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Did We Just Decouple Emissions From Economic Growth?

Greg Heilers headshotWords by Greg Heilers
Investment & Markets
Economic Growth

“We are in the beginning of a mass extinction, and all you can talk about is money and fairy tales of eternal economic growth,” Greta Thunberg told world leaders at the U.N. Climate Action Summit in New York City in September 2019. 

But, is it wrong to assume we can have the best of both worlds?

Was 2019 a turning point?

Economists and environmentalists have long agreed on one thing: As long as global GDP grows, our emissions will, too. But in 2019, energy-related emissions remained the same as in 2018, at about 33 gigatons, while global GDP increased by nearly 3 percent, according to recent research from the International Energy Association (IEA)

What remains to be seen is whether or not this is “a definitive peak in global emissions, not just another pause in growth,” Dr. Fatih Birol, executive director of the IEA, observed in a Twitter thread last week.

A history of steady, coupled growth

The data has long supported the assumption that economic growth and emissions are strongly correlated. IEA data demonstrate that total global emissions were approximately 20.5 gigatons in 1990. Global emissions climbed steadily until, in both 2018 and 2019, they reached as much as 33.3 gigatons.

World Bank data further corroborates a link between energy emissions and GDP growth. In 1990, global GDP was around $22.6 trillion. By 2018, that number had reached almost $86 trillion.

Developing vs. developed country emissions

One nuance to the debate on greenhouse gas (GHG) emissions and economic growth is where the burden lies to decrease or slow the growth of global emissions.

Developed countries, including those in North America, Europe and East Asia, are known to have achieved prosperity through the use of heavily emitting energy sources and technologies. Developing countries, such as India and China today, are following a similar path — and many people argue these countries are entitled to achieve the same level of prosperity as the developed world, using whatever means available.

To that end, data from the IEA, the World Bank, and the International Monetary Fund (IMF) together offer a compelling summary of global development and emissions since 1990. While the developed world’s energy-related emissions peaked at 13 gigatons in 2007, emissions from the developing world continued climbing nearly every year.

Does that mean developing countries are to blame for our current crisis? Absolutely not.

Varying perspectives on the responsibilities of developing and developed nations to address climate change will persist. Despite, and perhaps to help settle that debate, the question of whether economic growth and prosperity are directly connected to emissions is one we must continue to explore.

If for no other reason, global society needs to find our way forward in what has been termed by United Nations Secretary-General António Guterres as a “Decade of Action.” This dynamic is a factor worth considering for experts building drawdown strategies.

Where do we grow from here?

As vindication for Thunberg, the data shows that total global energy-related emissions and GDP growth are related.

However, those who value economic growth needn’t be depressed. The data also shows that economic growth is still possible during years when energy-related emissions decrease. It may be slower growth, but it is still growth, nonetheless.

For the IEA’s Dr. Birol, the 2019 plateauing of energy-related emissions is “evidence that clean energy transitions are underway,” he said in a public statement last week. And, he said, that alone should fuel a growth in more investments and government policies that can in the long term, help the clean energy sector grow and thrive.

Image credit: Ralf Vetterle/Pixabay

Greg Heilers headshotGreg Heilers

Greg Heilers writes on green business and sustainability for private clients and top publications. After graduating from university, he had the privilege to learn from opportunities in France, Palestine, Scotland, Guatemala and the USA. Today, he lives in the San Francisco Bay Area, and enjoys any chance he gets to garden or hike.

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