Emissions And Economics

The Earth Policy Institute has a new update on its site this week that boldly proclaims: "U.S. Headed for Massive Decline in Carbon Emissions." (hat tip: Green, Inc.) I hope it's right! It bases its claim on some emissions data. This shows that over the past two years, carbon emissions in the U.S. have decreased dramatically. Yet, this got me thinking about something else that's decreased significantly over the past two years: economic activity. Is there a correlation?

In theory, there should be. More economic activity requires more energy. More energy results in more emissions. While other factors are at play, this seems logical enough. So let's take a look.

First, here's the graph provided by the EPI:

That is, indeed, a serious decrease we're seeing. They project out 2009 there, so I'll do the same for Real Gross Domestic Product (GDP), assuming a 3% decline (per the CBO estimate). Here's real GDP over the same time horizon via the Bureau of Economic Analysis, with that projection:

Clearly, these curves do not precisely fall on top one another. Still, it does look like they both increased pretty regularly until the past two years. So let's do another test. Let's take the ratio of carbon emissions to real GDP:

I think this is an interesting and revealing chart. It shows a pretty continuous decline, particularly since around 1970. That means the U.S. is successfully emitting less carbon for every dollar of real GDP each year. And that holds for even 2008-2009, showing that you can't blame the recent emissions decrease entirely on less business activity. Obviously, this ratio can never hit zero, but the lower it gets, the more effective the U.S. is at growing its economic without emitting as much more carbon.