Who is winning the race to low-carbon prosperity?
Big cuts in CO2 emissions are coming soon if humanity hopes to preserve a safe and stable climate system. Economies that maximize wealth per declining tonne of CO2 will be in the best position to maintain prosperity.
My chart above shows how much money each of the G20 nations produces for each tonne of CO2 (tCO2) emitted. The G20 nations create 90% world's GDP and 84% of global climate emissions. These are the nations that will dictate the response to the climate crisis. I've also included the provinces of Alberta and BC in my chart to highlight the radically different climate challenges within Canada.
Three examples will help illuminate the race.
1) SPRINTING AHEAD
The UK economy produces $4,700 for each tCO2 emitted.
In 1990 the UK created just $2,500 per tonne (gold coin stack). They added another $2,200 since then (green coin stack). The British can now run their economy with just 8 tCO2 per person each year. Twenty years ago they would have needed to emit 15 tCO2 per person to generate the same GDP per person.
2) MIDDLE OF THE PACK
The USA economy produces $2,400 for each tCO2 emitted.
Because they make only half as much as the UK, Americans face two growing carbon threats. First they need to fight to get twice as big a share per person of the world's dwindling CO2 budget. Second, Americans will pay twice as much in carbon pricing per dollar of GDP.
3) RUNNING ON STEROIDS
Alberta's economy produces only $1,000 for each tCO2 emitted.
So far they have been able to produce a high standard of living despite a very dirty economy by emitting a gigantic level of CO2 per person: 60 tCO2 each! To maintain this, Albertans will need to grab seven times more CO2 per person than the British and three times more than the Americans. Everyone is going to be fighting for the dwindling share of CO2. How far into the climate crisis will Alberta have the political power grab so much more? Even if they do pull it off, Albertans will pay five times more in carbon pricing for each dollar of GDP. Imagine a carbon price of $100/tCO2. That would equal 2% of UK GDP but a whopping 10% of the Alberta's. And $100 is considered much lower than what will be required.
Here is the chart again (click it to view it larger) along with some key trends the chart highlights:
THREE TIERS OF NATIONS -- The G20 nations fall roughly into three tiers of GDP per tCO2.
- $1,000: Bottom tier nations make $1,000 or less per tCO2. China makes the least of any G20 nation at around $500/tCO2. Alberta is in this group, producing around $1,000 per tCO2.
- $2,000+: The middle tier nations make more than twice as much per tonne. These include Canada and USA. Three of Canada's four largest provincial economies – BC, Ontario and Quebec – are in front of this group with over $3,000 in GDP per tCO2.
- $4,000+: The Europeans are all up here. Japan is struggling to keep up. France now makes nearly $6,000 per tCO2.
MOST DOLLARS GAINED SINCE 1990-- UK added the most money per tCO2 since 1990: an extra $2,200.
BIGGEST PERCENT GAIN-- China pulled off the biggest percent gain by doubling their GDP per tCO2 since 1990. The second biggest percent gainer was the UK with an 87% increase.
THE PASSING LANE -- USA moved the farthest up the rankings as it jumped from 11th place to 6th place. They now lead the second tier of G20 nations but will need a major push to jump up to the top tier.
BIGGEST LOSS -- Saudi Arabia saw the biggest decrease. They lost the biggest percentage amount (-23%) as well as the biggest dollar amount (-$220).
How many dollars per person?
A primary measure of prosperity is how much money each nation produces per citizen.
To see how winning the race for low-carbon prosperity pays off, consider the intriguing example of France and China. Both nations emit the same amount of climate pollution per person: around 6 tCO2. However, they are at opposite ends of the G20 tables for dollars per tCO2. The result:
France's economy produces twelve times more money per citizen with the same climate pollution levels.
In terms of global climate agreements, France can afford to sign up to a climate treaty that requires eventual convergence with China in per capita emissions -- something China insists on. In fact the French already do better than that.
Quebec would produce around $25,000 per citizen at that level while Alberta would produce less than $7,000 per person.
I need more CO2 than you
My next chart shows how much CO2 per person each of the economies requires now for their current level of prosperity. I've highlighted the CO2 level of France and China.
Only four of the G20 nations require more than twice the "France-China" level: Saudi Arabia, Australia, USA and Canada. As the G20 nations wrangle to divide the shrinking CO2 pie it is going to take a lot of political and economic strength to grab a significantly larger slice than the others.
So far, Canada and Australia have been hiding behind the USA. But as I've written about recently, the USA is leading the world in CO2 cuts in recent years. And as I've shown above, the USA has made much greater progress than either Canada or Australia at lowering CO2 per person and at creating more GDP per tCO2.
Looking forward, the California factor looms large. California has been out front pushing the USA on environmental action for decades. It was California that forced the US to adopt dramatic increases in fuel efficiency in new cars. Canada was then forced to follow suit. And now California -- with an economy the size of Canada's -- just started a cap-and-trade programme to clean up their economy more quickly. Last week Oregon, Washington and BC agreed to join forces with California in a harmonized carbon-pricing bloc whose combined economy is the fifth largest on the planet.
Ready or not, the race for low-carbon prosperity is on. Laggards will suffer.
Below is another view of the top chart...