Can we afford economic growth and limit global warming?

We cannot afford global economic growth if we want to lower CO2 emissions. To avoid disrupting earth’s climate beyond +1.5C, we have to sharply cut global CO2 emissions. Merely replacing dirty technologies for cleaner ones will not do the trick. We need to transform our economic paradigm towards degrowth. Or maybe not. I explore how much truth is in this statement with the help of three graphs that combine economic and emissions data.

Inspired by the ongoing debate about the feasibility of staying below 1.5 or 2 degrees Celsius (in scientific papers in  Nature Geoscience and Climate Change, or blogs here and there). I wanted to check whether the numbers backed my recent observation on Twitter that we cannot continue growing the economy if we are serious about CO2 emissions.

I decided to explore the topic with the help of a bunch of data from the World Bank (find all data and analysis in Supplementary Information) and three graphs.

The relation between CO2 emissions and economic production

From 1960 to 2014, global GDP and CO2 emissions show a remarkably consistent relation. As the global economy grew larger, emissions of carbon dioxide followed through. The trend replicates at the national level for all five top (cumulative) emitters. Yet, more developed economies seem to have started breaking this tight relation. The European Union has slowly lowered its emissions since the 1980s while growing its economy.  See Additional figure 1 for the data per capita.

Fig 1. Evolution of CO2 emissions and GDP 1960-2014 for the world and top emitters

The development in Europe gives us some hope. But the sheer scale of the cut in global CO2 emissions required to avoid the worse version of climate change puts that hope into perspective (see red arrow in Fig 1). What do we need to cut CO2 emissions to that level while growing our economies? Well, many things. On the highest level of aggregation, we would need to change the relationship between changes in CO2 emissions and economic growth.

The relationship between changes in CO2 emissions and economic growth

The more the world economy grew, the more global CO2 emissions increased. In other words, whenever emissions decreased, there likely was a global economic downturn. The positive relationships in Figure 2 show us this. Particularly strong in the cases of China and the United States. Interestingly, India shows an almost flat relationship. It suggests that economic growth can happen without a major impact on CO2 emissions. Yet, it also means CO2 emissions can grow even with no economic growth, see Figure 1 (and Additional figure 3).

Fig 2

A positive relationship means no economic growth can happen if we want to lower CO2 emissions. In fact, we would need to decrease the size of the economy. Whether the statement with which we opened this post is true or not depends on our ability to change this relationship. The current positive relationship makes the statement true. At the global level, it even seems to be getting worse by the decade (see Additional figure 2). Could technological change transform this relationship? Will technological innovation and change allow economic growth and a drastic cut in CO2 emissions?

Global economy evolution in a world below the carbon budget.

It depends, but probably not. Technological change will need to be strong, continued, and widely spread. Otherwise, economic growth can’t happen in a world determined to decrease CO2 emissions and escape the worst version of climate change.

Suppose we are back in 2014. Somehow, all countries on the planet agree to curb emissions following a path stringent enough to avert the worst version of climate change. All countries agree that their collective CO2 emissions cannot exceed the cumulative carbon budget of 240 GtC that scientists (recently in the news) estimate needed to avoid +1.5C warming. So far, this is difficult enough to end our conversation but bear with me for a moment.

To simplify things, I assume that global emissions will not become negative anytime before 2100. Which does not mean we do may not need massive carbon removal. Using a decrease of global CO2 emissions of 3.81% per year (around a third per decade), we could reach 2100 without exceeding our 240 GtC carbon budget and with non-negative CO2 emissions (see alternative paths in Additional figure 4).

It has been argued that this carbon budget may be too generous, for example, by Glenn Peters:

The most recent attempt published in Nature Geoscience uses a new approach, to recalculate this budget, specifically for a target of 1.5 degrees of global warming, leading to a much larger available carbon budget than previously estimated. Their results may give new hope that meeting the 1.5 degree target is not yet “physically impossible.” But it is unclear whether this study will form a new scientific consensus, and it is unwise to use the new estimates until a consensus emerges.

However, despite agreeing with Peters, I decided to use it because using a more stringent carbon budget would only reinforce the implications we can extract with a more lenient one. Particularly with regards to economic growth, the topic we explore in this post.

Fig 3

Regardless the “generous” carbon budget, our scenario with a continuous decrease of CO2 emissions by 3.81% every year until 2100 is unlikely. At a global scale, CO2 emissions fell the most right after the oil crisis of 1979. The world saw for the first, and last, time four years of consecutive decrease in global CO2 emissions. However, the largest drop was only 3.09% between 1980-1981, and the average decrease in the four years 1.37%. Far from the continuous 3.81% decrease per year required to meet the carbon budget of 240 GtC. But, for a second time, bear with me a bit longer.

Even more difficult is to achieve economic growth within the limits of the carbon budget. The carbon intensity of the world economy would need to go down, very fast and very consistently. Indeed, carbon intensity would need to fall faster than CO2 emissions to allow economic growth. It is difficult, but history tells us it could happen (see Table below from World Bank data).

Table

Between 1964 and 2014, the average rate of decrease of the global CO2 intensity was as high as 4.94%. If we manage to repeat such rapid fall in CO2 intensity, we may have a chance to realize economic growth while below the 240 GtCcarbon budget (see green projection in Figure 3). It will not be easy, though. In most recent years, the improvement of the world CO2 intensity has slowed down. Unless we improve the rhythm of change in global CO2 intensity, the size of the global economy by 2100 would need to be that of the early 2000s. In other words, we would need to degrow the economy even if we manage to decrease our CO2 intensity by more than 3% each year.

Conclusion

Can we afford global economic growth and cut CO2 emissions to escape the worst version of climate change?

No. No, unless:

  • (a) we turn upside down the relationship between economic growth and changes in CO2 emissions, or
  • (b) we agree to impose strict limits on global CO2 emissions and everyone abides by them. At the same time, we achieve strong, continued and widely spread technological change to cut CO2 intensity.

If the carbon budget we use is proven too lenient, the conditions above will become harder to meet. As a result, the impossibility to continue growing the economy while tackling climate change will be ever more pressing.

Thanks for reading,
Alejandro

PS: Exploring what technologies either option needs is out of the scope of this post. But if you are curious enough, take a look at the Additional figure 4. It shows we may need a lot of carbon capture and storage to achieve large negative CO2 emissions. To be honest, going through the Additional figure 4 numbers changed my view on CCS.

Note on carbon budget: the 240 GtC carbon budget is used here as a 880 Gt CO2 budget for cumulative emissions between 2014 to 2100. This is in overall alignment with published studies, though leaning to the higher side:

Nunez-Jimenez Alejandro – NB Energy Supplementary Information Art 1 – 29-09-2017

Additional figure 1

Fig Extra 1

Additional figure 2

Fig Extra 2

Additional figure 3

Fig Extra 3

Additional figure 4

Fig Extra 4

Additional figure 5

Fig Extra 5

Published by Alejandro Nuñez-Jimenez

PhD & Research Associate in the Group for Sustainability and Technology, at ETH Zurich. @anunezjimenez

6 thoughts on “Can we afford economic growth and limit global warming?

  1. Thanks for your good thoughts. When I was in the first year of my PhD I had similar thoughts (thought more focused on quality replacing quantity in consumption). Here is the opinion I have now on this topic: The key is on your first point under “unless”:
    I guess we do need to flip the relationship between carbon emissions and growth. Clean tech is exactly doing this. As soon as low-carbon assets become the mainstream investment and fossil-fuel based assets the risky ones, the markets work in the right direction. The question is thus how fast can we make the financial markets flip. Sure, we can also debate sufficiency. But given the limited time we have and the “power” of the energy intensive lifestyle, we cannot afford to change our economic system and its underlying growth logic.

    1. Thanks for your comment Tobi! I agree with your point about the urgency of the change. If I may, I would only add a small comment. Perhaps, we need both approaches working at the same time: (short term) using growth logic to environment’s benefit (e.g. diffusion of clean techs) and (long-term) transitioning to no-growth or different growth logic. Eventually, the CO2 budget is only one of the limits to growth we face. Most prominently, resource scarcity is another clear one (from oil to water). Economic growth as I think it is currently understood (as material growth) will have to be revisited if our economies are to be truly sustainable anytime.

      1. I can subscribe to that. But would be hard. De-growth is really hard to realize. Material de-growth might work. From quantity to quality.

    1. Thanks for your comment Miklós! Indeed, your paper seems very close and I will have a close look at it.

      Regarding your point on the GDP growth and intensity improvement, I must confess I was very surprised and I am a bit sceptical. However, I decided not to dig deeper into the measures as my intention was to provide a quick, first estimation analysis from the available World Bank data. Perhaps the problem is in using current instead of inflation-corrected dollars? Taking a quick look at this data from IMF on real global GDP growth rates suggests lower figures (somewhere between 2% p.a. and 5% p.a.) http://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD

      Nevertheless, I think lower GDP and growth figures would reinforce the implications of the analysis (e.g. steeper relation GDP growth – change in CO2 emissions, slower improvement of CO2 intensity). But your point is well taken!

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