What’s Behind Global Emissions Decline, GDP Increase
PERI’s James Boyce breakdowns the policies that contributed to this first in the 21st century and how America can decouple itself from carbon
JESSICA DESVARIEUX, TRNN: Welcome to the Real News Network. I’m Jessica Desvarieux in Baltimore.
According to a recent report for the first time global CO2 emissions have decreased, while the global economy has grown. Researchers at the University of East Anglia and the Global Carbon Project found that emissions only increased by 0.6 percent in 2014, whereas they increased by an average of 2.4 percent in the nine previous years. Perhaps most notably, the authors also predict that in 2015 CO2 emissions will actually drop by about 0.6 percent. And unlike past periods with stalled emissions growth like the early 1990s after the fall of the Soviet Union, 2014 and 2015 have both exhibited a growth in GDP, global domestic product.
Here to discuss these findings is James Boyce. James is the director of the Program on Development, Peace Building, and Environment at the PERI Institute. He’s also a professor of economics at UMass Amherst. Thanks so much for joining us, James.
JAMES BOYCE: Nice to be back, Jessica. Nice to have something in the good news category to talk about for a change.
DESVARIEUX: I know. It’s rare we get to do this. So let’s right into it. Why are these findings so significant, James?
BOYCE: Well, what it means is that there’s some evidence that at last, a bit belatedly but better late than never, we’re beginning to turn the corner in terms of being able to separate out what’s happening to the trends for income, which continue to rise, and indeed need to continue to rise around the world to lift standards of living on the one hand, and trends in CO2 emissions, which need to fall in order to protect the climate for future generations.
So some thought for a long time that it was impossible to separate these two, that the relationship between income and CO2 was in effect locked in place. You couldn’t get more income without getting more CO2. But we’re starting to see the evidence come in that it is indeed possible to decouple the two, to grow income without growing CO2, and in years ahead worldwide I think we can probably look forward to declining emissions of CO2, which has already happened in some countries.
DESVARIEUX: Let’s talk about that decline. Why have we seen the decrease in growth of emissions?
BOYCE: Why has it happened?
BOYCE: Well, it’s a combination of reasons. It varies from country to country. In some cases it’s the result, in many cases it’s the result, of deliberate policies.
So for example, in the OECD countries, the U.S., Western Europe, Japan, total emissions of carbon dioxide have fallen by about 3 percent, I believe, in the last–maybe a little more than 3 percent, maybe 4, in the last five years. That’s mainly the result of policies that have been implemented to try to move forward a transition to clean and renewable energy such as putting prices on carbon, or renewable portfolio standards for electricity, or fuel economy standards for automobiles. Varies from country to country. China has reduced its consumption of coal last year for the first time in the 21st century by about 3 percent. Why did China do that? Well, I think, actually, one of the main motives was to try to improve air quality, which as you know is a terrible problem in major cities of China, including Beijing.
To some extent, the change has also been driven by what you might think of as market forces in that there’s been a shift in the United States, for example, from coal to natural gas in electric power generation. And that’s been driven by the declining prices of natural gas with the boom in fracking. So that’s a contributor as well. It’s a combination of multiple factors in multiple countries.
DESVARIEUX: Okay, James. Let’s talk about the predictions that this report makes. It says that we’re going to see emissions continue to fall. Do you think that’s accurate? And what evidence can we point to that supports that?
BOYCE: Well, I think it’s certainly possible. I hope it’s accurate. In fact, I hope it’s an underestimate. I hope that we will see emissions not only fall, but fall more rapidly, indeed much more rapidly, than one would expect, perhaps, extrapolating from current trends.
That kind of transition has already been made in certain places. If you look at the record in Sweden, for example, which was one of the first countries, maybe the first, to introduce a tax on carbon dioxide, and now has what I believe is the highest carbon dioxide tax in the world, $125 a ton. Sweden’s CO2 emissions over the last 20 years, in two decades, have fallen by about 30 percent while the country’s GDP, total income in real terms, has risen by more than 50 percent.
So Sweden began this decoupling process 20 years before the rest of the world sort of has caught up. But now I think we may be embarking on a path like that of Sweden, and as I said, my hope is that the emissions declines will prove to be even faster than those that have been achieved so far in places like Sweden.
DESVARIEUX: How could America get on that path? Because President Obama has stated that this decoupling from carbon should be one of our goals here in America. What do we need to do here to have those types of results that we see play out in places like Sweden?
BOYCE: Well, it absolutely should be one of our goals. Because not only is it our duty to future generations to do our share to try to reduce climate change, after all, historically the U.S. is the biggest cumulative emitter of the carbon dioxide that’s the main culprit in global climate change, but also by making this transition we can dramatically improve public health in the United States. We have 48,000 deaths a year from air pollution related to the combustion of fossil fuels, I discussed in a previous Real News interview a few weeks ago. And by getting with the program here, we can actually be players in the clean and renewable energy technologies of the future, rather than continuing to fall behind the curve. So from the standpoint of the competitiveness of the U.S. economy in the 21st century, it’s quite important for this to happen.
How could we do it? Well, I mean, the single best thing we could do to drive it forward would be to put a price on parking carbon in the atmosphere. To introduce a tax on fossil fuels, or alternatively a cap on the amount of fossil fuels that’s being used, and auction off the permits, which would have the same effect. It would raise the price of fossil fuels, and thus give the signals to individuals, to businesses, to local and state governments across our economy, give the price signal that would lead people to invest more in energy efficiency and in clean and renewable energy alternatives, and to move away from fossil fuels.
Now, of course one of the big problems with putting a price on fossil fuels, a price signal that’s strong enough to drive forward the kinds of investments we need, is that it’s going to cost people money, right. It’s going to raise the price of gasoline, of electricity. At least coal-fired electricity, natural gas-fired electricity for consumers.
And so one of the big issues that we also need to crack in making this happen in the United States is to start having a real conversation not just about putting a price on parking carbon in the atmospheric parking lot, but also about who owns the atmospheric parking lot, and therefore who’s going to get the money that people pay when we’re paying to put carbon into the atmosphere. That money doesn’t disappear, it goes somewhere. And as some of your viewers will know, when I’ve advocated in past interviews with you folks is that that money not go to corporations as windfall profits, which is what happens under cap and give away and trade. Nor most of it go to the government, which is what would happen if this was a revenue-generating measure for the government, but rather that the money be returned back to the people in an equal amount for every woman, man, and child. And if we did that, that would insulate working families from the effects of higher fuel prices, and at the same time economy-wide, everyone would be having this critical incentive to reduce our use of fossil fuels and accelerate the transition.
DESVARIEUX: So almost like a refund, James, you’d get something back?
BOYCE: Yeah. It’s an example of what economists call a feebate program, Jessica. So the idea of a feebate program is you pay fees based on your use of a common resource, and you get rebates based on the principle that you all own that resource together.
So to give you a concrete example, I’m told that there are office buildings in Silicon Valley where, for example, 1,000 people are working in the office but there’s only parking space for 500. And parking space is expensive in Silicon Valley. They’re not going to double the parking space. That’s high-priced real estate. So what do they do? Well, they put a price on parking so that the lot doesn’t fill up, just like we need to put a price on fossil fuel use so that the global parking lot for carbon dioxide doesn’t fill up. And at the end of the month they take the money that’s been collected by people paying for parking, and they give it, they hand it out to everybody in the building, all the 1,000 people who work there, in equal amounts per person.
So what happens? The person who drives to work every day in a single-occupancy vehicle pays more than he or she gets back. The person who walks or takes public transportation or bicycles to work every day doesn’t pay anything to park, but they get back the same amount. They come out way ahead. And the people who carpool to work break about even, right?
Well, that’s what we’re talking about. That’s an example of a feebate scheme. Fees pay for use of the parking lot, rebates based on the parking lot being owned in common by all the people who work in the building. We’re just talking about the same kind of thing here, only we’re talking about the atmospheric parking lot for our carbon emissions.
DESVARIEUX: Very interesting proposal. James Boyce, always a pleasure having you on the Real News.
BOYCE: Thanks, Jessica. And let me just add one thing. In case viewers didn’t know, a bill to do precisely this, to cap carbon emissions, auction off the permits, and return 100 percent of the funding to the American people was introduced last year by Congressman Chris Van Hollen in Washington. It’s got 27 co-sponsors already. Sooner or later, my hope is that we will have such a policy here in the United States, and frankly, I hope it’s sooner.
DESVARIEUX: All right, we’ll definitely do a followup on that. And thank you for joining us on the Real News Network.
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