The Effect of COVID-19 on CO2 Emissions

By ·August 18, 2020
University of California, Santa Cruz

The Issue:

Economic and lifestyle changes related to the COVID-19 pandemic and the related containment policies that countries around the world implemented resulted in a large reduction of carbon dioxide emissions. This reduction so far is likely larger than what we have experienced in past recessions. But, can this drop make a lasting dent on our climate change trajectory?

Daily carbon dioxide emissions declined on average by 8.6 per cent between January and April compared to the same period in 2019.

The Facts:

  • The global crisis brought about by the COVID-19 pandemic has led to an unprecedented drop in daily carbon dioxide emissions. Although there are no real time measures of carbon dioxide emissions and emissions are typically reported on an annual basis, scientists can estimate changes in emissions using information on energy consumption, economic activity and other factors. A study published in Nature Climate Change estimates a drop of up to 17% in daily emissions in early April 2020 (see chart). "Emissions reached their peak decline on April 7, with a 17 per cent decline compared to the same time last year," according to Dr. Pep Canadell, one of the authors of the study. At that time, China, the United States, India, and other major carbon-emitting countries were all simultaneously in a high-level of lock-down. Overall, the study authors estimate daily carbon dioxide emissions declined on average by 8.6 per cent between January and April compared to the same period in 2019. However, the full effect on annual emissions for 2020 will depend on the course of the pandemic as well as the evolution of lockdown and disease containment measures, and on the eventual pace of economic recovery.
  • Carbon dioxide emissions typically rise and fall in tandem with economic activity in the short run. CO2 emissions depend on the growth rate of four underlying components: population, real GDP per capita, energy intensity, and CO2 intensity. CO2 intensity captures CO2 emissions per unit of energy used, while energy intensity is the amount of energy needed to produce one unit of output. Thus, for a given technology of production, including energy production, CO2 emissions are proportional to the amount of output produced. This means that there is a very strong correspondence between real GDP growth and emissions. During the financial crisis of 2008 and the following Great Recession, for instance, global GDP declined by 1.5% and global emissions also declined by a corresponding 1.3%. Given the precipitous worldwide slowdown in economic growth induced by the pandemic, emissions are likely to see a corresponding decline. (See here for interactive data on world emissions). 
  • The drop in emissions due to the pandemic could be larger than what would be expected from a more typical recession. The decline in carbon dioxide emissions from the pandemic is expected to be large not just because of the magnitude of the hit to global growth, but also because of the sectors that have been particularly affected (see here and here). The pandemic has led to a marked decline in economic activity worldwide with especially sharp cuts in transportation and production. The airline industry has been particularly hard-hit, as a growing number of countries imposed travel restrictions and customers avoided confined spaces. Electricity production, transportation, and industrial activity account for more than 80% of carbon dioxide emissions from fuel combustion (see here). This means that the decline in emissions could be greater than that from a regular recession due to the fact that more energy-consuming sectors are being affected disproportionately. 
  • While much attention has been drawn to the unprecedented decline in emissions, it is important to keep in mind that it is not the flow of emissions but their stock, i.e. concentration of greenhouse gases in the atmosphere, that leads to climate change. Climate change is a cumulative problem as greenhouse gasses build up in the atmosphere over time. The dramatic reduction in emissions of carbon dioxide taking place as a result of the coronavirus pandemic means that the flow contributing to the concentration of carbon dioxide in the atmosphere is reduced — but there has not been a decline in the atmospheric concentration of carbon dioxide. In fact, the concentration of carbon dioxide in the atmosphere crept up to about 418 parts per million in May 2020, which was the highest ever recorded (see here and here). Moreover, the declines in emission flows observed recently are likely to reverse as lockdowns are lifted and economies return to growth. This has been the case in previous economic downturns — while emissions declined 1.3% during the Great Recession in 2009, they rebounded nearly 6% in 2010, returning the concentration of CO2 to its pre-recession upward trend. 
  • Shifting towards technologies with fewer emissions combined with investment in strategies to reduce the existing concentration of carbon dioxide in the atmosphere could have a more lasting impact on mitigating climate change. Moreover, a reduction in emissions obtained this way would likely impose less hardship than the economic pain that comes with drastic short-term reductions, such as those brought about by the current economic downturn and lockdown policies. There is a growing body of knowledge regarding technologies and investments that can produce significant changes in emissions. One source of information on existing knowledge comes from the Drawdown project, an organization that works to identify solutions to global warming and to disseminate information on the carbon impact, cost/savings, and path to adoption for each strategy. Climate solutions generally involve seeking ways to reduce or replace the use of fossil fuels — so that economic growth can take place with fewer emissions — as well as ways to increase nature's capacity to absorb carbon by augmenting natural carbon sinks. But there are many different areas beyond focusing on clean energy that help mitigate climate change. For instance, attention to food waste reduction and promotion of plant-rich diets could curb demand, deforestation, and associated emissions. Similarly, gains could by made by devoting resources to preventing leaks and improving disposal of chemical refrigerants, which are potent greenhouse gases. And, restoration of temperate and tropical forests, which are powerful, vast carbon sinks, could also play a role in beginning to reduce the concentration of carbon dioxide in the atmosphere (see here).

What this Means:

Recession-related reductions in CO2 emissions are not going to have a measurable impact on the CO2 concentration in the atmosphere — the driver of climate change. Climate change will not reverse by itself. The fact that large reductions in emissions as a result of dramatic and painful circumstances do not significantly alter CO2 concentration illustrates that active policies are necessary. Now is the time to design crisis recovery policies that incorporate the greening of the economy. A “green recovery” could contribute to as much as 0.3 degrees Centigrade decline in the path of global temperature increase, according to new research. The Drawdown project lists and ranks possible mitigation solutions. Europe is working on a concerted strategy under its European Green Deal. Active policies of decarbonization as well as reduction of other greenhouse gases are needed worldwide to reduce the danger of the next, climate-related, global crisis.

  • Editor's note: The analysis in this memo is based on "COVID-19 and CO2" by Galina Hale and Sylvain Leduc, Federal Reserve Bank of San Francisco Research Letter 2020-18, July 6, 2020.

  • Topics:

    Coronavirus / Environment
    Written by The EconoFact Network. To contact with any questions or comments, please email [email protected].
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