Could relative decoupling proceed fast enough to achieve real reductions in emissions?

Jackson turns to arithmetic for an answer and finds an economy in 2100 completely different than the one we have now.

No 2071 Posted by fw, October 9, 2017

To access all other synopses from Prosperity without Growth, click on the Tab titled “Prosperity without Growth” — Links to All Posts in the top left margin. 

When I saw the word ‘arithmetic’ in the title of Jackson’s section 4, Chapter 5, I thought immediately of the quip by the Woody Allan character in his movie Manhattan – “My accountant says I did this at a very bad time. My stocks are down. I’m cash poor or something. I got no cash flow. I’m not liquid, something’s not flowing. They got a language all their own.”

I may as well admit it at the outset: the prospect of trying to make rational sense out of economist Tim Jackson’s quantitative analysis of the relationship between economic growth and its ecological harmful impacts terrifies me. I’m not on good speaking terms with his sometimes obscure (to me) economic jargon: I have to keep going back to re-read what I have just read to confirm my understanding of his words.

So, reader beware! Below, is my best guess interpretation of Section 4, titled, “The arithmetic of growth”. It’s too long to be called a “synopsis. And, lengthy though it is, I’m not al all convinced that I have captured the essence of the author’s meaning.

But first, to put Section 4 in context, I begin with a definition of the key term ‘decoupling’ followed by a summary recap of the first three sections of Chapter 5.

The title of Chapter 5 is The Myth of Decoupling. The dilemma of continued economic growth is that it’s ecologically unsustainable versus it’s essential for prosperity. The conventional response to it is decoupling. To ‘decouple’ means to ‘separate’, ‘disengage’, ‘dissociate’ economic activity from its harmful effects. The harmful effects include: extraction of earth’s finite, scarce resources and/or burning of fossil fuels, releasing carbon emissions into the atmosphere, warming the planet, triggering a climate crisis.

In Section 1, the Introduction, Jackson focuses attention on the crucial difference between relative and absolute decoupling. The former refers to an improvement in the efficiency of the economy, but it doesn’t necessarily mean using fewer materials or emitting fewer pollutants overall. The latter refers to an outcome where resource and/or emissions decline absolutely over and above any accompanying rise in economic output. Thus, only absolute decoupling provides an escape from the dilemma of economic growth.

In section 2, Relative decoupling in historical perspective, although Jackson finds some supportive historical evidence for relative decoupling, the gains have not been uniform across countries and regions. Moreover, during the last decade, the overall measure of the energy efficiency of a nation’s economy has dropped because the world’s economic growth has shifted to countries that are using more energy to produce each unit of the world’s economic output. Bottom line, Jackson declared that the world’s input amount of material and energy resources used in production is not declining as fast as the increase in global growth of the economy.

In Section 3, Absolute decoupling in historical perspective, Jackson found that globalization has contributed to carbon emission “accounting errors”. Newer accounting models use ‘footprint’ accounting, which captures all emissions from the consumption of goods and services within a given country or region, including emissions  that have taken place elsewhere, that is, from production in the original source country or region. Previous accounting systems did not include emissions that were emitted in the production of goods and services imported from foreign countries. The difference between the two accounting measures calls into question the reliability of claims of reduced carbon emissions and lower materials resource consumption figures. Jackson concludes there has been no absolute decoupling of GDP from resource use during the period 1990-2008.

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The arithmetic of growth, from Chapter 5, “The Myth of Decoupling” of Tim Jackson’s book, Prosperity without Growth, Routledge, 2nd edition, 2016-17

At the very end of Section 3, Chapter 5, Jackson asked: “With the right political will, could relative decoupling really proceed fast enough to achieve real reductions in emissions and throughput [resources and materials], and allow for continued economic growth?”

At the very beginning of this section, Jackson signals that “arithmetic is key’ to answering this question:

“Arithmetic is key here. A simple mathematical identity* governs the relationship between relative and absolute decoupling. This identity was put forward almost 40 years ago by Paul Ehrlich and John Holdren.” (*identity — an equation that is true no matter what values are chosen. Example: a/2 = a × 0.5 is true, no matter what value is chosen for “a”).

Ehrlich’s and Holdren’s equation relates the impact of human activity to the product of three factors: the size of the population; its level of affluence expressed as per capita income in $; and a technology intensity factor, which measures the impact associated with each dollar spent.

This equation provides a ‘rule of thumb’ enabling us to figure out when relative decoupling will lead to absolute decoupling, which occurs when the rate of growth of overall impact, e.g., carbon emissions, is approximately equal to the sum of the growth rates of population, per capita income and carbon intensity.

Therefore, if the carbon intensity declines faster than the sum of the growth rates of population and income, then relative decoupling will lead to absolute decoupling. If it declines more slowly, we’ll still have relative decoupling, but not absolute. Thus, at the global level, emissions will continue to rise.

To further illustrate:

• Since 1990, carbon intensities have declined on average 0.6% per year. That’s good; but not good enough, because…
  • Global population has increased at a rate of 1.3%;
  • And average per capita income has increased by 1.3% per year;
  • So the rate of growth of carbon emissions is approximately 1.3 + 1.3 – 0.6 = 2% per year, leading over the years to a 62% increase in emissions, which is exactly what is reflected in Jackson’s data sources.

In a similar arithmetic calculation, the feasibility of decoupling carbon dioxide emissions from growth in the future can also be calculated.

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Though useful, Ehrlich’s and Holdren’s equation to figure out when relative decoupling will lead to absolute decoupling,” failed to “pick up some of the complexities associated with different stages of global development” encountered in a regionalized analysis.

For example, income grows faster in middle income countries than in other regions. And population grows faster in low income countries than elsewhere. However, the carbon intensity of output is typically higher and has historically fallen more slowly in both regions. These kinds of regional differences can have a big impact on the global picture.

Jackson walks us through seven quantitative scenarios, the first of which forecasts disastrous outcomes if we continue on our current path. Other scenarios consider outcomes based on different intervention strategies, all of which, in Jackson’s words end with “stark choices” the title of his next and final section of Chapter 5.“ 

Scenario 1 — Using UN population estimate of 9.7 billion people by 2050 —

• Assuming that regional incomes grow and regional carbon intensities* decline at rates typical of the last quarter of a century (*carbon intensity refers to the amount of raw energy used to produce each unit of the world’s economic output);
• Emissions would increase by more than 2% per year;
• By 2050, carbon dioxide emissions would be well over double what they were in 2015

Scenario 2 — To achieve a ten-fold reduction in carbon emissions would require —

• The average carbon content of economic output to be less than 20 grams of CO₂ per capita $ in 2050, a 26-fold improvement on the current global average.
• This would mean reducing the global emission intensity on average by 8.6% each year, almost 10 times as fast as it has actually declined over the last 50 years, and well over 50 times faster than it declined over the last decade. (*emission intensity is the ratio of greenhouse gas emissions produced to gross domestic product).

What matters for climate change is the cumulative burden of carbon dioxide in the atmosphere. So everything depends on how quickly emissions can be brought down.

Scenario 3 — Assuming we started straight away and achieved a more or less linear reduction in emissions towards 3.6 gigatons of CO₂ by 2050 –

• the carbon budget associated with the target 5°C would be used up by 2025
• beyond that point we would need technologies and strategies that could take carbon out of the atmosphere faster than we added carbon to it, in order to have a decent chance of restricting global temperature rise to less than 1.5°C.

Regarding technologies and strategies to take carbon emissions out of the atmosphere, (referred to as “negative emissions”), the rate at which cumulative emissions would have to be removed to stay within the carbon budget would have to be around 25 gigatons of CO2 a year. Of this daunting challenge, Jackson writes: “The potential to achieve this level of negative emissions on that timescale is highly speculative at the very least.”

Scenario 4 — One option would be to aim for a deeper carbon emission reduction target, say a 95% reduction instead of a 90% reduction by 2050, which would require –

• getting carbon intensity down to around 10 gigatons of CO2 per capita GDP$

This  scenario would lower the requirement for negative emissions in the second half of this century, but by the late 2020s the need for negative emissions would peak at around 25 gigatons of CO2.

Scenario 5 — A pathway that would set 2035 as the year by which we would reach our reduction target, not 2050.

• This would halve the demand for negative emissions to 5 gigatons of CO2
• But it would rush the introduction of low carbon technologies [LCTs include: Climate Smart Agriculture, Forests as Carbon Sinks, Carbon Capture & Storage, Renewables, Low Carbon Transport Fuels, Low Carbon Freight, and Energy Efficiency Buildings].
• The CO2 intensity* of the economy would have to fall on average by almost 13% per year to achieve a 90% reduction [*emission intensity is the average emission rate of a given pollutant (e.g., CO2) from a given source relative to the intensity of a specific activity; for example grams of carbon dioxide released per megajoule of energy produced, or the ratio of greenhouse gas emissions produced to gross domestic product (GDP)].
• To achieve a 95% reduction in annual carbon emissions, the CO2 intensity of the economy would have to fall on average by 15% per year.

Consider the “divided nature of the world” described in Scenario 5. In the most developed parts of the world, economic growth is taken to mean a steady 2% growth in incomes, with China and India leaping ahead at 5 to 10% per year at present. Poorer part of the world such as Africa, South America, and parts of Asia will be playing catch up for years to come.

Which brings us to –

Scenario 6 — This scenario describes what it would take for us to be living in an equitable world by 2050  

• To match income levels in rich countries growing at 2% per year, income levels in poorer countries would have to achieve “phenomenal growth rates”
• To match income levels in middle income countries, income levels in poorer countries would have to grow around 6% per year.
• To match income levels in low income countries, income levels in poorer countries would have to grow almost 12% per year.
• To restrict global temperature rise to 1.5°C, these levels of growth would place an even greater demand on technological progress.
• The global economy in this hypothetical world would be almost 11 times bigger in 2050 than it is today.
• To achieve the 90% emission reduction goal, the carbon intensity would have to be less than 5 gigatons of CO2 per capita GDP $ by 2050
• To reach 95% emission reduction, the carbon content of each dollar of economic output would have to be around 2 gigatons of CO2 per capita $ by 2050, more than 200 times lower than the average amount of energy used today to produce each unit of the global economy today.

Scenario 7 — Beyond 2050, with incomes in the rich countries still growing at 2% per year

• The economy in 2100 would have to be 30 times the size of today’s economy
• A complete decarbonization of every dollar would be required
• The long-run net carbon intensity of each dollar of economic output will have to be less than zero.
• Carbon will need to be removed from the atmosphere before 2050

In his penultimate paragraph of Section 4, Jackson asks: “What kind of economy is that?” presumably referring to Scenario 7, the economy in 2100,

• What are its consumption activities?
• What are its investment activities?
• What does it run on?
• What keeps it going?
• How is economic value created by removing carbon from the atmosphere?”

He concludes:

“One thing is clear. This is a completely different kind of economy than the one we have at the moment, which drives itself forward by using up more and more materials and emitting more and more carbon into the atmosphere.”

But, will the economy of 2100 be “completely different” in a good or bad way?