The economic imperative: Recession and social injustice imperil the energy transition
The pandemic revealed the human cost of chaotic decarbonisation achieved by tanking the economy. To keep its social licence, the energy transition must decouple GDP growth from CO2 emissions
When the economy booms, so do anthropogenic emissions of climate-warming gases. This year, the inverse happened.
The pandemic plunged the global economy into its most severe contraction since the Great Depression. Energy-related emissions, which were on a hockey-stick trajectory until 2019, were slammed into reverse and are on track to be 7% lower in 2020 than last year. The IMF last week forecast the global economy will shrink by 4.4% this year.
Energy-related CO2 emissions were 33 gigatonnes in 2019, so a 7% reduction would equate to carbon savings of 2.31 gigatonnes (where a gigatonne is a billion tonnes). Global GDP was worth USD 135.7 trillion last year, as per the World Bank, so a 4.4% contraction equates to USD 5.6 trillion. Therefore, the implicit economic cost of that 7% carbon saving equates to USD 2,424 per tonne of CO2, according to my rough calculations.
That is a very expensive way to cut emissions: almost two orders of magnitude greater than the prevailing European carbon …