Biden Climate Plan and Global GDP
KUDOS, and I mean it, to Biden. Real implementation will be incredibly difficult and failure will mean doom (don t think your grandchildren are going to survive in a world without plankton). By next election cycle the path the world is on will be visible to all and most likely we will see spiking carbon emissions, devastating weather catastrophes, the need for even more investment, carbon taxes, and even more weaponizing of painful choices.
The pandemic definitely decreased global emissions. To stay under the limit on future emissions needed to keep climate temps under the 1.5 centigrade increase, that same decrease in emissions Y on Y has to be achieved every year until 2030.
Reality No.1) Co2 and other greenhouse gas emissions have a very high correlation w Global GDP, .87 to .93
Climate change is unfortunately global so don t bother with arguments based on regional data. In the United States some progress growing GDP while cutting emissions has been achieved in some locales. Most of the progress is a result of a one time switch from coal to nat gas by utilities AND relatively poor main street economic performance since 2007. Yes, it is true that there is evidence (weak) of an uptick in consumer interest in sustainability in very developed countries as GDP grows, but half the worlds people can t wait to get a stove and AC.
Reality No.2) The multi trillion dollar stimulus in the pipeline is going to significantly increase Global GDP, unless everybody dies. April IMF forecasts is for 6 % global growth in 2021, and 4.5% for 2022. IMF forecasts for the next few yr.s have been trending higher each Q.
Global GDP in 2019 grew 2.3%, yet 2020 was tied for the hottest year on record even with the pandemic. Spending on the infrastructure to transition to a green economy will be slow to have measurable effect on emissions yet the stimulus is immediate.
Additionally, Green infrastructure spending ( think "good jobs" ), will likely have an immediate multiplier effect greater than what we've seen over the last 20 yr.s, ramping the marginal propensity of lower and middle income households to consume. Rates at the lower bound, moderating the crowding out effect, will add fuel to the fire.
Reality No.3) Much hope is based on switching the transport sector out of Internal Combustion Vehicles to EV's. It makes sense, it's a thing, big Fed investment committed, unfortunately the auto fleet in the US has a 15 year life span, EV's represent under 2% of that. See below for Global % sales history.
Meanwhile the total Global Auto and Light Truck Fleet sales clocks about 70 million.
Even with radical gov incentives like BUYING and DESTROYING your 2021 Sierra Pick Up and its SUPER unlikely to happen this term, EV s won't make any significant dent in the fleet before 2030 or even 2040. Sorry.
Reality No.4) The next 5 to 10 years are going to see the fastest growth of Co2 emissions ever, most likely exceeding current projections of worst case scenarios, as a result of the above.
IS there a solution? All the above we can do but more, and most importantly LESS. Less global GDP growth has to be engineered in there somehow, aimed at anything NOT actively contributing to Zero Emissions growth. A very painful decade.
A great start would be for the US Fed to stop forcing rates down. We've engineered and directed our growth with monetary, fiscal, tax policy, subsidies, grants, etc. for decades. We need to engineer this economy as if we are in a world war, which in fact we are.
Now our survival depends on getting it right.