The decoupling debate: can economic growth really continue without emission increases?

By Mark Burton

Most ecological economists argue that continued economic growth is incompatible with ecological safety. That is to say continued increases in Gross Domestic Product, (GDP and also Gross Value Added, GVA) cannot happen while reducing ecological impacts in general, and climate change-causing greenhouse gas (GHG) emissions in particular. It isn’t a popular message, and is one that is typically ignored, not least by our political leaders who still seem to think the economy can continue to grow while avoiding ecological catastrophe.

A year ago, in one of our most popular web articles, our group, Steady State Manchester took issue with claims from New Climate Economy (NCE) that there was no conflict between climate change mitigation and continued economic growth. NCE argued that by taking action on climate change economic growth could be boosted. While NCE marshalled a lot of useful information on the how of emissions reduction, emphasising the role of cities, investment in clean energy, and adopting more efficient technologies in aviation and shipping, their argument relies on the idea that economic (i.e. GDP) growth can be decoupled from the growth in GHG emissions. While the emphasis here is on the relationship between GDP and GHG emissions, similar analyses are needed for the material flows underpinning transgression of the other planetary boundaries, in addition to climate change.

There are two kinds of decoupling1. Relative decoupling means that the rate at which emissions increase is lower than the rate at which GDP decreases. That is not a lot of help in the climate crisis, since under relative decoupling, if there is economic growth, then GHGs continue to accumulate in the atmosphere, contributing to the already high risk of runaway global warming. Absolute decoupling on the other hand would mean that as the economy grew, emissions didn't. If it could be demonstrated, then we might want to rethink our critique of endless economic growth.

Last year, NCE made the claim that there was evidence for decoupling:

The decoupling of growth from carbon emissions in some of the best-performing economies, both in Northern Europe and in North America, demonstrates the gains that can be made in incomes, jobs, rates of innovation and profits from a low-carbon, resource-efficient model of growth.(34). (p. 18)

As we and this blog showed, there was no evidence for the vital absolute decoupling2. The only evidence was for relative decoupling, and for decoupling within a territory, whereas for post-industrial Western economies a large proportion of emissions (45% in 2012 for the UK, Germany 35% in 2005) have been outsourced to extraction, manufacturing and distribution outside the territory.

New "evidence" on decoupling is not what it seems

In their most recent report, NCE again make the claim that,

“The reduction in the CO intensity of global GDP adds to the growing body of evidence that countries can reduce GHG emissions while sustaining economic growth.” (p.22)

Yet two pages on they state what is actually the situation:

“But the challenge is clear. Although GHG emissions are gradually being decoupled from growth rates, they are not doing so at anything like the rate required to put the world on a 2°C path.” (p.24)

In other words, they admit that absolute decoupling is not happening.

However, a report “Turning point: Decoupling Greenhouse Gas Emissions from Economic Growth” has just been published by the Heinrich Böll Foundation's North America office. This appears to provide evidence that absolute decoupling is occurring in some economies. Let's look at this.

The Böll report substitutes the terms “strong” and “weak” decoupling for the more usual “absolute” and “relative”. They compare four economies, Germany, USA, China and India as well as reviewing global figures. They claim that Germany alone shows strong (absolute) decoupling. The US and China demonstrate week (relative) decoupling, while India does not demonstrate any decoupling (The China and Indian finding was also that of a 2007 study in New Zealand/Aoteroa ).

Yet, having checked the primary source (BP Statistical Review of World Energy June 2015) that they used for energy and emissions data, the claim for Germany's strong decoupling is based on the net territorial emissions and territorial energy use and not on the country's consumption emissions (and energy use), which will include, for example, consumer goods and components made in China and products such as steel from India. This is the same problem that we drew attention to last year, an unwarranted optimism based on looking at only a part of the picture. It is like trying to assess someone's attempts at weight loss based on the food prepared at home, mostly salads, when nearly half their diet is take-away fast food and confectionery!

Not surprisingly, then, when the Böll report looks at the global situation, it concludes that

Between 2004 and 2014, global GDP has grown by 44%, while the consumption of conventional fuels has increased by 19%, resulting in a 22% increase of worldwide emissions. (p. 10) and There is little evidence for a changing relation between fossil energy consumption and growth. (p.11)

So what do we know?

Firstly, there is undoubtedly progress on switching to renewable energy in much of the world's economy. There are also signs of a reduction in use of the dirtiest fossil fuel, coal (although we should be cautious here since this conclusion is based on what might turn out to be a 2014 blip).

Secondly, while renewables have increased their share, and expansion of fossil fuel use has slowed, as the New Climate Economy's 2015 report shows (pp. Se Fig. 1, p. 17), fossil fuel usage is still increasing, even if the rate of increase is slowing.

Thirdly, while it is important to focus on energy generation and use, there are other factors critical to GHG transactions. De-forestation, emissions from agriculture, release of trapped polar methane, reduction of ocean capacity to store carbon dioxide, and so on. Technological optimism about clean energy generation should not make us forget this. For a good example of how such factors can be incorporated into a (national) net zero carbon framework, see the Zero Carbon Britain work of the Centre for Alternative Technology.

Fourthly, while there is undoubted progress being made in some places, it is the global picture that is most important. China is to be commended for taking its emissions seriously, yet those emissions are still predicted to rise further, and it is the cumulative emissions that will kill us.

Fifthly, the hypothesis that economic growth is compatible with action on climate change remains unproven. Our best strategy is still managed degrowth to a steady state economy. However, degrowth alone is not likely, on its own, to deliver the 4.9 % annual emissions reduction that is needed to stabilise atmospheric CO2 at 450 ppm by 2050 (itself a frighteningly high level): economic growth makes the task harder: 7% p.a. would be needed if growth were a mere 1.4%3.

What does this mean for us?

1) We should continue to lobby for disinvestment from fossil fuels. This disinvestment needs to be matched by a strategy of re-investment in local renewable energy production, low-carbon transport, energy conservation and stewardship of the land.

2) We should encourage our public bodies, to adopt an economic policy that rejects the endless pursuit of aggregate growth, instead focussing on real local prosperity based on conserving resources, building resilience, and investing in the replacement economy. Perhaps we should offer a (symbolic) prize to the first local or national government that actually does this. 3) Campaign against fracking and other “unconventional fossil fuels”, which will lead to an increase in GHG emissions since they will add to rather than substitute for other fossil fuels. 4) Get a grip on food and energy waste, via policy and practice changes, targeting government, commercial bodies such as supermarkets, and big institutions such as Universities and hospitals. ------------------------------