A Kernel of Good News About Global Carbon Emissions

(Bloomberg) --

Global carbon dioxide emissions rose significantly last year, but they didn't rise quite as much as some experts expected. Instead of increasing by 4.9% over 2020 levels, which the Global Carbon Project forecast in November, new estimates from the group suggest the increase was about 4.3%.

If it sounds like a kernel of good news found on a cob full of bad news, you're mostly right. Had the world invested a lot more of its stimulus dollars toward green activities, as the International Energy Agency had urged governments to do, there was a chance the emissions wouldn't have bounced that much.

Still, there may be a reason to be a little optimistic. Let's turn back the clock to the financial crisis to understand why.

In 2009, as global growth came to a standstill during the financial crisis, CO₂ emissions fell. The year after, as the economy recovered, emissions swelled enough to cancel out any reductions in 2009.

But that pattern hasn't exactly replicated itself this time around. In 2020, when lockdowns forced the global economy to shrink, emissions fell drastically. The year after, as restrictions were lifted, global gross domestic product rose and so did emissions—except the increase in CO₂ wasn't as large as that seen in the post-financial crisis recovery.

One way to understand the difference is to consider the carbon intensity of the global economy. That is, how many kilograms of CO₂ are needed for every dollar of economic activity?

In 1990, after adjusting for inflation, every dollar of GDP led to 0.68 kg of CO₂. In 2021, it caused only 0.38 kg of CO2. (The calculations use emissions from the Global Carbon Project and GDP figures from the International Monetary Fund.)

That's broadly a good thing. The global economy is getting less carbon intensive over time. But the macro trend hides more complicated year-to-year changes.

One reason for that drop may be the growth in clean-energy investments. Between 2004 and 2008, just before the financial crisis, the total amount of investment in clean energy stood at less than $450 billion. Between 2015 and 2019, just before the pandemic hit, that spend stood at more than $2.2 trillion. Those investments likely pushed out the development of some new coal power plants, with India building fewer of those dirty assets in the 2010s than it did in the 2000s. All that may have stopped emissions from rebounding as much as they did a decade earlier.

Beyond that generalization, however, it's hard to pinpoint all the major reasons for the recovery to be cleaner this time, says Glen Peters, senior researcher at the Center for International Climate Research. That's because country-level trends make for a messy narrative.

In the European Union, for example, post-lockdown recovery led to an increase in the carbon intensity of the economy. That may be because Europeans burned a lot more coal in a period when lack of supplies caused gas prices to spike.

But if coal were the only reason, China's post-lockdown recovery should have looked bad too. That's because coal use reached record highs in China last year. And, yet, the carbon intensity of the Chinese economy fell in 2021 at about similar rates to the previous decade.

All this leaves Peters with more questions than answers. That could be resolved with a deeper analysis of how economic growth and emissions played out in different sectors in each country. Until then, the way forward is clear: increase investments in clean energy, while finding ways to cut energy use.

Akshat Rathi writes the Net Zero newsletter, which examines the world's race to cut emissions through the lens of business, science, and technology. You can email him with feedback.