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Global Economic Growth Driving Higher EmissionsGrowth in carbon dioxide (CO2) emissions from fossil fuel burning and industrial processes has lifted markedly in the early twenty first century. These emissions grew at only 1.1 per cent a year on average from 1990 to 1999. They increased at 3.1 per cent per year from 2000 to 2006. This increase occurred despite the dampening effect of extraordinarily large increases in petroleum prices, and through short-term cross-substitution, prices of other fossil fuels. Global emissions from combustion of fossil fuels accelerated sharply from around 2000. Since 2000 actual emissions have grown significantly faster than one of the high-growth SRES scenarios (A1FI) and about as fast as a second, A1B, which has the fastest short-term growth of all SRES scenarios (Figure 2).  Global emissions are likely to continue growing rapidly in the absence of effective mitigation measures. Global economic growth, the energy intensity of growth, and the carbon intensity of energy in the early twenty first century have all been exceeding expectations that had been built into the most influential assessments of climate change. Over recent years, average annual global economic growth has been around five per cent (using purchasing power parities (PPPs), as one should15, rather than market exchange rates (MERs)). This is much higher than in the last quarter of the twentieth century. This accelerated expansion has been led by growth rates of ten to twelve per cent in China and eight to nine per cent in India. The evidence is accumulating that these high average growth rates of the early twenty-first century are not temporary phenomena. In China, there are reasonable prospects for growth rates in the vicinity of ten percent per annum—higher still for a while—to continue for some time, and for high growth to continue until average Chinese productivity levels and living standards are approaching the range of developed countries in the late 2020s (Garnaut and Huang, 2007; Garnaut, 2007a). In India, the new, higher growth trajectory is soundly based, and has strong momentum. Global GDP growth at market rates has averaged 3.6 per cent for the last five years, compared to the A1FI scenario growth rate for the first decade of the twenty-first century of 3.3 per cent16. Global growth will accelerate in coming decades as the economic weight of the rapidly growing developing countries increases, at least in line with the modest increases foreseen by A1FI, perhaps more. Second, the IPCC scenarios presume continued reductions in the energy intensity of global growth along the lines of the late 20th century. This perspective would have been strongly influenced by perceptions of developments in China. The energy intensity of Chinese growth fell markedly through the first two decades of Chinese reforms in the 1980s and 1990s, when price reform and the dismantling of central planning led to large one-off gains. However, energy intensity of Chinese growth in the twenty-first century has been far higher than in the 1990s. The more recent tendency for energy intensity to increase is in line with the experience of most countries at similar levels of development. Energy intensity of global GDP fell by just 0.2 per cent per year from 2000-2005, compared to 1.4 per cent during the 1990s. In the SRES A1FI scenario, energy intensity is assumed to fall by 0.8 per cent per year from 2000-2010, with higher reduction rates after 2010. The fossil fuels of oil, gas and coal currently dominate the global energy mix. While increasing demand and limitations on expansion of production have lifted oil prices to exceptional levels and seem likely to keep them high, there is no similar scarcity constraint on coal, and total fossil fuel consumption could continue to increase rapidly for many decades to come. There is no necessary reason why the relationship between fossil fuel emissions and economic growth will change markedly and favourably without effective policy interventions. Technology for carbon capture and storage, if and when it becomes commercially available, would carry significant additional investment and operating costs and so will only be deployed under mitigation policies. The recent effects of higher oil prices are instructive. Two highly emissions-intensive alternatives – coal and synthetic liquid hydro-carbons (derived from coal, tar sands, shale or natural gas) – are expanding their roles in the major developing countries and in much of the world more rapidly than the lower-emission alternatives. Globally, the emissions intensity of total energy supply increased by 0.4 per cent per year from 2000-2005, compared to a reduction of 0.2 per cent per year over the previous decade. The A1FI scenario assumes an annual reduction of 0.2 per cent from 2000-2010, and the same to 2030. Initial analysis carried out for the Review suggests the likelihood, under business as usual, of continued growth of emissions in excess of the highest IPCC scenarios. Figure 3 shows that assuming more realistic growth and energy intensity for China and India alone produces higher projected global emissions from fuel combustion than even the most pessimistic of the IPCC scenarios out to 2030 (Sheehan et al., 2007).  Notes:
Source: GARNAUT CLIMATE CHANGE REVIEW, INTERIM REPORT TO THE COMMONWEALTH, STATE AND TERRITORY GOVERNMENTS OF AUSTRALIA, February 2008. go from Economic Growth Driving Higher Emissions back to Greenhouse Gases
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