Has the UK decoupled carbon emissions from GDP growth?

post updated with further links and minor corrections, 11 March, 2015

What has happened?

According to the Carbon Brief website, UK carbon dioxide (equivalent) emissions fell by 9.2 per cent in 2014. They base this on an analysis of UK government data, using a method with a likely error of no more than 0.5%1.

In the same period, they note, UK GDP rose by 2.6 per cent (ONS figures)

Why is this important?

We, in keeping with ecological economists generally, have argued that the evidence suggests that emissions cannot be decoupled from economic growth. More growth means more emissions, even if we are getting more efficient in our use of energy. So does this mean that, after all, it is possible to decouple carbon emissions from economic growth?

To answer that question we will look in turn at first the reduction in emissions, and then the rise in GDP.

Why have UK direct emissions fallen?

Carbon Brief are clear about the causes of the very large fall in emissions.

1) The use of coal fell by 20% – a fifth compared to the previous year. This is good, and it brings down the consumption of this dirtiest (most carbon-intense) of fuels to levels not seen since the 1850s (when of course other fossil fuel use was negligible). However, it is less than the rise of 26.4% in 2012 and it brings us back to the position before 2012 when more gas was being burnt than coal, something which has accounted for a large part of the UK’s direct emissions reduction since 1990.

Why was less coal burnt?

There are four reasons. Firstly, volatility in the price of coal, which fell from 2011 and is now rising again. This has meant the substitution of gas, although less gas was burnt too than in previous years.

Secondly, there were fires at two coal-fired power stations, so they stopped generating (and burning coal).

Thirdly, the huge Drax power station has been progressively switching its fuel from imported coal to imported wood pellets. This is part of the UK’s de-carbonisation strategy, and not necessarily a very sound one, although DECC sees this as a transitional measure. And fourthly …..

2) The warm weather meant less use of all types of fossil fuel for heating.

Carbon brief estimates that without this factor, emissions reduction would have been 4.9% rather than 9.2%. So taking out the correction for warmer weather (but is that the new normal, given climate change?), the reduction in emissions still appears greater than the rise in GDP. Incidentally, a cold January and February this year could yet mean a higher emissions figure in 2015

3) Energy demand in the UK is falling. Carbon Brief reports that this is by 7% across all fuel types, a trend repeated across the EU.

These falling energy use trends are a result of the installation of building insulation, improvements in product energy efficiency, vehicle fuel efficiency standards and changes in the structure of the economy.”

This is of course good news, although we need to be alert to this efficiency causing increased consumption elsewhere (rebound).

4) Renewables have increased, now accounting for 15% of the UK’s electricity generation, although there is debate about whether all the biomass generation should really be termed renewable. As Carbon Brief again point out, it depends.  As one of our associates pointed out,

A note of caution: Carbon Brief’s calculations (based on government figures) don’t include any emissions from extraction, cultivation and manufacture overseas, nor shipping and aviation, as we’ll discuss below.

What about the growth in GDP?

Just as we need to understand the composition of the emissions figure, so we need to understand what’s behind the bald GDP growth figure. Firstly, it depends what measure we use. The quoted 2.7% is the gross increase. But it makes more sense to correct that for both the growth in population and for changes in prices. Doing this, we find that GDP Growth per capita purchasing power parity was only 1.03%2.

But then, what is causing this growth in GDP? We reviewed this 14 months ago, concluding that,

The ‘recovery’ of GDP growth is based on a return to the old ways of consumer credit-based consumption and house price inflation. Companies are extracting profits, but they aren’t investing in rebuilding the UK’s broken economy, which remains dependent on, or rather in hock to overseas exporters.

and the picture has not changed very much.

The TUC Economic Quarterly for February 2015 characterises UK growth like this:

Crudely characterised, even while manufacturing saw some gains, UK economic growth seems dependent on a consumer and housing expansion, booming times for employment agencies, the private sector expansion resulting from outsourcing, and some of the usual business services ….. and is increasingly reliant upon a small number of sectors (which are susceptible to unsustainable booms) for growth, along with gaining from deteriorating conditions of employment. An economy which can only grow as private debt rises, house prices rocket and employees’ conditions are eroded is neither sustainable or strong.

What this means is that UK GDP growth relies overwhelmingly on,

  • Consumer expenditure, increases in which are funded largely by credit or dipping into savings to buy largely imported goods,

  • House price inflation – especially in the South East., and

  • Administrative activity of various kinds.

None of this can be expected to generate a lot of emissions growth, here in the UK. What emissions it does generate will be overseas, where things we use are made, and in the transportation of those things to this country.

Incidentally, the same goes for the emissions from fossil fuel extraction and distribution, whether Polish coal or US wood pellets.

Yet again, we are only looking at relative decoupling, not the only decoupling that counts, absolute decoupling.

And this is the elephant in the room, you can’t understand the relationship between economic growth and its consequences by only focussing on direct, territorial emissions. Because the UK, like other largely post-industrial economies, outsources its production, it also outsources its emissions (fifty percent of them, according to the government, see also this from the UK Energy Research Centre), and that hides the impact of our economic activity on worldwide emissions.

For every unit of economic growth in the UK, expect a consequence in emissions beyond our shores. And since the atmosphere is shared, it’s our problem too.

An afterthought. If there is light at the end of the tunnel, it might be coming from China, where in 2014 there was a reported 1% drop in emissions from coal, and possibly a 0.7% drop in overall carbon emissions. China is certainly beginning to take emissions mitigation seriously. However there are two notes of caution here. Firstly, to what extent can we believe the figures produced by this profoundly undemocratic State Capitalist power? Secondly, given that China is still aiming for 7% annual GDP growth, how secure is this reduction?

For Manchester, even though the reduction in national direct emissions will be reflected in progress towards the city’s carbon emissions target, this all means that we cannot let up on the move towards a Viable Economy, where radically reduced energy demand, a shift to renewables, and a refocussing on necessary consumption are key elements in the post-growth future.

Mark H Burton

Steady State Manchester

1On the basis of previous work – see the article.

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