Basing himself on the Kaya equation, Gaël Giraud demonstrate that if the international community wants to meet the climatic objectives before 2050, it needs to question the GDP growth imperative.
The various commitments made by the international community require CO2 emissions to be reduced by two-thirds over the next 3 decades. In addition, the IPCC and Gemmes-world model are both categorical: we need to reach the lower limit of zero emissions during the second half of this century if we want to have a planet on which human beings can live safely at the end of the century. Meeting these commitments requires questioning the GDP growth imperative, even in a deflationary economic context such as the Northern hemisphere is experiencing today. The following argument, put forward, for example, by Jean-Marc Jancovici during AFD’s Energy-Climate-Development seminar, makes it easy to understand the dilemma our economies are facing.
Let us start with the Kaya equation (which is trivial because it is tautological):
This very simple equation says that CO2 emissions (on a global scale, for example) are always equal to the product of the following ratios:
- CO2 emissions / energy dissipated on a global scale
- Energy dissipated / global GDP
- Global GDP / population
Consequently, to meet the commitments made by the international community, it is necessary to divide the product of the ratios listed above by three. Which terms of the equation do actors committed to the sustainable development of societies have the capacity to – or want to – reduce?
The current global demographic trend is mainly related to the strong population growth in Sub-Saharan Africa, where fertility rates remain high, or are even increasing in certain Sahelian regions.
By contrast with a certain vulgate, which is gladly repeated without any data analysis, it seems that it would be possible to reverse this demographic trend via an integrated approach including activities which aim to improve access to family planning services, to promote girls’ education or to improve social protection systems (with children playing an important insurance role in many African societies).
However, along the UN’s median trajectory, the world’s population is expected to increase by 1.25 by 2050. As indispensable as they may be, the policies to reverse the demographic curve just mentioned will only bear fruit in a generation. Consequently, it is a priori necessary to reduce the other ratios by 3 × 1.25 = 3.75.
Global GDP / population ratio?
No politician who has a program promising a reduction in per capita income will be elected. This is where our fascination for GDP growth lies. Let us suppose that we want to increase this ratio by 2% a year (which is considerable). This means doubling this ratio by 2050. In this case, the product of the other ratios needs to be divided by… 3, 75 × 2 = 7, 5.
Energy consumed / global GDP ratio?
There has been no real decoupling at global level for 15 years (see Figure 1). In addition, the decoupling observed at European level in the last two decades is in part an illusion.
Indeed, a significant proportion of the European continent’s apparent energy virtue is simply due to the fact that we have relocated factories in China which dissipate the energy required to produce our consumption goods.
Furthermore, even the decline in the energy intensity of global GDP up to the end of the 1990s is questionable. It is highly dependent on conventions in the calculation of world GDP.
Primary energy consumption in TEP to produce a 2005 dollar – at global level
Figure 1: Energy / GDP ratio
Consequently, we could gain a few percentage points in the Energy/GDP ratio by wasting much less, developing recycling, and making major energy efficiency efforts, etc.
However, my research on GDP dependency on energy (see Giraud & Kahraman, 2014) suggests that we will not be able to go very far in this direction. Thermodynamics engineers agree on this point: not a lot happens in this world without energy… Unless we remove all physical content from GDP, an absolute decoupling is obviously impossible, and it is largely confined by the first two laws of thermodynamics.
This is the “energy transition” ratio: to replace fossil fuels with lower-emission energies. I believe that this is the only ratio for which the world really does have the means to intervene in the short term, in a proactive and realistic manner, although Figure 2 below shows that we have made little headway in this direction since the 2000s. But no one believes that we can succeed in dividing the CO2/energy ratio by 7.5 in a generation, barring a technological miracle on which it would be unwise to base the lines of our action.
There are, of course, other ways of reducing CO2 emissions in addition to modifying an energy mix which, at global level, remains 85% “fossil” today: the end of deforestation, agriculture which respects soils able to store carbon (4 per 1000 initiative), restraint in the consumption of the richest, etc. This is what the theme of the “ecological transition” is all about.
CO2 emissions in tons for a primary energy unit in TEP – at global level
Figure 2: CO2/energy ratio
Measure prosperity differently
Consequently, the issue of the global economy is now the following: the more we stubbornly seek to increase per capita GDP, the more we demand Promethean efforts from ourselves on the CO2/energy ratio. In other words, any growth in the coming years is highly likely to be doomed to remain “brown growth”, or insufficiently green growth in any event, given the climate imperatives we have set ourselves. Taking the commitment of +2°C by the end of the century seriously (a fortiori our best efforts, with a view to +1.5°C) makes any advocacy for GDP growth in itself contradictory.
This does not, however, mean that there is any reason to advocate for universal negative growth, but it does require both public and private decision-makers to design and use other prosperity indicators than GDP. Indeed, the latter has for a long time been a very poor indicator of the wealth produced, as has been clearly demonstrated in the literature by Dominique Méda, Florence Jany-Catrice, Jean Gadrey and Patrick Viveret, the Stiglitz-Sen-Fitoussi report, Oxford’s Multidimensional Poverty Index, the Human Development Report Office (HDRO, New York), the Forum for Other Indicators of Wealth (FAIR), etc.
The French law of April 2015 “aiming to take new wealth indicators into account in the definition of public policies” is a first step in this direction.
Moreover, in many Southern countries, and especially in Sub-Saharan Africa, the fundamental question is to know how to organize the labor “market” so that it can absorb future generations of young people. Yet we have known since the 1990s that GDP growth is no longer necessarily synonymous with recovery in employment. It now depends on the countries and, in particular, on the penetration rate of recent telecommunications. In India and China, several studies suggest that recent growth may have been rather detrimental to employment. In other words, the international community will sooner or later need to realize that it is politically, socially and economically much more important to find a job for the greatest possible number of people than to increase GDP. The Arab Spring demonstrated this in its own way.
These are all points for which we need to be pedagogical vis-à-vis political and economic actors in the North and South alike. Latin America, with the Andean concept of buen vivir, is probably the most open continent on this issue.
It is, of course, possible to consider geographically differentiated objectives: GDP growth for the priority poor countries, “another prosperity” for the other countries. This would especially make sense because for several years, surveys on “subjective happiness” have shown, and with great unanimity, that above a certain threshold (approximately USD 12,000 per capita), the GDP increase is no longer correlated with the increase in the “happiness experienced” by populations. Conversely, this means that below this threshold, there is still and always a strong correlation (which confirms that this makes common sense!). However, the correlation between GDP growth and the increase in greenhouse gas emissions remains extremely high whatever the level of development of the countries observed. Consequently, for emerging countries and a fortiori advanced economies, continuing to increase GDP is neither a guarantee that citizens will be happier, nor a guarantee that there will be growth in employment. It does, however, guarantee that it will become impossible to meet our climate commitments.
Promoting GDP growth in Southern countries would only make sense if Northern countries committed, at the same time, to voluntarily reducing their per capita income (and hence their GHG emissions). John Romer, from Yale, has made a similar proposal. Is the international community ready to take this on board?
The opinions expressed on this blog are those of the authors and do not necessarily reflect the official position of their institutions or of AFD.