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Climate protection and economic growth: do they work together?

Climate protection and economic growth: do they work together?

Consumption and growth hinder climate protection. And climate change affects the economy. Researchers have investigated what that means exactly.

The news sounds good: the consequences that are harmful to the climate and the environment are falling. So did you do everything right? No, say authors of another study that has been published. The international research group looked at how consumption developed within the EU between 1995 and 2019 and what environmentally harmful consequences it can have.

The result: the European community of states outsources the effects of overconsumption to poorer countries. The research team found that pollution from emissions and material consumption increased above all in eastern countries such as Montenegro, Albania, Serbia, Moldova and Ukraine.

The result confirms what is already known: economy and consumption damage the climate. Because when productivity and prosperity grow, the need for resources and waste also increases. Global warming is progressing, reaching climate goals is becoming more unrealistic.

Unsettled weather slows the economy

Conversely, climate change also affects the economy. According to the study, with every degree by which the global temperature rises, global economic output decreases. Researchers from the Potsdam Institute for Climate Impact Research (PIK), Columbia University and the Mercator Research Institute on Global Commons and Climate Change (MCC) expect minus five percentage points.

In their study, they examined how temperature fluctuations over the past 40 years have affected a country’s economic performance. To do this, they compared data from more than 1,500 regions worldwide. “We show that unstable weather slows down the economy,” says co-author Anders Levermann from PIK and Columbia University in New York, summarizing the study results.

Countries in the Global South are particularly affected because their average annual temperature remains relatively constant compared to the Global North. While the temperature in Russia and Canada fluctuates by 40 degrees throughout the year, it is only three degrees in parts of Latin America and Southeast Asia. Due to climate change, however, extreme weather events occur more frequently there, including greater temperature fluctuations.

“We have known for a long time that changes in the annual mean temperature influence overall economic growth,” explains lead author Maximilian Kotz from PIK. The study shows the influence that short-term temperature fluctuations can have.

Economies in Europe and North America have grown with different seasons and seasonal temperature differences, so have adjusted accordingly. The more familiar a region is with (large) temperature fluctuations, the better prepared it is for them. According to the study, insurance and risk management have evolved accordingly.

And yet the losses from further emissions and rising temperatures would be significant, in the US. In 2100, depending on the scenario, they could be around 58 trillion euros. If the 1.5 degree target were met (read here why this is no longer achievable), global gross domestic product (GDP) would fall by 1.07 percent. If the temperature rises by 2 degrees, it would be 7.22 percent.

Poorer countries have no money for climate protection

According to the PIK researchers, countries with already small budgets are in a dilemma: how well countries adapt to temperature fluctuations and climate change depends on their economic situation. For many emerging and developing countries, the question of climate protection measures does not arise because the necessary prosperity is lacking.

This is also confirmed by the Environmental Performance Index (EPI), a data-based instrument that assesses a country’s state of sustainability. Countries with a flourishing economy are therefore investing more in climate protection policy. Germany ranks 13th, with Denmark, Great Britain and Finland occupying the top three places. India comes last.

Growing economy and climate protection: is that possible?

However, the researchers at the Intergovernmental Panel on Climate Change (IPCC) are certain that climate protection can work if the economy continues to flourish. In its fifth status report, 116 scenarios are listed in which a country’s economic output increases by two to three percent, but the temperature limit of less than two degrees can be maintained. However, the researchers do not anticipate a shift to renewable energies, but rather a removal of CO2 from the atmosphere. It is still unclear exactly how this is supposed to work, the necessary technologies have hardly been tested.

Experts like Jon Erickson, economic economist at the Gund Institute for Environment in Vermont, therefore consider the IPCC scenarios to be unrealistic. In his view, only a stagnant or shrinking economy could solve the climate problem. But that would ruin the livelihood of many people.

Carbon trading is not a way out for the economy

But trading in emission certificates is also apparently ineffective. With the CO2 certificates brokered by the United Nations, companies can offset their emissions and label their products as “climate neutral”. According to research by “Wirtschaftswoche” and Flip, the certificates are worthless. Climate researcher Martin Cames from the Öko-Institut, for example, assumes that up to 85 percent of UN projects do not help the climate as they claim.

According to their own statements, Flip and the “Wirtschaftswoche” newspaper investigated, among other things, a dam project in Brazil whose CO2 certificates are offered by a Brazilian company in the UN’s online shop. According to the responsible employees of the operator, the dam would have been built even without the money from the certificates. The project therefore does not save any additional emissions.

Sources: , , “Deutsche Welle”, with material from DPA and AFP

Source: Stern

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