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Has the link between economic growth and emissions been broken? New analysis of global carbon emissions reveals that the rate of increase significantly slowed in 2012. According to the Trends […]

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By Geoff Curran

Has the link between economic growth and emissions been broken?

New analysis of global carbon emissions reveals that the rate of increase significantly slowed in 2012. According to the Trends in Global CO2 Emissions report, produced by Europe’s Joint Research Centre and the Netherlands Environmental Assessment Agency, worldwide emissions reached 34.5 billion tonnes in 2012 – only 1.1% more than the 2011 figure and less than half the average 2.9% rate of growth seen over the last decade. In what is perhaps a paradox, the global economy actually grew by 3.5% during 2012.

Of course, this immediately suggests that the world is moving towards more sustainable energy production and that renewables and other sources of carbon-free generation, action on energy efficiency and the like are indeed having an impact.

Certainly, the report identifies a rise in renewable generation – excluding large hydro, global renewable output jumped 2.4% in 2012. Increases in energy efficiency were also observed in many developed countries. It’s the emergence of trends such as these that the report’s authors believe could lead to a sustained ‘decoupling’ of the increase in CO2 emissions from global economic growth.

However, when comparing regions where emissions are slowing, there are wide variations in the underlying causes – and these make it harder to identify a clear path to breaking the link between economic growth and carbon emissions.

Take China, for starters. The world’s largest carbon emitter, responsible for 29% of the global total, has seen emissions growth shrink to 3% in 2012, despite recording annual increases of around 10% over the last decade. A key factor behind this change is the end of China’s large economic stimulus package, intended to avoid a downturn during the recent global recession. China also increased its hydropower capacity and output by 23% in 2012.

Meanwhile in second placed USA, which produces 16% of the global total, carbon emissions decreased by 4% last year. This is despite reporting economic growth of 2%. The fall in emissions can be explained by the growing shift from coal to gas in the power sector, due to the low gas prices. The US is now the largest natural gas producer in the world on the back of its well-documented shale gas boom.

In third place, the European Union – with an 11% share of total carbon dioxide emissions – recorded a 1.6% drop in 2012. Perhaps not so surprising when the EU as a whole also experienced an economic recession. But despite a drop of 0.3% in EU GDP, actual CO2 emissions fell by 1.3%. The report cites a decrease in primary energy consumption of oil and gas, by 4% and 2% respectively, a decrease in road freight transport by 4%, and a decrease of 2% in total emissions from power generation and manufacturing installations participating in the EU Emissions Trading System (EU ETS) as major factors.

However, while total emissions from power generation in the EU decreased by 2.3% in 2012, very different trends were noticed among the various member states. In particular, the use of coal for electricity production became attractive in Europe again. In the UK, for example, coal consumption rose by 24% to the highest level seen here since 1996, although this trend is likely to be reversed as a number of our older coal-fired power stations will be closing due to European environment legislation.

Looking forward, the report highlights some significant uncertainties. For example, the rising production of shale gas could affect natural gas prices worldwide, while overcapacity and flexibility in the fuel mix for power generation may cause rapid changes. The report also warns that a prolonged recession in Europe may hinder any restoration of the functioning of the EU ETS carbon market and thus the ability to set and meet more ambitious emission reduction targets.

Overall though, the relatively small increase in emissions in 2012 may be the first sign of a slowdown in the increase in global CO2 emissions, and ultimately of declining global emissions. Perhaps more significantly for industrial and commercial users of energy, this analysis also suggests that a decoupling of emissions growth from economic growth is possible. And this must be the ultimate goal – a transition to a more sustainable energy cycle without damaging economic impacts.

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