14 Apr 2016: Analysis

Can We Reduce CO2 Emissions
And Grow the Global Economy?

Surprising new statistics show that the world economy is expanding while global carbon emissions remain at the same level. Is it possible that the elusive “decoupling” of emissions and economic growth could be happening?

by fred pearce

The statistic is startling. In the past two years, the global economy has grown by 6.5 percent, but carbon dioxide emissions from energy generation and transport have not grown at all, the International Energy Agency (IEA) reported last month. CO2 emissions in Europe, the United Sates, and — most stunningly — China have been falling. What is going on?

These numbers raise a key question of huge importance if nations are to avoid the worst effects of climate change: Is the world on a path toward “decoupling” economic activity from carbon dioxide emissions? Put another way: Is the idea of a future of “green growth,” with prosperity rising and emissions falling, real? Or as some fear, is it a dangerous myth?

When the United Nations holds an official signing ceremony for the Paris climate agreement on April 22, the hope is this high-profile event will ensure political momentum for meeting the Paris pledge to halt global warming at “well below" two degrees Celsius. But even climate scientists elated by the Paris agreement agree that, even with political will, the task will be extremely tough. Many are unsure whether to be optimists, keen to show the job can be done, or pessimists, determined to ensure nobody thinks it will be easy.

In its analysis last month, the IEA, a body linked with the Organization for Economic Co-operation and Development (OECD), reported that global CO2 emissions from energy-related activities have not risen since 2013, staying at 32.1 billion tons even as the global economy grew.

This surprising “decoupling” of emissions from economic activity was led by the two largest emitters, China and the U.S., which both registered declines in emissions of about 1.5 percent.

The IEA finding followed a similar conclusion about global emissions from an international team of climate scientists, headed by Corinne le Quere of the University of East Anglia in England, reported during the Paris climate conference last December.

A good part of the decoupling, both studies agree, is attributable to China. Its turnaround has been “quite remarkable,” says Fergus Green, an analyst of China’s energy policy at the London School of Economics. The country’s coal use grew annually by more than 8 percent between 2000 and 2013, and that growth was the biggest single cause of rising global CO2 emissions.

The carbon intensity of high-income countries has more than halved since 1970.

As recently as 2011, China got 80 percent of its electricity from coal.

But growing concern about killer smogs has triggered new controls that mean many coal-burning power plants in China have now been mothballed. Coal burning fell by 3 percent in 2015, by which time the percentage of China’s electricity produced by coal had fallen to 70 percent, according to the IEA.

Chinese emissions from oil and gas burning continue to grow, Green says. But that is more than counterbalanced by a combination of declining use of coal and reductions in energy demand from structural changes in the Chinese economy, with energy-guzzling heavy industries like cement and steel production both now declining.

Per head of population, Chinese emissions exceed those of Europe, even though average income is less than a half that of citizens of the European Union. But China seems set on the road to climate redemption. In Paris, Beijing pledged to peak emissions by 2030. In fact, it may already have done so, says Green. And even if not, he foresees only small increases from now on.

China is following a road already taken by more economically developed nations. The carbon intensity of high-income OECD countries has more than halved since 1970, meaning half as much CO2 is now emitted for every dollar of GDP.

Lately, things have gone further. U.S. emissions have been falling for more than half a decade now, as coal burning is replaced by fracked natural gas and wind power. The United States has become 28 percent richer, but 6 percent cleaner since 2000, says Nate Aden of the World Resources Institute, who reported that, since 2000, 21 countries — all in Europe, except the U.S. and Uzbekistan — have reduced their carbon emissions while growing GDP.

Britain, for instance, grew its economy by 27 percent while cutting emissions by 20 percent between 2000 and 2014.

Part of this national decoupling is a result of advanced economies offshoring heavy industry to places like China, says Aden, with most of the “decouplers” having reduced the industrial share of their economic activity. But this is a minor element, he believes. These 21 nations show an average emissions reduction of 15 percent, but cuts in the industrial share of GDP are just 3 percent.

That said, clearly not all countries are decoupling. Emissions continue to rise in much of Asia and the Middle East. From Turkey to India, enthusiasm for coal remains strong. India has plans to double its already large coal production, which the Delhi government justifies by pointing out that its per-capita emissions remain only one-tenth of those of the U.S. But optimists note that, despite the bluster, India also has big plans for expanding solar energy production.

It is far from clear, says the University of East Anglia’s le Quere, that the world has yet reached peak emissions of CO2 from energy sources — still less that this translates into a peak in greenhouse gas emissions overall. But with the three largest emitters — China, the U.S., and the European Union — all showing evidence of decoupling, the signs are suddenly rather encouraging.

The first hint that decoupling was under way came four years ago, when a report from the Netherlands Environmental Assessment Agency and the European Commission’s Joint Research Center (JRC) found that in 2012, CO2 emissions rose just 1.1 percent globally, while GDP rose 3.5 percent. Greet Janssens-Maenhout of the JRC says now: “There has been continuous and increasing decoupling over the past four years.”

The biggest cause of 'decoupling' is the dramatic growth of renewable energy.

There is no modern precedent. Global CO2 emissions growth briefly faltered in the early 1980s, in 1992, and again in 2009; but in each case this was due to a decline in economic activity.

The biggest cause of decoupling is the dramatic growth of renewable energy. Last year, more than twice as much money was put into new capacity for renewables such as solar and wind power than into new power stations burning fossil fuels, according to a new analysis by the Frankfurt School of Finance and Management. For the first time, the majority of this investment was in developing countries, with China responsible for 36 percent of the total.

The reason has as much to do with price as climate policies. The cost of photovoltaic equipment, much of it manufactured in China, has fallen by 80 percent in the past decade. As a result, auctions for solar power in Texas have recently seen prices as low as 4 cents per kilowatt hour, which is below the price of most coal-generated energy.

Renewables still only deliver about 10 percent of the total electricity generated worldwide. Even so, Ulf Moslener, a coauthor of the Frankfurt report, said recent investment in green energy has cut annual CO2 emissions from all energy sources, including transport, by about 1.5 billion tons, or 5 percent, from where they would otherwise be.

The growth of renewables is being accompanied by a sharp decline in coal burning, not only in China, but in the U.S. and elsewhere. Canadian climate blogger Kyla Mandel recently noted that a quarter of European Union countries no longer burn any coal for power generation.

This process is being amplified by a flight of capital, as investors fear that expensive coal mines and coal-burning power plants may become “stranded assets,” with no markets, as renewables ramp up and limits on CO2 emissions begin to bite. The coal industry has been hit hard, with the largest U.S. coal company, Peabody Energy, filing for Chapter 11 bankruptcy protection just this week.

This concern is likely to spread to other fossil fuels, says British energy analyst and former Greenpeace science director Jeremy Leggett. Current low oil prices may encourage oil burning and could postpone the market penetration of, for instance, electric cars. But low prices also discourage investment in new oil fields. As Leggett put it in a recent blog: “Most fossil fuel companies face a future in which they might not have the capital to expand even if they still want to.”

But there are countervailing trends. The IEA’s emissions audit does not cover all CO2 emissions. Deforestation for the past half century has been a major source of greenhouse gas emissions, although that too now appears to be declining. More worrying — because they are still increasing fast but were left out of the Paris agreement — are emissions from international aviation and shipping.

Expansion plans for the aviation industry could lead to emissions from this source tripling by 2040, says Annie Petsonk of the Environmental Defense Fund. Once these are taken into account, “the decoupling claimed for many nations disappears altogether,” says Kevin Anderson of the University of Manchester in England.

The aviation industry may reach agreement later this year on plans to offset its emissions by investing in United Nations schemes for forest conservation.

The warming effect of methane leaking from aging distribution pipes could negate the benefit of switching off coal.

But some environmentalists are concerned that the industry will simply be funding projects already promised by governments as part of their plans to meet their Paris pledges. If so, there will be no additional benefit to the planet.

There are growing concerns too about trends for some other greenhouse gases — in particular, the second most-important man-made planet warmer, methane, the main constituent of natural gas. When burned, natural gas produces energy with fewer CO2 emissions than coal. But if distribution systems leak significant amounts of gas, the warming effect of that methane could negate the benefit of switching off coal.

“Methane numbers may undermine the basic thesis [of decoupling],” says climate activist Bill McKibben, who recently wrote in The Nation that U.S. emissions of methane — “CO2’s nasty little brother” — have increased by more than 30 percent. In the article, McKibben pinpointed leakage from fracking as the likely cause.

This is a damaging failure of regulation, but at least it is fixable, at relatively low cost, according to studies by the United Nations Environment Programme. And while methane is a potent greenhouse gas, its lifetime in the atmosphere is roughly a decade, so we won’t be living with the consequences for nearly as long as those from CO2 emissions.

Even if global emissions of CO2 and other greenhouse gases can be curbed, however, this won’t fix climate change, say critics of the decoupling narrative. The big problem is that warming is driven not by annual emissions but by the accumulation of greenhouse gases in the atmosphere. And while methane may disappear relatively quickly, CO2 hangs around for centuries.

Last year, CO2 concentrations in the atmosphere exceeded 400 parts per million (ppm) for the first time. According to the U.N.’s Intergovernmental Panel on Climate Change, keeping global warming below two degrees probably requires keeping this figure below about 450 ppm. That means emitting in total no more than about 800 billion tons of CO2 from all sources — or less than 20 years worth at current rates. In practice, emissions have to be brought down to zero by mid-century.

“Set against the small and rapidly dwindling carbon [emissions] budgets associated with the Paris Agreement… the tentative signs of decoupling are of little relevance,” says Anderson, of Manchester University, an avowed pessimist. “The concept of green growth is very misleading.”

Others are more optimistic. Even if decoupling cannot limit warming to two degrees, it could deliver three or four degrees, after which the world might find ways to draw down CO2 from the atmosphere. But all agree the bottom line is that, as le Quere puts it, “we need to bring emissions down to zero. The faster we decrease the emissions, the less risk we take.”

Decoupling is real, but it is just the start.

POSTED ON 14 Apr 2016 IN Business & Innovation Climate Energy Forests Policy & Politics Policy & Politics Sustainability Africa Antarctica and the Arctic Asia Asia Australia Central & South America Europe Middle East North America North America 

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