Today’s AFR quotes Ross Garnaut saying that the economic crisis has put a clamp on greenhouse gas emissions. He says that we have “transferred two years” which might turn out to be more if the crisis lasts longer.
I am not sure where he gets this estimate from. Last year I had a research assistant look at the relationship between greenhouse gas emissions and world GDP. The relationship hinges on how you measure those emissions. It turns out that many measures simply measure output and so literally use production proxies for emission measures (e.g., amount of energy produced, fossil fuel burnt, etc). Not surprisingly, crimp output and your crimp these measures. But that isn’t really what we care about. We care about carbon actually in the atmosphere.
[DDET Read more]
So my RA looked at that too. There are series of data on the amount of CO2 in the atmosphere (using continuous measurements and something called flask measurements). They are pretty similar.
What happens when you correlate these with world GDP? A simple correlation gets you a significant result but CO2 last year likely explains lots of CO2 this year and so autocorrelation is a problem. Probably better is to look at growth rates of CO2 against GDP growth or some other log specification. In that specification, the data tell us that to get a 1 percent reduction of CO2 in the atmosphere requires around a 13 percent fall in GDP! That is on the high end of what we are facing. (I think that if we manage emission reduction efficiently rather than by destroying the economy, the equivalent cost is bounded by 4% of GDP).
To put this another way, if we get a 12 percent reduction in GDP, CO2 in the atmosphere may fall by 4ppm.
The upshot of this is: the global recession/depression is not really buying us anything in terms of environmental benefit.