Economic Growth, the Recession and Greenhouse Gas Emissions

The document investigates how the global economic slowdown affects greenhouse gas emissions, arguing that while recessions reduce emissions in the short term, the long-term impact depends on whether the downturn permanently lowers the GDP trajectory and how it influences energy prices and investment. It finds that many official projections may underestimate the long-term reduction in emissions by treating the recession as a transitory business cycle effect rather than a permanent shift in output. The authors estimate that the global emissions trajectory could be lowered by 1-5% in the long run, or 5-9% if a 'price rebound' effect from lower energy prices is excluded.

• There is a strong positive correlation between GDP and greenhouse gas emissions globally, although this relationship is weaker in high-income countries.
• Economic downturns reduce emissions through several channels: lower income reduces demand, and unexpected shocks hit carbon-intensive sectors like manufacturing and capital goods harder than service industries.
• Recessions can partially offset emissions reductions by slowing investment in energy-efficient plant, equipment, and R&D, as older capital is typically more energy-intensive.
• A 'price rebound' effect may occur if the recession permanently lowers real energy prices, which would discourage the adoption of energy-efficient technologies and increase long-term energy demand.
• The authors estimate that the global greenhouse gas emissions trajectory may be permanently lowered by 1% to 5% in the long term, or 5% to 9% if the uncertain 'price rebound' effect is not included.
• Many official emissions projections incorrectly assume business cycles are purely transitory, failing to account for the fact that financial crises often lead to permanent reductions in the level of GDP.
• The IEA's 2009 projections show a significant emissions reduction for 2020 (over 5% lower than 2008 projections) but a negligible reduction for 2030 (less than 1%), which the authors suggest is due to changes in assumptions about emerging markets rather than the recession's long-term impact.
• The US EIA's projections for 2030 assume GDP and energy prices will be largely unaffected by the recession, which contradicts evidence regarding the persistence of past economic shocks.
• The European Environment Agency (EEA) likely overestimated emissions because it failed to fully incorporate the latest downward GDP forecast revisions from the European Commission.

APA

Bowen, A., & Parker, S. (2010). Economic Growth, the Recession and Greenhouse Gas Emissions. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2014/11/eco-growth-recession-draft-31-may.pdf

Chicago

Bowen, Alex, and Sophia Parker. Economic Growth, the Recession and Greenhouse Gas Emissions. Climate Strategies, 2010. https://climatestrategies.org/wp-content/uploads/2014/11/eco-growth-recession-draft-31-may.pdf.

Wikipedia

{{cite report |last1=Bowen |first1=Alex |last2=Parker |first2=Sophia |title=Economic Growth, the Recession and Greenhouse Gas Emissions |publisher=Climate Strategies |date=May 2010 |url=https://climatestrategies.org/wp-content/uploads/2014/11/eco-growth-recession-draft-31-may.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{bowen2010economic, author = {Bowen, Alex and Parker, Sophia}, title = {{Economic Growth, the Recession and Greenhouse Gas Emissions}}, institution = {Climate Strategies}, year = {2010}, month = may, url = {https://climatestrategies.org/wp-content/uploads/2014/11/eco-growth-recession-draft-31-may.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }