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Breaking the Connection Between Emissions and Economic Growth

Nithin Coca headshotWords by Nithin Coca
Data & Technology
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One of the main arguments used against strong climate action is that it would have huge, adverse impacts on the economy, far greater than any future climate impacts. But as more and more countries shift to sustainability, we're seeing, for the first time ever, the decoupling of economic growth from carbon emissions.

In fact, according to the World Resources Institute (WRI), 21 countries experienced positive economic growth since 2000 while cutting carbon emissions, some dramatically. This includes several countries in Europe, aided by stronger climate policies such as the European Carbon Trading Scheme, but also, the United States, where emissions fell 6 percent and the economy grew by 28 percent over the past decade and a half.

This was confirmed in a report released last month by the International Energy Agency, which found that we have seen global greenhouse gas emissions fall for two consecutive years, without a corresponding drop in global economic growth. This was driven most by a dip in coal usage in the world's two largest economies, the U.S., and China.

There is no underestimating how big a shift this is. For most of the modern era, economic growth has been directly tied to energy, which, until recently, came mostly from fossil fuels. The more energy an economy consumed, the more goods and services it produced, and the higher its gross domestic product (GDP). Even today, there is a clear connection between per-capita energy consumption and per-capita income.

The problem is that most of the energy we used came from oil, natural gas and coal, and it was emitting huge amounts of greenhouse gases into the atmosphere. That, of course, wasn't clear until the 1960s when the connection was first made. Fifty years later, emissions are still sky-high, and we're only just starting to take necessary actions.

What is changing is that a greater amount of energy is coming from clean renewables, such as wind or solar, and efficiency is improving -- allowing us to get more economic output for each unit of energy.

“The decoupling of GDP growth and carbon emissions indicates that we may be transitioning to cleaner modes of economic growth,” Nate Aden, a research fellow with WRI, told TriplePundit.

Good policies help. In Europe, carbon trading allows for both the public and private sector to better price carbon, leading to greater efficiencies while also allowing for renewable energies to compete in a fairer market.

Certain states here in America, like California, have also led with pro-green growth policies, including carbon trading. And the positive impacts are clear to anyone. The Golden State accounts for more than 50 percent of all U.S. solar installations and is home to the largest solar companies. It also leads the country in innovation, accounting for 40 percent of venture capital investment. California did that while reducing emissions by 23 percent since its 2001 peak – far more than the United States as a whole.

This shift is just the start, and we need to go much, much further. Here in the U.S., President Barack Obama's Clean Power Plan would do just that, further reducing emissions by 6 percent while GPD would grow 13 percent between 2020 and 2025. As you well know, this plan is on hold due to unprecedented interference by the Supreme Court.

Globally, more research needs to be done on how growth can continue to allow both developed and developing countries to prosper while meeting necessary emissions-reduction goals. “Additional research is needed to understand emissions leakage, factors that have enabled decoupling, and new opportunities for industrial-sector emissions reductions,” Aden told us.

At the same time, this new research gives hope that we can counter the age-old, right-wing response, one that we've heard in the few times climate has come up in the republican presidential contest. Tackling climate change does not mean sacrificing growth, if done properly.

“Countries are more apt to reduce carbon emissions if they can also continue to provide economic opportunities,” Aden said.

The challenge is how to accelerate this process. Dropping emissions is not enough – we need drastic, immediate cuts in order to meet the goals outlined in the Paris Agreement. Even though we're seeing this shift toward decoupling, it's not enough.

“Decoupling has not happened fast enough to fully address climate challenges. Atmospheric concentrations of carbon continue to rise, and impacts are growing,” Aden said.

It's clear that this group of 21 countries is just a start. We need more and more states, cities, countries and regions to decouple growth from emissions. We need more policies that favor clean energy and more investment in low-carbon technology, particularly in developing countries where emissions are still rising today.

Still, this news gives hope. It is possible. We just need to double-down and push even harder. Only then will we see the first signs of a true revolution, the emergence of true clean-energy economies, and a break from the dirty growth model we've followed since the Industrial Revolution.

Image credit: Unsplash via Pixabay

Nithin Coca headshotNithin Coca

Nithin Coca is a freelance journalist who focuses on environmental, social, and economic issues around the world, with specific expertise in Southeast Asia.

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