Sunday, March 29, 2015

The puzzling flattening of carbon emissions and the problem of global growth

Last week we learned that maybe, just maybe, global carbon emissions were flat in 2014 even though the global economy supposedly grew by 3 percent. As Brad Plumer of Vox (whose work I greatly respect) points out, carbon emissions have moved up almost in lockstep with economic growth for the entire industrial age except during recessions and one year of growth 40 years ago.

This is why I use "supposedly" when referring to the global economic growth number. It's because there is another obvious and plausible explanation for the flat carbon emissions, namely, that the global economy did not grow by the stated percentage, that it may have grown only a fraction of that amount or not at all.

Economic measures are constantly being revised, and I think it is very likely that the global economic growth number for 2014 will be revised downward. Probably not to zero, but downward nonetheless. It's also possible that estimates of carbon emissions are too low. Plumer cites "notoriously unreliable" Chinese emission numbers as one reason to be skeptical.

But, even if 2014 turns out to be a year of growth without rising emissions, we shouldn't get particularly exercised. Nor should we be particularly excited if it continues for a time. This is because the only trend that will actually address climate change is a RAPID DECLINE in worldwide emissions (as Plumer rightly points out).

Plumer makes one very telling statement in this regard:

If we ever hope to stop global warming, we'll have to sever that relationship [of economic growth to emissions] — and figure out how to have economic growth while reducing emissions. (Alternatively, we could halt economic growth, but no one wants that.)

"Alternatively, we could halt economic growth, but no one wants that." Two questions arise from this observation: Is it true that "no one wants that"? Who specifically wants economic growth to continue and why?

The answer to the first question is no; there is, in fact, a small minority of people advocating an end to growth. Herman Daly, former World Bank senior economist, is the acknowledged dean of the steady-state economy movement. In a September 2005 Scientific American piece, "Economics in A Full World," he outlined his case for why there is little room for economic growth and why growth in recent decades has been uneconomic, that is, the cost of such growth has outweighed the benefits.

There are also the deep ecologists who value other species on the planet as much as our own, a view which implies not only an end to economic growth but a serious rollback of industrial civilization. Perhaps Derrick Jensen is the best known of the deep ecologists whose views about how to achieve the proper role for humans on planet Earth varies greatly.

Given that there are people who want to halt or even reverse economic growth, we must now ask the second question: Who wants growth and why?

If we follow Herman Daly's logic, we have long since passed the point of economic growth and now have "uneconomic growth," growth that imposes costs greater than the growth is worth: social costs in terms of inequality and environmental costs that undermine the long-term sustainability of human society.

So, who benefits from such growth? We now have a name for this group, the one percent. Those with the highest incomes and greatest financial wealth continue to benefit from such growth since they can both reap disproportionate rewards from it and insulate themselves from the costs associated with it--leaving others to bear them.

When Plumer says that no one wants economic growth to end, what he is unwittingly saying is that the power elite in the world does not want to face the grand implication of a steady-state economy--namely, that lower-income groups cannot be assured of a better material existence through economic growth and so such betterment would, of necessity, have to come from the redistribution of wealth.

As long as the chimera of perpetual growth can be sold to the masses, no one will have to deal with the thorny issue of redistribution as the primary method for the economic betterment of the middle and lower classes.

And yet, growth ended for many people around the globe in 2008. According to the International Labour Organization (ILO), if you earn the median wage in Kenya, your real income has declined 26 percent from 2008 through 2013. For Greece, the decline has been 24 percent. For prosperous Singapore and Japan the number is minus 1 percent. Egyptian real median income declined 10 percent; the United Kingdom declined 7 percent; Iceland and Italy, 6 percent; Taiwan, 5 percent; Spain and the Netherlands, 3 percent; Ireland, 2 percent; Austria, Luxembourg and the Philippines, all hovered around zero percent growth.

Of course, some prospered. Median wages in Romania, Panama, Paraguay, Norway, Jordan, Poland, Vietnam and Morocco all rose more than 10 percent from 2008 onward. There were standouts: The Brazilian median wage grew by 21 percent; Thailand by 26 percent; China by 74 percent; Mongolia by 75 percent. Ukrainian workers enjoyed a media wage increase of 43 percent through 2013 though it is likely that much of that has since been wiped out by the war and currency crisis there. In the United States, the median wage registered a one percent increase according to the ILO, though homegrown analysis suggests a decline.

The metaphorical tide of economic growth that is supposed to lift all boats is lifting far fewer people much more selectively than before.

On the other hand, if you possess substantial financial assets, you have prospered quite nicely as financial markets post daily records in the face of ever more precarious economic growth numbers around the world. But, only a small portion of the world's people have any financial assets at all. The fate of a large number of the others has been stagnant or falling incomes or unemployment in an increasingly uncertain world.

Whether economic growth for all the world's people will return is an open question. The system by which we've governed the world economy, a system dependent on central banking, central government spending, the build-up of huge and unsustainable debt, and the ever more rapid depletion of fossil fuels and other resources is showing its decrepitude.

Six years of pedal-to-the-metal monetary policy and government deficit spending have barely nudged world growth forward while levitating financial markets to unsustainable levels (and thereby exacerbating inequality). Such policies in the past would have had the world economy quickly overheating with central bankers responding by hoisting interest rates sky high to rein in inflation and financial excesses.

Instead, the economy remains so weak that the U.S. Federal Reserve had to reassure the world that despite language in its recent public statement that would indicate an imminent increase in interest rates for the first time in 10 years (that's not a typo), the central bank really wouldn't be raising them anytime soon after all.

So, maybe flat carbon emissions are actually telling us something "no one" wants to hear: that economic growth has faltered or even halted for a large portion of the world's people and that we are going to have to deal with the consequences of that until we design a new system that can either grow for the benefit of everyone--a difficult proposition--or that can sustainably, equitably and successfully manage a steady-state economy--an even more difficult proposition.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now, The Oil Drum,, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at


KAP said...

Flat CO2 emissions are not really hard to explain if you look at the data from China, which has reported (for the first time ever) reduced coal burning in 2014. The Chinese are going full speed ahead with wind and nuclear, and now see coal as a major pollution problem. China is, of course, the world's largest CO2 emitter.

Luís de Sousa said...

Recent economic data out of China actually points to a decline in global CO2 emissions. In all likelihood, global CO2 emissions in 2015 will be lower than in 2014 and 2013.

But while CO2 is a physical entity, GDP is a human construct. They can certainly decouple, with the amount of fossil fuels extracted worldwide declining and GDP growing.

And even if the Chinese renewable energy programme is not fully successful, global CO2 emissions do not have that much room to grow.


Ken Barrows said...

Is GDP really a good measure of wealth? It doesn't account for depreciation. More importantly, 70% of it in the USA is consumption and 15% or so is government.

Sandwichman said...

There are more caveats here than you can shake a stick at.

First, the IEA announcement only referred to “energy-sector” emissions. It doesn’t include emissions that didn’t come from, say, transportation, construction or agriculture.

Second, the announcement only referred to carbon dioxide emission, not to all emissions of greenhouse gases. So switching to natural gas from coal-fired electricity generation would reduce CO2 emissions, even if it increased a more than equivalent amount of methane emissions.

Third, this is only about the flattening of a flow. Tthe stock continues to increase, just not at a faster rate than previously.

See my blog post “Of Bathtubs, Bombshells and Boilerplate” for more on this supposed GHG emissions “bombshell”

Dingles Bell said...

Mr. Cobb certainly highlights an extremely salient point with: "... the one percent." ... Further that, "the power elite ... do not want to face the grand implication of a steady-state economy ...". Central Banks have certainly screwed the Western economies across the globe, with their advocating of deficit spending - driving funds away from each economy's productive sector into the global financial sector, which produces nothing, and only widens the gap between the wealthy and the poor, as he rightly, if indirectly, notes.

I support Herman Daly's concept of a Steady State Economy and think it has great merit, aside from being an imperative. However, I am not convinced that it must therefore mean: " ... such betterment would, of necessity, have to come from the redistribution of wealth."

I believe the critical factor is over-population of the globe and that that growth is simply reflected in the rate of economic growth. Population increases simply expand consumption and thereby increase demand, culminating in growth in production and jobs, all only necessary because of population increases.

In other words, if we remove the constant, i.e., that of an ever-increasing population, then the growth factor will, by natural progression, also be removed and become entirely unnecessary to drive an economy. It will automatically and instead be replaced by a "steady state" of growth or no growth. A simple reality. I don't believe, however, that such necessarily imposes any significant wealth re-distribution. Surely, it would merely mean that the ongoing, perpetual drive to increase profits year in year out, would simply cease to occur, that these too would simply also become steady. Which is not quite the same result as a re-distribution of wealth, but rather a levelling off of the annual rate of growth in the profits of the top one percent.

Nonetheless, his point still prevails, i.e., that that top one percent, the bankers, are controlling the dialogue by propagandising that economies must have perpetual growth. It is deliberate and insidious misinformation, designed to fill the coffers of the financial sector - for what better way to make untold and enormous wealth, than to persuade governments to go into deficit spending??