GHGs and GDP: The Correlation in Canada

Every year Environment Canada produces a National Inventory Report of Greenhouse Gas Sources and Sinks in Canada. The idea is to help identify areas for improvement, but the report has also turned into a fantastic data set. Each year the report features numerous charts showing annual emissions trends, such as the following:

Source: Environment Canada, National Inventory Report 1990-2011

The question of the correlation between GHG emissions and GDP always comes up, but you will never see a chart featuring both data sets. Instead, the report (particularly in recent years) has emphasized "emissions intensity" - a measurement of GHG emissions per unit of GDP. So, inevitably there will be a chart that looks like this:

Source: Environment Canada, National Inventory Report 1990-2011

Both of these charts tell a particular story, but they also omit important details, so I have taken the liberty of producing my own 'mash-up' versions to highlight some of the missing details.

First up, I have added into the Canadian Emission chart the original reduction target under the Kyoto protocol. Figure S-1 above suggests that GHG emissions peaked in 2007, which so far is true, and by including the 2020 Copenhagen goal on the right side, the chart conveys a message that the government is on track to meet its goals. But as the following mash-up reminds us, our federal government failed miserably in reaching the Kyoto target of a 6% reduction of 1990 levels by 2012. This is the level of reduction necessary for Canada to help maintain global GHG levels below a threshold of runaway warming, whereas the Copenhagen protocol will allow for several hundred Megatonnes of additional GHGs to be released. The Kyoto target would have brought national emissions down to much-needed pre-1990 levels, whereas the Copenhagen target will only bring national emissions down to mid-1990 levels (over 50 MT of GHGs more each year). This is a significant failure. Whereas the federal government had signed into law an attempt to reduce emissions to 555 MT by 2012, the target was overshot by nearly 25%.
This chart tells a very different story, and here's an analogy to highlight the point: An obese person comes to appreciate in 1997 that they turned a negative corner back in 1990, and thereby makes a plan to return to a healthier body mass by reducing their weight back to what it was before it became dangerously high (that's Kyoto in a nutshell). Then in the early 2000s it is clear to the obese person that they are not effectively on track to meet the healthy target, yet instead of trying to make a concerted effort to meet the target, they just adopt a new one... In 2009 they thus decide that bring their weight back to what it was in the mid 1990s in time for 2020! Meanwhile, they will still be obese, and will have been unhealthy for a span of 30 years, and have created a precedent of failing to achieve a weight reduction objective at the same time (that's Copenhagen in a nutshell)!

My mash-up of Figure S-1 above

Second, there are problems with Figure S-2 above: The overall message is, again, that Canada is achieving great success when it comes to reducing emissions, because the amount of emissions per unit of economic activity is declining. However, this does not mean that the correlation between GHGs and GDP is getting weaker. As the following chart shows, when you plot the two indicators together it is evident that there is still a close relationship between economic growth and GHG emissions. The most notable link can be seen in the wake of the 2008 financial crisis. The economy took a nose dive, and so did emissions (as fossil fuels became less affordable); Then as the economy started to recover, emissions began to rise again. This is because consumption in this country is still very closely associated with increased usage of fossil fuels:

With data from Statistics Canada, Table 380-0064 & Environment Canada's National Inventory Report 1990-2011

Ideologically the current government has much to gain from portraying a weakening link between economic growth and GHG emissions, because it espouses a perspective of ecological modernization in which economic growth can be made 'green'. The problem is that a macro-view of the global economy actually suggests a much closer correlation than we see at the domestic level. One of the main reasons Environment Canada lists for why 'GHG Intensity' is falling involves...

Structural changes involving a shift from an industrial-oriented economy to a more service-based economy. Between 2000 and 2008, the gross domestic product (GDP) of the service industries rose by 32%, while heavy industries and manufacturing together grew by only 3%. Service industries are less emission intensive than goods producing industries, so this ongoing change has lowered Canadian GHG emissions (Environment Canada, National Inventory Report, 2013).

Of course, as our rising expenditure-based GDP figures suggest, we are still buying plenty of goods - the only difference is that they are increasingly being manufactured abroad. So those manufacturing and industrial emissions haven't disappeared, they've just moved elsewhere! This gives us a false sense of accomplishment which only reinforces the incorrect notion that we can consume more and reduce emissions at the same time. It just doesn't work out at a macro-level, at least not until we have systems of production which are not founded upon fossil fuels.

Yes, it is true that there have been major efficiency gains which have helped drive down emissions - including in the electric power generation sector and through emissions reductions programs (retrofits, etc.) - but my worry is that further reductions from efficiency gains will not be significant. There is only so much to be gained from producing and consuming more efficiently. If there were endless efficiencies to be gained, then one would expect a clearer curve in Figure S-1; the GHG levels should have peaked and consistently declined since then. But they haven't. Instead, emissions have begun to grow again, and it's no surprise when you consider the areas where Canada's economic activity has spiked - in particular the energy and transportation sectors.

The problem with the current approach taken in the National Inventory Report is that it conveys a sense of steady accomplishment and suggests that Canada is 'on track' to reduce emissions, and further that this can all take place while its citizens continue to consume at increasingly higher levels each year. A critical appraisal of the same data, however, suggests an entirely different reality. Ultimately, we need to consume less and change the things we produce (and how we produce them) dramatically if we are going to do our part to help keep the worsts of climatic change at bay.