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Recessions Help The Environment

 3 min read / 

With more frequent extreme weather and El Niño oscillations, the ramifications of climate change has become more observable even for sceptics. The release of carbon dioxide into the environment through burning fossil fuel is the main cause to blame. This anthropogenic change involve all countries but the main contributors to the rising atmospheric CO2 levels are no doubt the biggest nations: China and the United States.

Since 2007, the United States have experienced a dramatic fall in emissions with the amount of CO2 released dropping by 11%. By 2012, the emission level in the U.S. was 5% lower compared to levels in 1997. It is to no surprise with the issue of being “environmentally friendly” broadcasted in the media, it has increased our awareness about the environment we live in and become more considerate. We presume the fall in emission level is due to the transitioning to less carbon intensive fuel sources. However, it turns out the switching fuel type only contributed little to the improvement of emission levels. The main force in decreasing emissions is surprisingly is the result of one of the most shattering economic events this century experienced – The Great Recession.

Throughout the 10 years prior the collapse of the Lehman Brothers, there has been a blossoming economic and population growth in the United States. The increase in demographics and cash correlated with the rising levels of CO2 emission within the 10 year duration.

During this period to 2009, CO2 emission married the economic trend and plunged. It was also the year that the U.S. joined the Kyoto Protocol and with pressure to change fuel mixes, e.g. with strong emphasis on low carbon intensive fuels (natural gas), people claimed it was the reason why emissions dropped. However, a study by Nature Communications showed evidence that all these have only contributed to 17% of the fall in CO2. The primary reason (83%) of this reduction is due to the drop in the consumption of goods, as individuals became more conservative with their spending habits. The reduction in consumption led to decrease in transport usage as companies send fewer products by road, sea and air, which severely cut down the release of CO2.

As the economy began to recover, the expectation of a rise in emissions were not realised. Several economic factors were deemed responsible. In 2012, the price of gasoline peaked and with a warmer than usual winter, meant a lower demand for heaters. As energy for generating heating is considered carbon intensive, even a fractional drop (12.7%) will decrease CO2 emissions substantially. By that time, the private sector along with the public sector have risen their output of more energy efficient products.

With regards to the present day, the U.S. economic performance has significantly improved since the crisis, evident as the gold price hit a 5 year low on 20th July. Therefore we can all expect Yellen to raise interest rates sometimes between September and October. Currently, the overall U.S. carbon emissions is consistent with President Obama’s aim of decreasing it by 17% by 2020. However, given the aforementioned, can emissions still diminish with a strengthening economy?

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