Decarbonization Equals Lower Economic Growth

PricewaterhouseCoopers (PwC) has released a report on the 2014 Low Carbon Economy Index and the world's progress towards "decarbonization," which is a measure of the amount of carbon dioxide emitted per unit of GDP (h/t Brad Plumer at

According to the PwC report, "to meet the global carbon budget necessary to limit warming to 2 C, the global economy needs to increase decarbonization to 6.2 percent a year, every year to 2100."  For context, the annual average change in carbon intensity for the world's economy between 2008 and 2013 was only -0.6 percent per year, or more than an order of magnitude slower than what the PwC report claims is required to avoid warming the planet by more than two degrees.

The PwC report also contains comparative economic growth and decarbonization rates between 2008 and 2013 for the global economy, the EU, G7, and the E7 emerging economies.

Two key points are apparent from this PwC data.

First, there is a direct negative correlation between the rate of decarbonization and economic growth – the faster the decarbonization, the slower the economic growth, and vice versa.

Second, once the rate of decarbonization drops below 2% per year (as we saw with the EU), economic growth turns negative.  This suggests that a decarbonization rate of 6.2% annually would lead to a rapid and continuous contraction of any economy that attempts to follow the path.

We've seen this story before.  British Columbia's economy was significantly harmed by carbon taxation in its attempt to reduce greenhouse gas emissions, as was that of Denmark.  Australia introduced a carbon tax, and its unemployment rate immediately shot up.  And among the G7, greater carbon dioxide reductions correlate strongly with reduced economic growth.