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The Next Economy
If 21 Countries Can Reduce Emissions While Growing GDP, It Should Be No Sweat for Companies

Whether climate stabilization and economic growth can coexist or promote each other is the subject of ongoing debate. Recent analyses by the World Resources Institute (WRI) and the International Energy Agency (IEA) add to the evidence that we could indeed have the best of both.

Based on preliminary data, the IEA reports that global energy-related carbon dioxide (CO2) emissions stayed flat over the last two years while Global Domestic Product (GDP) continued to grow. Similarly, the WRI identified 21 countries that have reduced their greenhouse gas (GHG) emissions while growing their GDP since 2000.

The IEA’s analysis shows that approximately 32.1 billion tonnes of CO2 emissions were generated in 2015 – essentially the same amount as in 2013 and 2014 – while the global economy grew by more than 3 percent. The organization suggests that electricity generated by renewables played a critical role, having accounted for around 90 percent of new electricity generation in 2015.

“The new figures confirm last year’s surprising but welcome news: we now have seen two straight years of greenhouse gas emissions decoupling from economic growth,” said IEA Executive Director Fatih Birol. “Coming just a few months after the landmark COP21 agreement in Paris, this is yet another boost to the global fight against climate change.”

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The two largest emitters, China and the United States, both registered declines in energy-related CO2 emissions, of 1.5 and 2 percent respectively. IEA attributes these declines to switches away from coal. However, increases in emissions in most Asian developing countries and the Middle East, and “a moderate increase in Europe,” offset the declines observed from China and the US. The IEA is expected to release a more detailed report at the end of June.

Slovakia (+75 percent) and Romania (+65 percent) saw the largest change in GDP, and each reduced their emissions by 22 percent. In a ranking of the 21 countries, these emissions reduction would place Slovakia and Romania tied in 5th. The United Kingdom was close behind with an emissions reduction of 20 percent, and saw one of the strongest cases of decoupling, with a change in GDP of +27 percent.

More than 90 percent of the countries that decoupled GDP and GHG emissions between 2000 and 2014 reduced the industrial sector share of their economies. However, interestingly, Bulgaria and Uzbekistan managed to expand their industrial activity, and the industrial portion of Switzerland’s and the Czech Republic’s GDP remained essentially steady, while all four managed to reduce their emissions.

The WRI reports that across the 21-country group, the average change in the industry share of GDP was a 3 percent reduction over the period, with an average CO2 reduction of 15 percent.

The United States also made the list, with an emissions reduction of 6 percent and increase in GDP of 28 percent. In its analysis of the Clean Power Plan, the U.S. Energy Information Administration forecasts that moving to a cleaner electricity system after 2020 would bring about a sustained period of GDP-GHG decoupling. Implementation of the Plan is expected to cut the U.S.’s total energy-related CO2 emissions by a further 6 percent between 2020 and 2025, while GDP is expected to increase by 13 percent in real terms over the same period.

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