September 2023. h­t ­t­p­s://w­w ­w.iea.org/reports/net-zero-roadmap-a-global-pathway-to-keep-the-15-0c-goal-in-reach/executive-summary3	‘Turning the tide in scaling renewables’, KPMG International, September 2023. https://assets.kpmg.com/content/dam/kpmg/xx/images/2023/09/scaling-renewables-client-survey-landscape.pdf
4‘Global EV Data Explorer’, International Energy Agency. h­t ­t­p­s://w­w ­w.iea.org/data-and-statistics/data-tools/global-ev-data-explorer
1
2

9 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

Country profiles

About KPMG ESG

KPMG contacts

Global sector
summaries

10 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

EconomyThere are several factors that look likely to constrain
investments by governments and businesses on
decarbonization over the next couple of years.
Many governments worldwide increased spending sharply
on healthcare and economic support for individuals andbusinesses during the COVID-19 pandemic. Following theRussian government’s invasion of Ukraine in February 2022
and subsequent increases in the price of natural gas, many
European countries spent heavily to subsidize householdenergy bills.1
Such support has led many governments to borrow more,with global public debt increasing from 84 percent of grossdomestic product in 2019 to 92 percent in 2022 according
to the International Monetary Fund.2 Adding to this, risinginterest rates have further increased the cost of servicing debts
for governments. “It leaves less room for them to spend on
meeting net zero targets,” says Yael Selfin, Chief Economist,
KPMG in the UK.
In addition, economic growth is relatively weak in many
countries, constraining government tax revenues and putting
downward pressure on profits for businesses in some sectors,
which make them less able to pursue green investments.
Higher interest rates also increase the cost of borrowing bycompanies to fund such investments. Finally, elections due
in several major economies over the next two years add
to the policy uncertainty as they could lead to changes inenvironmental policies, making companies more likely to wait
before embarking on large projects.

11 | Net Zero Readiness Report 2023

Such support has led
many governments
to borrow more,with global public
debt increasing from
84 percent of grossdomestic product in2019 to 92 percent in
2022 according to theInternational Monetary
Fund. Adding to this,rising interest rates havefurther increased thecost of servicing debts
for governments.

Carbon border adjustments
Many jurisdictions have set up emissions trading systems (ETS),
also known as cap-and-trade systems, that limit or cap the total
emissions that certain companies or industries are allowed
to emit annually. The amounts are covered by tradeable
allowances or permits, which allow the holder to emit a
specified volume of greenhouse gas emissions. This sets a
price on carbon by requiring companies to buy permits thatcover the volume of emissions emitted during a given period orface substantial penalties.

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

The schemes aim to reduce emissions by having a limited
number of permits available that are gradually reduced,
increasing the carbon price over time. Such schemes, which
typically start by covering just the largest producers ofgreenhouse gases, provide a long-term financial justification
for cutting emissions while allowing companies to choose
how they do this. However, due to increased costs fromboth emissions trading and decarbonization efforts, local
companies can potentially be undercut on price by importersfrom jurisdictions that do not have equivalent carbon pricing
systems, a problem typically referred to as ‘carbon leakage’.
The EU established the world’s first ETS in 2005, which now
covers around 15,000 stationary installations producing some
36 percent of the bloc’s greenhouse gas emissions andincluding non-EU countries Iceland, Liechtenstein and
Norway.3 The EU is strengthening EU ETS by extending its
scope to additional sectors, phasing out free allowances andaccelerating the reduction of the number of allowances incirculation, but all this heightens the risks of carbon leakage.
To address this risk the EU has introduced the world’s firstcarbon border adjustment mechanism (CBAM), which will
require affected companies importing specified goods
into the EU to buy certificates with prices based on the
EU ETS weekly auction price adjusted for any recognizedmandatory carbon price effectively paid in the country oforigin. The intention is that importers will pay the same forthe carbon emissions required to produce goods as producers
within the EU, creating a level playing field and preventing
carbon leakage.
EU CBAM’s transitional phase, starting on 1 October 2023,
requires importers to report on emissions embedded in
specified goods in a limited number of carbon intensive sectors:

12 | Net Zero Readiness Report 2023

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

cement, iron and steel, aluminum, fertilizers, electricity andhydrogen.4 Full implementation of the mechanism, under which
importers will have to buy CBAM certificates, is linked to thephasing out of free allowances currently provided under EU ETS
and is planned to start on 1 January 2026. Before this the EU
will assess the mechanism’s functioning with a view to extend
its scope to other carbon-intensive sectors at risk of carbon
leakage. The intention is that all goods and sectors covered by
EU ETS will also be covered by EU CBAM by 2030.5

products affect competitiveness,” says Nicole de Jager,
Senior Tax Manager — Global ESG Tax, KPMG International.
“As other countries explore the potential for implementationof their own CBAMs, it is clear that the production of greener
products is no longer limited to sustainability departments or
public perception management. The carbon content of goods isbeginning to feature as a strategic business decision, one that
impacts cross-border trade and companies’ future growth andprospects of surviving.”

Other countries are exploring the implementation of their own
CBAMs. In March 2023 the UK, which was part of EU ETS
until it left the bloc and set up its own similar scheme, said it
would consult on proposals for a UK CBAM to be introduced
from 2026 at the earliest. KPMG in the UK says the British
proposal has similarities with EU CBAM but that businesses
could still have to comply with two distinct regimes.6

Climate and sustainability reporting

Businesses in other countries with carbon-intensive exports
may be faced with significantly increased export costs tomarkets covered by CBAMs, if importers choose to pass
the cost of purchasing certificates on to suppliers. At the
COP27 UN climate change conference in November 2022
the governments of Brazil, South Africa, India and China
published a joint statement saying that “unilateral measuresand discriminatory practices, such as carbon border taxes, that
could result in market distortion and aggravate the trust deficit
amongst parties, must be avoided”.7 In May India indicatedthat it intends to challenge EU CBAM at the World Trade
Organization.8 South Africa’s government is considering how
to respond, although KPMG in South Africa says some large
companies are already working on the issue.9“The introduction of the EU’s CBAM represents a new eraof global trade — one where the embedded emissions ofCompanies around the world will soon need to provide more
information on how they will be affected by climate change andwhat they are doing to tackle it. The International Sustainability
Standards Board (ISSB) produced what is intended as a global
baseline for reporting on sustainability, drawing on the work of
the Task Force on Climate-related Financial Disclosures (TCFD),
which countries including the UK have indicated they will
incorporate into national rules. Other jurisdictions including the
EU and the US are introducing their own regimes that build on
the ISSB baseline with Japan planning to do likewise.
The ISSB, EU and US all intend to improve disclosures forinvestors on climate change, with the EU’s draft standards
also covering other stakeholders. Both the EU and US plan tophase in such reporting from the 2024 financial year for reports
published in 2025. The ISSB standards will be available for2024 financial year reports although the timing will be a matterfor each jurisdiction.10
Many large companies already publish such material, withresearch by KPMG in 2022 finding that 96 percent of theG250 group of the world’s 250 biggest companies report onsustainability issues. The survey found that TCFD standards© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

were used by 61 percent of the G250, up from 37 percent
in the previous survey two years earlier, with nearly threequarters of reports including carbon targets.11“Effective ESG reporting will not happen overnight andintegrating ESG into corporate strategy and operations is a
substantial change management exercise,” says Dr Jan-Hendrik
Gnändiger, Global ESG Reporting Lead and Partner, KPMG in
Germany. “Senior executives should waste no time in hastening
their company’s transition to a position where non-financial
reporting holds the same importance as financial reporting —and be prepared to obtain assurance.”

ESG assurance
The release of the European Sustainability Reporting Standards
in the EU and the first two ISSB standards represents animportant milestone, the establishment of globally acceptedframeworks that companies can adopt and adhere to while also

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

providing a basis for assurance measures. This offers companies
a structured path to follow and a robust system for validation.
ESG assurance has emerged as a crucial mechanism foroffering credible and unbiased verification of a company’s
progress towards achieving its net zero objectives. As
companies increasingly set ambitious emission reduction
targets, the precision and openness of their reported data
have taken on significant importance. KPMG’s ESG Assurance
Maturity Index, focusing on companies with an averagerevenue of US$15.6 billion, found that only 23 percent haveeffectively documented, tested and implemented processes
and controls for their environmental data, indicating theongoing challenges many face in this area.12

KPMG contacts

balances that will drive meaningful change and contribute to amore sustainable global economy. “In the journey to net zero,
ESG assurance serves to enhance the public trust over ESGrelated data, and is a strategic driver enhancing transparency,
accountability and authenticity, propelling companies toward
meaningful and impactful sustainability outcomes,” says Mike
Shannon, Global Head of ESG Assurance, KPMG International.

As reporting standards are phased in over the coming years,
ESG assurance will play a vital role in bridging the gap between
intention and impact and providing necessary checks and	‘Which countries are doing the most to tackle energy bills?’, BBC News, 21 December 2022. h­t­t­p­s://w­w­w.bbc.com/news/61522123

1	‘2023 Fiscal monitor’, International Monetary Fund, April 2023. h­t­t­p­s://w­w­w.imf.org/en/Publications/FM/Issues/2023/04/03/fiscal-monitor-april-2023

2

	‘EU Emissions Trading System (ETS) data viewer’, European Environment Agency, 27 July 2023. h­t­t­p­s://w­w­w.eea.europa.eu/data-and-maps/dashboards/emissions-trading-viewer-1 and ‘The EU Emissions Trading System in 2021: trends and projections’, European Environment
Agency, updated 7 February 2023. h­t­t­p­s://w­w­w.eea.europa.eu/publications/the-eu-emissions-trading-system-2

3	‘Carbon Border Adjustment Mechanism’, European Commission. h­t­t­p­s://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en4	Merijn Betjes, ‘Update Carbon Border Adjustment Mechanism (CBAM): provisional agreement reached’, KPMG Meijburg in the Netherlands, 14 December 2022. h­t­t­p­s://meijburg.com/news/update-carbon-border-adjustment-mechanism-cbam-provisional-agreement-reached5	Carol Newham, ‘Government announces UK CBAM consultation’, KPMG in the UK, 17 April 2023. https://kpmg.com/uk/en/home/insights/2023/04/tmd-government-announces-uk-cbam-consultation.html

6	‘BASIC Ministerial joint statement at the UNFCCC’s Sharm el-Sheikh Climate Change Conference’, South Africa Department of Forestry, Fisheries and the Environment, 15 November 2022. h­t­t­p­s://w­w­w.dffe.gov.za/mediarelease/basicministerialmeeting_cop27egypt2022

7

	Manoj Kumar and Neha Arora, ‘India plans to challenge EU carbon tax at WTO’, Reuters, 16 May 2023. h­t­t­p­s://w­w­w.reuters.com/world/india/india-plans-challenge-eu-carbon-tax-wto-sources-2023-05-16/8	See South Africa profile.

9	‘Comparing sustainability reporting proposals’, KPMG International, April 2023. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2022/06/comparing-sustainability-reporting-proposals-talkbook.pdf

10	‘Big shifts, small steps: Survey of Sustainability Reporting 2022 executive summary’, KPMG International, October 2022. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2022/10/ssr-executive-summary-small-steps-big-shifts.pdf

11	‘Road to readiness: ESG Assurance Maturity Index’, KPMG International, September 2023. https://kpmg.com/xx/en/home/insights/2023/09/road-to-readiness.html

12

13 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

Electricity
The last two years have seen renewable electricity used torespond to economic sanctions as well as decarbonization
targets. The Russian government’s invasion of Ukraine in
February 2022 and the resulting need to replace supplies of
Russian natural gas led the European Commission to accelerate
and enhance existing plans to extend renewable generation,
through its rapidly developed REPowerEU plan outlined in
March 2022 and published in May of that year. In a recent
assessment the commission says that installation of windand solar generation both rose by nearly 50 percent in 2022
compared with 2021 while use of natural gas (for heating as wellas electricity generation) was 18 percent lower between August2022 and March 2023 compared with the previous five-year
average for those months.1
The EU’s use of renewables to tackle a potential energy
crisis was an important moment according to Mike Hayes,
Climate Change and Decarbonization Leader, Global Head ofRenewable Energy, KPMG International: “It put decarbonization
solutions and particularly renewable energy at the center of theenergy debate,” he says. However, the sharp rises in energy
costs resulting from the removal of Russian gas have also
highlighted the energy trilemma involved in balancing price,
availability and decarbonization.
Globally, spending to develop low carbon energy is now
significantly higher than that for fossil fuels. The International
Energy Agency predicts that clean energy will receive
US$1.8 trillion (in prediction for spending on clean energy) ofinvestment in 2023 compared with US$1 trillion for coal, gas andoil, with this year seeing more investment in solar energy than oil

14 | Net Zero Readiness Report 2023

for the first time.2 However, the shift in investment is yet to makemuch of an impact on the overall mix of energy sources used togenerate electricity. In 2022, renewables, hydroelectricity andnuclear combined generated 38 percent of the world’s electricity
according to annual data published by the Energy Institute, aprofessional membership body, but coal remained the single
biggest source producing 35 percent with natural gas second at
23 percent.3

In a recent assessment
the commission says that
installation of wind andsolar generation bothrose by nearly 50 percent
in 2022 compared with
2021 while use of naturalgas (for heating as wellas electricity generation)
was 18 percent lower
between August2022 and March 2023
compared with theprevious five-year
average for thosemonths.

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

While some countries are replacing coal with low carbon
sources, fast-growing economies including China and India areadding both fossil fuel and low carbon generation to try to meet
rapidly increasing demand. Anish De, Global Head of Energy,
Natural Resources and Chemicals, KPMG in India, says India
is developing more generation from nuclear, hydrogen andsolar as well as storage capacity. “But that doesn’t change thebalance that much,” he says, as the country has also increased
coal generation rapidly over recent years.4

Offshore wind, solar and nuclear
Among renewable technologies, offshore wind and solar haveparticularly strong potential over the next few years. Offshore
wind is less constrained than onshore developments, whichhave to compete with other land uses and planning regulations.
Floating platform technology currently under development willallow turbines to be installed in deeper seas than those fixed
to the seabed, opening new areas of ocean for generation.
Countries with large areas of territorial waters such as Canada,
China, France, Ireland, Japan, the UK and the US are among
those developing offshore wind.
Meanwhile, solar power looks likely to become an increasingly
important export for countries with enough sunlight and land
to produce it, with those in the Middle East and north Africa

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

having massive potential to use new interconnector cables
to sell electricity to Europe. Several countries are showing
renewed interest in nuclear generation, both conventional large
plants and new small modular reactors (SMRs), given this does
not produce greenhouse gas emissions from production.5

production of components including solar panels, as well as
difficulties sourcing critical minerals. While renewable energy
projects can now be established with well-tested development
processes that use reliable technologies to generate electricity
at reasonable cost, there are still barriers to overcome.

Grids and other challenges

Government policies look likely to continue to encourage
greater adoption of renewable electricity generation, including
the US Inflation Reduction Act, REPowerEU and similar policies
elsewhere. Financial incentives introduced by governments
such as carbon taxes and levies including the EU’s Carbon
Border Adjustment Mechanism incentivize companies tomake greater use of low carbon electricity and individuals
will similarly be influenced by tax breaks and regulations onelectrification of vehicles and in some countries home heating,although some may cause political controversy. “We are going
to see a lot more policy measures to help drive us towards lowcarbon electrification,” says Hayes.

Connecting renewable generation to consumers typicallyrequires the re-engineering of electricity grids, most of whichwere designed to distribute predictable levels of electricity
from a few large power plants rather than handle lots of farflung sites with intermittent production. Many operators arebuilding new power lines, connection points and substations aswell as changing the way they manage their grids or have plansto do so.
New renewable generation may be essential in decarbonizing
economies and slowing climate change, but it often causes
impacts on local environments, wildlife and biodiversity. Some
projects are also being opposed by those living nearby including
indigenous people, such as Sámi communities in Norway andSweden who oppose wind turbines as they affect their reindeer.
Projects can also be delayed by overstretched supply chains,
although several countries are making efforts to develop local	‘REPowerEU — one year on’, European Commission, May 2023. h­t ­t­p­s://energy.ec.europa.eu/topics/markets-and-consumers/actions-and-measures-energy-prices/repowereu-one-year_en

1

	Executive summary, ‘Net Zero Roadmap: A Global Pathway to Keep the 1.5°C Goal in Reach’, International Energy Agency, September 2023. h­t ­t­p­s://w­w ­w.iea.org/reports/net-zero-roadmap-a-global-pathway-to-keep-the-15-0c-goal-in-reach/executive-summary,‘Clean energy investment is extending its lead over fossil fuels, boosted by energy security strengths’, International Energy Agency, 25 May 2023. https://www.iea.org/news/clean-energy-investment-is-extending-its-lead-over-fossil-fuels-boosted-byenergysecurity-strengths2	‘Electricity generation by fuel’, Statistical Review of World Energy 2023, Energy Institute. h­t ­t­p­s://w­w ­w.energyinst.org/statistical-review

3	‘India’, International Energy Agency. h­t­t­p­s://w ­w ­w.iea.org/countries/india

4	Kevin Masters, ‘How small modular nuclear reactors can help decarbonize power grids’, KPMG in the UK, January 2023. https://kpmg.com/xx/en/home/insights/2023/01/how-small-modular-nuclear-reactors-can-help-decarbonize.html

5

15 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

Transport
The automotive industry continues its transition from internal
combustion engines to electric vehicles, although the pace ofadoption varies widely from country to country. The worldwide
sales share of electric cars tripled from 4.2 percent of sales in2020 to 14 percent in 2022 according to the International Energy
Agency (IEA). Electric cars’ share of the EU market doubled
over the same period to 21 percent and rose fivefold in China to
29 percent. In Norway, which has led the world in their adoption,
88 percent of car sales in 2022 were of electric models.1

recovery of energy from braking and use of solar panels
on vehicles could increase battery ranges. Meanwhile, theintroduction of inductive charging that does not need a cable
could make it more convenient, with Sweden planning toequip thousands of kilometers of road with this technology
over the next two decades.4 “In geographically large
environments or where there is a culture of driving such as in
the US, people need confidence in their ability to recharge theirvehicles,” he says. “Technology can sort some of this out.”

The IEA says that two and three-wheeler vehicles, popularin many emerging and developing economies, are alreadyhighly electrified with more than half of India’s three-wheeler
registrations in 2022 being for electric vehicles. Sales ofelectric light commercial vehicles and buses are increasing
rapidly and manufacturers are bringing more electric heavyduty models to market.2

However, he adds that electric vehicles rely on the availabilityof a wider range and greater quantity of critical minerals thatare needed for internal combustion engine ones, with a typicalelectrical model requiring 53 kilograms of copper compared with
22 kilograms in a conventional one according to the IEA.5 Someof these minerals are mined in only a few locations globally andChina has 90 percent of the current processing capacity.

However, growth in some countries may be constrained by
the ability of charging infrastructure to keep up. Problems
include incompatible charging systems between countries andwithin them and capacity limitations of electrical grids. Several
European governments have reduced financial support for
those buying electric vehicles and their price has not decreased
to compensate for this. Research in December 2022 for KPMG
with automotive executives in Europe shows that they had
lower expectations of future growth than in 2021.3
Jonathon Peacock, Global Oil & Gas Leader, KPMG in
Australia, says that better battery performance, improved

16 | Net Zero Readiness Report 2023

As well as changing the technology of private vehicles,
countries can cut emissions by encouraging people to use
shared alternatives. Public transport services, which typicallyhave much lower levels of emissions per passenger kilometer
than cars, saw sharp drops in use during the COVID-19
pandemic and data indicates many systems have not yet
recovered. Passenger rail kilometers traveled in the EU fell
from 414 billion in 2019 to 224 billion in 2020 and recovered
only slightly to 261 billion in 2021, a drop of more than a third
between 2019 and 2021.6
Use of tram and light rail systems globally followed a similar
pattern, falling from around 14.8 billion trips in 2019 to around9 billion in 2020 then remaining below 10 billion in 2021.7
Journeys on Transport for London’s bus, Underground, tram
and rail services were around 10 percent lower in the second
quarter of 2023 than the same period in 2019.8‘Global EV Data Explorer’, International Energy Agency. h­t ­t­p­s://w ­w ­w.iea.org/data-and-statistics/data-tools/global-ev-data-explorer‘Executive summary’, Global EV Outlook 2023, International Energy Agency. h­t ­t­p­s://w ­w ­w.iea.org/reports/global-ev-outlook-2023/executive-summary3
	‘Charging ahead: addressing the EV cost hurdle’, KPMG International, August 2023. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/07/charging-ahead-addressingthe-ev-cost-hurdle.pdf
4
See Sweden profile.
5	‘Minerals used in electric cars compared to conventional cars’, International Energy Agency, 5 May 2021. h­t ­t­p­s://w ­w ­w.iea.org/data-and-statistics/charts/minerals-used-inelectric-cars-compared-to-conventional-cars
6	‘Railway passenger transport statistics - quarterly and annual data’, Eurostat, November 2022. h­t ­t­p­s://e­c.europa.eu/eurostat/statistics-explained/index.php?title=Railway_
passenger_transport_statistics_-_quarterly_and_annual_data
7	‘The global tram and light rail landscape 2019-21’, UITP (International Association of Public Transport), May 2023. h­t ­t­p­s://c­m­­s.uitp.org/wp/wp-content/uploads/2023/06/
Statistics_Brief_-LTR-update.pdf
8	Comparison of data for 12 weeks from 1 April for 2019 and 2023 (reporting periods 1-3) for all transport types, ‘Public transport journeys by type of transport’, Transport for
London, 24 June 2023. h­t ­t­p­s://d­a­t­a.london.gov.uk/dataset/public-transport-journeys-type-transport

1
2© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

Aviation
As a sector, aviation has long timelines. For example, given a
successful focus on safety, the sector is cautious on changing
regulations and processes, while aircraft built now are still likely
to be in service in the 2040s. “2050 as the net zero target
is pretty much tomorrow for this sector,” says Christopher
Brown, Partner, Aviation Strategy, KPMG in Ireland.
Airlines are mostly reliant on manufacturers, air traffic control
and fuel producers in reducing their emissions. However, there
are some options they can take. The biggest ‘quick win’ is to
reduce the formation of condensation trails or contrails, which
research suggests may contribute to comparable amounts ofatmospheric warming as the carbon dioxide from fuel.1 UAE
airline Etihad is introducing technology that advises pilots
on route and altitude changes that avoid conditions wherecontrails are more likely to form.2
Manufacturers are developing electric-powered aircraft but
the weight of batteries means these are likely to serve only on
short flights for the foreseeable future. Aviation’s plans to reachnet zero by 2050, adopted by the International Civil Aviation
Organization (ICAO) in October 2022, rest primarily on adopting
sustainable aviation fuel (SAF). The organization says SAF willcontribute 65 percent of decarbonization by 2050 with newtechnologies including hydrogen and electric engines, offsets
and carbon capture making up most of the rest.3 However,this is likely to be challenging for a number of reasons, andan analysis of the energy sector’s ramp up of planned SAF
production suggests this target is already at risk.
SAF, which is compatible with existing aircraft engines andairport infrastructure, is made either from biofuels or synthetic
e-fuels, chemical clones of kerosene produced with low carbon

17 | Net Zero Readiness Report 2023

Manufacturers aredeveloping electricpowered aircraft but
the weight of batteriesmeans these arelikely to serve only on
short flights for theforeseeable future.
Aviation’s plans toreach net zero by
2050, adopted by theInternational Civil
Aviation Organization(ICAO) in October 2022,
rest primarily on
adopting sustainableaviation fuel (SAF).

electricity. E-fuels look easier to produce on a large scale, as
unlike biofuels they are not constrained by cropland and organic
waste availability, although they would require significant
amounts of low carbon electricity that most grids do not haveto spare at present.4
SAF is typically several times as expensive as the kerosene
currently used by aircraft, meaning a total switch would
significantly add to ticket prices. Recent market research for
KPMG has found that customers, while not prioritizing a flight’s© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

carbon environmental footprint in their purchase decisions, will
tolerate increases in fares if these are a fair reflection of theextra cost of SAF.5
Moving entirely to SAFs looks technically feasible but apartfrom the cost, doing so by 2050 would require huge increases
in production: “It looks like a task that would be exceptionallydifficult to deliver on,” says Malcolm Ramsay, Global Headof Aviation, KPMG in Singapore. He adds that governments
could support this by providing incentives for fuel producers toallocate capital to SAF production.

	‘Contrails: How tweaking flight plans can help the climate’, BBC News, 22 October
2021. h­t­t­p­s://w ­w ­w.bbc.com/news/business-58769351

1	‘Etihad Airways and SATAVIA collaborate to implement contrail prevention for the
first time on an Atlantic crossing’, Etihad Aviation Group, 10 November 2022. h­t ­t­p­s://w ­w ­w.etihadaviationgroup.com/en-ae/newsroom/etihad-airways-and-sataviacollaborate-to-implement-contrail-prevention-for-the-first-time-on-an-atlanticcrossing

2	‘Developing sustainable aviation fuel (SAF)’, International Civil Aviation
Organization. h­t ­t­p­s://w ­w ­w.iata.org/en/programs/environment/sustainableaviation-fuels/3	‘Sustainable aviation fuel’, KPMG in Ireland, November 2022. https://kpmg.com/
ie/en/home/insights/2022/11/sustainable-aviation-fuel.html

4	‘Who pays for aviation’s decarbonization?’, KPMG in Ireland, August 2023.
https://kpmg.com/ie/en/home/insights/2023/08/aviation-2030-series-who-paysfor-aviations-decarbonization-fs-aviation.html

5

18 | Net Zero Readiness Report 2023

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

Logistics
The movement of goods may be less visible than moving
people but it has nearly as great an impact on climate change.
In 2018 road freight vehicles emitted 2.4GtCO2 globallycompared with passenger road vehicles that produced
3.6GtCO2 according to the International Energy Agency. The
organization expected that annual road freight emissions would
decline by just 0.1GtCO2 by 2030, compared with 0.5GtCO2
less from passenger road vehicles as the latter shift toelectricity.1 The weight of batteries and longer average journey
distances make trucks harder to electrify than cars althoughsome vehicle makers have developed electric models.2
Logistics is a low-margin sector where decisions are usuallybased on price, making it difficult for operators to invest
in decarbonization unless governments require this. Somesuch legislation is coming in Europe, requiring companies
to collect and publish data on their emissions under the
Corporate Sustainability Reporting Directive that came into
force in January, as well as a proposed directive on corporate
sustainability due diligence. The latter would initially oblige
companies turning over more than 300 million euros (EUR)(US$318 million) to ensure their business models and

KPMG contacts

strategies are compatible with the Paris Agreement on climatechange and would be phased in over three years.3 International
logistics providers need to comply with EU directives tooperate within Europe while other jurisdictions including the US
are introducing their own standards for corporate reporting.4
Collecting emissions data will not be easy for many logistics
providers given high levels of subcontracting in what is ahighly fragmented industry. Dr Steffen Wagner, Global Head,
Transport & Leisure, KPMG International, says that accurate
information can help companies to reduce their emissions andcosts, such as by making use of empty trucks. Around one-fifthof the EU’s road freight kilometers in 2020 were used by empty
vehicles with further unused capacity in partially empty ones.5“If trucking companies collaborate, they can better use their
existing resources and reduce the carbon footprint of individual
goods,” says Wagner, adding that there is a trend towards
using online platforms to match companies that have sparecapacity with those requiring it. Logistics providers can also
cut emissions by installing rooftop solar panels on warehouses
and using electrically powered robots within them, as well as
making greater use of road-to-rail facilities that transfer freightto railways for parts of journeys.

	‘Transport sector CO2 emissions by mode in the Sustainable Development Scenario, 2000-2030’, International Energy Agency, updated 27 May 2019. h­t ­t­ps://w­w ­w.iea.org/
data-and-statistics/charts/transport-sector-co2-emissions-by-mode-in-the-sustainable-development-scenario-2000-2030

1	See Sweden profile.

2	‘The EU’s Corporate Sustainability Due Diligence Directive’, February 2023, KPMG International. https://kpmg.com/xx/en/home/insights/2023/02/the-eu-corporatesustainability-due-diligence-directive.html

3	See section on climate and sustainability reporting.

4	‘A fifth of road freight kilometres by empty vehicles’, Eurostat, 10 December 2021. h­t ­t­p­s://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-20211210-1

5© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Shipping
Like aviation shipping is a sector that changes slowly, partly
due to difficulties regulating an inherently international businessand partly as vessels remain in service for several decades.
There are regulatory changes taking place, including the EU
phasing in the use of its emissions trading system in maritime
transport between 2024 and 2027 for all large ships that use
the bloc’s ports regardless of flag of registration. This will likely
require vessel operators to buy EU ETS allowances covering allof the greenhouse gas emissions generated while in EU ports
and on voyages between them, as well as half of the emissions
from journeys that either start or end in the EU.1
Monique Giese, Global Head of Shipping, KPMG International,says that while EU ETS offers a regional solution, theInternational Maritime Organization (IMO) is likely to holdthe key to a global one. The IMO 2020 rule to cut coastal
air pollution from sulfur in fuel oil could provide a model for
reducing the sector’s greenhouse gas emissions. It was
introduced through an amendment to the International
Convention for the Prevention of Pollution from Ships andhas led to vessels adopting very low sulfur fuels or installingexhaust gas cleaning systems.2

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

A July meeting of the IMO’s member states in London adopted
a net zero strategy that includes development of a pricing
mechanism for maritime emissions over the next few years.3
Giese adds that the IMO 2020 sulfur rule shows a challenge tothis in that countries may introduce different levels of penalties,
with Singapore threatening two-year prison sentences andfines of up to 10,000 Singapore dollars (SGD) (US$7,340) for
using non-compliant fuel while other countries have muchsmaller fines.4
Batteries can power vessels for short journeys making themsuitable for some ferries, but long-distance shipping will require
low carbon fuels. The world’s largest international shipping
companies, known as liners, are making different choices overwhich fuels to introduce. Denmark-based Maersk has ordered
19 vessels that run on green methanol.5 Swiss-headquartered
MSC already uses biofuels as part of blended fuels and isinterested in developing use of hydrogen.6 In February 2023
Germany-based Hapag-Lloyd announced it will work with
UK-headquartered energy group Shell on developing use ofbiomethane and liquified e-methane.7 Countries in Asia areahead of the rest of the world in building infrastructure tosupply ships with liquid natural gas (LNG), a lower emission
fossil fuel.

KPMG contacts

Giese says that liners are choosing different types of low
carbon fuel as supplies of each are constrained, but thisfragmentation could make it difficult for energy companies tosupply all of them at large scales. “It is getting better, but there
is still a disconnect between energy companies and the liners,”
she says, adding that many in the shipping industry would
welcome further regulation in this area.
It will take several decades for shipping to move to low carbon
fuels as vessels are typically in service for 20 to 30 years andoften cannot be refitted to use alternative fuels. Increasing
efficiency through better collaboration and greater transparency
offers quicker benefits. These were the aims of TradeLens,a digital platform designed to support data sharing between
organizations involved in supply chains, but in November 2022
its founders Maersk and US-headquartered technology provider
IBM announced its closure.8 Giese says TradeLens suffered froma lack of trust between organizations and regulatory concerns
over sharing data. “But the idea was brilliant and I would guessthat we will see something similar in the near future,” she says.

	‘Reducing emissions from the shipping sector’, European Commission. h­t ­t­p­s://climate.ec.europa.eu/eu-action/transport/reducing-emissions-shipping-sector_en	‘IMO 2020 — cutting sulphur oxide emissions’, International Maritime Organization. h­t ­t­p­s://w­w ­w.imo.org/en/MediaCentre/HotTopics/Pages/Sulphur-2020.aspx3	‘International Maritime Organization (IMO) adopts revised strategy to reduce greenhouse gas emissions from international shipping’, International Maritime Organization, 7 July 2023. h­t ­t­p­s://w­w ­w.imo.org/en/MediaCentre/PressBriefings/pages/Revised-GHGreduction-strategy-for-global-shipping-adopted-.aspx
4	‘In Singapore, high-sulfur fuel could lead to prison’, Maritime Executive, 3 April 2019. h­t ­t­p­s://w­w ­w.maritime-executive.com/article/in-singapore-high-sulfur-fuel-could-lead-to-prison
5	See Denmark profile.
6	Bud Darr, ‘Roadmap to a zero-carbon future’, MSC, 2 March 2021. h­t ­t­p­s://w­w ­w.msc.com/en/newsroom/stories/roadmap-to-a-zero-carbon-future7	‘Shell and Hapag-Lloyd collaborate on marine fuel decarbonisation and sign multi-year LNG supply agreement’, Hapag-Lloyd, 27 February 2023. h­t ­t­p­s://w­w ­w.hapag-lloyd.com/en/company/press/releases/2023/02/shell-and-hapag-lloyd-collaborate-on-marine-fueldecarbonisation.html
8	Jacob Gronholt-Pedersen, ‘Maersk, IBM discontinue shipping blockchain platform’, Reuters, 29 November 2022. h­t ­t­p­s://w­w ­w.reuters.com/technology/maersk-ibm-discontinue-shipping-blockchain-platform-2022-11-29/
1
2

19 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

Industry
Industrial manufacturing
Industry is historically a major producer of greenhouse gas
emissions, meaning that industrial decarbonization is a leverthat can make a significant impact in efforts to reach net zero.
Over the last decade however, industrial manufacturing throughnew innovations in the field of energy-saving technologies
and accelerated shift of manufacturing equipment’s poweringfrom fossil fuels to electricity has decisively repositioned itself
as being an essential part of the solution to reach the world’s
ambitious net zero targets.
Steel produced through the blast furnace process releases CO2
through the melting of coke and iron ore at high temperatures.
It is being radically transformed through the development of
so-called ‘green steel’ where carbon is replaced by hydrogenthat if produced with low carbon energy can turn iron ore into
manufactured steel with far fewer emissions. The challenge
being addressed by steel industry leaders as well as low
carbon energy providers is to scale up such technologies
required to lead to commercially viable steel production.
Currently the cost disadvantage still requires massive subsidies
that require public-private sector initiatives.

Another option is to replace existing blast furnaces withelectric arc furnaces (EAF), a broadly adopted technologythat increases circularity by relying on scrap steel as its main
input. As an example, supported by the French government,
ArcelorMittal is investing EUR1.7 billion (US$1.81 billion)building EAFs at Fos-sur-Mer near Marseille and Dunkirk, aswell as a hydrogen-powered unit in Dunkirk. The company says
this transformation will cut emissions by 7.8MtCO2 a year, atenth of the total from French manufacturing industry.1 German
steelmaker Salzgitter is working to power its blast furnaces
with green hydrogen produced from renewable energy, which
it says could cut 95 percent of the 8MtCO2 annual emissions
from its steelworks at a capital cost of EUR2 billion equallyshared between by the company and public funding from
Germany’s federal government and the state of Lower Saxony.2“While there is no silver bullet for achieving net zero inindustrial manufacturing, a comprehensive technology portfolio
is beginning to take shape. While the cost to achieve this goaladds up to a substantial portion of global GDP, the cost ofinaction would far surpass it, given the increasingly tangible
and visible impacts of climate change,” he says.
“Policies such as Europe’s Green Deal and Net Zero Industry
Act and the US Inflation Reduction Act are showing paths
forward but ultimate success will require unwaveringcollaboration between government, private business andindustry players,” Souchet adds.

Stéphane Souchet, Global Head of Industrial Manufacturing,
KPMG International, says what has become increasingly
clear since COVID-19 and inflation exacerbated by the war in
Ukraine is that government policy interventions to accelerateenergy transition are in full swing in most major economies.
Governments are now demonstrating a willingness to invest inindustrial decarbonization at levels not seen before.

	‘ArcelorMittal accelerates its decarbonisation with a €1.7 billion investment programme in France, supported by the French Government’, ArcelorMittal, 4 February 2022. h­t­t­p­s://corporate.arcelormittal.com/media/press-releases/arcelormittal-accelerates-its-decarbonisationwith-a-1-7-billion-investment-programme-in-france-supported-by-the-french-government

1

2‘SALCOS’, Salzgitter AG. h­t­t­p­s://salcos.salzgitter-ag.com/en/index.html

20 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Buildings
Home heating
In many countries, heating is the residential sector’s mainenergy requirement, with nearly four-fifths of EU householdenergy used to heat space and water. Sources of homeenergy and subsequent emissions vary greatly from country tocountry. Norwegian homes get three-quarters of their energy
from low carbon electricity with almost all the rest comingfrom renewables and biofuels. Denmark and Sweden get abouta third of their domestic energy from derived heat systems
such as district heating, with most of the rest from electricity,
renewables and biofuels. Natural gas provides 53 percent of
the energy used by homes in Italy and 43 percent in Germany,
while 42 percent of Irish home energy comes from oil andpetroleum products.1 Countries with dispersed populations
and colder climates such as Canada, as well as rural areas inmany countries, may find it difficult to move away from oil andnatural gas for domestic heating unless these can be replacedwith similarly energy-dense and transportable fuels.2
Decarbonizing residential heating that relies on fossil fuels willusually require significant work to be carried out in individual
homes, causing political problems over both disruption and

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

who pays for this. It is possible to convert newer natural
gas boilers to use green hydrogen produced with renewableelectricity, but doing so would involve big increases inhydrogen fuel production. Governments including Germany andthe UK, which also relies heavily on natural gas for domestic
heating, have proposed electrical heat pumps as the best
option to replace gas boilers. Few British homeowners have
yet installed a heat pump with only a fraction of the costs
met by government subsidies and many properties being
unsuitable.3 In Germany, public opposition to recent plans to
ban the installation of new gas-fired boilers from 2024 forced
the government to allow exemptions for boilers that could be
converted to hydrogen.4

Building efficiency
Regardless of source, many buildings make poor use of heat
energy due to low levels of insulation or old designs. This isa particular problem for national net zero targets of or around2050 as buildings tend to last for decades and constructing
new ones is itself a carbon-intensive process, making
renovation of existing buildings a strong option. In 2021, theEuropean Commission said that 75 percent of buildings in
the EU are not energy efficient but that 85 to 95 percent of
those in use now will still be standing in 2050. Its directive on	‘Energy consumption in households’, Eurostat, June 2023. h­t­t­p­s­:­/­/e­c­.e­u­r­o­p­a.e­u /­e­ur­ost­at/statistics-explained/index.php?title=Energy_consumption_in_households#Energy_
consumption_in_households_by_type_of_end-use
2	See Canada profile.
3	See UK profile.
4	See Germany profile.
5	‘Making out homes and buildings fit for a greener future’, European Commission, 15 December 2021. h­t ­t­ps://e­c.e­u­ropa.eu/commission/presscorner/detail/en/fs_21_6691
6	See South Korea profile.
7	See Switzerland profile.
8	‘Net Zero Urban Program’, KPMG International. https://kpmg.com/xx/en/home/insights/2022/10/net-zero-urban-program.html
9	‘The role of energy and utilities in achieving net zero cities’, Plugged In magazine, KPMG International, March 2023. https://kpmg.com/xx/en/home/industries/energy/powerutilities/plugged-in-magazine-2/the-role-of-energy-and-utilities-in-achieving-net-zero-cities.html
1

21 | Net Zero Readiness Report 2023

KPMG contacts

building energy performance is set to require owners of theleast efficient buildings to carry out improvements over the
next few years as well as insisting that new buildings musthave zero emissions by 2030.5 South Korea already requires
new buildings to include renewable generation and will
require operators of existing public sector buildings to add thisfrom 2025.6
Ownership of buildings is often split between a relatively small
number of institutional owners that are more likely to haveresources and expertise to decarbonize properties, as wellas increasing requirements to report on net zero targets, anda much larger group of private owners. The latter are more
likely to find it harder to pay for and manage improvements
and they can be more resistant to change, given their number
and resultingly louder collective voice. Switzerland, which has
passed a climate law requiring that emissions from buildings
fall by 82 percent on 1990 levels by 2040, has seen someinstitutions selling inefficient buildings to private investors.7

Decarbonizing cities
More than half of the world’s population lives in urban areas
and this is likely to rise to two-thirds by 2050. Cities aredensely populated centers of government and business,making them good locations for innovative work in thisarea. There are specific reasons for focusing on cities, withrenewable energy-based systems such as district heating
working better in dense urban areas and large buildings
possessing economies of scale for retrofitting new glazing,heating and cooling systems, energy management technology
and on-site renewable production. In November 2022 KPMG
launched the Net Zero Urban Program8 that aims to help raise
capital and apply digital technologies to prototype projects thatcan support urban decarbonization.9© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Infrastructure
Infrastructure tends to get much less attention than the
products and services directly purchased by individuals
and organizations. However, based on a broad definition
infrastructure is responsible for 79 percent of all emissions
and will take up 88 percent of the costs of adapting to climatechange, according a 2021 report produced by the UN Officefor Project Services, UN Environment Programme and the
University of Oxford. The water sector alone will require
54 percent of all adaptation spending to reduce risks fromflooding, sea level rises, storm surges and other impacts.1
A lot of infrastructure requires the use of concrete, with its key
ingredient cement accounting for around 7 percent of global
emissions, twice as much as aviation’s total contribution.2 This isdue to the current need for fossil fuels to generate the very hightemperatures required in its production. While there are options
to reduce emissions from concrete a little by changing somematerials, ‘mineralizing’ or capturing carbon dioxide generated
within finished concrete could turn it into a material that removes
greenhouse gases from the atmosphere rather than adds tothem.3 However, this is at an early stage of development witha US startup mineralizing just 30 kilograms of carbon dioxide inconcrete in a test announced in February this year.4

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

Just as in nature, evolution will take multiple paths as humanity
moves towards net zero, with some that will work and somethat will be dead ends, so it would be foolhardy to stand idle until
the perfect solution is found. It makes sense to adopt alreadyproven techniques such as modern methods of construction,
which transfer some smaller-scale work to factories that provide
units for on-site assembly. This makes construction more
efficient, reducing total carbon output through the use of fewer
resources as opposed to new materials.
Infrastructure is more likely to make progress towards net
zero by taking many small steps rather than a few big ones.
Governments can play a role now by supporting pathfinder anddemonstration projects and by instructing regulators to takea pragmatic approach, such as considering the damage fromglobal climate change a project could help tackle along with theimpacts it would have on the local environment.
Infrastructure projects typically take years or decades to getfrom inception through planning, approval and construction
to completion and delays have always been common. The
resulting assets are often used for decades or even centuries,
meaning that for example roads change slowly compared with
the increasingly electrically powered vehicles that use them.

KPMG contacts

However, there are trends that look likely to reshape
infrastructure in ways that may support decarbonization,although these will vary significantly by country and region.
What these changes look like in specific regions andjurisdictions will result from their unique conditions andthe ways their societies respond to the need for change.
For example, millions of people were forced to work fromhome during the COVID-19 pandemic and some realized
they preferred to do so at least some of the time, with theperiod also highlighting the potential for remote meetingsand collaboration. Increased home working and remotecollaboration is likely to change demand for both commuterand business transport and the infrastructure required tosupport it.5 Some new infrastructure may be needed tosupport homeworkers who spend more or most of their timein the same town or suburb rather than traveling regularly
to a city center. Similarly, moves to shorten supply chains to
manufacture goods closer to customers could require changes
to the scale and shape of infrastructure at and near ports.

	‘Infrastructure for climate action’, UN Office for Project Services, UN Environment Programme and University of Oxford, October 2021. h­t­t­ps://content.unops.org/publications/Infrastructure-for-climate-action_EN.pdf

1	‘Aviation contributes 3.5% to the drivers of climate change that stem from humans’, Manchester Metropolitan University (UK), 3 September 2020. h­t­t­p­s://w­w­w­.mmu.ac.uk/news-and-events/news/story/12787/

2	‘Concrete’, MIT Climate Portal. h­t­t­p­s://climate.mit.edu/explainers/concrete

3	Peter Henderson, ‘Concrete traps CO2 soaked from air in climate-friendly test’, Reuters, 4 February 2023. h­t­t­p­s://w­w­w.reuters.com/business/sustainable-business/concrete-traps-co2-soaked-air-climate-friendly-test-2023-02-03/

4	‘Insights on current trends in remote working’, KPMG International, March 2022. https://kpmg.com/xx/en/home/insights/2022/03/insights-on-current-trends-in-remote-working.html

5

22 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Oil and gas
The last two years have seen sharp fluctuations in the costof oil and natural gas, primarily because of Russia’s invasionof Ukraine in February 2022 and the resulting removal of
Russian natural gas from energy markets, along with economic
recovery from the COVID-19 pandemic. The months following
the invasion saw the highest average crude oil prices since2013 and the cost of natural gas in Europe tripling to set newrecords, although these prices have since returned to levels
near their long-term averages due to factors including China’s
slow economic recovery.
While non-hydroelectric renewable generation increased bynearly a percentage point to 7.5 percent in 2022, the worldcontinued to depend on fossil fuels for 82 percent of its
primary energy.1 Given overall global demands for energy arewidely expected to increase over the next decade, oil and gas
production looks likely to play a significant role for some years
to come, even as low carbon sources increase.
In addition, an era of volatile and complex geopolitical
relationships has caused many countries to look for ways toreduce their dependence on potentially hostile nations. This
includes investing in their own energy sectors as a way of
increasing their ‘energy sovereignty’ so they are less likely
to find themselves in the position of European countries thaturgently sought new supplies following the removal of Russiangas. Such investments include securing oil and gas supplies

23 | Net Zero Readiness Report 2023

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

on the grounds of self-reliance and economic development,
including some countries with relatively strong records on
decarbonization. For example, in July 2023 the UK said it will
issue hundreds of new oil and gas licenses for its North Sea
waters, arguing that the country will still obtain a quarter of its
energy from these sources in 2050 when it reaches net zeroand should therefore reduce its reliance on hostile states.2
Higher prices have led to higher income for governmentsfrom taxes and royalties and some are investing this indecarbonization. The Australian state of Queensland is using
revenues from natural gas and mining to support renewableprojects through loans and grants, with a target to increase
renewable production by eight times between 2022 and 2035
through new solar, wind, pumped hydro storage and grid
upgrades.3 Some countries have introduced significant financial
incentives for such work including the Inflation Reduction Act
in the US or the EU’s Green Deal while others including Japanand South Korea are strongly encouraging their companies toundertake it.

An evolving license for companies
Increased prices have also provided oil and gas companies withmuch more capital. Several, particularly those headquarteredin Europe, are investing some of this in developing ways todecarbonize customer use of their fuels through technologies
such as green hydrogen production, carbon capture, utilizationand storage, biomass and biogas. Some are also investing in© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

renewable generation. Jonathon Peacock, Global Oil & Gas
Leader, KPMG in Australia, says this shows an evolution in howsocieties treat these companies: “You can continue to producehydrocarbons provided you can demonstrate a positive intent
on how you plan to or are reducing emissions,” he says, partly
driven by carbon pricing in some countries as well as pressure
from stakeholders including employees, communities andactivist shareholders.
But these technologies are at early stages of development
and represent relatively risky investments, which may or may
not offer strong returns. “Companies are still trying to workout what the most economically viable means of emissions
reduction looks like,” says Peacock. “It varies by geography,
geology and government policy.” He adds that US-based oil
and gas companies generally focus on minimizing scope 1
and scope 2 emissions from production and the composition

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

of products rather than those generated by customer use,
known as scope 3 emissions, and generally have higher market
valuations than those with a stronger focus on customer
decarbonization. Those oil and gas companies trying to moveto new types of energy production are being affected by apolarization in investor views between those who want thesector to deliver reliable returns from fossil fuels, increasingly
from projects with relatively short timeframes, and those who
avoid the sector completely because they do not think its
transition plans are strong enough.
Peacock adds that there are broader reasons for rich countries
and companies to work on decarbonization technologies, asthese could help provide poorer countries with green, safe andreliable sources of power, including the 2.4 billion people wholack access to cleanly-fueled cooking facilities.4

KPMG contacts

The use of oil in producing plastics and gas in ammoniabased fertilizers as well as their current dominance of energymeans both fuels will continue to be needed until societies
decide to stop using derived products or researchers findadequate substitutes, something which will take time. Peacocksays that oil and gas companies are well-placed to work on
decarbonizing their products as they have the capital to invest
in research and development, are used to working acrossborders and have an engineering-led approach to deliveringresults. “It’s not oil and gas or renewables,” he says. “Theyhave got to work together.”	‘2022 key highlights’, Statistical Review of World Energy 2023, Energy Institute. h­t­t­p­s://w­w­w.energyinst.org/statistical-review

1	‘Hundreds of new North Sea oil and gas licences to boost British energy independence and grow the economy’, UK Prime Minister’s Office and Department for Energy Security and Net Zero, 31 July 2023. h­t­t­p­s://w­w­w.gov.uk/government/news/hundreds-of-new-northsea-oil-and-gas-licences-to-boost-british-energy-independence-and-grow-the-economy-31-july-20232	‘Queensland energy and jobs plan overview’, Queensland Government, September 2022. h­t­t­p­s://w­w­w.epw.qld.gov.au/__data/assets/pdf_file/0031/32989/queensland-energy-and-jobs-plan-overview.pdf

3	‘WHO publishes new global data on the use of clean and polluting fuels for cooking by fuel type’, World Health Organization, 20 January 2022. h­t­t­p­s://w­w­w.who.int/news/item/20-01-2022-who-publishes-new-global-data-on-the-use-of-clean-and-polluting-fuels-forcooking-by-fuel-type

4

24 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

Agriculture
As with other sectors, the Russian government’s February 2022
invasion of Ukraine put global agriculture under stress. Ukraine
is a major producer of grain and oilseed as well as the world’s
largest source of sunflower oil and the second largest supplierto the UN World Food Programme, while Russia has been a big
producer of wheat, seed oil and fertilizer ingredients. Disruption
in Ukraine, sanctions on Russia and sharply increasing energy
prices caused by the conflict looked likely to accelerate ashift by farmers worldwide towards regenerative agriculturethat uses less energy and inputs such as fertilizer.1 Instead, it
has encouraged farmers to improve efficiency by focusing on
how to produce more with similar or lower levels of inputs.
This reduces emissions intensities — levels of greenhousegases generated for each unit of output — but has not made asignificant difference to overall volumes.
However, emissions from agriculture have taken an increasingly
high profile as other sectors make big changes to address
climate change. Ian Proudfoot, Global Head of Agribusiness,
KPMG International, says that at present the sector is unable
to make the obvious changes equivalent to a bus company
replacing diesel vehicles with electric ones. “You can’t swap
one cow for a lower-emissions cow at the current time,” hesays. “Agriculture has been found wanting on not necessarily
having the answers as to how to start its journey to a loweremissions future.” While some advocate replacing the output of
dairy and livestock farming with plant-based alternatives, doing
so can deprive people of products that they enjoy and that
contribute to a nutritionally balanced diet.

25 | Net Zero Readiness Report 2023

New processes, new relationships
The current lack of options may change given promisingdevelopments on reducing emissions from agriculture,
many of which come from methane and nitrous oxide as
well as carbon dioxide. Researchers are working on ways

However, emissions
from agriculture havetaken an increasingly
high profile as othersectors make bigchanges to address
climate change. Ian
Proudfoot, Global
Head of Agribusiness,
KPMG International,says that at present
the sector is unable
to make the obvious
changes equivalent to abus company replacing
diesel vehicles withelectric ones.

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

to treat dairy farming effluent that can prevent nearly all
methane emissions.2 This effluent could also be used to
produce biofuels through anaerobic digestion and farming
co-operatives in Europe and the United States are looking at
how they could help their members take advantage of this.3
Emissions from cattle can also be reduced by adding seaweed
to their food, with research on this taking place in countries
including Australia, Ireland, the US and the UK.4 This is oneof a range of ‘blue economy’ opportunities that involve using
oceans to reduce or sequester greenhouse gases.5 More
broadly farmers will increasingly be able to provide ecosystemservices from the carbon they are able to sequester within
their farming systems, creating a new revenue stream by
selling verifiable carbon credits to offset emissions fromsectors that will never be able to become climate positive inthe way that biologically based sectors can aspire to be.

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

Some retailers and food processors are changing the way theywork with farmers, moving from short-term contracts based
primarily on price to longer-term partnerships. These cangive buyers more security over supplies as well as providing
financial stability for farmers to invest in reducing the climate
impact of their operations. In some cases, such companies
are supporting their farmers financially to lower theiremissions by adopting new equipment or processes, helping
to reduce their scope 3 supplier emissions. However, many
food retailers have a strong focus on prices and are currently
under pressure to prioritize low prices by politicians concerned
about the cost of living.

KPMG contacts

Farm-level answers
New Zealand’s government has worked with organizations
representing farmers and growers to develop a plan foremissions pricing at the level of individual farms, although thisis still under negotiation.6 Regardless of the outcome in New
Zealand, Proudfoot says that rewarding individual farmers
looks like the best way to reduce emissions in the sector,
given they have led agricultural innovation for thousands ofyears and have strong incentives to protect their lands, often
their main asset. Governments should encourage farmers tocollaborate internationally and with partners including foodprocessors to find new ways cut their own emissions andsequester them for others: “We have got to unleash farmers
to be a huge part of the solution, rather than expecting themto adopt whatever gets given to them,” he says.

	Ian Proudfoot, ‘Ukraine-Russia sector considerations: Agriculture’, KPMG International, May 2022. https://kpmg.com/xx/en/home/insights/2022/05/ukraine-russia-sector-considerations-agriculture.html

1	‘Lincoln University scientists develop game changing greenhouse gas emission reduction technology’, Lincoln University (New Zealand), 11 November 2021. h­t­t­p­s://w­w­w.lincoln.ac.nz/news-and-events/lincoln-university-scientists-develop-game-changing-greenhouse-gasemission-reduction-technology/2	Natalie Long, ‘Rethinking methane: Dairy farmers capture an opportunity for leadership’, Land O’Lakes, 25 August 2022. h­t­t­p­s://w­w­w.landolakesinc.com/Blog/August-2022/reducing-methane-emissions-in-agriculture3	‘Seaweed used to feed cattle in trial aimed at cutting methane emissions’, RTE, 10 November 2021. h­t­t­p­s://w­w­w.rte.ie/news/regional/2021/1110/1259109-seaweed-cattle-feed/4	‘See Blue economy section’, KPMG International, June 2023. https://kpmg.com/xx/en/home/insights/2021/05/you-cant-go-green-without-blue.html

5	See New Zealand profile.

6

26 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Blue economy
Governments are increasingly looking to the world’s oceans andcoasts to support their moves towards net zero. Oceans alreadyprovide the planet’s largest ‘carbon sink’ by absorbing 25 percent
of all carbon dioxide emissions and 90 percent of the excess heat
they generate, with mangrove forests on tropical and subtropicalcoasts being some of the most efficient ecosystems for storingcarbon.1 By increasing areas covered by mangroves and othernatural carbon sinks, countries with suitable coastlines could
benefit financially by helping to meet rapidly growing demand forcarbon assets while enjoying nature-related benefits including
better flood protection and an improved marine environment.2
Alternatives include protecting and encouraging the spread ofunderwater seaweed forests, which Canadian charity Ocean Wisesays can sequester carbon more effectively than planting trees.3
There is also potential to enhance the open ocean’s natural carbon
sink function through methods including enhancing alkalinity,
encouraging fertilization and injecting carbon dioxide, althoughthese are yet to be fully tested.4
A new UN Biodiversity Beyond National Jurisdiction (BBNJ)
agreement agreed in March 2023 will establish an international
legal framework to protect the environment of more than the
two-thirds of the oceans that are outside national management.5

GlobalGlobalsector
sectorsummaries
summaries

Country profiles

About KPMG ESG

KPMG contacts

Josh Hasdell, Head of Global Blue Economy Services, KPMG in
Canada, says the agreement is indicative of a shift away fromseeing oceans and coasts as places for conservation. “It’s moved
on from ‘let’s protect our oceans and keep our beaches clean’ toseeing oceans as fundamental to our survival and meeting our net
zero goals,” he says. “We can’t go green without blue.”6 He adds
that there are challenges, including reliable verification of carbon
sequestered through coastal ecosystems and the oceans and alack of funding for such projects.
As well as sequestration, oceans increasingly host renewable
power generation in the form of offshore wind. There ispotential to go much further, including with floating solar farms,
technologies that harness tides, waves and currents and the
exploitation of differences in ocean temperatures and salt
concentrations.7 Wild fisheries provide a low carbon sourceof protein as well as local jobs.8 While there is potential tomine minerals from ocean floors, the risk of causing severe
environmental damage means that countries should be highly
cautious about granting permits until all the ramifications can be
fully understood.
For emerging coastal and small island nations, blue economy
and blue carbon ecosystems offer a platform for growth that
can attract international funding and investment, allowing themto undertake cultivation while achieving just transitions andincreasing economic prosperity.

	‘The ocean — the world’s greatest ally against climate change’, United Nations. h­t­t­p­s­:­/­/w­w­w­.­u­n.­o­r­g/­e­n­/c­li­m­a­techange/science/climate-issues/ocean	‘The (blue) wealth of nations’, KPMG International, June 2023. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2023/06/the-blue-wealth-of-nations-Web.pdf
3	‘Seaforestation: benefits to the climate, the ecosystems and the people of British Columbia’, Ocean Wise, June 2022. h­t­t­p­s­:­/­/­oc­e­a­n.o­r­g/a­p­p/uploads/2022/07/OceanWiseSeaforestationV1-1.pdf
4	‘Blue ecosystems are our natural allies’. KPMG International, May 2022. https://kpmg.com/xx/en/home/insights/2022/05/blue-carbon-ecosystems.html
5	Jane Collins, ‘The new UN Ocean Agreement on Marine Biological Diversity of Areas Beyond National Jurisdiction’, KPMG International, May 2023.
https://kpmg.com/xx/en/home/insights/2023/05/the-blue-economy.html
6	‘You can’t go green without blue’, KPMG International, June 2023. https://kpmg.com/xx/en/home/insights/2021/05/you-cant-go-green-without-blue.html
7	Mike Hayes, ‘Turning the tide on climate change. Utilizing our oceans for energy and carbon capture’, KPMG International, May 2023.
https://kpmg.com/xx/en/home/insights/2023/05/the-blue-economy.html
8	‘Climate change and fishing’, Marine Stewardship Council. h­t­tp­s­:­/­/­w­w­w­.m­­s­c­.o­r­g­/wha­t-we­- are-doing/oceans-at-ri­sk/climate-change-and-fishing1
2

27 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

Country profiles

About KPMG ESG

KPMG contacts

Country
profiles28 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Following a change of government in May 2022’s federal
elections, the new Labor party administration has enshrineda net zero target date of 2050 in law.1 It has also increased
the country’s interim emissions reduction target for 2030
from 26-28 percent to 43 percent below 2005 levels2 andintroduced a range of supporting laws, targets, regulations
and initiatives. “It’s a quantum leap in Australia’s legislativearchitecture,” says Barry Sterland, Partner, Energy Transition
Leader, Management Consulting, KPMG Australia. This has
involved a rapid acceleration from the country’s previous
less mature position, with supply chains and regulatorsstruggling to keep up. “The biggest challenge is the speedof change required. You would not start from here,” he adds.

Australia
2022’s change of government has led to alegally enshrined net zero target for 2050 andsupporting activity, including the expansionof emissions trading in industry and a target
to increase renewable electricity’s sharefrom 27 to 82 percent by 2030.

The new government has built on existing legislation byreforming the so-called Safeguard Mechanism to introduce
binding emissions baselines, emissions trading and therefore
carbon pricing to all non-electricity facilities that generate
more than 100ktCO2e a year, affecting industry, oil andgas production and mining. 3 The strengthened version of
the scheme started in July 2023 and aims to gradually
reduce emissions baselines in line with the government’s
emission reduction targets, in what Sterland says is aclever adaptation of an existing scheme. The government
provides less restrictive baselines for trade-exposed heavy
manufacturing and funding for industrial decarbonization
through its Powering the Regions fund. It is considering acarbon border adjustment mechanism that would provide
an alternative means of protecting trade-exposed domestic
companies by levying equivalent charges or providing
rebates on traded goods.

KPMG contacts

The government wants renewable electricity production
to rise from 27 percent at present to 82 percent in 2030. 4
It aims to do this in a planned way through underwriting
development of transmission and renewable energy zones,
which host both grid infrastructure and production including
solar, onshore wind and hydroelectric generation as wellas battery storage to provide stability. Federal and state

GHG emissions split by sector (2022)*
15% Energy excluding electricity

29% Electricity

18% Transport
4% Buildings
13% Industry
19% Agriculture
3% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023*EDGAR (Emissions Database for Global Atmospheric Research) Community GHG Database, a collaboration between the European Commission, Joint Research Centre (JRC),
the International Energy Agency (IEA), and comprising IEA-EDGAR CO2, EDGAR CH4, EDGAR N2O, EDGAR F-GASES version 8.0, (2023) European Commission, JRC (Datasets).
IEA-EDGAR CO2, a component of the EDGAR (Emissions Database for Global Atmospheric Research) Community GHG database version 8.0 (2023) including or based on data fromIEA (2022) Greenhouse Gas Emissions from Energy, h­t­t­p­s­:­/­/­w­w­w­.­iea.org/data-and-statistics, as modified by the Joint Research Centre.

29 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

governments are underwriting renewable production andstorage, including with contracts for difference which
provide a long-term price floor for the electricity produced.
Indigenous Aboriginal communities are increasingly involved
in renewable energy developments on their lands, such asplans for a 3 billion Australian dollar (AUD) (US$1.92 billion)
solar, hydroelectric and green hydrogen project in the
Kimberley region of Western Australia. 5 Governments areworking with indigenous communities to develop a First
Nations Clean Energy Strategy.
There is no nuclear electricity generation in Australia at
present and this looks unlikely to change. However, roofmounted solar generation is increasingly common in cities
and the country is planning development of offshore wind,
although this is unlikely to contribute significantly until
the 2030s. The government is also developing a National
Energy Performance Strategy on energy efficiency and

1

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

electrification.6 The state government of Victoria hasannounced new house developments will be all electricfrom 2024.

Sector-specific plans
In July, Climate Change and Energy Minister Chris Bowen
asked the Climate Change Authority to provide statutory
advice on emissions targets for 2035 and six sector-specificplans.7 On transport the federal government is working on
emissions standards for new road vehicles, provides tax
incentives for adopting electric vehicles and along with state
governments helps fund charging infrastructure.
Agriculture and land use, Australia’s second biggestemitting sector after electricity, is largely regulated at astate level and in July the federal and state governments
announced that they will jointly develop a national strategy.

KPMG contacts

So far, decarbonization work in agriculture has focused on
research including methane emissions from livestock. Somelandowners are using reforestation and similar projects toclaim carbon credits that they can sell to large emitters or
use against their own emissions.
“As well as regulatory developments the Australian
government is moving fast to implement mandatory climate
reporting on a phased basis for all large organizations,”
says Adrian King, Partner in Charge, Climate Change &Sustainability Services, KPMG Australia. These new climate
reporting rules will be based on the global International
Sustainability Standards Board. The Australian AccountingStandards Board is working on standards which KPMG
Australia expects to be published in time to meetgovernment requirements for mandatory climate reporting. 8‘Australia legislates emissions reduction targets’, Prime Minister of Australia, 8 September 2022. h­t­t­p­s://w­w­w.pm.gov.au/media/australia-legislates-emissions-reduction-targets

	Tiffanie Turnbull, 'Climate change: Australia signs new carbon emissions target’, BBC News, 16 June 2022. h­t­t­p­s://w­w­w.bbc.com/news/world-australia-61822046

2

	‘Safeguard mechanism’, Australian Department of Climate Change, Energy, the Environment and Water. h­t­t­p­s://w­w­w.dcceew.gov.au/climate-change/emissions-reporting/national-greenhouse-energy-reporting-scheme/safeguard-mechanism3	‘Australia has raised its climate targets and now needs to accelerate its clean energy transition, says new IEA review’, International Energy Agency, 19 April 2023. h­t­t­p­s://w­w­w.iea.org/news/australia-has-raised-its-climate-targets-and-now-needs-to-accelerate-its-clean-energytransition-says-new-iea-review

4	Daniel Mercer, ‘Traditional owners take majority stake in $3 billion Western Australian green energy project’, ABC News, 17 July 2023. h­t­t­p­s://w­w­w.abc.net.au/news/2023-07-18/traditional-owners-stake-in-australias-green-energy-transition/102611194

5

	‘National Energy Performance Strategy’, Australian Department of Climate Change, Energy, the Environment and Water. h­t­t­p­s://w­w­w.energy.gov.au/government-priorities/australias-energy-strategies-and-frameworks/national-energy-performance-strategy

6	Speech by Chris Bowen, Australian Minister for Climate Change and Energy, 18 July 2023. h­t­t­p­s://minister.dcceew.gov.au/bowen/speeches/address-clean-energy-council

7	‘Get ready for global sustainability standards’, KPMG in Australia, 25 July 2023. https://kpmg.com/au/en/home/insights/2022/04/issb-sustainability-reporting-disclosures-guide.html

830 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
-1%
28%
-18%
28%
16%
4%
-11%
-12%
-150%

-100%

-50%

0%

50%

100%

150%

0%

50%

100%

150%

Change in emissions intensity (2005–2022)
-36%
-18%
-33%
-17%
-25%
-28%
-33%
-43%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

31 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Brazil has gone a long way towards decarbonizing its power
production with almost 45 percent of its energy coming fromrenewable sources. Around four-fifths of electricity comes fromhydropower plants and solar generation is growing quickly.1
Most of the country’s cars are flex-fuel models that can run
on ethanol biofuel produced from sugarcane or corn as well as
gasoline, something the government sees as a significant pointin favor of its automotive industry. Chinese manufacturer Great
Wall Motor started local production of hybrid cars in April thatrun on 100 percent ethanol and electricity.2

BrazilBrazil hopes to benefit from high levels of
clean energy use when exporting to the EU
under the new Carbon Border Adjustment
Mechanism. A new freight railroad, a robust
agriculture plan and enhanced deforestation
monitoring provide further opportunities todecarbonize.

32 | Net Zero Readiness Report 2023

Felipe Salgado, ESG Advisory Decarbonization Director for KPMG
in Brazil, says the country’s progress on clean energy creates
opportunities for its companies. For example, it could mean
Brazilian exporters paying less than those in other countries
under the EU’s Carbon Border Adjustment Mechanism (CBAM),
which started its initial transitional phase on 1 October. CBAM
will tax imports to the bloc in line with charges faced by European
companies under its Emissions Trading System (ETS), helping
countries that use low-carbon energy.3
The Brazilian government is also discussing the introduction ofa regulated carbon market aligned to the EU ETS and hopes
to unveil plans before November’s COP28 UN climate change
conference. “This is a game changer,” says Salgado. “These
two drivers, the internal regulated market and CBAM, can pushthe decarbonization of big companies as they start measuring andimplementing carbon reduction initiatives.”

KPMG contacts

in Glasgow.4 Plano ABC+ includes the recovery of 15 million
hectares of currently degraded pastures, expansion of the use of
biological nitrogen fixation to replace nitrogen-based fertilizers andthe reforestation of millions of hectares of land. Salgado says that
as well as reducing net emissions and improving the country’s
environment, reforestation provides commercial opportunities
through the potential sale of carbon offsets.
Freight trucks in Brazil tend to use carbon-intensive diesel rather
than ethanol biofuel. In June the government completed the 35year construction of the 2,257 kilometer North-South Railroad

GHG emissions split by sector (2022)
5% Energy excluding electricity
4% Electricity
16% Transport
4% Buildings
11% Industry

46% Agriculture

Agricultural plans and new railways
Agriculture is responsible for significant emissions and a newversion of Brazil’s ABC plan for decarbonizing the sector,
succeeding one which ran from 2010 to 2020, was publishedby the government in October 2021 for the COP26 conference

13% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

which links areas that produce commodities including soy,corn and cotton to the sea ports of Santos near São Paulo inthe southeast of Brazil and Itaqui in Maranhão in the north. 5
Even before its completion, the railway was transporting
around half of the country’s exported agricultural bulk solids.
Brazil is also looking at how it can shift some freight fromroads to sea transportation.
There are challenges for Brazil’s government to address.
Salgado says some existing programs and policies including
those on deforestation are undermined by poor inspection andenforcement and conflicts can arise between decarbonization
work and social policies. The government does not currently
tax ownership of older vehicles, but there are initial discussions
on changing this to encourage drivers to switch to newer andtypically more fuel-efficient ones. However, Salgado says that this
could require financial support to help those with old vehicles tobuy newer ones, rather than price them off roads.

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
23%
-1%
46%
53%
20%
9%
18%
30%
-150%

-100%

-50%

0%

50%

100%

150%

50%

100%

150%

Change in emissions intensity (2005-2022)
-12%
-46%
-13%
10%
-14%

	‘Brazil’, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/countries/brazil

1-6%	Gabriel Araujo, ‘Hybrid-flex cars a great asset for Brazil’s decarbonization efforts, says
VP’, Reuters, 28 April 2023. h­t­t­p­s://w­w­w.reuters.com/business/sustainable-business/hybrid-flex-cars-great-asset-brazils-decarbonization-efforts-says-vp-2023-04-28/

2

-26%
-7%

	‘Carbon Border Adjustment Mechanism’, European Commission. h­t­t­p­s://taxationcustoms.ec.europa.eu/carbon-border-adjustment-mechanism_en3	‘Brazil expands carbon emission reduction targets’, AgênciaBrasil, 19 October 2021.
h­t­t­p­s://agenciabrasil.ebc.com.br/en/politica/noticia/2021-10/brazil-expands-carbonemission-reduction-targets

4	Pedro Rafael Vilela, ‘Railroad linking four Brazilian regions completed after 35
years’, AgênciaBrasil, 16 June 2023. h­t­t­ps://agenciabrasil.ebc.com.br/en/politica/
noticia/2023-06/railroad-linking-four-brazilian-regions-unveiled-after-35-years-150%
Economy

-100%

-50%

Energy excluding electricity

Electricity

0%Transport

Buildings

Industry

Agriculture

Waste

5

33 | Net Zero Readiness Report 2023

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Like many countries, Canada has been affected by inflationand concerns over the cost of living. But it is also seeing theimpact of climate change related events such as increasing
numbers of extreme weather such as flooding, droughts andits worst-ever wildfire season.1 These events have increased
public awareness regarding the physical impacts of climatechange and the urgent need for interventions.
Canada has seen emissions intensities dropping across the
economy and particularly in electricity, waste and transport,with other sectors falling less. This presents both challenges
and opportunities says Andrew McHardy, Partner, National
Decarbonization Hub Leader, KPMG in Canada. The country
has the technical expertise and skills, along with abundantnatural resources including critical minerals, to accelerate themove to a low-carbon future. This represents a significant
opportunity for Canadians to decarbonize their communities
and industries while supporting economic growth by exportingthese solutions globally.

CanadaThe federal government is encouraging
investment in renewable energy and related
technology through a range of funding
mechanisms and working with provinces toenable development of related projects andindustries across the country.

34 | Net Zero Readiness Report 2023

The 2023 federal budget included several incentives,
financing and funding opportunities that focused on building
a clean economy in Canada. This included 20 billion
Canadian dollars (CAD) (US$14.7 billion) to support
investments in clean electricity, hydrogen, technology
adoption, technology manufacturing and carbon capture,utilization and storage (CCUS). The budget also allocated
CAD15 billion for a Canadian Growth Fund and CAD20 billion
to the Canada Infrastructure Bank to support clean electricity
and growth infrastructure projects along with additional
funding to strengthen the electricity grid. 2
Budget 2023 included consultation on the introductionof carbon contracts for difference, which would support
decarbonization projects such as CCUS by providing

KPMG contacts

greater certainty on the future price of carbon to reduce
upfront investment risk. 3 The Clean Fuel Regulations, whichbecame federal law in 2022, provide fuel producers withincentives to reduce carbon emissions throughout the
lifecycle of extraction, processing, distribution and use. 4
The government also remains committed to introducing
a previously announced carbon tax. “The bottom line isthat the government is using incentives and funding as
the levers to encourage and accelerate investment in low

GHG emissions split by sector (2022)

25% Energy excluding electricity
10% Electricity
24% Transport
13% Buildings
16% Industry
8% Agriculture
3% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

carbon solutions,” says McHardy, which should support
favorable decisions on projects that can last for many years
or decades.

Potential for more energy
Around three-quarters of Canada’s electricity comesfrom low carbon sources, but the country has significant
potential to increase this supply through the developmentof additional renewable energy. For example, in April 2022
the province of Newfoundland and Labrador ended a 15-year

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

ban on developing onshore wind farms 5 while the country
has seas suitable for much more offshore wind generation.
In July, the province of Ontario said it was planning a newlarge-scale nuclear plant at the Bruce Power site and three
more small modular reactors at Darlington in addition to one
already announced.6
Although electric vehicle sales made up less than 10 percent
of all car sales in 2022, the federal and provincial governments
are supporting greater adoption through purchase incentives
and by addressing supply chain constraints through investing

KPMG contacts

in the construction of vehicle battery plants. Major public
transport systems are also decarbonizing, including the OnCorridor project to electrify and expand Greater Toronto and
Hamilton’s rail network.7 However, McHardy adds that thecountry’s size, dispersed population and climate continue
to create challenges for the transportation sector to reduce
dependency on fossil fuels, with the same being true ofelectricity, heating and industry in remote areas.

	Ismail Shakil, ‘Canada on track for its worst-ever wildfire season’, Reuters, 6 June 2023. h­t­t­p­s://w­w­w.reuters.com/world/americas/canada-track-its-worst-ever-wildfire-season-2023-06-05/

1

	'Minister Guilbeault highlights the big five new Clean Investment Tax Credits in Budget 2023 to support sustainable made-in-Canada clean economy', Government of Canada, 5 April 2023. h­t­t­p­s://w­w­w.canada.ca/en/environment-climate-change/news/2023/04/ministerguilbeault-highlights-the-big-five-new-clean-investment-tax-credits-in-budget-2023-to-support-sustainable-made-in-canada-clean-economy.html

2	Steve Scherer, ‘Exclusive: Canada budget sees contracts for difference for large clean-tech projects — source’, Reuters, 27 March 2023. h­t­t­p­s://w­w­w.reuters.com/world/americas/canada-budget-set-up-contracts-differences-large-projects-source-2023-03-27/

3	‘What are the Clean Fuel Regulations?’, Government of Canada. modified 7 July 2022. h­t­t­p­s://w­w­w.canada.ca/en/environment-climate-change/services/managing-pollution/energy-production/fuel-regulations/clean-fuel-regulations/about.html

4	‘N.L. government lifts 15-year ban on onshore wind farms’, CBC, 5 April 2022. h­t­t­p­s://w­w­w.cbc.ca/news/canada/newfoundland-labrador/nl-wind-moratorium-lifts-1.6409296

5	Paul Day, ‘Canada’s nuclear drive picks up speed’, Reuters, 25 June 2023. h­t­t­p­s://w­w­w.reuters.com/business/energy/canadas-nuclear-drive-picks-up-speed-2023-07-25/

6	ONxpress. h­t­t­p­s://onxpress.com/

735 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
2%
22%
-37%
5%
10%
0%
12%
0%
-150%

-100%

-50%

0%

50%

100%

150%

0%

50%

100%

150%

Change in emissions intensity (2005–2022)
-23%
-12%
-41%
-21%
-17%
-12%
-16%
-24%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

36 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

China, the world’s largest emitter of greenhouse gases byvolume due to its large population and manufacturing sector,
relies on a combination of factors to tackle this. The first is
top-down planning, with the national government providing
top-level design and guidance with detailed implementation
schemes in key sectors and supporting plans, while provincial
governments, corporates, financial institutions and others
implement projects. The country also has high levels ofinvestment on energy transition, estimated at US$550 billion
in 2022 by researcher BloombergNEF,1 and has nearly tripled
low carbon energy generation between 2010 and 2020 toreach 2,591TWh. 2 “They need to play all together to makeit work,” says Daisy Shen, Partner, Head of Climate andSustainability, KPMG China.

China
Rapid growth in renewable energy generation is
supported by planning, high levels of investment
and grid upgrades. While energy security andeconomic growth support short-term increases
in coal consumption, achieving carbon neutrality
will require a profound transformation of China’s
energy system.

37 | Net Zero Readiness Report 2023

The country faces challenges in managing this growth,
including upgraded grid infrastructure to link renewablegeneration in the west of the country to population andindustrial centers in the east. The State Grid budgeted morethan 500 billion Chinese yuan renminbi (RMB) (US$68.5 billion)
in 2022 for ultra high voltage power lines, other grid upgradesand digitization work.3 China is also expanding use of energy
storage technologies that help to smooth the intermittent
nature of renewable production, with electrochemical storage
capacity more than doubling in 2022,4 and rapid increases inhydrogen fuel production, although mainly from coal and gas
at present.5
Coal remains China’s most important fuel generating
4,928TWh of electricity in 2020 and electricity production
accounting for just under half of Chinese emissions. In 2022,
local authorities permitted 106GW of new coal generation,
four times the amount in 2021 and six times as much as therest of the world combined according to research by US data
publisher Global Energy Monitor.6 The government sees coal

KPMG contacts

as providing energy security, having joined India and othercountries to successfully negotiate that coal be “phased
down” rather than phased out at the COP26 climate change
conference in November 2021.7“In the long term the plan is to phase out coal,” says
Wei Lin, Head of Environmental, Social and Governance,
KPMG China. “There is always this balance between
the long-term and short-term crunches in power or
economic development.” A government plan publishedin October 2021 projects that coal consumption will

GHG emissions split by sector (2022)
11% Energy excluding electricity

38% Electricity
6% Transport
5% Buildings
32% Industry
6% Agriculture
3% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

continue to rise until 2025 then start to fall by 2030, alongwith overall carbon dioxide emissions. The proportion ofenergy produced without fossil fuels is projected to riseto 20 percent by 2025, 25 percent by 2030 and exceed
80 percent by 2060. 8

Expanding emissions trading
Emissions trading systems (ETS) represent an important
policy instrument for China to achieve its climate targets.
In 2013 the country launched regional carbon ETS pilots,

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

its first systematic attempt to use market-based instruments
to regulate carbon emissions. Building on the experience ofregional pilots China brought a national carbon ETS online in
2021, the largest carbon market in the world, covering only
the power generation sector so far. The government plans toextend the scheme to eight major industries and restart the
Chinese Certified Emission Reduction scheme by the endof 2023, providing financial incentives for cutting emissions.
The country will also need to prepare for new international
levies such as the EU’s Carbon Border Adjustment
Mechanism. Some high-emitting industries including steel

KPMG contacts

production are researching hydrogen and carbon capture andstorage but this has yet to reach commercialization.
China is the world’s biggest adopter of electric vehicles by
number and among the largest by proportion, with electricmodels making up 29 percent of cars sold in 2022.9 The
country’s automotive manufacturers have developed low-cost
electric vehicles such as BYD’s Seagull, unveiled at the Shanghai
auto show in April, with hopes for significant export potential.10	‘China can achieve net-zero energy emissions by 2050 while strengthening its energy security‘, BloombergNEF, 30 May 2023. h­t­t­p­s://about.bnef.com/blog/report-shows-way-for-china-to-meet-climate-goals-10-years-early/1	‘China‘, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/countries/china

2	Wei Lin, Angus Choi and Ebele Angela Onyeabo, ‘Smarter grids: powering decarbonisation through technology investment‘, KPMG in China, 18 May 2023. https://kpmg.com/cn/en/home/insights/2023/05/smarter-grids.html

3	‘New energy storage technologies empower energy transition (synopsis)‘, KPMG in China and China Electricity Council, May 2023. https://assets.kpmg.com/content/dam/kpmg/cn/pdf/en/2023/03/new-energy-storage-technologies-empower-energy-transition.pdf

4	‘The fast-growing hydrogen energy industry (synopsis)‘, KPMG in China, 26 October 2022. https://kpmg.com/cn/en/home/insights/2022/09/understand-the-hydrogen-energy-industry-in-one-article.html

5	Yujie Xue, ‘Climate change: China approved most coal power plants since 2015 last year, making environmental goals harder, research shows‘, South China Morning Post, 27 February 2023. h­t­t­p­s://w­w­w.scmp.com/business/china-business/article/3211656/climate-changechina-approved-most-coal-power-plants-2015-last-year-making-environmental-goals

6	Valerie Volcovici, Kate Abnett and William James, ‘U.N. climate agreement clinched after late drama over coal‘, Reuters, 14 November 2021. h­t­t­p­s://w­w­w.reuters.com/business/cop/un-climate-negotiators-go-into-overtime-save-15-celsius-goal-2021-11-13/

7	‘Action plan for carbon dioxide peaking before 2030‘, China Department of Resource Conservation and Environmental Protection, 27 October 2021. h­t­t­p­s://en.ndrc.gov.cn/policies/202110/t20211027_1301020.html

8	‘Global EV Data Explorer‘, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/data-and-statistics/data-tools/global-ev-data-explorer

9	Zhang Yan and Casey Hall, ‘As EV costs tumble in China, an export wave builds‘, Reuters, 19 April 2023. h­t­t­p­s://w­w­w.reuters.com/business/autos-transportation/ev-costs-tumble-china-an-export-wave-builds-2023-04-19/

10

38 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
86%
100%
149%
121%
10%
74%
-5%
65%

-150%

-100%

-50%

0%

50%

100%

150%

50%

100%

150%

Change in emissions intensity (2005–2022)
-50%
13%
-29%
-40%
-70%
-55%
-52%
-55%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

39 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Denmark has a long history of developing alternative sourcesof energy to fossil fuels. The majority of Danish renewableenergy production comes from biomass used in power plants,
including wood chips and pellets, straw from the agricultural
sector and degradable household waste. This biomass isalmost exclusively used in the district heat networks that areconnected to nearly two-thirds of Danish homes.
The second largest renewable energy source is wind
power. The country built its first commercial wind turbine
in 1979 and has expanded their use to the extent that on
15 September 2019 production from wind exceeded total
national demand for electricity.1 Given this large shareand the variable nature of wind, also true for solar power,
Denmark has been focusing on how to integrate intermittent
power production, leading to the Danish electricity
transmission operator developing world-leading expertise inthis area.

Denmark
The long-term political focus on green,
renewable energy has encouraged anecosystem of manufacturers and financiersable to collaborate on projects including anenergy island for offshore wind. The current
government is working on emission-basedtaxes on agriculture.

40 | Net Zero Readiness Report 2023

Strong interconnections with neighboring countries thatallow electricity to be exported or imported help the country
manage intermittent renewable production and Denmarkis planning further interconnections. As wind and solar
production will continue to increase for the next decade,the government also plans to develop green hydrogenproduction as well as direct electricity storage in either
batteries or other technologies, a strategy backed bycompanies that have plants planned or in operation.
Denmark has developed one of the world’s largest windturbine manufacturing sectors and is also home of thecommercial fund manager Copenhagen InfrastructurePartners (CIP) which specializes in developing renewableenergy, particularly offshore wind. CIP is part of aconsortium working to build VindØ, an artificial ‘energy

KPMG contacts

island’ 100 kilometers away from the coast that is due to beestablished by 2030. This will eventually connect 10GW of
offshore wind production to Denmark through a high voltage
link and will also host energy storage, a harbor, maintenancefacilities and accommodation for workers with the option ofadding production of green fuels from electricity. 2
Michael Birkebæk Jensen, Partner, Head of Products and
ESG, KPMG in Denmark, sees this network of renewableenergy companies as a national strength: “This is something

GHG emissions split by sector (2022)
5% Energy excluding electricity
14% Electricity
27% Transport
9% Buildings
13% Industry
24% Agriculture
7% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

that has been built over time. It positions us nicely to pushahead on green power,” he says. Denmark could also draw
on its experience of extracting oil and gas by developing
carbon capture and storage work, he adds, given the overlap
in technologies and skills.

Agricultural levies
A new coalition government formed in December 2022
announced plans to introduce new levies on agriculture, thecountry’s second-biggest emitting sector, although it has
yet to publish details. In February 2023 the government’s
independent advisor recommended an emissions-based
tax that would encourage farmers to switch from beef
and dairy to crops and pork production, with a lobby grouparguing that this would lead to bankruptcies among Danish

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

farmers and have little effect on global emissions, as
reduced Danish production would just be substituted byincreased production in other countries. 3 Jensen says there
are opportunities to help decarbonize agriculture throughuse of digital technologies such as precision farming that
automates and optimizes the use of inputs.
Digital techniques can also improve the efficiency of logistics
and KPMG in Denmark has worked with the maritime industry
to optimize routes of ships, including through use of artificial
intelligence. Decarbonization will also require new fuels andDanish shipping and logistics group Maersk, which aims toachieve net zero emissions by 2040, has ordered 19 vesselsthat can run on green methanol produced by renewableelectricity, including six large ocean-going ships from Hyundai
Heavy Industries.4

KPMG contacts

In September, the company’s first green methanol powered
ship, a smaller container vessel, was named Laura Maersk
by EU Commission president Ursula von der Leyen in a
ceremony in Copenhagen. 5
On land, Danish freight operator DSV has started to electrify
its vehicle fleet in North America.6 In partnership withlogistics and ferry operator DFDS and food groups Arla andDanish Crown, the company is also planning to establish acarbon neutral food transport corridor to the UK by using
electric trucks, refrigerated trailers and greener fuels.7
Denmark is also nearing the 2027 completion of a program
to electrify the majority of its state railway network by
converting 1,362 kilometers of track. 8

	“Biomasseanalyse”, Danish Energy Agency, May 2020. h­t­t­p­s://ens.dk/sites/ens.dk/files/Bioenergi/biomasseanalyse_final_ren.pdf”B1	‘Energy Island VindØ‘, Copenhagen Infrastructure Partners. h­t­t­p­s://w­w­w.cip.com/approach/our-projects/energy-island/2

	Johannes Birkebaek, ‘Taxing farming vital for Denmark‘s climate target - govt adviser‘, Reuters, 20 February 2023. h­t­t­p­s://w­w­w.reuters.com/world/europe/taxing-farming-vital-denmarks-climate-target-govt-adviser-2023-02-20/

34‘Decarbonising ocean transport‘, Maersk. h­t­t­p­s://w­w­w.maersk.com/sustainability/our-esg-priorities/climate-change/decarbonising-ocean-shipping

5‘EU Commission president names landmark methanol vessel “Laura Mærsk”’, Maersk, 14 September 2023. h­t­t­p­s://w­w­w.maersk.com/news/articles/2023/09/14/eu-commission-president-names-landmark-methanol-vessel-as-laura-maersk

	‘DSV Places Order for 10 Electrified Trucks as Part of North American Emissions-Reduction Initiative‘, DSV, 25 January 2023. h­t­t­p­s://w­w­w.dsv.com/en-us/about-dsv/press/news/us/2023/01/north-american-emissions-reduction-trucking

6	‘Danish companies teaming up to provide climate-neutral transport between Denmark and the UK‘, DSV, 20 June 2023. h­t­t­p­s://w­w­w.dsv.com/en/about-dsv/press/news/com/2023/06/danish-companies-to-provide-climate-neutral-transport7	‘Electrification programme‘, Banedanmark. h­t­t­p­s://uk.bane.dk/en/Projects/Electrification-Programme

8

41 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
-32%
-49%
-69%
-6%
-40%
-32%
3%
91%
-150%

-100%

-50%

0%

50%

100%

150%

100%

150%

Change in emissions intensity (2005–2022)
-46%
-62%
-26%
-53%
-44%
16%
52%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

50%
Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

42 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

For two decades, large companies in France have compiled
data on emissions, governed by legal and regulatory
requirements on its accuracy, and used this to set and meet
decarbonization targets. The results have been significant
reductions in corporate scope 1 and scope 2 emissions,
supported by use of France’s low carbon electricity, most ofwhich is generated by its fleet of nuclear power plants. In 2022
three of the 12 corporates with the highest ‘triple A’ rating from
CDP, an international not-for-profit environmental disclosureorganization, were listed in France.

FranceFrench companies have decarbonizeddirect emissions, partly due to government
regulations and use of low carbon nuclear
electricity, and want suppliers to do likewise.
A government focus on transport has led it
to ban flights on a few routes and increase
controls on urban car use.

43 | Net Zero Readiness Report 2023

Jérémie Joos, Partner, KPMG in France, says that for many
companies the greatest challenge comes from scope 3
emissions generated by suppliers which in some cases makeup 80 percent of the organization’s total. Ignoring these canlead to double standards as a company could replace its own
fleet with electric vehicles while contractors continued to use
diesel and petrol. He adds that corporate scope 3 emissions
often rise in line with sales, as managers for countries andregions focus on and are incentivized to increase sales rather
than meet decarbonization targets.
Most French companies working on supplier decarbonization
started doing so recently, although a few have a long recordof this. Joos says that companies that want to reduce scope 3
emissions may need to support suppliers in doing so, particularly
for dependent smaller businesses. “We need to accelerate
initiatives to fund the transition of these smaller companies,”
he says. “They don’t have the financing to decarbonize theiractivities.” One option is to offer better payment terms. Among
his clients in agriculture, food and beverages, one has offered to
fix prices for 2 years rather than the usual 6 months and anotherto pay 12 months in advance of delivery, both in order to help
fund decarbonization work.

KPMG contacts

He adds that consultants can take a role in supporting smaller
companies by helping to develop new ideas and initiatives.
To support better decision-making across its clients, KPMG
in France has integrated a process within its decarbonization
methodology that works out the carbon emissions which result
from the business’s main goals and the capital expenditurethat would be required to tackle this, providing something
meaningful to senior executives.

GHG emissions split by sector (2022)
5% Energy excluding electricity
12% Electricity
28% Transport

17% Buildings
17% Industry
16% Agriculture
6% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

From planes to trains

Global sector summaries

CountryCountry profiles
profilesKPMG contacts

Change in absolute emissions (2005–2022)-21%

Across the economy overall emissions intensity has halved
since 1990, but the highest-emitting sector transport has
seen below-average declines in recent years. To tackle
this, in May the French government banned the use ofscheduled flights for journeys that can be made in under
2.5 hours by train, although this applied to only a handful ofroutes given exceptions based on train service levels. As
part of work described by President Emmanuel Macron as“collective sobriety” in energy use, the government is alsooffering subsidies to encourage people to trade in cars forelectric bicycles.1
Sales of electric vehicles rose slightly to 21 percent of all
car sales in 2022.2 Paris is increasingly restricting access todrivers with some more-polluting vehicles already banned —although a plan to toughen these rules in the summer of2023 was postponed until January 2025 — with the eventual
intention of making the city center entirely car-free.3

About KPMG ESG

-26%
-15%
-10%
-31%
-33%
-12%
-25%
-150%

-100%

-50%

0%

50%

100%

150%

50%

100%

150%

Change in emissions intensity (2005-2022)
-34%
9%
-24%
-42%
-29%

	Lottie Limb, ‘It’s official: France bans short-haul domestic flights in favour of train
travel’, Euronews, 23 May 2023. h­t­t­p­s://w­w­w.euronews.com/green/2022/12/02/
is-france-banning-private-jets-everything-we-know-from-a-week-of-green-transportproposals

1	‘Global EV data explorer’, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/data-andstatistics/data-tools/global-ev-data-explorer

-17%
-37%

2

	‘Paris delays ban on diesel cars’, The Local Fr, 13 July 2023. h­t­t­p­s://w­w­w.thelocal.
fr/20230713/paris-delays-ban-on-diesel-cars

-150%

-100%

-50%

0%

3

EconomyEnergy excluding electricity

Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

44 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Germany’s politics provide strong support for its shift towards
net zero. The country’s Green party is one of three making up
its coalition government and people across society provide
relatively high levels of consent to pursue environmental
goals. Germany also hosts well-functioning capital markets
and a wealth of technical innovators, giving companies
access to the funding and expertise needed to decarbonize
their operations.
Key industries including automotive are changing rapidly.
Vehicle makers across the EU are required to stop selling carsthat emit carbon dioxide by 2035,1 but the country’s largest
manufacturer Volkswagen is moving faster with more than
two-thirds of its EUR180 billion (US$191 billion) 2023–27
investment budget allocated to electrification and digitization.
The company expects that a fifth of the vehicles it sells willbe all-electric as early as 2025, compared with just 7 percent
in 2022. 2

Germany
Germany has committed itself todecarbonize its economy swiftly, but whilemost political parties and industries including
automotive are strong supporters of this
aim there is debate over the pace. The
country needs to find ways to increase clean
electricity and housing efficiency.

45 | Net Zero Readiness Report 2023

“There is a large effort to move to electrification of passenger
vehicles,” says Goran Mazar, Partner, EMA and German
Head of ESG and Automotive, KPMG in Germany. “It is nota question of whether we go for electrification of passenger
vehicles, it is about how fast we get there.” Manufacturers areinvesting in green hydrogen generated with renewable energy
as the replacement fuel for commercial vehicles that needmore power than batteries can provide.
The automotive sector is also adopting circular economy
techniques, which aim to minimize waste such as throughrepairing, reusing and recycling. Mazar says that a new
EU directive on electric vehicle batteries which mandates
their recycling should reduce emissions as well as reducing
the sector’s dependency on imports of raw materials forbatteries, supporting the shift to electric vehicles. 3

KPMG contacts

Tripling electricity demand
Germany’s economy is strongly focused on manufacturing
compared with many other developed countries. Moving
energy-intensive sectors including automotive, steel andchemical production and processing from fossil fuels could
mean the country needing three times as much electricity
over the next decades as today. The country has increased
low-carbon production from a low base to generating nearly
half of its electricity, but maintaining this momentum could
be challenging. The strongest potential for wind generation

GHG emissions split by sector (2022)
5% Energy excluding electricity
31% Electricity

19% Transport
16% Buildings
19% Industry
7% Agriculture
2% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observationsin Germany is in the north of the country and off its northerncoastline, but demand is mainly in the middle and south, which
will require new grid infrastructure. Germany is unlikely todevelop new nuclear power generation as this is not supportedby the main political parties in either government or opposition.
Decarbonizing residential property faces similar practicalissues. The German government’s plans to require all new
domestic heating systems to run on at least 65 percent
renewable energy, effectively blocking the installation of newgas-fired boilers, ran into significant public opposition leading
to exemptions such as for boilers that could be converted

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

to run on hydrogen.4 More broadly, the current form of an
unfinalized EU directive would require 30 percent of residentialbuildings with the lowest energy efficiency ratings to undergo
upgrades by 2030.5 “That cannot be done by the owners ofthese properties alone,” says Dr Stefan Otremba, Partner,
Risk and Compliance Services, KPMG in Germany, adding thatgovernment subsidies or incentives are likely to be needed.
For companies in particular, the pressure to find ways todecarbonize will likely continue to increase. From 2024,
the EU’s Corporate Sustainability Reporting Directive will
require the largest listed companies to publish much more

KPMG contacts

detailed information on environmental and social issues6 andthis requirement will eventually cover some 15,000 German
companies.7 These are part of an international movement,with the International Sustainability Standards Board recently
publishing its first two standards to aim to co-ordinate these
globally.8 Otremba says that the greater availability of suchinformation, combined with the increasing environmental focus
of capital providers, will be “a huge driver” for companies toaccelerate their moves towards net zero emissions.

	Kate Abnett, ‘EU countries approve 2035 phaseout of CO2-emitting cars’, Reuters, 29 March 2023. h­t­t­p­s://w­w­w.reuters.com/business/autos-transportation/eu-countries-poised-approve-2035-phaseout-co2-emitting-cars-2023-03-28/

1	‘Volkswagen Group’s solid financial performance lays basis for profitable growth in key markets’, Volkswagen Group, 14 March 2023. h­t­t­p­s://w­w­w.volkswagen-group.com/en/press-releases/volkswagen-groups-solid-financial-performance-lays-basis-for-profitable-growth-inkey-markets-16940

2

	Goran Mazar and Arnoud Walrecht, ‘Sustainable batteries’, KPMG International, March 2023. https://kpmg.com/xx/en/home/insights/2023/03/sustainable-batteries.html

3	Holger Hansen and Riham Alkousaa, ‘Germany’s coalition agrees changes to green heating law after dispute’, Reuters, 13 June 2023. h­t­t­p­s://w­w­w.reuters.com/world/europe/germanys-coalition-agrees-changes-green-heating-law-after-dispute-2023-06-13/

4	‘Energy performance of buildings (recast)’, European Parliament, 14 March 2023. h­t­t­p­s://w­w­w.europarl.europa.eu/doceo/document/TA-9-2023-0068_EN.pdf

5	‘Get ready for a new level of ESG reporting’, KPMG International, January 2023. https://kpmg.com/xx/en/home/insights/2023/01/get-ready-for-the-next-wave-of-esg-reporting.html

6	Goran Mazar and Dr Jan-Hendrik Gnändiger, ‘Corporate Sustainability Reporting Directive (CSRD)’, KPMG in Germany. https://kpmg.com/de/en/home/insights/overview/esg/corporate-sustainability-reporting-directive.html

7	Mark Vaessen, ‘ISSB standards are now live’, KPMG International, 26 June 2023. https://kpmg.com/xx/en/home/insights/2023/06/issb-ifrss1-ifrss2-talkbook.html

846 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

50%

100%

150%

100%

150%

KPMG contacts

Change in absolute emissions (2005–2022)
-20%
-17%
-30%
-7%
-22%
-8%
-13%

-150%

-100%

-50%

0%

Change in emissions intensity (2005–2022)
-36%
80%

13%
-26%
-26%
-37%
-24%
-24%

-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

50%
Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

47 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

India has been working to decarbonize its power sector at
the same time as greatly expanding its capacity. Overall
energy consumption has more than doubled since 2000
with the country providing access to electricity for nearly
all households according to the International Energy
Agency (IEA).1 Despite this, the proportion of electricity
produced from low carbon sources has risen slightly tonearly one-quarter.
Apurba Mitra, Partner, ESG, KPMG in India, says the shift
was initially driven by government incentives to develop wind
power which attracted investments from individuals as wellas corporates and encouraged domestic manufacturing. The
solar boom since 2009 has seen a new focus on cost withthe government using reverse auctions that favor very large
solar and wind projects that use imported equipment. Overall,renewable electricity generation capacity increased from
27GW in 2000 to 154GW in 2021 according to IEA data and theagency expects it to double to at least 300GW by 2027.2

India
India is rapidly increasing renewablegeneration, which fits well with a prime
ministerial target of “energy independence”
by 2047. The government has significant
programs to decarbonize transport andindustry, but agriculture is likely to present
challenges.

48 | Net Zero Readiness Report 2023

Mitra says that falling global prices as well as government
action have supported increased use of renewables, which
now have comparable costs to coal for electricity generation.
Given intermittent supply of wind and solar, coal will still beneeded for the near future: “We are still dependent on coalfor the baseload, as we don’t have access to much naturalgas.” There are efforts to build more storage capacity,
but at present India is relatively weak on distribution andtechnology for scheduling consumption.
India has economic as well as environmental motivations
to change its energy mix. In 2021, Prime Minister Narendra
Modi set a target of “energy independence” by 2047, a
century after the country’s national independence. He said
this would include much more hydrogen production and use

KPMG contactsof electric vehicles, although also increased use of naturalgas. 3 In February 2022 the government announced a policy
which aims to make the country a hub for production andexport of green hydrogen produced with renewable energy. 4

Programs for transport and industry
Unlike most other sectors which have seen sharp declines
since 2005, India’s emissions intensity from transport has
fallen only slightly since that date. Government support forvehicle electrification has changed, with the third version of the

GHG emissions split by sector (2022)
5% Energy excluding electricity
32% Electricity
8% Transport
7% Buildings
22% Industry

20%

Agriculture

6%

Waste

Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Faster Adoption and Manufacturing of Electric vehicles (Fame)
subsidy program currently under consideration,5 following ashift from vehicles to batteries between its first and second
versions. So far, drivers of two and three-wheeled vehicles
have been more likely to shift to electric models than those offour-wheeled cars. Among larger vehicles, electric buses are
growing in popularity, supported by many being operated bypublic-sector organizations, but such a shift is not yet seen forcommercial trucks.
Industrial energy consumers in some sectors are encouraged
to reduce use through Perform, Achieve and Trade, a regulatory
instrument managed by the Ministry of Power’s Bureau ofEnergy Efficiency allowing savings to be traded.6 Work is

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

underway on subsuming this and a similar scheme for theenergy sector into a cross-sectoral trading system.
Agriculture in India, as in other countries, may find it
challenging to make significant further cuts despite somedecline in its emissions intensity. Fertilizer is subsidized bygovernment which can encourage overuse and it would be
difficult to reduce methane emissions from dairy livestock.
“This is a sector that will probably take longer than others todecarbonize,” says Mitra.
India plans to reach net zero by 2070 as part of Prime
Minister Modi’s Panchamrit climate goals. These also
include reducing emissions intensity by 45 percent by 2030

KPMG contacts

compared with 2005 levels rather than a figure for overall
volumes given the country’s economically developing
status. While this means there may be less money for
decarbonization than in some other countries, Mitra says
there are opportunities too: India is probably yet to build
half of the infrastructure it will need by 2050, meaning thiscan be constructed in an energy-efficient fashion whileother countries have to rely on retrofitting. The Panchamrit
goals for 2030 also include increasing non-fossil fuel energy
capacity to 500GW, meeting half of energy requirementsfrom renewable sources and reducing projected carbon
emissions by 1GtCO2e.7

	‘Energy in India today’, India Energy Outlook 2021, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/reports/india-energy-outlook-2021/energy-in-india-today

1	Renewables Data Explorer using data from ‘Renewables 2022’, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/data-and-statistics/data-tools/renewables-data-explorer

2	‘PM Modi sets 2047 target for becoming energy independent’, Times of India, 15 August 2021. h­t­t­p­://timesofindia.indiatimes.com/articleshow/85342771.cms

3	‘India’s green hydrogen policy’, Invest India, 9 March 2022. h­t­t­p­s://w­w­w.investindia.gov.in/team-india-blogs/indias-green-hydrogen-policy

4	‘Fame 3.0: Govt considers fresh subsidy plan for EVs’, Times of India, 13 July 2023. h­t­t­p­s://timesofindia.indiatimes.com/business/india-business/fame-3-0-govt-considers-fresh-subsidy-plan-for-evs/articleshow/101711387.cms

5	‘Perform Achieve and Trade (PAT)’, India Bureau of Energy Efficiency. h­t­t­p­s://beeindia.gov.in/en/perform-achieve-and-trade-pat-06	‘Cabinet approves India’s updated nationally determined contribution to be communicated to the United Nations Framework Convention on Climate Change’, India Ministry of Environment, Forest and Climate Change, 3 August 2022. h­t­t­p­s://pib.gov.in/PressReleasePage.
aspx?PRID=1847813

7

49 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
79%
34%
124%
157%
52%
153%
17%
35%
-150%

-100%

-50%

0%

50%

100%

150%

0%

50%

100%

150%

Change in emissions intensity (2005–2022)
-34%
-20%
-12%
-5%
-44%
-6%
-32%
-50%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

50 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

In July 2021 the Republic of Ireland committed to cutting
greenhouse gas emissions by 51 percent by 2030 comparedwith 2018 levels, on the way to reaching net zero emissions
no later than 2050.1 While there is political consensus on
these legally binding targets there are doubts about how
quickly they can be delivered. A June 2023 assessment by
Ireland’s Environmental Protection Agency projected thatthe country would reduce emissions by only 29 percent
over the period based on current trajectories.2 “We havereally ambitious targets for 2030,” says Philip Connolly,
Associate Director, Sustainable Futures, KPMG in Ireland.
“Whether or not we achieve them is another question, but
having those interim targets and being ambitious is a key
strength for Ireland as everyone knows where we have to
get to.”Ireland
Ambitious targets to halve emissions by 2030
will mean extending already extensive useof wind power through offshore projects,
although grid capacity and planning could
cause delays. Transport and the country’s dairy
and beef herds represent further challenges.

51 | Net Zero Readiness Report 2023

Ireland already has the highest percentage of its electricity
generated from onshore wind at more than 40 percent. 3 It
is now working to develop offshore wind, which as well as
meeting domestic demand could allow the country to become
an exporter of green hydrogen according to a National
Hydrogen Strategy published in July.4 The government wants
to see 5GW of offshore wind capacity by 2030 then increase
this to at least 30GW through the use of floating platforms
that can operate in deeper seas.5 In June the system operator
EirGrid concluded ORESS 1, its first auction for offshore wind
support, which approved four projects with total generation
capacity of just over 3GW, three off the east coast near
Dublin and one off the west coast county of Galway.6 Ireland
has also attracted international investment including a joint
venture between Denmark-based renewables developerØrsted and Irish utility ESB to develop up to 5GW of offshore
wind projects.7

KPMG contacts

The development of offshore wind will contribute to
the government’s target of increasing the proportion ofelectricity from renewables from just below half to up to
80 percent. 8 Russell Smyth, Head of Sustainable Futures,
KPMG in Ireland, says growth has slowed recently. “Thegrid is beginning to get saturated and the easy early wins
have been used up,” he says. “Planning and policy areproving sluggish. Things are still positive but it’s getting
harder to move that proportion.”

GHG emissions split by sector (2022)
2% Energy excluding electricity
14% Electricity
19% Transport
17% Buildings
12% Industry

35% Agriculture
1% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Transport and agriculture challenges
In July the Department of Transport cut maximum grants forprivately purchased electric vehicles from EUR5,000 (US$5,310)
to EUR3,500 although it has maintained the levels of grants
for businesses. It has also published a strategy to improvecharging infrastructure, including funding for fast chargers at
hundreds of sports clubs around the country.9 Connolly saysthat transport emissions rising by 6 percent in 2022 shows thateven with increased sales of electric vehicles more needs to bedone to offer people safe and sustainable alternatives to privatecars. He adds that cost alone is unlikely to change behavior

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

given that 2022 saw demand for petrol and diesel increasing
despite high prices.
Smyth adds that there is a lack of clarity over emissions
reductions in agriculture, Ireland’s largest source ofgreenhouse gases and dominated by dairy and beef
produced for export. While a 2021 KPMG study foundthat emissions reductions of around 20 percent could
be achieved through widespread adoption of proventechnologies, going beyond this at present would require
new technologies or reduced animal numbers.10

KPMG contacts

Note on emissions intensity relative to GDP: Ireland’s
gross domestic product rose by 159 percent between 2014
and 2022 to EUR506 billion, with a significant proportion ofthis growth caused by multinational companies booking billionsof euros of international revenues in the country. This meansthat measures of emissions intensity based on GDP tend tooverstate Ireland’s recent progress on decarbonization. The
country’s Central Statistics Office compiles an alternative
measure designed to exclude ‘globalization effects’ called
modified gross national income, which rose by 83 percent to
EUR273 billion over the same period.11

	‘Ireland’s ambitious Climate Act signed into law’, Ireland Department of the Environment, Climate and Communications, 23 July November 2021. h­t­t­p­s://w­w­w.gov.ie/en/press-release/9336b-irelands-ambitious-climate-act-signed-into-law/1	‘Ireland projected to fall well short of climate targets, says EPA’, Ireland Environmental Protection Agency, 1 June 2023. h­t­t­p­s://w­w­w.epa.ie/news-releases/news-releases-2023/ireland-projected-to-fall-well-short-of-climate-targets-says-epa.php

2	Russell Smyth and James Delahunt, ‘Ireland’s offshore wind pipeline’, KPMG in Ireland, 14 March 2022. https://kpmg.com/ie/en/home/insights/2022/03/irelands-offshore-wind-pipeline-infra-gov.html

3	‘National Hydrogen Strategy’, Ireland Department of the Environment, Climate and Communications, 12 July 2023. h­t­t­p­s://w­w­w.gov.ie/en/publication/624ab-national-hydrogen-strategy/4	‘Offshore Wind Delivery Taskforce’, Ireland Department of the Environment, Climate and Communications, 11 August 2022. h­t­t­p­s://w­w­w.gov.ie/en/publication/c8749-offshore-wind-delivery-taskforce/5	‘Renewable Electricity Support Scheme: ORESS 1 final auction results’, EirGrid, 14 June 2023. h­t­t­p­s://w­w­w.eirgridgroup.com/site-files/library/EirGrid/ORESS-1-Final-Auction-Results-(OR1FAR).pdf

6	‘ESB and Ørsted enter partnership in landmark Irish offshore wind agreement’, Ørsted, 2 June 2023. h­t­t­p­s://orsted.com/en/media/newsroom/news/2023/06/20230602683411

7

	‘Climate Action Plan 2021 — Securing Our Future’, Ireland Department of the Taoiseach, 4 November 2021. h­t­t­p­s://w­w­w.gov.ie/en/press-release/16421-climate-action-plan-2021-securing-our-future/8	‘Changes to grants for privately purchased electric vehicles’, Ireland Department for Transport, 22 March 2023. h­t­t­p­s://w­w­w.gov.ie/en/press-release/e0766-changes-to-grants-for-privately-purchased-electric-vehicles/9	‘Ireland’s 2030 carbon emissions targets — an economic impact assessment for the agriculture sector’, KPMG in Ireland, October 2021. https://assets.kpmg.com/content/dam/kpmg/ie/pdf/2021/11/ie-ireland-2030-carbon-emissions-targets.pdf

10	‘Annual National Accounts 2022: GNI* and De-Globalised Results’, Ireland Central Statistics Office, 14 July 2023. h­t­t­p­s://w­w­w.cso.ie/en/releasesandpublications/ep/p-ana/annualnationalaccounts2022/gniandde-globalisedresults/

11

52 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

0%

50%

100%

150%

0%

50%

100%

150%

KPMG contacts

Change in absolute emissions (2005–2022)
-17%
-43%
-7%
-6%
-20% -8%
-3%

-150%

-100%

-50%

Change in emissions intensity (2005–2022)
-66%
-54%
-62%
-61%
-73%
-46%

-150%
Economy-100%
Energy excluding electricity-50%
Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

53 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Italy has made strong progress on energy efficiency, with
the International Energy Agency (IEA) noting in a recent
report that since 2010 energy demand has decoupled from
economic growth and that the country is on track to reachits 2030 national target in this area.1 The country is alsoplanning to end use of coal to generate electricity by 2025
and may manage this in 2024, its environment minister
Gilberto Pichetto Fratin said in June. It increased its use ofcoal in 2022 to provide alternatives to gas imported from
Russia, but the country intends to increase the proportionof electricity generated from renewables from one-third to
two-thirds by 2030, he added, although there are no plansto reintroduce nuclear power after the country voted toabandon it in a 1987 referendum. 2

Italy
Italy has strengths in energy efficiency
and its plans to become a hub forgreen hydrogen, but difficulties gaining
authorizations to develop new power
generation and renovate homes, particularly
older and historic ones, pose challenges.

54 | Net Zero Readiness Report 2023

The government is focused on developing green hydrogenproduced from renewable energy, based partly on Italy’s
location between northern Africa and central Europe. In June,
the German Chancellor Olaf Scholz and Italian Prime Minister
Giorgia Meloni agreed to a pipeline that could carry hydrogenas well as natural gas between their two countries, following
an announcement in May by the Italian, German and Austrian
governments supporting a SoutH2 Corridor hydrogen-readypipeline system that would stretch 3,300 kilometers between
Italy and northern Africa. 3
In October 2022, energy companies Enel Green Power and
ENI announced they will receive public funding to set up
electrolysis systems to produce green hydrogen at two ENI
refineries in Gela and Taranto.4 In June this year, French energy
company EDF’s Italian subsidiary Edison opened a renovatednatural gas-fired power station near Venice that can run partly
on hydrogen, which was presented by the government as a
strategic development in the country’s energy transition.5

KPMG contacts

Obstacles to authorization
However, some obstacles are slowing the development of
new energy generation, while infrastructure aimed at capturing
and storing carbon dioxide is limited or still to be developed.
“Authorization processes slow down the development of new
installations,” says Stefano Giacomelli, Associate Partner,
KPMG in Italy. Building a new solar photovoltaic plant requires
the involvement of many stakeholders and institutions that can

GHG emissions split by sector (2022)
4% Energy excluding electricity
25% Electricity

24% Transport

18% Buildings
17% Industry
8% Agriculture
4% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

take a long and unpredictable time to complete their work, hesays, with plans influenced by the presence of nearby historicsites in a country that has many of them.
Italy has already achieved some progress in decarbonizing
buildings. The IEA says that energy consumption is falling
for residential and commercial property, with the sector
expected to provide 60 percent of overall annual energy
savings, encouraged through government policies designed
to encourage refitting existing buildings.6 Giacomelli

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

says that further progress may be challenged by the ageof many Italian homes that were built before energysaving regulations were introduced, meaning they requirerenovation, and this will be harder for those of historic
importance. There are also conflicting demands on thegovernment to provide more social housing.

KPMG contacts

Carbon Border Adjustment Mechanism. Riccardo Lucarelli,Assistant Manager — Sustainability & Climate Change
Services, KPMG in Italy, says it will be important to ensurethat these changes encourage decarbonization in a targeted
way, such as through developing green hydrogen and carbon
capture and storage.

The country’s industrial users will be affected by thewithdrawal of almost all free allowances under the EU
Emissions Trading Scheme and the transition to the bloc’s	‘Energy efficiency’, Italy 2023 energy policy review, International Energy Agency, May 2023. h­t­t­p­s://w­w­w.iea.org/reports/italy-2023

1

	Francesca Landini, ‘Italy could abandon coal by 2024, environment minister says’, Reuters, 5 June 2023. h­t­t­p­s://w­w­w.reuters.com/world/europe/italy-could-abandon-coal-by-2024-environment-minister-says-2023-06-05/

2

	Rachel More and Francesca Landini, ‘Germany, Italy support new hydrogen-ready pipeline project’, Reuters, 8 June 2023. h­t­t­p­s://w­w­w.reuters.com/business/energy/germany-italy-support-new-hydrogen-ready-pipeline-project-2023-06-08/3	‘Green hydrogen: IPCEI Hy2USE to fund joint projects in Gela and Taranto between Enel Green Power and ENI’, ENI, 13 October 2022. h­t­t­p­s://w­w­w.eni.com/en-IT/media/press-release/2022/10/green-hydrogen-projects-gela-taranto.html

4	Giancarlo Navach and Francesca Landini, ‘Edison opens ‘strategic’ hydrogen-ready power plant near Venice’, Reuters, 16 June 2023. h­t­t­p­s://w­w­w.reuters.com/business/energy/edison-inaugurates-power-station-running-hydrogengas-mix-2023-06-16/

5	‘Foreword’, Italy 2023 energy policy review, International Energy Agency (as above).

6

55 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

100%

150%

100%

150%

KPMG contacts

Change in absolute emissions (2005–2022)
-32%
-32%
-39%
-23%
-23%
-45%
3%
-48%
-150%

-100%

-50%

0%

50%

Change in emissions intensity (2005–2022)
-32%
53%
-36%
-24%
-23%
-40%
12%
-48%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

50%
Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

56 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Japan has limited land for onshore renewable power generationand few shallow seas suitable for fixed-bottom wind turbines.1
To utilize deep water areas, the government has updated
its Basic Plan on Ocean Policy and prepared legislation thatwould allow the development of floating wind turbines inJapan’s large exclusive economic zone of ocean as well as
within its much smaller territorial waters.2 The government
acknowledges that wind power plays a major role for reaching
net zero emission targets.
While the country is looking at developing green hydrogen andammonia production, doing so would require large amountsof low-carbon electricity. Ayako Torii, Manager at KPMG in
Japan, says Japan aims to supply 12 million tonnes of hydrogenannually by 2040 through the public and private sectors
investing 15 trillion yen (JPY) (US$101 billion) according to thegovernment’s revised hydrogen strategy published in June 2023.3

Japan
The government looks to develop low
carbon energy sources, including floating
wind, green hydrogen and nuclear, while
establishing green transformation policies
and initiatives including a GX League forcompanies to collaborate on decarbonization.

57 | Net Zero Readiness Report 2023

In August 2022, Prime Minister Fumio Kishida announced a new
focus on nuclear generation, representing a significant shift inpolicy.4 The country idled most its plants and planned to phaseout nuclear power by 2030 after an earthquake and tsunami
in 2011. Following Kishida’s remarks, in December 2022 thegovernment adopted a plan to extend the life of working reactors
beyond an existing 60-year limit, restart stations not currently in
use and build new reactors.5

GX League and policy
Technology is at the heart of other aspects of Japan’s
decarbonization efforts. In February 2022 the Ministry of
Economy, Trade and Industry announced plans for a GX
League, a group of companies willing to work towards carbon

KPMG contacts

neutrality by 2050 through the use of green transformation or‘GX’.6 With companies from a range of industries, the group is
working to develop plans including rules to create markets anda carbon credit exchange scheme.7
In February this year, the government published a broad GX
policy which was approved by Japan’s Cabinet in July. As wellas covering the expansion of nuclear power and renewables
and exploring the use of carbon capture and storage for power

GHG emissions split by sector (2022)
4% Energy excluding electricity

42% Electricity

16% Transport
11% Buildings
22% Industry
4% Agriculture
1% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

generation, it includes plans for the gradual introduction of anemissions trading system and carbon pricing mechanism.8
Torii says GX transition bonds will be issued to support private
investment towards decarbonization. The government isfocusing GX work on hydrogen and ammonia production, carbon
recycling fuel, fuel cells and other decarbonization technologies.
Japan has been relatively successful in decarbonizing transport, butthere are challenges ahead. Automotive manufacturers including

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Mitsubishi and Nissan were among the first to produce electricvehicles, but their success in selling hybrids that combine use offossil fuels and battery technology has led to them falling behind
Chinese, American and European manufacturers on sales of purely
electric vehicles.9 Meanwhile, public use of Japan’s renowned
rail system fell sharply during the COVID-19 pandemic leadingsome people to move to carbon-intensive car travel. However, railpassenger numbers during April and May 2023’s Golden Week
holiday period recovered to 94 percent of the 2018 level.10

KPMG contacts

The agriculture ministry has developed a strategy forsustainable food systems known as Midori, which includes
ending fossil fuel use in agriculture, forestry and fisheries by
2050 and has similarities with the EU’s ‘farm to fork’ foodsystems strategy.11 In August 2022 the ministry set interim
targets for 2030 under its strategy, including a 10.6 percent
reduction in carbon dioxide emissions.12

	‘Offshore wind power in Japan, too’, Renewable Energy Institute (Japan). h­t­t­p­s://w­w­w.renewable-ei.org/en/activities/projects/osw_message_202304.php

1	‘Japan’s new maritime policy to promote decarbonization, offshore wind power’, Japan News, 2 March 2023. h­t­t­p­s://japannews.yomiuri.co.jp/business/economy/20230302-94570/

2

	‘Japan to invest $100bn in hydrogen supply for decarbonization’, Nikkei Asia, 6 June 2023. h­t­t­p­s://asia.nikkei.com/Spotlight/Environment/Japan-to-invest-100bn-in-hydrogen-supply-for-decarbonization3

	Mayu Sakoda and Yoshifumi Takemoto, ‘Japan signals return to nuclear power to stabilise energy supply’, Reuters, 24 August 2022. h­t­t­p­s://w­w­w.reuters.com/world/asia-pacific/japan-pm-call-development-construction-new-generation-nuclear-power-plants-2022-08-24/

4	Mari Yamaguchi, ‘Japan adopts plan to maximize nuclear energy, in major shift’, Associated Press, 22 December 2022. h­t­t­p­s://apnews.com/article/russia-ukraine-business-japan-climate-and-environment-02d0b9dfecc8cdc197d217b3029c5898

5	‘GX League Basic Concept Announced, Call for Endorsing Companies Starts’, Japan Ministry of Economy, Trade and Industry, 1 February 2022. h­t­t­p­s://w­w­w.meti.go.jp/english/press/2022/0201_001.html

6	‘About GX League’, GX League. h­t­t­p­s://gx-league.go.jp/en/

7	Takeo Kumagai and Atsuko Kawasaki, ‘Japan’s green transformation policy to alter LNG contract strategies’, S&P Global Commodity Insights, 17 February 2023. h­t­t­p­s://w­w­w.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/021723-japansgreen-transformation-policy-to-alter-lng-contract-strategies

8	Ko Fujioka, ‘How success in hybrid cars turned Japan into an EV laggard’, Nikkei Asia, 29 December 2022. h­t­t­p­s://asia.nikkei.com/Business/Business-trends/How-success-in-hybrid-cars-turned-Japan-into-an-EV-laggard

9	‘Golden Week express train passengers at 94% of pre-pandemic level’, The Japan Times, 8 May 2023. h­t­t­p­s://w­w­w.japantimes.co.jp/news/2023/05/08/national/golden-week-train-passengers/

10	‘Strategy for Sustainable Food Systems, Midori’, Japan Ministry of Agriculture, Forestry and Fisheries. h­t­t­p­s://w­w­w.maff.go.jp/e/policies/env/env_policy/meadri.html

11	‘Japan sets new 2030 targets for Green Food System Strategy’, US Department of Agriculture Foreign Agricultural Service, 22 August 2022. h­t­t­p­s://w­w­w.fas.usda.gov/data/japan-japan-sets-new-2030-targets-green-food-system-strategy

12

58 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

50%

100%

150%

50%

100%

150%

KPMG contacts

Change in absolute emissions (2005–2022)
-16%
-28%
4%
-27%
-29%
-26%
2%

-150%

-100%

-50%

0%

Change in emissions intensity (2005–2022)
-21%
3%
12%
-32%
-34%
-32%
30%

-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

59 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Mexico’s work towards net zero emissions is being strengthened
under four major constituent parts according to Alicia Moreno
Lara, ESG Strategy Director, KPMG in Mexico. The Mexican
Emissions Trading System moved in 2023 from a pilot phase to an
operational one. In 2022, Mexico toughened its UN climate change
nationally determined contributions, increasing its greenhouse gas
emissions reduction target from 22 percent to 35 percent by 2030,
compared with 1990 levels, with the possibility of increasing thetarget to 40 percent if it receives sufficient international support
on finance, innovation and technology transfer.1 During recent
years the government has implemented carbon taxes at specificstate level jurisdictions and in March 2023 it launched the Mexican
sustainable taxonomy, a classification system designed to define
criteria for sustainable projects and activities that are aligned topositive environmental and social impacts.2

MexicoThe country has strengthened its
decarbonization targets and produced
sector-specific strategies with social as wellas environmental aims, while renovatinghydroelectric power plants and designing
state-level strategies for addressing climate
ambitions.

60 | Net Zero Readiness Report 2023

Challenges include establishing financial mechanisms andcommitments for long-term support as well as developing
detailed plans at federal and regional level, Lara says. Mexico
should identify and implement useful technologies and ensure
the technical skills and capacities to use these as well as toimplement mitigation and adaptation actions based on political will
and public-private collaboration.
Mexico currently generates most of its electricity from fossil fuels
but plans to change this through a range of measures, including
upgrading the hydroelectric power plants that produce much of
the country’s renewable energy.3 The country is also working tointegrate clean energy into electricity generation, substitute highcarbon fuels with natural gas in power plants and reduce technicallosses in the power grid. It is also working on the development ofsolar powered homes and the promotion of green hydrogen use.
On transport, the government is focusing on public services
where improvements also have social benefits, such as by

KPMG contacts

introducing electric bus rapid transit vehicles. Other work includes
regulations on vehicle efficiency, the development of cleantransportation programs, urban planning that increases spacefor pedestrians and the expansion and rehabilitation of the rail
network. The government has issued a decree that makes lithium,used in batteries, a strategic mineral and published a national
strategy to promote remote working and reduce commuting.
As well as participating in emissions trading and carbon pricing
mechanisms, the government is aiming to decarbonize industry
through a range of strategies, including the circular economy.

GHG emissions split by sector (2022)
11% Energy excluding electricity
16% Electricity
18% Transport
4% Buildings
26% Industry
15% Agriculture
10% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

In agriculture it is promoting fertilizer substitution, reduced
agricultural burning and the capture and management of livestock
biogas. The country is working to develop carbon capture throughits ENAREDD+ strategy to reduce emissions from deforestationand forest degradation, although it needs to set and strengthen
specific actions to meet its ambitious goals to increase the land
covered by natural protected areas.
While the government has developed numerous strategies, Larasays that a lot of initiatives in place still need to set clear rules ofoperation, including mechanisms such as the Emissions Trading
System and carbon taxes. “There are still questions over how
these will be applied, how the public, private and third sectors aregoing to collaborate, how skills and capabilities will be attained
and how we are going to access sustainable finance for leveraging
these plans,” she says.

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
16%
-11%
-4%
10%
4%
4% 48%

48%

24%
31%
-150%

-100%

-50%

0%

50%

100%

150%

100%

150%

Change in emissions intensity (2005–2022)
-12%
52%
-29%
-16%
-21%
37%
-13%

	‘Mexico announces new commitments to combat climate change at COP27’,
Government of Mexico, 14 November 2022. h­t­t­p­s://w­w­w.gob.mx/sre/prensa/mexicoannounces-new-commitments-to-combat-climate-change-at-cop27

1	‘Comunicado No. 16 La Secretaría de Hacienda presenta la Taxonomía Sostenible deMéxico’ (in Spanish), Government of Mexico, 15 March 2023. h­t­t­p­s://w­w­w.gob.mx/
shcp/prensa/comunciado-no-16-la-secretaria-de-hacienda-presenta-la-taxonomiasostenible-de-mexico-1%2	Cas Biekmann, ‘Mexico’s hydropower modernization examined’, Mexico Business
News, 1 October 2021. h­t­t­p­s://mexicobusiness.news/energy/news/mexicoshydropower-modernization-examined-150%
Economy

-100%

-50%

Energy excluding electricity

Electricity

0%Transport

50%
Buildings

Industry

Agriculture

Waste

3

61 | Net Zero Readiness Report 2023

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

The Netherlands has included net zero emissions objectives ina range of national policies, including those on waste reduction,
rural areas, energy and transport. The latest version of its
decades-old Delta flooding and water management program
includes preparing for extreme weather such as the torrential
rainfall experienced in Limburg in 2021 across the country.1 In
2019 government, companies and organizations agreed a climateagreement as part of the country’s regularly updated climate plan.

Netherlands
The country has strong ambitions andnational net zero policies, but is seeing
significant implementation problems, with
EU-driven requirements to cut nitrogen
emissions leading to mass protests by
farmers and delays to new renewable energy
plants, along with a reluctance to subsidize
emerging energy technologies.
62 | Net Zero Readiness Report 2023

But the Netherlands is experiencing problems implementing
some of these policies. A 2019 court ruling on reducing nitrogen
emissions, which led to a plan to close around 11,200 livestock
farms and significantly reduce the size of 17,600 more, resulted
in widespread protests by farmers.2 A protest party founded to
oppose these plans won more seats in March 2023 elections to
the Dutch Senate than Prime Minister Mark Rutte’s party.3 Thiswas one factor contributing to the failure of Rutte’s attempts tocontinue his coalition government in July, leading to a generalelection in November and an interim government until then.4“A lot of plans will be delayed significantly due to there being
no room for decisions,” says Ubbo van Zessen, Head of ESG,KPMG in the Netherlands.
The nitrogen reduction rules have also blocked or slowed
construction work, including some for new low carbon energy
production. In July the outgoing chief executive of the port ofRotterdam said that the need to apply for nitrogen emission
permits is hindering construction of green hydrogen and biofuel
plants by companies including Shell and Neste at the port.5

Improving existing energy technologies
The government focuses its energy development subsidies on
improving existing technologies such as solar, offshore wind andcarbon capture and storage, rather than emerging ones including
green hydrogen and geothermal. “They are not risk-minded,”says Bob Hoogendoorn, Director of Sustainability, KPMG in the

KPMG contacts

Netherlands. “They are really careful about where they spend
their money, but that means you often make stronger what
is already strong, making it difficult to develop new ideas.”
For example, the Netherlands has made strong progress ondeveloping solar power production but there are physical andadministrative constraints in grid infrastructure. This means thatin some areas the grid network operator will not allow new or
expanded connections, which particularly affects new onshore
wind parks, installation of solar energy and expansion of charging
infrastructure for electrical vehicles. As a result, more energy
storage capacity and innovation to develop this further will be a
key part of the Netherlands’ energy transition.

GHG emissions split by sector (2022)
9% Energy excluding electricity
25% Electricity
16% Transport
14% Buildings
22% Industry
10% Agriculture
4% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

The country faces issues with its carbon pricing system, which
gives some industrial exporters advantages which can work
against smaller companies in the food processing sector, althoughinternational competition and EU policies are counteracting
this. Meanwhile, the implementation of the EU’s Corporate
Sustainability Reporting Directive, requiring companies to reporton climate change as well as other impacts on the environmentand society, is likely to accelerate corporate decarbonization workand should motivate government agencies to do likewise.
The Netherlands also has the potential to develop carbon captureand storage, alternative construction materials and work to saveenergy. It has made significant progress on saving energy recently
due to high energy prices, something which is an essential partof meeting decarbonization targets and making a success of theenergy transition.

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
-26%
-21%
-31%

-4%

-21%
-39%
-21%
-5%
-32%
-150%

-100%

-50%

0%

50%

100%

150%

0%

50%

100%

150%

Change in emissions intensity (2005–2022)-42%	‘Brochure outlines Delta Programme 2023’, Netherlands National Delta
Programme, 20 September 2022. h­t­­t­p­s://english.deltaprogramma.nl/documents/
publications/2022/09/20/brochure-outlines-delta-programme-2023-english

1

-47%
-39%

	‘Why Dutch farmers are protesting over emissions cuts’, BBC News, 29 July 2022.
h­t­t­p­s://w­w­w.bbc.com/news/world-europe-62335287

2

-53%

	Bart Meijer, ‘Dutch farmers’ protest party scores big election win, shaking up Senate’,Reuters, 16 March 2023. h­t­t­p­s://w­w­w.reuters.com/world/europe/farmers-protestparty-set-shake-up-dutch-political-landscape-2023-03-15/

3

-33%
-18%

	Charlotte Van Campenhout and Bart Meijer, ‘Dutch polls, first in years without PM
Rutte at VVD helm, set for November’, Reuters, 14 July 2023. h­t­t­p­s://w­w­w.reuters.
com/world/europe/dutch-election-be-held-nov-22-nos-2023-07-14/

4

	Andy Bounds, ‘Dutch emissions laws stall €10bn of green investment at Europe’s
biggest port’, Financial Times, 19 July 2023. h­t­t­p­s://w­w­w.ft.com/content/cc024ad9f9ab-46f8-a212-a5a23b531c0e and ‘Haven van Rotterdam: als stikstofcrisis niet snel
wordt opgelost, dreigen we miljarden mis te lopen’ (in Dutch), NPO Radio 1, 9 May
2023. h­t­t­p­s://w­w­w.nporadio1.nl/nieuws/binnenland/ed4eb9c2-6145-4cb9-9942ed3636c9fd9a/directeur-haven-van-rotterdam-als-stikstofcrisis-niet-snel-wordtopgelost-dreigen-we-miljarden-mis-te-lopen

-47%

5

63 | Net Zero Readiness Report 2023

-150%
Economy

-100%

-50%

Energy excluding electricity

Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

New Zealand is one of just two countries in the NZRR where
agriculture and land use are responsible for more than half oftotal emissions. The country is a major agricultural exporter,
expecting to sell 25.1 billion New Zealand dollars (NZD)(US$15.1 billion) of dairy products and NZD11.9 billion of meat
and wool overseas in the year to June 2023.1 New Zealand’s
agricultural sector is already highly efficient and continues
to make progress in decoupling emissions from production.
However, the speed and scale of reductions in agriculturalemissions required to meet the country’s 2030 commitments
are not being realized, says Dr Charles Ehrhart, Head of Climate
Risk, Resilience and Adaptation, KPMG International andPartner, Co-Lead Climate Change, Decarbonization, ESG and
Sustainability, KPMG in New Zealand.

New Zealand
A lack of agreement on plans to reduce
emissions from livestock farming and areversed government intervention in theemissions trading scheme are causes forconcern, but the industrial and electricity
sectors are making good progress.

64 | Net Zero Readiness Report 2023

The government formed a partnership, He Waka Eke Noa,with representative organizations of farmers and growers,
which was tasked with establishing a plan to measure,manage and reduce on-farm agricultural greenhouse gas
emissions and adapt to climate change. The partnership’s work
included developing proposals for an effective system to priceagricultural emissions from 2025. In October 2022, it publisheda proposal on emission pricing at the farm level.2 Ehrhart
says: “He Waka Eke Noa has not succeeded in developing amutually acceptable approach to pricing agricultural emissions.
We are not making the progress required to identify, muchless execute, a collaborative solution to decarbonizing New
Zealand’s agriculture sector.” If a scheme for the sector
cannot be agreed with farmers, the government plans to add
agriculture to the New Zealand Emissions Trading Scheme (NZ
ETS) by January 2025.

KPMG contacts

The government’s management of the NZ ETS has itself
caused problems. In December 2022 the government decided
to loosen its price and unit settings over concerns that its
gradually increasing carbon price would contribute to higher
fuel and electricity costs for consumers, despite advice
against this from the country’s Climate Change Commission.3“The changes resulted in market participants losing

GHG emissions split by sector (2022)
3% Energy excluding electricity
6% Electricity
17% Transport
4% Buildings
13% Industry

51% Agriculture

6% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Fund for industrial decarbonization

Fund, which aims to accelerate decarbonization by providing
co-funding for initial capital costs of fuel switching to
renewables.6 KPMG in New Zealand has advised the fund’s
manager, the New Zealand Energy Efficiency and Conservation
Authority, on structuring grant funding for the steel industry.7
With GIDI support, NZ Steel will replace existing technology
with what is slated to be the first electric arc furnace in New
Zealand, reducing industrial greenhouse emissions by an
estimated 800ktCO2e annually.8

In other sectors, New Zealand is making good progress. The
government is channeling proceeds from its ETS through theGovernment Investment in Decarbonising Industry (GIDI)

Industry’s decarbonization is supported by the fact thatmost electricity comes from low-carbon sources. There iscross-party agreement on further developments to supportconfidence, failed auctions of credits and a slide in the carbon
price from around NZD90 per MtCO2e in November 2022 to
NZD35 on 5 July 2023,” says Markus Vencatachellum, Senior
Advisor, Carbon Markets practice, KPMG in New Zealand.4 The
price rose sharply on 25 July when the government announced
it was tightening price and unit settings again, having lost a
judicial review.5

KPMG contacts

clean electricity, such as easing bottlenecks on planning andpermits for new renewable generation and increased grid
capacity to support this.
Transport decarbonization is more challenging, with mostof the country lacking population densities that can support
effective public transport and neglected rail and coastal
shipping services. Ehrhart says that more coherence fromgovernment on decarbonizing the sector, including work to
encourage adoption of electric vehicles, would be welcome.

	‘Situation and outlook for primary industries’, New Zealand Ministry for Primary Industries, June 2023. h­t­t­p­s://w­w­w.mpi.govt.nz/resources-and-forms/economic-intelligence/situation-and-outlook-for-primary-industries/

1	‘Consultation on proposals to price agricultural greenhouse gas emissions’, New Zealand Ministry for the Environment, 11 October 2022. h­t­t­p­s://environment.govt.nz/news/consultaton-on-government-proposals-to-price-agricultural-greenhouse-gas-emissions/2	Marc Daalder, ‘Cabinet overrides Shaw and Commission on carbon price’, Newsroom, 16 December 2022. h­t­t­p­s://w­w­w.newsroom.co.nz/sustainable-future/cabinet-overrides-shaw-and-commission-on-carbon-price3	Agamoni Ghosh and Kshitiz Goliya, ‘New Zealand carbon prices rally as government strengthens ETS price settings’, S&P Global Commodity Insights, 27 July 2023. h­t­t­p­s://w­w­w.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/072723-newzealand-carbon-prices-rally-as-government-strengthens-ets-price-settings4	‘Emissions Trading Scheme settings updated’, New Zealand Government press release, 25 July 2023. h­t­t­p­s://w­w­w.beehive.govt.nz/release/emissions-trading-scheme-settings-updated5	‘About the Government Investment in Decarbonising Industry Fund’, New Zealand Energy Efficiency and Conservation Authority. h­t­t­p­s://w­w­w.eeca.govt.nz/co-funding/industry-decarbonisation/about-the-government-investment-in-decarbonising-industry-fund/6	‘NZ’s biggest ever emissions reduction project unveiled’, New Zealand Government press release, 21 May 2023. h­t­t­p­s://w­w­w.beehive.govt.nz/release/nz%E2%80%99s-biggest-ever-emissions-reduction-project-unveiled7	Luke Malpass, ‘Government announces massive emissions-cutting deal with NZ Steel, Contact Energy’, Stuff, 21 May 2023. h­t­t­p­s://w­w­w.stuff.co.nz/national/politics/132102525/government-announces-massive-emissionscutting-deal-with-nz-steel-contact-energy

8

65 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

100%

150%

100%

150%

KPMG contacts

Change in absolute emissions (2005–2022)
-6%
-27%
-54%

-4%
3%
-1%
28%
-3%
-5%

-150%

-100%

-50%

0%

50%

Change in emissions intensity (2005–2022)
-37%
54%
-54%
-31%
-34%
5%
-17%
-37%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

50%
Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

66 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Norway generates nearly all of its electricity from hydropower, uses this renewable electricity to heat most homes
as well as power them and has led the world in adopting
electric vehicles. The country has set a legally binding target
to reach net zero emissions by 2050 but is aiming to becarbon neutral as soon as 2030 by offsetting its emissions,
including through an agreement with the EU to take part inits Emissions Trading System despite not being a member ofthe bloc.

NorwayThe country is a leader in decarbonization
efforts with most new cars now electricallypowered, but a new government isdeveloping rather than dismantling thecountry’s economically key oil and gas
production, reflecting dilemmas over how tomake a net zero transition work.

67 | Net Zero Readiness Report 2023

But a new government elected in October 2021, led by thecenter-left Labor party with the support of the rural-focusedCenter party, said soon after that the country’s large oiland gas sector would be “developed, not dismantled”.1
In January this year it offered a record number of areas
in its Arctic territorial waters to companies for oil andgas exploration. 2 In June, its parliament approved thedevelopment of 19 oil and gas fields which will involve
investments in excess of 200 billion Norwegian krone (NOK)(US$18.4 billion), despite protests by environmentalists. 3
Carl Christian Christensen, Head of ESG Advisory &Assurance, KPMG in Norway, says that other European
countries have put pressure on Norway to produce more oiland gas to help compensate for supplies reduced following
embargos of Russian gas supply. “We are in a dilemma
where on one side we are determined to make this transition
to net zero work over time, but in the short and medium
term we still have to produce our share of what the market
needs in terms of oil and especially gas to Europe,” he says.
More broadly, Norway’s determination to decarbonize comes
into conflict with its national wealth and welfare system,
built largely on revenue from oil and gas production.

KPMG contacts

The country is developing offshore wind generation,
drawing on its experience in offshore oil and gas, and by
2040 hopes to allocate areas with the capacity to produce
30GW of electricity. In March, the government announced
competitions to build turbines in the Utsira Nord and Sørlige
Nordsjø II project areas. 4 At the same time, the building of alarge onshore wind farm of 151 turbines in Norway’s Fosen
district has led to protests and legal action by an indigenous
Sámi community who use the area for reindeer herding. 5

GHG emissions split by sector (2022)

43% Energy excluding electricity

2% Electricity
18% Transport
4% Buildings
25% Industry
6% Agriculture
2% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Electric ecosystem
Norway has led the world in electrifying road transport,with 88 percent of new cars sold in the country in 2022
either battery or plug-in hybrid electric vehicles, comparedwith 21 percent across the EU’s 27 members, and just overa quarter of all cars on the road in Norway are electric.6
The government encouraged adoption through tax breaks
and price incentives, with previously low electricity prices
providing further encouragement. This has helped develop
Norwegian start-ups, including companies like Zaptec,
which makes electric vehicle home chargers,7 and Tibber,

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

a digital native electricity supplier whose technology
helps customers charge vehicles when electricity prices
are lowest. 8 The combination of tax incentives and a fast
growing and well-functioning ecosystem has accelerated theadoption of electric vehicles especially by consumers.
In 2021 the agricultural industry agreed to reduce its
emissions by 5MtCO2e by 2030 through measures
including more climate-friendly and sustainable livestock
fodder, a shift to low carbon fuels such as electricity,
biofuels and hydrogen for farm machinery and using soil
for carbon storage. 9 But in some sectors the country is

KPMG contacts

being challenged on decarbonization by the US Inflation
Reduction Act, with Norwegian chemical manufacturer Yara
announcing a joint-venture in March to produce low-carbon‘blue’ ammonia in Texas.10
Christensen says that despite the challenges, Norway’s
consensual culture means it is likely to continue to press
on with decarbonization, including companies adopting
standards, plans and targets: “Norway is a high-trust
society. Based on experience, this will likely support thetransition towards net zero for Norway,” he says.

	‘Norway’s oil and gas sector will not be dismantled, new government says’, BBC News, 13 October 2021. h­t­t­p­s://w­w­w.bbc.com/news/world-europe-58896850

1

	Nerijus Adomaitis and Gwladys Fouche, ‘Norway plans to offer record number of Arctic oil, gas exploration blocks’, Reuters, 24 January 2023. h­t­t­p­s://w­w­w.reuters.com/business/energy/norway-offers-up-92-new-oil-gas-exploration-blocks-2023-01-24/

2

	Terje Solsvik, ‘Norway approves more than $18 billion in oil, gas investments’, Reuters, 28 June 2023. h­t­t­p­s://w­w­w.reuters.com/business/energy/norway-approves-more-than-18-bln-oil-gas-investments-2023-06-28/

3

	‘Havvind’ (in Norwegian), Norwegian Government. h­t­t­p­s://w­w­w.regjeringen.no/no/tema/energi/landingssider/havvind/id2830329/

4

	‘Respect existence or expect resistance: Protests in Norway against wind farm on Sami land’, Euronews Green, 2 June 2023. h­t­t­p­s://w­w­w.euronews.com/green/2023/06/02/respect-existence-or-expect-resistance-protests-in-norway-against-wind-farm-on-sami-land5	‘Global EV Data Explorer’, EV sales and EV stock shares for Norway and EU27 for 2022, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/data-and-statistics/data-tools/global-ev-data-explorer

6	‘About Zaptec’, Zaptec. h­t­t­p­s://brand.zaptec.com/d/K8pkbUYNXePL/press-kit-1#/company/about-zaptec-1686317475

7	‘About us’, Tibber. h­t­t­p­s://tibber.com/en/about-us8	‘Landbrukets klimaplan 2021-2030’ (in Norwegian), Norges Bondelag. h­t­t­p­s://w­w­w.bondelaget.no/bondelaget-mener/miljo-og-klima/klima/les-klimaplanen-her

9	Victoria Klesty and Rod Nickel, ‘Yara and Enbridge plan $2.9 bln ammonia plant in Texas’, Reuters, 31 March 2023. h­t­t­p­s://w­w­w.reuters.com/business/energy/yara-enbridge-eye-29-bln-texas-ammonia-plan-2023-03-31/

10

68 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
-2%
-6%
116%
-7%
-34%
-3%
-3%
-56%
-150

-100

-50

0

50

100

150

Change in emissions intensity (2005–2022)
-6%
-27%
94%
-27%
-49%
-9%
-37%

-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

50%
Buildings

100%
Industry

Agriculture

150%
Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

69 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

In October 2022 Singapore’s government said it plansto reach net zero emissions by 2050, rather than aroundthis date as previously, as well as set a target for 2030
of 60MtCO2e compared with a 2020 business as usual
projection of 77.2MtCO2e.1 “Over the last five years Singapore
has made a conscious decision to move towards net zero,”says Sharad Somani, Head of Infrastructure for KPMG Asia
Pacific and Head of KPMG ESG at KPMG in Singapore. “Fora city-state dependent on imports for almost all its suppliesof necessities and being a petrochemicals and logistics hub,this is the start of large-scale economy-wide transformation.”
He adds that the government’s reputation for stability and the
pursuit of high standards will support its increasing focus on
decarbonization.

Singapore
Singapore has committed to net zero by2050 while raising its carbon tax and looking
to neighboring countries for renewableelectricity. It is working to replace shipping’s
bunker fuel with green ammonia andcontinuing to decarbonize land transport.

70 | Net Zero Readiness Report 2023

Singapore introduced a carbon tax in 2019, the first country in
the region to do so, which applies to about 50 high-emitting
facilities. It is currently set at SGD5 (US$3.67) per tonne ofcarbon dioxide equivalent emitted but will rise sharply to
SGD25 at the start of 2024 then to SGD45 in 2026, with arange from SGD50-80 planned for 2030. 2 The government
has also legislated for companies to appoint energy managers
and publish energy conservation plans on a voluntary basis,
which it hopes will help develop business opportunities ingreen financial services.
Almost all of the city-state’s energy comes from imported
fossil fuels and there is very little space for renewableenergy production, although the government envisages theinstallation of about 2GW of roof-top and floating solar by2030. Last year the Energy Market Authority of Singapore
launched a tender for the import of up to 4GW of low-carbon
electricity by 2035 from neighboring countries. In March thisyear it granted conditional approval for 1GW of renewable

KPMG contacts

electricity from Cambodia through subsea cables of morethan 1,000 kilometers in length. 3 The remaining 3GW is
expected to be awarded by end of 2023. By 2050 thecountry is looking to develop green hydrogen produced withrenewable energy as its main energy source and is runningresearch and proof of concept work, which should provide
opportunities to develop an import and export hub for greenhydrogen given its experience in research and development. 4

GHG emissions split by sector (2022)
6% Energy excluding electricity
30% Electricity
8% Transport
1% Buildings

46% Industry

0% Agriculture
8% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

The city-state imports water from neighboring Malaysia
under a long-term water supply agreement which runs until
2061. 5 Singapore plans to become water independent before
that date through rain water harvesting, desalination plants
and water recycling as well as imported water. Desalination
is highly energy intensive so the water authority PUB is
working on technology improvements to improve efficiency.6

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Cleaning up transhipment
Singapore hosts the world’s largest port for transhipment,
the process of moving cargo from one vessel to anotheras part of a journey. Shipping currently relies on bunker oil,which generates local air pollution as well greenhouse gas
emissions, but following feasibility and safety work the
Maritime and Port Authority of Singapore expects it canstart fueling vessels with green ammonia produced withrenewable electricity from 2026.7 It has also published along-term decarbonization plan for its maritime sector. 8

KPMG contacts

The city-state has already done a lot to decarbonize local
transport, including plans for all buses to run on electricity by
2025. It has cut the number of certificates of entitlement for
private car ownership it auctions to enforce zero growth inoverall numbers.9 As a result, the 3-month average cost of a
10-year certificate for a larger car tripled from SGD39,500 in
December 2019 to SGD118,900 in July 2023.10

	‘Singapore Commits to Achieve Net Zero Emissions by 2050 and to a Revised 2030 Nationally Determined Contribution’, Singapore National Climate Change Secretariat, 25 October 2022. h­t­t­p­s://w­w­w.nccs.gov.sg/media/press-releases/singapore-commits-to-achieve-net-zero/1	‘Carbon tax’, Singapore National Climate Change Secretariat. h­t­t­p­s://w­w­w.nccs.gov.sg/singapores-climate-action/mitigation-efforts/carbontax/2	‘EMA Grants Conditional Approval for 1 Gigawatt (GW) of Electricity Imports from Cambodia’, Singapore Energy Market Authority, 16 March 2023. h­t­t­p­s://w­w­w.ema.gov.sg/media_release.aspx?news_sid=20230316xWTI36SCKjwW

3	Sharad Somani, ‘Taking Singapore forward as a regional green hydrogen hub’, KPMG in Singapore, 2 July 2022. https://kpmg.com/sg/en/home/media/press-contributions/2022/07/taking-singapore-forward-as-a-regional-green-hydrogen-hub.html

4	‘Water agreements’, Singapore Ministry of Foreign Affairs. h­t­t­p­s://w­w­w.mfa.gov.sg/SINGAPORES-FOREIGN-POLICY/Key-Issues/Water-Agreements5	‘Desalinated water’, Singapore PUB. h­t­t­p­s://w­w­w.pub.gov.sg/watersupply/fournationaltaps/desalinatedwater

6	Rong wei Neo, ‘INTERVIEW: Singapore’s MPA sees earliest ammonia bunkering from 2026, methanol pilot to pave way’, S&P Global Commodity Insights, 3 July 2023. h­t­t­p­s://w­w­w.spglobal.com/commodityinsights/en/market-insights/latest-news/lng/070323-interviewsingapores-mpa-sees-first-ammonia-bunkering-from-2026-methanol-pilot-to-pave-way

7	‘Maritime Singapore Decarbonisation Blueprint: Working Towards 2050’, Maritime and Port Authority of Singapore, 2022. h­t­t­p­s://w­w­w.mpa.gov.sg/maritime-singapore/sustainability/maritime-singapore-decarbonisation-blueprint8	‘Certificate of Entitlement Quota for November 2021 to January 2022, and Vehicle Growth Rate to maintain until 31 January 2025’, Singapore Land Transport Authority, 15 October 2021. h­t­t­p­s://w­w­w.lta.gov.sg/content/ltagov/en/newsroom/2021/10/news-releases/COE_
quota_for_Nov21_to_Jan_22.html

9	COE bidding results, quota premium and prevailing quota premium data from ‘Statistics’, Singapore Land Transport Authority. h­t­t­p­s://w­w­w.lta.gov.sg/content/ltagov/en/who_we_are/statistics_and_publications/statistics.html

1071 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
38%
-39%
14%
5%
14%
112%
60%
-150%

-100%

-50%

0%

50%

100%

150%

0%

50%

100%

150%

Change in emissions intensity (2005–2022)
-35%
-24%
-51%
-2%
-25%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

72 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

South Africa’s greatest opportunities to move towards net
zero at present come from the private sector. Foreign-listed
multinationals and companies with international investors
will in many cases have to increase their reporting on
climate change risks and develop plans to decarbonize.
However, there are financial pressures to delay such work.
“There is not a big drive for companies in South Africa
that are trying to make ends meet in a very slow economy
to embrace additional measures linked to net zero,” says
Pieter Scholtz, Partner and Africa ESG Lead, KPMG in
South Africa.

South Africa
Companies are likely to lead decarbonization
work but the state of the economy, slow
pace of regulatory change and unreliabilityof electricity supply are hindering progress,
while heavy-emitting industries could
be affected by the EU’s Carbon Border
Adjustment Mechanism.

73 | Net Zero Readiness Report 2023

The government is doing little to help or force companies todecarbonize, whether through legislation or other measures.
A June 2021 speech by President Cyril Ramaphosa discussed
an expansion of renewable energy, which at present provides
only a small proportion of the country’s electricity, but thishas not been sustained. “The slow pace of regulatory change
is a challenge,” says Poogendri Reddy, Associate Director,
Sustainability Services, KPMG in South Africa. Plans from2019 to break up the government-owned and coal-dependent
power group Eskom are progressing slowly, although in July
the country’s energy regulator licensed its plans to set up a
separate transmission operator.1
Eskom frequently imposes ‘load shedding’ — planned
power cuts — on customers, given a chronic lack of capacity
resulting from severe financial, plant and labor problems withcuts occurring on 288 days in 2022. In February, President
Ramaphosa declared a state of disaster because of what
he called “the electricity crisis”. 2 As part of its response,
in March the government created a new minister ofelectricity post, initially held by Kgosientsho Ramokgopa,
previously the head of the Presidency’s Investment andInfrastructure Unit. 3

KPMG contacts

The government has also allowed Eskom to bypass sulfur
dioxide pollution controls at its Kusile coal power station
so the company could resume production from generation
units proving 2GW of electricity, despite this risking severe
health problems for those living nearby. 4 “Stability of supply
right now outweighs current emissions concerns,” says
Reddy, although this has an impact on the uptake of leversfor decarbonization adopted in other countries. One example
is the slow adoption of electric vehicles if access to power
needed for charging them is unreliable and such power isstill generated from coal.

GHG emissions split by sector (2022)
19% Energy excluding electricity

38% Electricity

10% Transport
5% Buildings
15% Industry
7% Agriculture
6% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

CBAM’s industrial impact
The introduction of the EU’s Carbon Border Adjustment
Mechanism (CBAM) as well as similar schemes elsewhere
will provide the country’s heavy-emitting industrial
companies with financial reasons to decarbonize, by applying
charges on imports designed to match carbon taxes leviedon domestic producers. A February 2023 paper published bySouth Africa’s Presidential Climate Commission found that
EU countries imported an annual average of US$1.4 billion

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

of products from South Africa that could attract charges
under CBAM from 2017-21 with iron, steel and aluminumproduction most likely to be affected. 5 The South African
Revenue Service and National Treasury are considering
responses to CBAM, which will be phased in over the next
few years.
Scholtz says that some large companies in the energy andnatural resources sectors have been working on CBAM
programs for a couple of years, but the large scale of the

KPMG contacts

changes required means these will take time to implement. He
says that South African companies of all kinds need to have astrategy for net zero based on gathering accurate data on theircurrent emissions, including scope 3 ones from suppliers, thendevelop long-term plans based on these with a target net zerodate and interim reduction targets. He adds that companies
in some sectors, including energy, natural resources andtelecoms, are making good progress on such planning.

	‘Energy regulator decisions of meeting number 262 of 27 July 2023’, National Energy Regulator of South Africa. h­t ­t­p­s://w­w ­w.nersa.org.za/wp-content/uploads/bsk-pdf-manager/2023/07/Media-Statement-Energy-Regulator-Decisions-of-Meeting-No-262-of-27July-2023_-1.pdf

1	Cecilia Macaulay, ‘Eskom crisis: What does South Africa’s state of disaster mean?’, BBC News, 10 February 2023. h­t­t­p­s://w­w­w.bbc.co.uk/news/world-africa-64594499

2

	Paballo Lephaka, ‘Profile: meet SA’s Minister of Electricity, Dr Kgosientsho Ramokgopa’, SABC News, 7 March 2023. h­t­t­p­s://w­w­w.sabcnews.com/sabcnews/profile-meet-sas-minister-of-electricity-dr-kgosientsho-ramokgopa/

3	Sheree Bega, ‘Eskom’s Kusile pollution rules exemption to ease blackouts threatens health’, Mail and Guardian, 16 March 2023. h­t­t­p­s://mg.co.za/environment/2023-03-16-kusile-pollution-rules-exemption-to-ease-blackouts-threatens-health/4	‘Carbon border adjustment mechanisms and implications for South Africa’, Presidential Climate Commission, February 2023. h­t­t­p­s://w­w­w.climatecommission.org.za/publications/cbam

574 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

50%

100%

150%

50%

100%

150%

KPMG contacts

Change in absolute emissions (2005–2022)
-4%
-22%
-3%
5%

18%

-11%
3%
-2%
34%
-150%

-100%

-50%

0%

Change in emissions intensity (2005–2022)
-29%
-15%
2%
-13%
-34%
2%
-45%
-1%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

75 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESGIn March, South Korea’s government confirmed its 2030
target of cutting greenhouse gas emissions by 40 percent
compared with 2018, on the way to carbon neutrality by
2050. However, it reduced a sector-specific reduction target
for industry by planning to accelerate a shift to renewableenergy and nuclear power, which the previous government
had intended to phase out. President Yoon Suk Yeol, whotook office in 2022, is expanding the use of nuclear energy
to provide more than 30 percent of electricity by 2030 whilehalving coal’s current share of more than 40 percent as partof meeting the country’s UN emissions targets.1

South Korea

Diana Ah Ryung Lee, Senior Manager, KPMG in Korea, sees
the way the government uses emission reduction targets as astrength. “The government seeks achievable actions that can
reduce greenhouse gas emissions and boost the economy
at the same time,” she says. However, it may be difficult to
expand renewable generation significantly given limited amountsof suitable land and it will take a lot of effort to move awayfrom existing heavy use of coal, natural gas and oil. “We stillsee chronic issues relating to energy and power generation,”she adds.

Companies supporting suppliers

Plans to cut 40 percent of emissions by 2030
involve expansion of nuclear and renewableenergy but reducing heavy use of fossil fuels
will take effort. Some manufacturing groups
are supporting suppliers in decarbonization
while the automotive sector shifts to electricvehicles.

76 | Net Zero Readiness Report 2023

Korea’s economy is reliant on manufacturing with small andmedium companies in the sector, typically suppliers of thecountry’s large industrial groups and some of the latter areproviding training and financial help for their suppliers’ efforts
to decarbonize. In an environmental strategy published in
September 2022 Samsung Electronics said it would support its
suppliers in setting and meeting emissions targets, includingby sharing research on cutting emissions from semiconductor
production. The company also committed to achieving net
zero emissions by 2050 and joined the global RE100 group of

KPMG contacts

companies that seek to use 100 percent renewable energy,
although Samsung will initially aim to achieve this only forelectricity used outside Korea.2
A range of emitters will be affected by phase 4 of Korea’s
Emissions Trading Scheme (K-ETS) which begins in 2026,
updating a scheme that started in 2015 and moved to thecurrent phase 3 in 2021.3 Lee says the changes to K-ETS
are likely to include reductions in free carbon allowances andcoverage of additional sectors, although these are yet to be
decided, and that this looks likely to encourage companies to

GHG emissions split by sector (2022)
8% Energy excluding electricity

41% Electricity

15% Transport
8% Buildings
20% Industry
4% Agriculture
4% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

increase decarbonization work. The country’s Zero Emissions
Buildings regulations already mean that new buildings must
include renewable generation capacity and from 2025 thesewill also require that operators of existing public sector buildings
remodel these.
In February, the government announced reforms to electricvehicle subsidies which will give higher weighting to theperformance and safety of vehicles as well as to technologicalinnovation and customer service levels.4 June saw Hyundai Motor,
the country’s leading automotive manufacturer whose brands
include Kia and Genesis, announcing accelerated electrificationtransition plans with a 2030 annual sales target of two million
electric vehicles constructed in both new and converted factories.5
Lee says that across the Korean automotive sector the focus is on
moving to electric-only vehicles rather than hybrids.

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)

25%
66%
42%
5%

25%

-14%
7%
21%
31%
-150%

-100%

-50%

0%

50%

100%

150%

50%

100%

150%

Change in emissions intensity (2005–2022)-27%

	Hyonhee Shin, ‘South Korea cuts 2030 emissions reductions targets for industry’,
Reuters, 21 March 2023. h­tt­ ­ps­ ://w­ww­ .reuters.com/business/sustainable-business/south-korea-cuts-2030-emissions-reductions-targets-industry-2023-03-21/

1

-10%
-27%

	‘Samsung Electronics announces new environmental strategy’, Samsung Electronics,
14 September 2022. h­t­t­p­s://news.samsung.com/us/samsung-new-environmentalstrategy-announcement-2022/

2-50% -34%
-50%
-35%

	‘South Korea approves initial wave of near-term ETS reforms’, International Carbon
Action Partnership, 5 December 2022. h­t­t­p­s://icapcarbonaction.com/en/news/southkorea-approves-initial-wave-near-term-ets-reforms

3	‘Environment ministry to reform rule on subsidies for the purchase of
EVs in 2023 to popularize EVs’, South Korea Ministry of Environment,
24 February 2023. h­t­t­p­s://eng.me.go.kr/eng/web/board/read.
do?menuId=461&orgCd=&boardId=1582640&boardMasterId=522

1%
-23%

4

	‘Hyundai Motor Way sets course for accelerated electrification and future mobility
goals at 2023 CEO investor day’, Hyundai Motor Company, 20 June 2023. h­t­t­p­s://w­w­w.hyundai.com/worldwide/en/company/newsroom/%E2%80%98hyundai-motorway%E2%80%99-sets-course-for-accelerated-electrification-and-future-mobilitygoals-at-2023-ceo-investor-day-0000017048

577 | Net Zero Readiness Report 2023

-150%
Economy

-100%

-50%

Energy excluding electricity

Electricity

0%Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Spain has developed a strong regulatory framework on
climate change by combining national and European
regulations, with membership of the EU also providing
access to finance. “As a result of that, companies andemitters need to adapt,” says Ramón Pueyo, Head of
Sustainability, KPMG in Spain. “I think we were latecomers
on climate change but citizens are now aware of how big an
issue this is and how we need to decarbonize.”

Spain
The government has ambitious plans todevelop renewable generation, phase out
nuclear and coal by 2025 and upgrade thecountry’s electrical grid, but adoption ofelectric vehicles may be slowed by a lackof public chargers and financial incentives
to switch.

78 | Net Zero Readiness Report 2023

A key part of this regulatory framework is the country’s energy
and climate plan (Plan Nacional Integrado de Energía y Clima,
PNIEC). The first version of this was published in 2020 and thegovernment is consulting on increasing its targets for 2030,
including that 81 percent of electricity and 48 percent of allenergy use would come from renewable sources.1 A draft plan
published in June 2023 also doubled the country’s 2030 target
for biogas production and nearly tripled the target for greenhydrogen, along with smaller percentage increases for wind,solar and power storage. It also confirmed plans to phase out
the use of nuclear energy and brought forward the date forending use coal for electricity from 2030 to 2025.2 In 2022
the government agreed improvements to Spain’s electricity
grid to help integrate more renewable production, including
2,700 kilometers of new transmission lines, 700 kilometersof undersea cables and upgrades to 8,000 kilometers of theexisting network.3

Electric vehicles and chargers
The government is ambitious to make progress on energy
generation but this is less true of other sectors, says Pueyo.
Transport, the highest-emitting sector, has seen electricvehicles sales grow to 8.9 percent of all cars in Spain in 2022,
but this is below the EU average of 21 percent. 4 Pueyo
says that drivers may need financial incentives and more

KPMG contacts

public chargers to encourage them to go electric, with
Spain having 20 electric vehicles for each public charging
point compared with the EU average of 13 last year. 5 The
Climate Change and Energy Transition law passed in 2021
requires Spanish ports to reduce direct emissions to zero by2050 and for the government to promote the use of rail forpassengers and freight traveling distances greater than 300
kilometers. As with transport, Pueyo adds that the buildings
sector is likely to require financial incentives to help homes
and businesses decarbonize.

GHG emissions split by sector (2022)
7% Energy excluding electricity
15% Electricity
28% Transport
11% Buildings
18% Industry
14% Agriculture
7% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Spain’s agricultural sector will be affected by the updated
version of the EU’s Common Agricultural Policy (CAP) whichcame into effect in January 2023 and includes strengthened
protections for environmental and climate objectives.
Spain’s strategic plan on how it plans to implement
CAP requirements includes financial support to develop
renewable energy production by farms as well as improving
energy efficiency through better thermal insulation ofagricultural buildings.6
Smaller companies in the industrial sector would benefit
from more pragmatic advice on decarbonization to support
smaller companies in setting plans and targets. “We have alack of awareness among managers, directors and officers
at small and medium-size companies,” says Pueyo. Thisparticularly applies to new reporting requirements under2021’s Climate Change and Energy Transition law and theEU’s Corporate Sustainability Reporting Directive.

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
-28%
20%
-57%
-18%
-5%
-44%
5%
3%
-150%

-100%

-50%

0%

50%

100%

150%

0%

50%

100%

150%

Change in emissions intensity (2005–2022)
-37%
-54%

	‘Public consultation on the draft update of 2023-2030 PNIEC’, Spain Ministry for the
Ecological Transition and the Demographic Challenge. h­t­t­p­s://energia.gob.es/en-us/
participacion/paginas/detalleparticipacionpublica.aspx?k=607

1

-28%
-17%

	Pietro Lombardi, ‘Spain raises bet on green hydrogen, biogas in draft plan’, Reuters,
28 June 2023. h­t­t­p­s://w­w­w.reuters.com/sustainability/climate-energy/spain-doublesdown-green-hydrogen-biogas-2023-06-28/

2

-30%

	‘2026 Electricity Grid Development Plan’, International Energy Agency, updated
11 May 2023. h­t­t­p­s://w ­w ­w.iea.org/policies/17479-2026-electricity-griddevelopment-plan

-21%

3

	‘Global EV data explorer’, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/data-andstatistics/data-tools/global-ev-data-explorer

-10%

4

	‘Number of electric LDVs per public charging point’, Global EV Outlook 2023,
International Energy Agency. h­t­t­p­s://w ­w ­w.iea.org/reports/global-ev-outlook-2023/
trends-in-charging-infrastructure5	‘At a glance: Spain’s CAP strategic plan’, European Commission, 24 April 2023.
h­t­t­p­s://agriculture.ec.europa.eu/system/files/2023-04/csp-a-a-glance-spain_en.pdf

679 | Net Zero Readiness Report 2023

-150%
Economy

-100%

-50%

Energy excluding electricity

Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Sweden has been a leader on sustainability for several
decades with high levels of awareness among bothcompanies and individuals. More than 90 percent of electricity
comes from low carbon sources, primarily hydropower andnuclear, and the country has cut its overall emissions intensity
by around 60 percent over the last three decades.

SwedenTo continue its strong record ofdecarbonization, Sweden will need togenerate more low carbon electricity froma range of sources including nuclear power.
The country’s geography requires the useof road freight, with companies developing
electric trucks and batteries.

80 | Net Zero Readiness Report 2023

But to go further it needs more electricity. The country could
greatly cut its remaining emissions by moving a few large
industrial coal users in sectors including mining, steel and cement
to either green hydrogen generated with low carbon electricity
or directly to electricity, says Torbjörn Westman, Partner,
KPMG Assurance Services and the Head of Assurance, KPMG
in Sweden. Finding the extra generation capacity would be asignificant challenge with no easy options. Some plans to expand
onshore wind generation are opposed by stakeholders in different
parts of Sweden, for example indigenous Sámi communities
as turbines disturb their reindeer and ways of living.1 In June thegovernment won parliamentary approval to build new nuclear
plants, 40 years after the country voted to phase them out,changing its energy target from 100 percent renewable to
100 percent fossil-free, but they remain controversial.2
Westman says that as well as small-scale nuclear, it would
make sense for the country to consider carbon capture, storageand lower consumption: “It is a combination that we need.
Renewables will not be enough.” Expanding the country’s
electricity generation to levels sufficient to meet its net zerotargets could take 20 or 30 years, he adds.

Southern people, northern energy
Most of Sweden’s population live in the south of the country
while much of energy generation potential and some heavy
industrial emitters are hundreds of kilometers to the north acrossrugged terrain, requiring more grid infrastructure that would need

KPMG contacts

capital and land to build. The country’s dispersed geography also
makes transport decarbonization challenging, as it requires useof road as well as rail for freight. Sweden has several companies
working to electrify heavy road transport, with truck maker AB
Volvo offering electric freight vehicles3 and its competitor Scania
recently announcing a jointly developed battery cell for electrictrucks with green battery maker Northvolt.4 However, their highcost can be off-putting for users.
Electric cars are now the majority of new vehicles, making up
54 percent of sales in 2022.5 Westman says growth is likely tocontinue although it may be slowed by the economic downturn

GHG emissions split by sector (2022)
5% Energy excluding electricity
14% Electricity
24% Transport
4% Buildings
27% Industry
11% Agriculture
15% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

and the government’s withdrawal of a ‘climate bonus’ subsidy
in November 2022.6 He adds that charging infrastructure willbe essential in sustaining adoption of electric cars and trucks.
In May Sweden announced it will install permanent ‘dynamic
charging’ to recharge vehicles in motion on the E20 motorway
by 2025, with plans to have 3,000 kilometers of road similarly
equipped by 2045.7
While most sectors have seen significant reductions in emissions
intensity over the last three decades, agriculture has made lessprogress. Westman says it is a particularly difficult activity todecarbonize given the high cost of new vehicles and equipment
and a lack of capital available to many farmers, meaning they tend
to keep old equipment in service for as long as possible.

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
-26%
-12%
-20%
-31%
-56%
-32%
-7%
-1%
-150%

-100%

-50%

0%

50%

100%

150%

0%

50%

100%

150%

Change in emissions intensity (2005–2022)
	Kasia Strek and Jonas Ekblom, ‘Europe’s green revolution threatens indigenous
culture’, Bloomberg, 26 June 2023. h­t­t­p­s://w­w­w.bloomberg.com/features/2023sweden-indigenous-sami-green-energy/

1

-47%

	Simon Johnson, ‘Swedish parliament passes new energy target, easing way for new
nuclear power’, Reuters, 20 June 2023. h­t­t­p­s://w­w­w.reuters.com/sustainability/
climate-energy/swedish-parliament-passes-new-energy-target-easing-way-newnuclear-power-2023-06-20/

2

-26%
-51%

	‘Electric trucks’, AB Volvo. h­t­t­p­s://w­w­w.volvotrucks.com/en-en/trucks/renewablefuels/electric-trucks.html

3

-69%

	‘Northvolt and Scania unveil green battery capable of powering trucks for 1.5 million
kilometers’, Northvolt, 19 April 2023. h­t­t­p­s://northvolt.com/articles/northvolt-scaniacell/

4

-37%
-12%

	‘Global EV data explorer’, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/data-andstatistics/data-tools/global-ev-data-explorer

5	‘Klimatbonusen upphör den 8 november’ (in Swedish), Swedish Government,
7 November 2022. h­t­t­p­s://w­w­w.regeringen.se/pressmeddelanden/2022/11/
klimatbonusen-upphor-den-8-november/

-29%

6

	Roselyne Min, ‘Sweden is building the world’s first permanent electrified road for
EVs to charge while driving’, 6 July 2023, Euronews. h­t­t­p­s://w­w­w.euronews.com/
next/2023/05/09/sweden-is-building-the-worlds-first-permanent-electrified-road-forevs-to-charge-while-dri7

81 | Net Zero Readiness Report 2023

-150%
Economy

-100%

-50%

Energy excluding electricity

Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

In June, Swiss voters approved the country’s new climate act ina referendum. This enshrines in law that Switzerland will reachnet zero greenhouse emissions by 2050 and be ‘net negative’,removing and storing more emissions than are released, after that
date. It also includes intermediate targets for emissions including
cuts by 2040 of at least 75 percent compared to 1990, as well as
sector-level targets for buildings, transport and industry for 2040
and 2050. It calls for all Swiss companies to achieve net zeroby 2050 on scope 1 and 2 emissions and encourages them todevelop plans for this before 2029.1

Switzerland
New climate act enshrines 2050 net zero
goal and includes specific targets forbuildings, transport and industry but excludes
supplier emissions and the financial sector.
From 2024 large Swiss companies will haveto disclose climate risks, impacts and plans.

82 | Net Zero Readiness Report 2023

While passing the law represents a strength for the country it
has certain weaknesses according to Patrick Schmucki, Director,
Financial Services, Corporate Responsibility Officer, KPMG in
Switzerland. “Scope 3 emissions are scoped out,” he says,referring to those caused by suppliers. This is significant given
the country has among the world’s highest emissions per person
when supply chains are included, with Switzerland’s emissions
in 2020 more than tripling if carbon emissions embedded in
trade are included.2 The act also relies on considerable levelsof offsetting and lacks a specific target for the country’s
economically vital financial services sector, although it does allow
for further sector targets to be added later.

Targeting buildings and transport
Some sectors have more demanding targets than others, with theact requiring the buildings sector to cut emissions by 82 percent
on 1990 levels by 2040. Schmucki says that the country’s building
stock is already of a relatively high quality compared with othercountries and that institutional real estate investors are engaging
well with decarbonization work. But there are questions overwhether individuals who own buildings will do likewise and someinstitutions have sold inefficient buildings to private investors. To

KPMG contacts

support change the government is providing financial support of2 billion Swiss francs (CHF) (US$2.22 billion) over 10 years to help
replace fossil fuel heating.3
The climate act sets a less severe target for the transport sectorof reducing emissions by 57 percent by 2040 compared with
1990. Schmucki says this reflects the economic importanceof logistics with high volumes of imports, exports and goods
transiting the country by road and air. “It requires more time so as
not to harm the economy of Switzerland,” he says.

GHG emissions split by sector (2022)
3% Energy excluding electricity
6% Electricity
33% Transport

25% Buildings

20% Industry
12% Agriculture
2% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Electricity is a strength for Switzerland, given it has generated
nearly all of its supply from low carbon sources for several
decades and has the lowest carbon intensity of the International
Energy Agency’s member countries.4 It relies on hydroelectricand nuclear power, with four reactors still producing significant
amounts of power despite a 2017 vote to decommission
these over time.5 The country plans to expand solar and windproduction from their present low base.
The country will soon require large companies to report on
climate change based on the international recommendations of
the Task Force on Climate-related Financial Disclosures. From
January 2024, public companies, banks and insurance companies
with more than 500 employees and CHF20 million in assets or
CHF40 million in turnover will have to publish financial risks fromclimate-related activities, the impact of these activities on the
climate, their corporate emission reduction targets and how theyplan to meet them.6

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
-19%
26%
-10%
-10%
-38%
-15%
-5%

-150%

-100%

-50%

0%

50%

100%

150%

0%

50%

100%

150%

Change in emissions intensity (2005–2022)-41%

	Julian Meitanis and Manfredi Fiorillo, ‘Swiss companies need to develop adecarbonization plan’, KPMG in Switzerland, 22 June 2023. https://kpmg.com/ch/
en/blogs/home/posts/2023/06/swiss-companies-need-develop-decarbonizationplan.html

1

-13%
-35%

	‘CO2 emissions embedded in trade, 2020’, Our World in Data.
h­t­t­p­s://ourworldindata.org/grapher/share-co2-embedded-in-trade

2

-55%

	‘Swiss companies need to develop a decarbonization plan’, KPMG in Switzerland
as above.

-39%

3

-9%

	‘Switzerland’, International Energy Agency. h­t­t­p­s://w ­w ­w.iea.org/countries/
switzerland

4	Sara Ibrahim, ‘Nuclear yes or nuclear no: where does Switzerland’s energy
strategy go?’, SWI, 21 May 2022. h­t ­t­p­s://w­w ­w.swissinfo.ch/eng/sci-tech/nuclearenergy-strategy-switzerland-russia-ukraine-electricity-renewables/47610154

5

	‘Federal Council brings ordinance on mandatory climate disclosures for large
companies into force as of 1 January 2024’, Switzerland Federal Office for theEnvironment, 23 November 2022. h­t ­t­p­s://w ­w ­w.bafu.admin.ch/bafu/en/home/
documentation/news-releases/anzeige-nsb-unter-medienmitteilungen.msgid-91859.html

-150%

-100%

-50%

6

83 | Net Zero Readiness Report 2023

EconomyEnergy excluding electricity

Electricity

Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

The United Arab Emirates has demonstrated a renewed
commitment to decarbonizing in advance of hosting thisNovember’s COP28 UN climate change conference. In July
the UAE said it plans to cut emissions by 40 percent from the1990 baseline used under the Paris Agreement, up from a
31 percent cut previously, on its way to net zero by 2050. It alsoannounced a target of producing 1.4 million tonnes of hydrogenby 2031, with 1 million tonnes of this being green hydrogenproduced with renewable energy, with the total increasing to
15 million tonnes by 2050, as well as a tripling of renewableenergy capacity between now and 2030.1 The country has anabundance of solar energy potential with two large solar parks
already in operation.

United Arab Emirates
A major oil exporter pushes to announce
decarbonization strategies before it hosts
the COP28 conference, including tripling
renewable energy capacity by 2030, greener
industry and adoption of electric vehicles.

84 | Net Zero Readiness Report 2023

Fadi Al Shihabi, Partner and Head of ESG Advisory Services,
KPMG Lower Gulf, says that on present data the UAE has work
to do on cutting emissions, but it is making significant changes.
“Because of COP28 coming up, there is a push to announce
strategies and targets to decarbonize,” he says, with “a hugeshift into implementation” likely to follow in the next couple ofyears. The country’s oil revenues provide it with the financial
resources to fund such work, including investments in researchand development which Al Shihabi thinks are likely to become
increasingly significant for the country.
It is also completing new nuclear capacity, with Emirates Nuclear
Energy Corporation saying in June that the fourth and final unit of
its Barakah energy plant in Abu Dhabi is undergoing tests before
going live, with the other three units already in service. Whenfully operational, the nuclear plant will provide around a quarter of
the UAE’s electricity and the operator says that this has alreadypushed gas demand in Abu Dhabi to an 11-year low.2

KPMG contacts

Industrial circular economy
Industry was responsible for 42 percent of the country’s
emissions in 2022, including energy-intensive productionof aluminum and steel. In June, Abu Dhabi, one of theseven emirates that make up the UAE, launched an industrial
strategy involving investment of 10 billion Emirati dirhams(AED) (US$2.72 billion) which includes environmentally
focused aspects, including circular economy regulatory work,

GHG emissions split by sector (2022)
16% Energy excluding electricity
25% Electricity
13% Transport
0% Buildings
42% Industry
1% Agriculture
3% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

procurement that considers environmental issues and incentives
for improving environmental sustainability.3 Abu Dhabi also
makes use of natural carbon sequestration, reckoning that in2018 the equivalent of around 5 percent of its carbon emissions
were removed from the atmosphere by plantations including
forests, mangrove wetlands and croplands.4

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Only a few thousand electric vehicles are currently on
the UAE’s roads but this looks set to increase rapidly withthe emirate of Dubai’s Green Mobility Strategy requiring
30 percent of public sector and 10 percent of all vehicle sales
to be either electric or hybrid by 2030. Dubai also plans for
all taxis to be hybrid or electric by 2027 and it has more than
620 electric vehicle charging stations with a target of more

KPMG contacts

than 1,000 by 2025. Abu Dhabi is exploring hydrogen fuelfor vehicles and its national energy company wants to installmore than 70,000 electric charging points across the UAE by
2030.5 Etihad Rail, the country’s recently completed national railsystem, aims to reduce the UAE’s annual transport emissions
by 8.2MtCO2e through moving freight off the roads.6

	Maha El Dahan, ‘UAE’s revised energy strategy includes big hydrogen plans’, Reuters, 11 July 2023. h­t­t­p­s://w­w­w.reuters.com/world/middle-east/uaes-revised-energy-strategy-includes-big-hydrogen-plans-2023-07-11/1	‘Greenhouse gas inventory and projections for Abu Dhabi emirate’, April 2021, Abu Dhabi Environment Agency. h­t­t­p­s://w­w­w.ead.gov.ae/-/media/Project/EAD/EAD/Documents/Resources/EAD-GHG-Executive-Summary-Report-EN-final.pdf

2	‘United Arab Emirates electric vehicle market’, US International Trade Administration. h­t­t­p­s://w­w­w.trade.gov/market-intelligence/united-arab-emirates-electric-vehicle-market

3	John Dennehy, ‘How Etihad Rail’s freight service aims to cut travel times for UAE motorists’, The National News, 16 May 2023. h­t­t­p­s://w­w­w.thenationalnews.com/uae/2023/05/16/how-etihad-rails-freight-service-will-improve-your-commute/4	‘Greenhouse gas inventory and projections for Abu Dhabi emirate’, April 2021, Abu Dhabi Environment Agency. h­t­t­p­s://w­w­w.ead.gov.ae/-/media/Project/EAD/EAD/Documents/Resources/EAD-GHG-Executive-Summary-Report-EN-final.pdf

5	‘Final unit of the Barakah plant commences operational readiness preparations’, Emirates Nuclear Energy Corporation, 8 June 2023. h­t­t­p­s://w­w­w.enec.gov.ae/news/latest-news/final-unit-of-the-barakah-plant-commences-operational-readiness-preparations/6

85 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

Change in absolute emissions (2005–2022)
74%
23%
41%
73%
139%
132%
-150%

-100%

-50%

0%

50%

100%

150%

100%

150%

Change in emissions intensity (2005–2022)
2%
-6%
-45%
1%
58%
36%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

50%
Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

86 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

United Kingdom
Successes on cutting total emissions andexpanding renewable electricity production
are welcome, but the UK faces a big
challenge in making homes more energy
efficient and converting them from natural
gas to low carbon forms of heating.

87 | Net Zero Readiness Report 2023

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

KPMG contacts

The United Kingdom has recorded some majorachievements on its journey towards net zero. It has cut
greenhouse gas emissions by almost half since 1990, oneof the best records of any developed country, while growing
the size of its economy by around two-thirds. “It shows you
can decarbonize while still growing,” says Simon Virley, Vice
Chair and Head of Energy and Natural Resources, KPMG in
the UK.

In September 2023, the government announced a “morepragmatic” approach to reaching net zero, delaying a ban
on new petrol and diesel cars from 2030 to 2035, the samedate as the EU. It also delayed bans on the installation of
new fossil fuel boilers while increasing cash grants for
replacing such boilers with heat pumps by 50 percent to
7,500 British pounds (GBP) (US$9,220). 3

About half of the UK’s electricity now comes from low
carbon sources, mainly renewables with some nuclear
energy. Coal is a rarely used standby option and renewablegeneration continues to grow rapidly, shown by theelectricity system operator National Grid registering a record
low in Great Britain’s electricity carbon intensity of 33gCO2e
per kilowatt hour on 10 April 2023, compared with quarterly
averages of 400-500gCO2e from 2010-14.1 The UK has also
led efforts on requiring companies to report on climate risks
and plans, improving transparency and encouraging action,measures that many other countries are adopting.

GHG emissions split by sector (2022)

The UK now faces major challenges on buildings, industry
and some types of transport. “We have done the easy
bit,” says Virley. “The next part may be a lot harder.” At
2021’s UK-hosted COP26 climate change conference thegovernment set a 2030 target of cutting emissions by
68 percent compared with 1990. In a report this June,the independent Climate Change Committee said that theannual rate of reduction outside electricity will likely need toquadruple to hit this, adding it was markedly less confident
the target will be reached than a year ago. 2

21% Buildings

8% Energy excluding electricity
17% Electricity

25% Transport

14% Industry
11% Agriculture
3% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Inefficient gas-heated homes
The UK has some of the least energy efficient homes in Europe4
and around four-fifths are heated with natural gas. To tackle
the latter the government wants to see 600,000 electricallypowered heat pumps installed annually by 2028, but the
Climate Change Committee says the current rate is about oneninth of this while implementation of other energy efficiency
measures continued to fall in 2022. The UK’s housing stockincludes many poorly insulated decades-old terraces as well as
tower blocks, both of which could present challenges for heatpump installation. With new homes, Laura Forzani, ESG Chief
Operating Officer, KPMG in the UK, says that decarbonization
should be embedded in the planning but this is often not

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

the case with many including natural gas boilers despite aforthcoming ban on these in new homes.
Virley says that the UK government has not ramped up
efforts on energy efficiency to nearly the same extent as
most other European countries in response to the Ukraine
war. The private sector could play a significant role inhousing’s decarbonization by making it easier for owners to
install heat pumps and insulation, offering long-term loans
to pay for this and supporting a national awareness andengagement program that includes personalized advice andeasier customer processes. 5

KPMG contacts

Many UK-based industrial emitters are interested in using
green hydrogen as a route to decarbonization, but a lack ofclarity from government over subsidies and where supplies
of hydrogen will come from is holding back progress. There
are significant challenges in the transport sector, such as
over how aviation and international shipping can switch to
low carbon fuels, but more encouragingly 23 percent ofcars sold in the UK in 2022 were electric powered.6 Usingsuch vehicles can encourage people to think more broadly
about their power consumption and consider tariffs thatoffer cheaper electricity when demand is lower, Virley says:“I think the take-up of EVs has the potential to change thepublic’s relationship with energy.”	National Grid ESO, ‘We’ve double checked the data...’, Twitter, 14 April 2023. h­t­t­p­s://twitter.com/NationalGridESO/status/1646856505872769025 National Grid ESO, Historic GB Generation Mix data for 2010-2014.
h­t­t­p­s://data.nationalgrideso.com/carbon-intensity1/historic-generation-mix/r/historic_gb_generation_mix

1	‘Better transparency is no substitute for real delivery’, UK Climate Change Committee, 28 June 2023. h­t­t­p­s://w­w­w.theccc.org.uk/2023/06/28/better-transparency-is-no-substitute-for-real-delivery/2

	‘PM recommits UK to Net Zero by 2050 and pledges a “fairer” path to achieving target to ease the financial burden on British families’, UK Prime Minister’s Office, 20 September 2023. h­t­t­p­s://w­w­w.gov.uk/government/news/pm-recommits-uk-to-net-zero-by-2050-andpledges-a-fairer-path-to-achieving-target-to-ease-the-financial-burden-on-british-families

3	Simon Levey, Jez Fredenburgh and Caroline Brogan, ‘UK behind European countries on home upgrades to combat bills and climate crisis’, Imperial College London, 14 December 2022. h­t­t­p­s://w­w­w.imperial.ac.uk/news/242271/uk-behind-european-countries-home-upgrades/4	‘Home is where the heat is’, Sustainable Homes and Buildings Coalition with KPMG in the UK, 21 October 2021. h­t­t­p­s://w­w­w.natwestgroup.com/news-and-insights/news-room/press-releases/climate/2021/oct/home-is-where-the-heat-is.html

5	‘Global EV data explorer’, International Energy Agency. h­t­t­p­s://w­w­w.iea.org/data-and-statistics/data-tools/global-ev-data-explorer

6

88 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

50%

100%

150%

100%

150%

KPMG contacts

Change in absolute emissions (2005–2022)
-37%
-46%
-64%
-16%
-15%
-36%
-5%
-64%
-150%

-100%

-50%

0%

Change in emissions intensity (2005–2022)
-49%
38%
-55%
-31%
-30%
-40%
-14%
-70%
-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

50%
Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

89 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

The United States has an abundance of renewable energy
potential, including from solar, wind, geothermal andhydropower. 2022 marked the first year that electricity fromrenewables exceeded coal with 21 percent of production
from the former and 20 percent from the latter according
to the US Energy Information Administration. Natural gas
remained the largest source with 39 percent.1 With a strong
record for innovation, the US is well-positioned to lead thetransition to a low-carbon economy but many factors hang in
the balance.

United States of America
With a strong record for innovation, the US
is well-positioned to lead the transition to a
low-carbon economy but many factors hangin the balance.

In August 2022, President Joe Biden signed into law the
Inflation Reduction Act, which contains major tax incentives
and benefits for work focused on decarbonization. 2 “Wehave consistently decarbonized and reduced our emissions
intensity, but emissions intensity is still high compared toa number of other economies,” says Rob Fisher, US ESG
Lead and Partner, KPMG in the US of the trend over the lastfew decades. The Inflation Reduction Act and increasing
investor demands are likely to lead to a further reduction inemissions, with an analysis from the National Renewable
Energy Laboratory predicting that the legislation will help the
US get to around 80 percent clean electricity by 2030. 3
New climate disclosure rules from the Securities andExchange Commission expected during 2023 should
further support investments by providing more informationand greater transparency for investors, Fisher adds.
However, the shift to renewables, which produce electricity
intermittently compared with fossil fuels and nuclear, andincreasing demands to recharge electric vehicles, will require
increasing investment in US electricity grid infrastructure.

KPMG contacts

Reducing waste, decarbonizing suppliers
The Inflation Reduction Act encourages manufacturers togo further on reducing waste, such as circular economy
efforts to find other uses for materials that would otherwise
be discarded, which reduces emissions as well as having
other environmental benefits. Fisher says that a number oflarge US-headquartered companies are also increasingly
requiring that their suppliers improve their environmental
performance, helping to decarbonize whole value chains.

GHG emissions split by sector (2022)
10% Energy excluding electricity
27% Electricity

29% Transport
10% Buildings
14% Industry
7% Agriculture
3% Waste
Source: Calculated by KPMG International using data from EDGAR,
h­t­t­p­s­:­/­/­edgar.jrc.ec.europa.eu/report_2023

90 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

For example, technology giant Microsoft requires its
suppliers to commit to reducing greenhouse gas emissions
by 55 percent by 2030 unless otherwise agreed, withsupport for some suppliers in developing countries todecarbonize through assistance and financing. The company
is aiming to become carbon negative by 2030 and says that
scope 3 emissions including those from suppliers make up
the majority of its overall emissions. 4
Fisher adds that in the US it is paramount that ESG strategies
and programs enhance financial value or they will not besustainable as either a company would lose market share or
the programs would be cut as organizations tighten their belts
through different economic cycles. The US$370 billion
allocated to energy security and climate programs in the

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

Inflation Reduction Act has helped make the near-term
economics of investing in decarbonization more viable andfinancially attractive.
KPMG in the US has seen dealmakers such as private equity
firms placing increasing weight on sustainability when
undertaking due diligence work. Recent market turmoil has
led to volumes of deals falling sharply, with global mergers
and acquisitions activity in the second quarter of this year
36 percent lower than the same period in 2022 according
to researcher Dealogic. 5 As deal levels bounce back andwith sustainability now built into due diligence processes,
a company’s ability to tell its own data-driven sustainability
story can mean a higher valuation or the difference between
whether or not a deal closes. A KPMG survey conducted

KPMG contacts

in April 2023 found that 59 percent of corporate investors
have had deals canceled due to material findings from due
diligence related to ESG reporting, while 46 percent offinancial investors had a deal canceled or opted for a pricereduction after a material ESG due diligence finding.6
Fisher notes that when it comes to sustainable consumer
products, it is important to meet people where they are. For
example, inflation-pinched American households may notalways be willing to buy the product with the least amountof emissions associated with it if it means a significant priceincrease. As more consumer-facing companies continue toembed sustainability into their processes, there should beless of a premium on sustainable products as they become
the baseline market expectation.

	Isabella O’Malley, ‘US renewable electricity surpassed coal in 2022’, Associated Press, 28 March 2023. h­t­t­p­s://apnews.com/article/renewable-energy-coal-nuclear-climate-change-dd4a0b168fe057f430e37398615155a01	‘Inflation Reduction Act changes the game for energy transformation’, Plugged In magazine, KPMG International, March 2023. https://kpmg.com/xx/en/home/industries/energy/power-utilities/plugged-in-magazine-2/inflation-reduction-act-changes-the-game-for-energytransformation.html

2	Ella Nilsen, ‘Can Biden achieve his cornerstone climate goal? Why 100% clean power is still out of reach’, CNN, 14 July 2023. h­t­t­p­s://edition.cnn.com/2023/07/14/politics/biden-clean-electricity-goal-report-card-climate/index.html

3	FAQs on environmental protection, ‘Learn about your responsibilities as a Microsoft supplier’, Microsoft. h­t­t­p­s://w­w­w.microsoft.com/en-us/procurement/supplier-conduct.aspx?activetab=pivot:primaryr11

4	Anirban Sen and Andres Gonzalez, ‘Global mergers and acquisitions plunge in second quarter, dealmakers see green shoots’, Reuters, 30 June 2023. h­t­t­p­s://w­w­w.reuters.com/markets/deals/global-mergers-acquisitions-plunge-q2-dealmakers-see-green-shoots-2023-06-30/

5	‘KPMG study: most US investors want a dedicated ESG due diligence product that can analyze risks and opportunities’, KPMG in the US, 27 July 2023. https://info.kpmg.us/news-perspectives/industry-insights-research/kpmg-esg-due-diligence-survey-2023.html

691 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

CountryCountry profiles
profilesAbout KPMG ESG

50%

100%

150%

50%

100%

150%

KPMG contacts

Change in absolute emissions (2005–2022)
-15%
-3%
-36%
-5%
-7%
-2%
5%

-150%

-100%

-50%

0%

Change in emissions intensity (2005–2022)
-37%
-34%
-39%
-30%
-30%
-13%
0%

-150%
Economy-100%
Energy excluding electricity-50%
Electricity

0%Transport

Buildings

Industry

Agriculture

Waste

Source: Calculated by KPMG International using data from EDGAR, h­t ­t ­p ­s­: ­/ ­/­e dgar.jrc.ec.europa.eu/report_2023; Energy Institute’s 2023 Statistical Review of World
Energy, h­t ­t­p­s­: ­/­/ ­w ­w ­w­.energyinst.org/statistical-review; Economist Intelligence Unit (EIU) Viewpoint; The World Bank Open Data

92 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

Country profiles

About KPMG ESG

KPMG contacts

About KPMG‘s decarbonization, climate and nature services
Business commitments to reach net zero emissions andreduce their impacts on the planet have increased rapidly.
As the global push towards decarbonization accelerates andthe impacts of climate change play out globally, businesses
are preparing for a low-carbon future — rising to stakeholder
demands for accountability on plans, action and progress.​
Strong decarbonization targets and robust transition plans todecarbonize business operations and supply chains, together
with targets and actions to reduce impacts on nature, are now
expected. Boards are under significant pressure to addressenvironmental issues, and it is critical that businesses grasp the
implications of climate and nature risks and opportunities.​
KPMG decarbonization, climate and nature teams form an
extensive global network of deep expertise, establishedservices, innovative technologies and carefully selected
alliances, spanning:​•

Climate and nature risk​•

Decarbonization strategy and implementation​•

Climate policy and incentives advisory​•

Low carbon deal advisory​

Subscribe today to receive the latest
ESG-related content straight to your inbox.

Learn more
KPMG, as a global organization,knows the intrinsic power of ESG totransform your business. KPMG ESG
professionals can show you how toenhance trust, mitigate risk and unlock
new value as you transform to build asustainable future.
Visit kpmg.com/esg to explore more.

KPMG ESG insights
For more information about how you can help
your organization in achieving its ESG goals,
check out and subscribe to ESG insights,
which is an ongoing subscription that allows
you to receive articles, publications, webcasts
and podcasts curated for ESG leaders.
kpmg.com/esg
kpmg.com/esginsights

KPMG professionals can help navigate this increasingly complex
landscape, enabling you to deliver on your environmental
ambitions for your business, people and the planet.​

93 | Net Zero Readiness Report 2023

© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

Quick reader guide

Foreword

Key insights and observations

Global sector summaries

Country profiles

About KPMG ESG

KPMG contacts

KPMG contacts
Climate Change andDecarbonization Leader, Global
Head of Renewable Energy
Mike Hayes
E: mike.hayes@kpmg.ie
Global Managing Director
David Greenall
E: dgreenall@kpmg.ca
Global Head of Transport &Logistics
Steffen Wagner
E: steffenwagner@kpmg.com
Global Head of Energy, Natural
Resources and Chemicals
Anish De
E: anishde@kpmg.com
Chief Economist
Yael Selfin
E: yael.selfin@kpmg.co.uk
Global Head of Oil & Gas
Jonathan PeacockE: jjpeacock@kpmg.com.au
Global Head of Shipping
Monique Giese
E: moniquegiese@kpmg.com

Director, Global Strategy Group
Christopher Brown
E: christopher.brown@kpmg.ie

Australia
Barry Sterland
E: bsterland@kpmg.com.au

IrelandRussell Smyth
E: russell.smyth@kpmg.ie

South Africa
Ron Stuart
E: ron.stuart@kpmg.co.za

Major projects advisory
Lisa Kelvey
E: lisa.kelvey@kpmg.co.uk

BrazilFelipe Salgado
E: felipesalgado@kpmg.com.br

Italy
PierMario Barzaghi
E: pbarzaghi@kpmg.it

South Korea
Diana Ah Ryung Lee
E: ahryunglee@kr.kpmg.com

Global Head of Industrial
Manufacturing
Stéphane Souchet
E: ssouchet@kpmg.fr

CanadaAndrew McHardy
E: amchardy@kpmg.ca

Japan
Ayako Torii
E: ayako.torii@jp.kpmg.com

Spain
Ramon Pueyo Viñuales
E: rpueyo@kpmg.es

China
Daisy Shen
E: daisy.shen@kpmg.com

MexicoAlicia Moreno
E: aliciamoreno@kpmg.com.mx

SwedenTorbjörn Westman
E: torbjorn.westman@kpmg.se

Denmark
Michael Birkebæk Jensen
E: mijensen@kpmg.com

Netherlands
Bob Hoogendoorn
E: hoogendoorn.bob@kpmg.nl

Switzerland
Patrick Schmucki
E: pschmucki@kpmg.com

FranceJeremie Joos
E: jeremiejoos@kpmg.fr

New ZealandCharles Ehrhart
E: cehrhart@kpmg.co.nz

United Arab Emirates
Fadi Al Shihabi
E: falshihabi@kpmg.com

Germany
Goran Mazar
E: gmazar@kpmg.com

NorwayCarl Christian Christensen
E: carl.christian.christensen@kpmg.no

Amro Osman
E: aosman2@kpmg.com

India
Anish De
E: anishde@kpmg.com

Singapore
Sharad Somani
E: sharadsomani@kpmg.com.sg

Senior Tax Manager —Global ESG Tax
Nicole de Jager
E: dejager.nicole@kpmg.com
Global Head of ESG Reporting
Jan-Hendrik Gnändiger
E: jgnaendiger@kpmg.com
Global Head of ESG Assurance
Mike Shannon
E: mshannon@kpmg.com
Global Head of Agribusiness
Ian Proudfoot
E: iproudfoot@kpmg.co.nz

Apurba Mitra
E: apurbamitra@kpmg.com

94 | Net Zero Readiness Report 2023

United Kingdom
Richard Andrews
E: richard.andrews@kpmg.co.uk
United States of America
Rob Fisher
E: rpfisher@kpmg.com© 2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

kpmg.com/esg

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be
no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thoroughexamination of the particular situation.
Throughout this document, “we”, “KPMG”, “us” and “our” refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity.
©2023 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.
KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG International Limited is a private English
company limited by guarantee and does not provide services to clients. For more detail about our structure please visit kpmg.com/governance.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization.
Designed by Evalueserve.
Publication name: Net Zero Readiness Report 2023
Publication number: 139001-G
Publication date: November 2023