Carbon emissions and economic growth continue to decouple

17th March 2017

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Andrew Gillies

UK emissions fell 38% between 1990 and 2015 while the economy grew by 64%, according to the latest government data. Meanwhile, the International Energy Agency (IEA) has reported that global emissions were flat for the third consecutive year despite a growing economy.

Publishing its annual forecast of emissions and energy demand, the Department for Business, Energy and Industrial Strategy (BEIS) said that it expected the trend of falling emissions and economic growth to continue.

The department predicted that overall energy demand would fall by 2% from 2016 to the mid-2020s. After this it would increase and be 4% higher in 2035 than in 2016.

BEIS said future demand for energy would continue to be highest in the transport sector. It accounted for 39% of final energy demand by households and businesses in 2015 and this is expected to remain almost constant to 2035.

The department has elevated its prediction of energy demand from transport since it last reported in 2015 after revising its estimations of fuel efficiency of road vehicles by basing them on real world conditions rather than laboratory tests. It now expects transport energy demand to be substantially higher on average between 2016 and 2035.

Industrial energy demand is projected to fall by 12% between 2016 and 2035 despite a 3% rise in activity across the sector. An increasing proportion of the sector’s energy is expected to come from electricity, more of which will come from renewable generation, BEIS said.

Demand from households is expected to rise by less than 1% on average for each year between 2016 and 2035. The services sector accounted for 14% of final energy demand in 2015, a share that is forecast to remain constant through to 2035.

BEIS said it expected primary energy demand to decline steadily to 2025, and then increase to 2% above current levels in 2035 as the impact of existing policies declined.

Between 2016 and 2025, solid fuel use is forecast to fall by 59%, mainly due to declining use of coal for electricity generation. Demand for natural gas is predicted to fall by 24%, while renewables and nuclear fuels for electricity generation are projected to increase strongly.

Globally, the IEA found that CO2 emissions were flat at 32.1 gigatonnes for the third year running due to the growth of renewable power generation, replacing coal with natural gas, improvements in energy efficiency and structural changes in the global economy. During this time, the global economy grew by 3.1%, it said.

CO2 emissions declined in the US and China and were stable in Europe, which offset increases in most of the rest of the world.

Emissions fell by 3% in the US in 2016 due to a surge in shale gas supplies and a rise in renewable generation. The country’s economy grew by 1.6% last year.

President Donald Trump yesterday published his budget proposals. These include discontinuing funding for the clean power plan, the central plank of former president Barack Obama’s domestic climate change strategy. The plan aimed to cut CO2 emissions from the power sector to 32% below 2005 levels by 2025.

In China, the IEA noted that emissions fell by 1% last year as demand for coal declined, while the country’s economy grew by 6.7%. Renewable sources increased their share of energy generation, and gas use in the industrial sector grew as the government brought in policies to combat air pollution, the IEA noted.

‘These three years of flat emissions in a growing global economy signal an emerging trend and that is certainly a cause for optimism, even if it is too soon to say that global emissions have definitely peaked,’ said Dr Fatih Birol, the IEA's executive director. ‘They are also a sign that market dynamics and technological improvements matter. This is especially true in the US, where abundant shale gas supplies have become a cheap power source.’


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