The Coming Transitions in Economics and Climate

This is one of the most well-known images that has succeeded in bringing climate change to the global agenda. The blue and red bars mark the anomalies (deviations) from the 30-year statistical mean of global surface temperatures between 1961–1990.

Figure 1. Source: T.J., Jones, P.D., and Simpson, I.R., 2021: An updated assessment of near-surface temperature change from 1850: the HadCRUT5 dataset. Journal of Geophysical Research, 126, e2019JD032361 https://doi.org/10.1029/2019JD032361

The Backstory

Post-WWII was defined by the most dramatic shift in societies and economies that had been seen for generations: people wanted peace, stability and a job. There was a huge migration off the farms into the urban centres. One of the major priming factors of that growth was the acceleration of manufacturing of automobiles, trucks, planes, tractors and all manner of new consumer conveniences with a lot of technology coming from the war economies: all requiring high inputs of fossil fuels. With the tremendous demand for pleasure and work vehicles, there came an exponential demand for more and more refined petroleum products, followed soon by plastics industries using oil and natural gas by-products. Figure 1 (below) says a great deal about the changes that were in motion and continue until today.

Figure 2. The transition from horses to tractors in the US by the end of WWII.

Consequences of Cheap Energy

The London “smog” of 1952, caused by domestic and industrial use of coal, resulted in an estimated 12,000 deaths, and in 1956 the Parliament enacted a Clean Air Act. Coal was the fuel of choice in all major economies: industry was addicted to a very nasty drug. Between the 1950s and the 1990s the US enacted the Clean Air Act brought about by industrial air pollutants and severe health risks. In 2005 Canada and the US were still at odds over “acid rain” falling onto the forests and into lakes of Canada caused by the sulphur by-products from the coal emissions from the US industrial belt.

The emergence of the automobile industries meant huge inputs of energy and outputs fuel emissions. In 1929 the US industry accounted for ~90% of the world’s production. Today, much of the production has shifted from US-Canada to Asia and Mexico.

The Global Challenge

Let’s be realistic, holding global surface temperatures to an increase below 1.5 C, or below 2.0C, by the years 2030–2040, will be very difficult, but not impossible. I have (below) prepared four graphs. — — over the past ~25 years, CO2 has increased by ~32%, while the US GDP has increased by more than 45-fold. It continues exponentially, as does CO2, but at a lower rate. Obviously, CO2 and GDP are highly correlated. The US GDP was chosen because it is the largest economy in the world and also because the US is the second highest carbon emitter.

Figure 3. Change in global CO2ppm over the past 60 years recorded at the Mauna Loa Research Laboratory.

Figure 4. Changes in the US GDP bn$ over the past 60 years.

Figure 5. CO2ppm vs US GDP over the past 60 years.

The Conundrum

Our globalized economy since WWII has become heavily dependent upon fossil fuels. The three graphics above need very little explanation, the story is in the data. The cumulative effects of CO2 and other greenhouse gases are intrinsically linked to the economies that make up wealthy, modern societies; yet, almost one-half the 8 billion people on this Earth produce no more emissions than what would have occurred 250 years ago. The top emitters can be found at this link: https://www.worldometers.info/co2-emissions/co2-emissions-by-country/

Question: How do we reduce atmospheric carbon (plus other GHGs) in order to bring down the upward trend in global temperatures while at the same time not crashing our economies?

Based upon the brief analyses presented here, it is obvious that it will require more dedication and innovation than ever before. Figure 6 (below) is an excerpt from the data shown above. In 2007-2008 our world went through the most stringent stress test since the financial crash in 1929. In 2020 the world Covid-19 pandemic produced another memorable stress test, financially and many other ways (still in effect in some places).

Figure 6. Data showing the US GDP over the past 17 years. The effects of two major financial perturbations, the financial meltdown 2008–08 and the global pandemic beginning early 2020, are obvious.

The point of Figure 6 is this: most of us suffered financially or otherwise during both those two perturbations over the past few years but in order to really drive down CO2 emissions and, restrict Earth’s temperature from exceeding 1.5–2.0 C, these data curves must flatten, and better yet, decrease. It remains to be seen whether the impact on GDP beginning in 2020 will return the GDP to its original trajectory: note the downturn appears to persist in the system based upon the expected value in the linear fit.

Obviously, as many countries are trying to do, reducing our dependence upon fossil fuels should hopefully hold warming to a net-zero increase within a few decades. Yes, we can do this IF…we are willing to absorb the economic shocks. Globally we’ve filled a huge bag full of cash and now slowly we must empty out the “dirty dollars” and start putting in the “clean dollars” while creating a “new” economy with the least amount of upheaval. This will, I believe, require lots of leadership and collaboration. Taking a quick survey of geopolitics, adaptation will be up to the combined strength of billions of our fellow Earthly passengers. No one is going to save us except ourselves; there will be no cavalry riding to our rescue.

Data transformation to percentages using 1960 as the baseline.

CO2: 1960= 316.91/316.91*100=100; 1961=/317.64/316.91*100=100.2 …

GDP: 1960=542/542*100=100; 1961=562/542*100= 104 …

Thank you Marilyn for your helpful discussion, especially regarding the period 2005-2022.

Thank you for using your time to read my writing. Feel free to leave comments.

Zack Florence