Low-Carbon Sectors Performs Better; Induces Economic Production

By Czarina Ara Lasco

Oct 12, 2016 06:32 AM EDT

A new study found that areas with low carbon emissions shows better economy in terms of productivity growth and an increasing number of jobs and skill sets. The study was published by Grantham Research Institute on Climate Change and the Environment and ESRC Centre for Climate Change Economics and Policy at the London School of Economics and Political Science. 34 developed and developing nations are analyzed by Dr. Baron Doda from the London School of Economic to see their carbon intensity, defined in terms of the volume of carbon dioxide emitted per unit of output. 

Over the study period of 1995 to 2009, places with high carbon intensity displayed comparatively low employment in the economy and declines in the number of jobs and skill level on an average worker.

 "The Paris Agreement on climate change means that sectors of the economy that have high carbon intensities will need to lower their emissions or shrink in size," Dr Doda said. "But the evidence is that economic sectors with low carbon intensities are more dynamic and growing, particularly in developing countries, and so have the potential to make up for the impacts on high-carbon-intensity sectors."

Dr. Doda found that low carbon intensity areas in developing countries "are among the most dynamic and can provide a cushion for low-skilled workers becoming unemployed in" high carbon intensity sectors. The working-paper study entitled: Tales from the tails: Sector-level carbon intensity distribution which was published on Monday concluded that technological changes combined with going away from agriculture and manufacturing towards services, have impacted the carbon dioxide emissions of developing counties.

The amazing thing about the study is the catalysts for such a change over the study period. According to the results of the analysis, "Climate change policies are unlikely to have been the prime reason for the trends identified in this study in all but a few northern European countries," Dr Doda explained. "This is good news in the sense that climate change policies need only to help rather than reverse the profound economic changes that are occurring."

"In Finland and Sweden, economic activity has shifted towards business sectors that have low carbon intensities, and at the same time the carbon intensities of sectors have declined more quickly than in other rich countries since they introduced explicit carbon prices. And over the period of this study, both countries have recorded robust economic growth."

Dr. Doda concluded that gathering emission reduction targets in line with the 2015 Paris Agreement "can be achieved through reductions in economic activity, declines in its carbon intensity, or changes in its structure." For some developing countries simply decreasing economic activity is not only difficult, but would actually oppose its development goals.

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