Seeker Blog

John Wixted examined the divergence between GDP growth and US carbon emissions a month ago. John attempts to work out the implications of the recent data showing the US is improving greenhouse gas intensity [GGI] faster than the EU15. I think some of John’s conclusions are correct

…Meanwhile, we should also do something serious, like fund research investigating how to make the burning of coal a cleaner process. A substantial reduction in CO2 emissions depends on the success of that research (nothing else).

and some aren’t correct — like the first sentence of that paragraph

Politically, we should do what everyone else has learned to do (i.e., make vows). It’s not serious, but it’s cheap and it seems to make some people less angry than they otherwise would be.

Given more study time I’ll speculate that John will come to much the same conclusion that I have: that it is time to make policy design our principle focus — to develop a politically viable risk managment strategy. What should be the future emissions targets [very rarely discussed, but economically critical]? How can we get there at the least economic cost? What are those costs? Who pays?

In a comment I looked at explanations for the divergence, none of which reflect policy changes — nor inform future policy:

Good post John. Like hurricanes, presidents have little short term impact on economic growth or greenhouse gas emissions. There is some evidence that the Bush tax cuts accelerated economic growth, but that’s another topic.

What explains the divergence of CO2 from GDP growth? Three things I think:

[1] In part it is the yearly dividend of GGI [greenhouse gas intensity], which has been averaging about -1.8%/year for the past 50 years. Since 1990 GGI has averaged -1.9%/year. GGI is a compounding improvement in efficiency [like productivity], so since 1990 the CO2 emissions per unit of GDP have declined almost 27%.

[2] The weather was favorable: mild winter, cooler summer.

[3] The power generation fuel mix shifted slightly, away from coal to more natural gas, nuclear, and renewables.

There is more background at the Energy Information Agency. The EIA also has a PDF/Flash presentation on this topic which provides a short tutorial on the interplay of most of the factors that influence US emissions.

Bottom line: the 2006 drop isn’t a new trend. So politically unpopular policies are still required to adjust incentives so the markets produce the results we desire:

1. A carbon tax, see, e.g. “Carbon taxes or cap-and-trade?”

2. Real-world full scale tests of carbon sequestration. If this doesn’t work then we are facing very serious problems with coal dependence. We need to know ASAP, which can only be achieved by “doing it”. The MIT Future of Coal study stresses this urgent priority.

3. For a better-explained top-five key actions see Elements of an effective response to global warming.

UPDATE: for a quality study of the costs of a range of risk management strategies, see “Managing the Transition to Climate Stabilization”