TODAY’S STUDY: PROOF GREENHOUSE GAS EMISSIONS ARE BEING DECOUPLED FROM ECONOMIC GROWTH
Turning point: Decoupling Greenhouse Gas Emissions from Economic Growth
Lars Handrich, Claudia Kemfert, Anselm Mattes, Ferdinand Pavel, Thure Traber, September 2015 (DIW Econ)
The transformation of economic growth towards a lower dependency on fossil fuels and related greenhouse gas (GHG) emissions is essential for the feasibility of a successful global climate strategy. The year 2014 was the first in decades that saw worldwide economic growth and a reduction of energy-related GHG emissions. This study attempts to explore these developments and illuminate the drivers through descriptive data analysis, a review of empirical research and a regression analysis. The assessment covers data for the period 1990 to 2014 and includes economic growth, energy-related GHG emissions, energy consumption and energy carriers for 34 countries. Particular emphasis is put on the often-cited examples of China, the US and Germany, which are then compared with the OECD aggregate, India and the worldwide picture.
This study distinguishes weak and strong decoupling of energy consumption from economic growth to analyze specific evolutions. Weak decoupling is defined as a reduction of energy intensity, i.e., energy consumption per GDP, while absolute consumption still rises with economic growth. Strong decoupling is present, if total energy consumption falls with economic growth. Furthermore, this concept is applied to the analysis of decoupling from GHG emissions and to decoupling from conventional energy as the sum of nuclear and fossil energy consumption.
Regarding the past decade, it turns out that global growth went along with an increase of energy use, and that despite a steady decrease of conventional energy intensity. This weak decoupling process was facilitated by greater energy efficiency and the roll-out of renewables. Since 2004, solar and wind have been the fastest growing energy sources worldwide, and they saw substantially accelerated growth over the last four years. This is true for China, India and the OECD group of countries. Moreover, our empirical assessment of the causal relationships suggests that renewables may even promote economic growth. For climate policy this presents an optimistic perspective. In particular, the OECD countries show a strong decoupling of conventional energy and of emissions over the last decade. As exemplified by Germany, a successful renewable energy strategy combined with substantial energy savings will result in substantial emissions reductions – and that despite the phasing out of nuclear energy.
China and India are of particular importance for global trends due to their high growth rates. However, their growth follows diverging patterns. While on a continued economic growth path, China succeeded in a weak decoupling from conventional energy requirements and emissions. Moreover, strong decoupling seems possible in the near future. In 2014, China stopped the expansion of coal use and met the modest 3% growth in energy consumption mainly with less emission intensive energy sources such as natural gas, wind and solar power. By contrast, India’s renewable energy expansion is more than canceled out by investment in emission-intensive power sources, mainly coal-fired power plants.
For the US, the second largest GHG emitter, the outlook is unclear. Although the US has successfully combined substantial economic growth with a reduction in total emissions, strong decoupling has not continued since 2012. If China succeeds to further reduce its emissions, this will send strong signals towards a global low-carbon transition.
We observe a global trend of weak decoupling of conventional energy from growth (measured as reduced conventional energy intensity) over the last five years. A global strong decoupling from energy-related emissions seems viable.
Strong decoupling over the last decade with a reduction of total energy consumption and emissions despite economic growth is observed for the OECD countries.
Since 2004, solar and wind are the fastest growing energy sources worldwide, and they saw substantially accelerated growth over the last four years.
Germany, thanks to a substantial hike in energy efficiency over the last decade, exemplifies strong decoupling of energy and emissions. The rollout of renewables has more than compensated for the nuclear-phase out and the slight rise in coal usage after the financial crisis.
In the US, absolute energy consumption has been growing lately, and shale gas usage and renewable energy may suffice only for a weak decoupling of emissions from growth. On a ten-year basis, total energy slightly decreased despite only moderate energy savings.
China is on a weak decoupling course with decreasing energy requirements and emissions per additional GDP. Strong decoupling seems possible in the near future.
In India, renewable energies are challenged by investment in conventional emission-intensive types of energy generation.
China and India are particularly important for worldwide trends due to their high growth rates.
An empirical causality analysis of panel data including the years 1990 to 2014 reveals bi-directional impacts between renewables, conventional energy and GDP, indicating a feed-back relationship. Substitutability of conventional energy by renewable energy together with growth effects of renewables gives support for a viable decoupling policy.