Hunting for green growth in the G20


The G20 has committed to sustainable growth, but Kate Raworth asks if it has really been making its growth go green?


Assessing the G20’s record on green growth means getting clear on the concept of decoupling. Sounds tedious, I know, but it matters. (If you want to understand income inequality, you need to know about Gini coefficients – likewise, if you want to understand sustainable growth, you need to know the difference between relative and absolute decoupling). It’s set out below.

Absolute and relative decoupling

Relative and absolute decoupling: GDP and resource use
Here GDP is growing (from an indexed starting point of 100), against two different scenarios for resource use (let’s say it’s CO2 emissions for simplicity). When GDP and CO2 emissions both grow, but GDP grows faster, that’s relative decoupling.

It’s an important start towards sustainability, but not enough because CO2 emissions are still rising: you could call it greener growth. Given that global CO2 emissions have already overshot sustainable limits, what’s needed is absolute decoupling, and that’s only achieved when GDP grows while CO2 emissions fall absolutely. That has to be the standard for green growth – and it’s what high-income countries must achieve if they are to cut their CO2 emissions significantly below 1990 levels, to help stop dangerous climate change.

So how have the G20 been doing on decoupling? Here’s their GDP growth versus the CO2 emissions they produced to generate that growth, from 1991 to 2007.

Comparison of GDP against CO2 emissions in G20 countries

The G20’s record on GDP and CO2 emissions growth, 1991-2007
What’s going on in here?

The diagonal line shows one-for-one growth, with no decoupling. Indonesia is on that line, with both GDP and CO2 emissions increasing around 100% over the period. This is Zone 1.

In Zone 2, below that line, are all the relative decouplers: countries whose GDP grew faster than their emissions did. Among emerging economies, the top performers for relative decoupling were Mexico, where GDP grew four times faster than CO2 emissions (in part due to the rise of ‘light industry’ under the North American Free Trade Agreement, eclipsing the importance of the oil sector), and China, whose GDP grew two and a half times faster than its emissions. Along with them,
many other G20 countries have been achieving greener growth. Good start – but not nearly enough.

The hunt for evidence of green (absolutely decoupled) growth has to focus in on the high-income G20 members, because they are the ones who should be making it happen. How have they done since 1992? Mostly, not very well. Australia, Canada, Italy, Japan, and the US have all only relatively decoupled: their CO2 emissions are rising more slowly than GDP, but they are still rising.

The really interesting action – and the hope on which green growth is pinned – is below the horizontal axis, in Zone 3, because that’s where GDP grows while CO2 emissions fall. Four countries made it down there. Russia is unfortunately a case of no growth rather than green growth over the period, so doesn’t count. But Germany, France and the UK all saw GDP rise while their CO2 emissions fell.

That’s absolute decoupling in action. Green-growth evidence in the bag – case closed? Not at all: here come the caveats.

First, what about emissions embedded in a country’s imports? Sure enough, if you take account of traded carbon, the UK rises back above the line significantly (the UK may be producing less carbon-heavy stuff, but is consuming more of it). So only France and Germany are left firmly below the line.

Second, relative to the rest of the G20, France and Germany grew pretty slowly over those two decades. Countries with high GDP growth rates would have to be making phenomenal gains in technical efficiency and behaviour change to cut their carbon emissions even faster. Is absolute decoupling only possible for slow-growers?

Third, we’re talking carbon here, but sustainability obviously means much more than that: absolute decoupling in using other resources – like water, nitrogen and phosphorus – matters too, but is not under anything like the scrutiny that carbon is.

Still, well done France and Germany. How did they do it? Well, France gets around 80% of its energy from nuclear power – a thorny issue – but has also promoted feed-in renewable tariffs, fast trains, and efficient buildings. Germany’s emissions cuts are born of both hope and despair: thanks to impressive legislation and investment promoting renewable energy (growth from 1% to 11% of Germany’s energy use, 1990-2011), but also thanks to industrial shut-down in East Germany in the early 1990s after reunification.

The vast majority of high-income countries in the G20 have so far provided no evidence that they can make economic growth environmentally sustainable. Of course, most have barely started to put in place the policies required to make it happen – but delay will only make it harder.

So what does the G20 evidence show? That absolute decoupling is possible (we’ve seen it!), at least for some of the countries, for some resources, for some of the time. But that’s a far cry from believing that environmentally sustainable GDP growth is possible everywhere, all the time, indefinitely.

Jury, please remain in court. We need more evidence – on both sides – before we can close the case on green growth. Anyone out there got the evidence to swing it?

Download the Left Behind by the G20? paper.

Author: Kate Raworth
Archive blog. Originally posted on Oxfam Policy & Practice.