Among G7, greater CO2 emissions reductions correlate with lower economic growth

My last article on how the United Kingdom's real per capita GDP has declined substantially since it brought forward The Climate Change Act 2008 (c 27) has caused some confusion.

Specifically, when we look at how each of the G7 economies has performed in terms of real per capita GDP growth since 2007 (i.e., the year before the U.K.'s Climate Change Act), we find that the U.K. is the second-worst performer.  In other words, only Italy's real per capita GDP grew less than the U.K.'s did since 2007.

Who was the best-performing G7 nation over this timeframe?  Germany.

And this is where the confusion starts.  Some conservatives seem to think Germany is a nation committed to reducing its carbon dioxide emissions, and showing the world that Germany's economy has outperformed the rest of the G7 since 2007 will send a message that the environmentalists will love to hear – namely, that reducing carbon dioxide emissions leads to economic growth.

Wrong.  Wrong.  Wrong.

I'm not sure why some conservatives think Germany is reducing its carbon dioxide emissions more than other G7 emissions, but this belief is simply erroneous.

Between 2007 and 2012, Germany's carbon dioxide emissions (i.e., "total GHG emissions excluding LULUCF/LUCF - Gas: CO2 - Unit: Mg") declined by only 3.2 percent, but its population also declined by 2.2 percent.  Thus, Germany's per capita emissions were essentially unchanged (only a 0.9-percent decline) between 2007 and 2012.  That is the worst carbon dioxide emissions reduction performance among the G7.

Yes, Germany's share of electricity production from renewable sources (excluding hydroelectric) increased over this period from 10.6 percent to 18.9 percent, but the nation found other ways to compensate for these carbon dioxide emission savings.  Overall, whatever emission reductions Germany achieved by increasing the share of renewable energy electricity sources were offset by emission increases in other sectors.

By comparison, the U.K. decreased its per capita carbon dioxide emissions by 16 percent from 2007 to 2012.  Only Italy had a greater decline, at 20 percent.  Who were the two worst-performing nations in the G7 with regard to real per capita GDP?  The U.K. (2nd worst) and Italy (worst).  An amazing coincidence?

Perhaps not.  Here is a plot of the change in real per capita GDP within the G7 nations between 2007 and 2012 against the corresponding change in per capita carbon dioxide emissions.

And look: there is a statistically significant correlation (p<0.05).  Countries that reduced their emissions the least grew the most.  Countries that reduced their emissions the most grew the least.

The usual caveat applies: correlation is not necessarily causation.  But causation requires correlation.

By the way – Germany has the third-highest per capita carbon dioxide emissions in the G7, behind only the United States and Canada.  The U.K.'s per capita emissions are already 35 percent lower than Germany's, and the gap is continuing to grow.

Some take-home messages: (1) Germany is not the emissions reduction utopia many on both sides of the debate think it is; (2) in general, G7 nations that reduced their greenhouse gas emissions more had lower economic growth rates; and (3) the findings fit within a broader pattern evident almost everywhere we look – efforts to lower greenhouse gas emissions correlate with poor economic performance.

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