How to build a greener future: Where the US ranks on Green Future Index
2021 will see investment in clean technology, the prospect of a Green Recovery, and updated country targets under the Paris Agreement on climate change. The MIT Technology Review’s Green Future Index measures the progress that countries are making towards lowering global carbon emissions. Take a closer look at where the US stands compared to its peers in its efforts to achieve net zero emissions.
By GreenPortfolio Team
March 26, 2021
Five years after the adoption of the Paris Agreement on climate change in 2016, 120 countries have set a date to achieve net-zero emissions. However, more ambitious targets are still needed. Despite accounting for nearly two thirds of global carbon emissions, these countries through their current commitments may achieve the goal of limiting warming to 2ºC by 2100, but will likely not be able to reach the more aggressive target of limiting to 1.5ºC.
What to expect in 2021?
The efforts made in 2021 will be critical. This year, many countries that have adopted the Paris Agreement will propose updated Nationally Determined Contributions (NDCs), with a mandate that terms be more ambitious than those that were set five years ago. Pandemic stimulus packages, already totaling more than $12 trillion globally according to the IMF, can spur a “green recovery” if investment is directed towards renewable energy infrastructure and other green projects. Private investment flows into green projects also continue to grow; the US SEC recently announced an increased focus on climate-related disclosures by public companies.
The MIT Technology Review’s Green Future Index takes a closer look at how 76 countries are making the transition to low carbon economies, considering five key themes critical to achieving carbon neutrality: carbon emissions, energy transition, green society, clean innovation, and climate policy. Common amongst many of the top twenty countries, branded “Climate Leaders”, is an effective public policy aligned with investment in innovation. Countries that have fallen to the bottom of the ranking, the “Climate Abstainers”, have largely disconnected from efforts to decarbonize. Most countries lie in between, balancing commitments to reduce emissions with political and economic factors, including fossil fuel dependency, that have posed challenges to effectively implementing a green agenda.
Where does the US rank?
Ranked 40 out of 76 countries in the index, the US just makes it into the cohort of countries labeled as the “Greening Middle”. These countries, ranked 21 to 40, represent those that are still in the earlier stages of policy development and the energy transition. The US’s placement is due to a combination of the relatively low albeit growing proportion of renewable energy sources in the country’s energy sector and recent absence from the Paris Agreement as well as its leadership in clean technology, energy-efficient buildings, and recycling.
Where is the US lagging?
Theme 1: Carbon Emissions
As the second largest emitter of carbon, the US will play a critical role in achieving targets for decarbonization. While the US has made some progress towards reducing carbon emission in transport, industry, and agriculture, the rate of reduction will need to be faster for the US to adequately contribute to the goals limiting warming to 1.5ºC above pre-industrial levels. Analysis by the Climate Action Tracker labeled the US efforts as “critically insufficient” in 2020.
The US, having rejoined the Paris Agreement in February 2021 under the new Biden administration, has now also committed to achieving net zero emissions by 2050. The country will set new emissions reduction targets in 2021, which according to the World Resources Institute, will need to be more ambitious that when the country first joined the Agreement in 2016.
Theme 2: Energy Transition
Fossil fuels remain an important part of the US energy sector. According to the US Energy Information Administration (EIA), in 2019, 80 percent of both US energy production and of energy consumption was from fossil fuels. Pandemic stimulus spending has continued to flow to infrastructure projects that support non-renewable sources of energy as well as to industries that have not committed to reducing emissions. The $1.9 trillion stimulus bill passed in the US in March 2021 again delayed investment in clean projects, which are instead anticipated to be part of an infrastructure bill introduced later in the year.
But the EIA also notes progress is being made. US production of coal has declined in the past decade while renewable energy production increased. 2019 also marked the first- time renewable energy contributed to a greater share of consumption than coal in the US.
Climate Leaders, Denmark and Norway, offer examples of how countries with significant oil and gas sectors are transitioning their economies. Demark, the largest oil producer in the EU, has been developing offshore wind capacity as well as green hydrogen technology - a shift that has included the transformation of the national oil company into a renewable energy company. The country, which committed to ending fossil fuel extraction by 2050 and announced at the end of 2020 that it would no longer issue new oil and gas exploration licenses, has also made investment in economic development for affected regions as part of the transition.
Where is the US better positioned?
Theme 3: Clean Innovation
Innovation is critical to continue to make incremental progress towards net zero targets. While countries now have a roadmap for a clean energy transition, the challenge of decarbonizing industry and manufacturing will require significant investment.
Two key technologies recognized as key to this transition are green hydrogen as well as the development of carbon capture and storage technologies. Green hydrogen technology is at the earliest stages of development and will depend on a combination of public and private investment to achieve the efficiency, cost, and scale required to impact emissions. Iceland’s number one position in the Green Future index is due in part to its long-standing investment and leadership these technologies.
A number of investments into green hydrogen projects have also been made in the US. As a country with an established technology sector, it is well-positioned to provide leadership in clean technology development according to the Green Future Index. Promisingly, the index notes one fifth of all green patents have originated in the US.
Theme 4: Green Society
The US is a leader in this category, ranked first amongst countries in the Green Future Index for the number of LEED green buildings relative to the country’s urban population and in the top ten countries for its recycling efforts.
While the US falls near the bottom of the ranking for meat consumption, a significant emissions contributor, the country is also creating more sustainable agriculture and land use practices, helping improve the efficiency in food production overall. The country also ranks well in foodtech private investment, supporting a shift to more plant-based diets.
Theme 5: Climate Policy
Effective public policy is closely aligned with progress towards achieving a low carbon economy – supporting innovation and promoting investment. Nine out of ten countries ranked as best performing in climate policy are also ranked in the top 10 of the Green Future Index overall.
The US, which ranks number 43 on its progress towards implementing an effective climate policy, has proposed a number of steps under the Biden Administration to advance a more substantial climate agenda. The US has set targets for reaching net zero by 2050 and net zero for emissions from electrification by 2035. The administration is also expected to propose a comprehensive infrastructure bill with investment in green technologies and jobs. With only a small portion of pandemic stimulus spending globally having gone towards green projects so far, challenges remain to implement these proposals.
What can individuals do to contribute to a greener future?
Achieving a low carbon future will require a combined effort from government and the private sectors. Citizens in their role as consumers, investors, and voters will drive business decisions, capital flows, and public policy at all levels of government.
GreenPortfolio enables individuals to research how to reduce their carbon footprint through renewable energy investments.
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