Will the recession cut our CO2 emissions?

Economic activity is slumping, the price of carbon trading credits plunging – but analysts forecast only a negligible slowdown in global warming

David Adam
guardian.co.uk, Monday 23 February 2009 18.29 GMT

As the recession bites, the economies of many countries are slumping. But is the consequent fall in demand for energy and goods significantly ­reducing greenhouse gas emissions?
In Europe, the emissions trading scheme provides a clue. Firms with high levels of pollution must buy carbon credits, the price of which has fallen below €9 from €30 last summer.
Analysts say the price drop reflects a slowing demand for credits as companies scale back production and cut their carbon emissions. But it could also indicate companies have sold large amounts of surplus credits to raise cash.
Frank Convery, professor of environmental policy at University College Dublin, said the big sectors in the trading scheme, such as cement, steel, pulp, paper and glassmaking, were all in sharp decline. "And all that feeds back into emissions."
Sectors of the economy not covered by the scheme, such as agriculture and light industry, are faring little better. "Every single one you look at, the output is heading south," Convery said.
Alex Bowen, an economist with the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, who helped to write the 2006 Stern review on the economics of climate change, said transport would be affected too, as firms sent fewer goods and materials by road, sea and air. "Emissions from transport are likely to be hit quite a lot," he said.
Figures from the Department of Energy and Climate Change for the third quarter of 2008 showed a 8.5% fall in transport fuel consumption on 2007 levels — though this is more likely to reflect last summer's high prices.
Bowen said emissions from gas burnt in domestic heating, the other major source of UK carbon emissions, were less likely to shrink with the recession.
The actual impact of the recession on emissions will be confirmed only by the publication of national pollution ­figures, but these are issued infrequently and are usually out of date.
Overall, experts say the impact of the recession on global warming will not be very significant, because, despite ­policies to cut carbon emissions, the scale of a country's carbon emissions is still tied closely to its gross domestic product (GDP).
Bowen said the rule of thumb used in the Stern review was that a 1% change in GDP brings a 0.9% change in carbon pollution. That means the 2.5% decline in worldwide GDP for 2009 projected by the International Monetary Fund would reduce emissions by 2.25%.
Figures for the past five years ­suggest carbon emissions have risen by 2.5% each year, which indicates they could still rise by 0.25% this year, despite the economic downturn. The rise will continue to be driven by ­coal-fuelled economic growth in China and India, Bowen said, but more slowly than before.
Pieter Tans, a scientist with the US National Oceanic and Atmospheric Administration (NOAA), which ­monitors CO2 in the atmosphere, said: "I see no sign of any slowdown of the global trend." Carbon dioxide levels have risen by between 2 and 3 parts per million (ppm) each year over the past decade. Tans said a 6% drop in emissions — equivalent to a near 7% drop in GDP — would reduce that annual growth rate only by 0.24ppm. "This is well within the year-to-year natural variability of the CO2 increase we have observed over many decades."
Preliminary measurements show the amount of CO2 in the atmosphere reached a new high of 386.6ppm in December 2008.
Keith Allott, head of climate change with WWF, said the recession would be a "painful blip" in emissions figures. "In terms of the global carbon budget we have for this century, it might buy us a year or two," he said. Allott warned the short-term cut in carbon emissions could "flatter to deceive", by suggesting the problem was under control, and should not be allowed to derail investment in clean energy. "We've seen a huge boom and bust in the economy. We can't afford a similar boom and bust in the climate."
There is one positive note for some European countries — the recession may help them meet tough greenhouse gas targets set under the Kyoto protocol. Nations such as Austria, Spain, Portugal, Ireland, Denmark and Finland, are way off-track on Kyoto targets andface having to buy millions of credits to cover their shortfalls from 2012.
In Ireland, for example, experts say the recession has cut GDP by 9%, taking it back to 2005 levels. Convery says this has probably reduced annual greenhouse gas emissions by the same amount, from the 70m tonnes recorded in 2006, to close to the 63m tonnes permitted under Kyoto. Ireland alone could therefore save €300m on purchases of carbon credits, Convery said.