Empirical Explanations of Carbon Mitigation during Periods of Economic Growth

Prior research on the empirical relationship between anthropogenic carbon dioxide (CO2) emissions and economic growth, as measured by increases in gross domestic product (GDP), indicate that a 1% growth in GDP can lead to anything between an increase in emissions by 2.5% to a decline by 0.3%. Studies have paid little attention to independent mechanisms that reduce emissions. Statistical properties of the data undermine the estimation techniques used in many studies. To address these shortcomings, we used novel methods and panel data integrating emissions, economic, and energy-system characteristics across 70 economies over 1970-2013 to derive a universal GDP-emissions relationship and identify key emissions-reduction mechanisms. We found that, robust to a variety of estimation procedures, every 1% increase in GDP was associated with a 1% increase in CO2 emissions when controlling for other mechanisms. Emissions reductions were mainly driven by four mechanisms: (i) energy system decarbonization, (ii) increased economic efficiency, (iii) electrification, and (iv) deindustrialization. A 1% increase in these factors was associated with 0.2-1.8% reductions in CO2 emissions per year; together, these factors contributed to 18 petagrams of emissions reduction globally over 1970-2013. Decarbonization contributed most to emissions reductions in high-income economies, while economic efficiency and electrification contributed most to reductions in low-income economies.