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CO2 Emissions Reductions lead to Slower Growth
Activists inadvertently show decoupling economic growth from CO2 emissions reductions is a myth
Since my article about slow productivity growth being related to high energy costs arising from Net Zero policies was published, I have noticed various people on Twitter making claims that reducing CO2 emissions is good for growth. The phrase used is “decoupling emissions from economic activity.”
Using figures from Our World in Data, the claim is that “we can increase economic growth while decreasing CO2 emissions”. The chart shows the economic growth of 25 countries compared to emissions reductions from 2005-19. At the time of writing that tweet had received over 452,000 views.
The trouble is, closer analysis of the data illustrates the point I was making rather well. If you plot a scatter chart of growth versus CO2 emissions reduction, you can see the opposite of what is claimed.
Aside from outliers Romania, Ireland and Singapore, there is a clear correlation that shows bigger emissions reductions lead to slower growth, or smaller cuts lead to faster growth (blue dots on Figure 2).
This gives further support to my analysis showing high electricity costs reduce productivity growth.
It seems to me that the claim of decoupling economic growth from CO2 emissions is a myth.
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