Economic Growth and Climate Change Part 1 - Factors Influencing CO2 Emissions

Environmentalists have long argued that we should adopt more sustainable models of living due to the limitations of natural resources and the environmental problems resulting from their exploitation. Probably the most serious environmental threat is climate change caused mostly by human activity in the form of greenhouse gases.  We are currently on track for a warming of between 4 to 7.1 deg C over pre-industrial levels by 2100 according to Hadley centre projections. This level of temperature rise would threaten the stability of the global ecosphere as we know it.

The concentration of the most important anthropogenic greenhouse gas carbon dioxide (CO2) has been steadily increasing in the atmosphere since the 19th century, with the rate of emissions of this gas from human activities increasing by 45% between 1990 and 2010, and fossil fuel combustion being mainly responsible. 

The so-called Kaya identity can be used to conveniently describe the key factors which determine fossil fuel CO2 emissions from an economic perspective

CO2 ≡ population x [energy/GDP] x [CO2 /energy] x [GDP/population]

Where energy refers to primary energy, energy/GDP the energy intensity, CO2/energy  the carbon intensity, GDP/population the (economic) output per capita and GDP the gross national product. So this identity reduces to:

CO2 ≡ population x energy intensity x carbon intensity x output per capita

We shall briefly consider the potential for reductions in each one of these terms, although these can be interdependent.


The InterAcademy Panel Statement on Population Growth, which was ratified by 58 member national academies in 1994, called the growth in human numbers "unprecedented", and stated that many environmental problems, such as rising levels of atmospheric carbon dioxide, global warming, and pollution, were aggravated by the population expansion.

Over most of human history, high birth rates have almost been balanced by death rates. However, as agriculture, sanitation and medicine improved, death rates, and particularily infant mortality reduced, this led to a more rapid population expansion. More recently, the global fertility rate (the number of children born per female) has fallen rapidly, halving between 1950-1955 and 2000-2005 to 2.65. Unfortunately, this reduction will take time to feed through to birth rates since fertility rates are also dependent on the proportion of women of child bearing age which is higher in a rising population. Therefore, global population is still expected to grow substantially before peaking. According to United Nation estimates it may have recently passed 7 billion and could reach 10.1 billion by 2100.

Whilst a reduction in fertility due to family planning and cultural changes have been partially successful in many developing countries, these changes have generally not been extended to Africa, and some Middle Eastern states, which still exhibit very high fertility rates. These countries may produce little fossil fuel based CO2 at present, but they can still contribute appreciably to other global warming pollutants such as black carbon and methane. Their populations may also aspire to the standards of the richest countries, potentially storing up severe environmental problems for the future.

A number of factors limit the efficacy of interventionist measures for controlling population growth. First of all sustained increases in longevity increases population. Secondly because the number of births per population tend to lag fertility changes, to halt population growth quickly it would be necessary to initially restrict fertility rates to well below two, which is a difficult policy to enforce. Even in authoritarian countries such as China, where this policy has been successfully used to control population, this can lead to social and economic problems due to the lack of young people to support the old in subsequent generations.

Energy Intensity [primary energy/GDP]

Energy intensity can be thought of as the efficiency we can turn primary energy into GDP. Methods of reducing energy intensity include improving thermodynamic or process efficiencies, such as increasing industrial plant and commercial building insulation properties. This shouldn’t be confused with simply using less energy, since some changes could reduce GDP by still more and therefore increase energy intensity.

The efficiency at which certain energy processes can be improved is at least at a basic level, limited by thermodynamic laws, however, changing the nature of economic activity is not subject to these limitations. For example, intellectual property would require very little energy whilst contributing to GDP.

Economic status strongly influences energy intensity. Generally countries with dominant, high value service economies such as Switzerland have a low energy intensity, whilst major petroleum economies such as Canada, Russia and Saudi Arabia have a high energy intensity. However, some developing countries such as Bangladesh have the lowest energy intensity of all since they are very efficient at translating energy into GDP.

Many developed economies have reduced their production based energy intensity as they introduced more efficient industry and moved towards a service economy importing products from abroad. However, when measured on a consumption basis this is usually higher

Some economists have proposed that increasing energy efficiency makes the use of energy relatively cheaper thereby fuelling economic growth, which could lead to increased use of energy and emissions of CO2. One version of this theory is sometimes better known as the Jevons' paradox. The degree of this rebound effect is uncertain but it can’t be ignored entirely, so efficiency improvements may have to be used in conjunction with taxes or emission caps to limit any significant effect.

Carbon Intensity [CO2/primary energy]

Large reductions in the carbon intensity of energy use can be made by switching to lower carbon fuels, such as from coal to natural gas, or from any fossil fuel to nuclear and renewable sources of energy such as wind and solar. Other greenhouse gases such as Nitrous Oxide and Methane, which can be translated to equivalent units of CO2 global warming potential, can also be reduced by changing agricultural processes.

Many countries tend to use the cheapest energy source available, which unfortunately for the two largest CO2 emitters, the USA and China is high carbon coal, and there appears to be substantial reserves of this fuel left. Fitting carbon capture and sequestering technology to coal power stations would reduce the carbon intensity of GDP by reducing carbon and increasing energy. Of course this might increase the output/capita term as well, reducing some of the benefit.

Replacing petroleum with some first generation biofuels will be more carbon intensive relative to fossil fuels due to the effects of deforestation for plantations, and emissions from nitrogen fertilisers. However, biofuels made from sugar cane, lignocellulosic feedstock and biogas from anaerobic digestion can reduce the carbon intensity of energy use relative to petroleum fuels.

Output per Capita [GDP per population]

The output of an economy is sometimes measured in terms of the Gross Domestic product (GDP) whilst output per capita is often considered an indicator of a country's standard of living.

The countries with the highest output per capita have historically been generally concentrated in three main economic blocs, the US, the European Union and Japan which between them have been responsible for the majority of global CO2 emissions. However, the expanding economies of China, Brazil and India have more recently become major emitters. This is due to their population size combined with a rapid increase in economic growth, although their output/capita has still a long way to grow before they reach the levels of fully developed economies. It is possible this will be repeated for the rest of the developing world later this century unless economic growth becomes limited by resources or environmental factors.

Economic growth dominates contemporary political and economic thinking, and this is reflected in our consumer oriented culture. Businesses attempt to expand, and individuals are encouraged to work longer to earn and consume more. Since world economies are so dependent upon fossil fuels for energy, fertilisers and a wide range of synthetic consumer products, increases in CO2 emissions have historically been correlated with economic growth.

In part 2 of this series we shall examine whether we can meet recommended CO2 targets by reducing the energy and carbon intensity alone as most economists and politicians desire, or whether we need to target economic growth as well.

Posted by perseus on Wednesday, 23 November, 2011

Creative Commons License The Skeptical Science website by Skeptical Science is licensed under a Creative Commons Attribution 3.0 Unported License.