The unprecedented declines in economic activity precipitated by the COVID-19 pandemic will likely drive the largest single-year reduction in global CO2 emissions on record. Based on a country-level analysis of both new IMF GDP forecasts and longer-term trends in decarbonization, we predict that global CO2 emissions will fall by around 4.8% in 2020 (2.1% to 7.4%) if the pandemic fades over the summer, and by 7.6% (5% to 10.1%) if it lingers on or re-emerges later in the year.

This represents a significant update from our mid-March analysis suggesting likely 2020 drops ranging from 0.5% to 4.1%. The higher estimates are driven primarily by worsening forecasts of economic damages, along with a more thorough assessment of the role of long-term factors driving decarbonization.

^{Global CO2 emissions from fossil fuels over the 1980-2019 period from the Global Carbon Project, as well as Breakthrough Institute forecasts – along with uncertainties – for 2020 and 2021 under the IMF base case GDP scenario.}

CO2 emissions may increase again in 2021 — at least in scenarios where new major outbreaks do not occur — but emissions will likely remain below pre-crisis levels.

While lower CO2 emissions are nominally a good thing, the cost of achieving them will be astronomical. We calculate that each ton of carbon reduced in 2020 will come at the cost of $1,750 in reduced economic activity — a cost more than an order of magnitude higher than clean energy technologies available today.

There is also a real risk that the economic downturn could slow down investments in decarbonization technologies needed to drive meaningful and lasting reductions in emissions, leading to higher emissions in the long-run — particularly if countries do not prioritize job creation measures with decarbonization co-benefits as part of economic recovery efforts. We expect the overall rate of decarbonization — the carbon emissions per unit of GDP — to slow down in 2020. While the world as a whole has been decarbonizing by close to 3% per year on average over the past decade, our model suggests it will only decarbonize by 1.8% in 2020 — before going back up to around 3% in 2021.

The temporary nature of COVID-19 impacts on emissions — and its minimal effects on long-term climate change — highlights the fact that technology-driven decarbonizing is the only sustainable pathway to achieve long-term reductions in CO2 emissions.

Worsening GDP Projections

Forecasting the effects of the COVID-19 pandemic on global and regional activity is necessarily uncertain, given that we still do not know how long the disease will continue to spread, how long economic lockdowns will continue, or if it will rebound after shutdowns are lifted or re-emerge later in the year. Early estimates in mid-March — such as those from JP Morgan — suggested more modest impacts, with global GDP rapidly recovering after Q2 2020 and growing by 0.5% over the full year.

The International Monetary Fund (IMF) recently released its April World Economic Outlook examining different scenarios of how the disease might progress. These IMF projections are much more dire; global GDP is projected to decline by 3% in 2020 in the base case, with much larger declines in advanced economies — 5.9% in the US, 7.5% in the EU. In cases where the disease lingers through the fall and/or new outbreaks occur in 2021, the IMF projects that economic damage will be much worse. The table below — from the IMF report — shows their 2020 and 2021 GDP base case projections for major countries, regions, and other groupings:

The IMF examined four different scenarios for the progression of the COVID-19 pandemic. In the base case, the disease dissipates over the summer and does not re-emerge in the fall. In the new 2021 outbreak case, COVID-19 fades in the second half of 2020 but re-emerges during 2021. In the longer outbreak case, COVID-19 infections last into the fall, rebounding after shutdowns are lifted and only fully fading by the end of the year. Finally, the longer and new outbreak scenario combines both a longer outbreak and a 2021 re-emergence. The global economic projections for each of these cases are shown in the figure below.

^{Global GDP scenarios for 2020 and 2021 from the IMF April World Economic Outlook.}

Large Drop in 2020 Emissions with a Modest 2021 Rebound

Here we examine the likely change in global CO2 emissions in both 2020 and 2021 global emissions changes under the four different IMF economic scenarios.

Emissions of CO2 do not have a simple one-to-one relationship with economic activity. Rather, emissions have increased notably slower than economic output over time, as economic activity has become less carbon-intensive. For example, despite Chinese economic growth of 6% to 8% per year, emissions have only been increasing by around 1% to 2% as the economy becomes less carbon-intensive.

Any projection of future emissions changes should account for long-term trends in decarbonization as well as changes in economic activity. There will be large uncertainties in projecting historical rates of decarbonization forward during the current economic crisis, however, as the economic shocks the world is now experiencing are unprecedented in modern history. In this case the past may serve as a necessarily imperfect guide to the likely response of emissions to changes in economic activity.

The current crisis is also a very different type of economic shock than has been experienced in the past. The purposeful restriction of economic activity — and restrictions on the movement of people — will likely affect emissions across sectors of the economy in very different ways than in past financial crises. For example, while the 2008 financial crisis wiped out a lot of wealth and led to a wave of home foreclosures, it did not restrict transport or commercial energy use in the way that is occurring today.

To assess the likely changes to CO2 emissions in 2020 and 2021 we developed a model that uses both the long-term trend in decarbonization and the latest IMF economic projections. This model accounts for uncertainties in historical changes in carbon intensities, and provides estimates of how both individual countries and global emissions may change. See the methodology section at the end for more technical details.

The figure below shows the results of the global analysis across the four scenarios for both 2020 and 2021 CO2 emissions.

^{Global CO2 emission change forecasts across the four IMF GDP scenarios for 2020 and 2021. 2018 and 2019 changes in emissions from the Global Carbon Project.}

In 2020 there are effectively only two different emissions scenarios, as the IMF projects the same GDP changes in 2020 whether or not there is a new outbreak in 2021. Under both the base case and new outbreak scenarios, 2020 emissions are very likely to fall between 2.1% and 7.4%, with a central estimate of 4.8%. Under the longer outbreak and longer-and-new outbreak scenarios, emissions are very likely to fall by 5% to 10.1% with a central estimate of 7.6%.

In 2021, CO2 emissions may either rise or fall relative to 2020 depending on the scenario, but are likely to remain below 2019 levels.

Base case 2021 emissions: up 2.6% from 2020 (down 0.8% to up 6.1%)
New outbreak 2021 emissions: down 2% (down 5.3% to up 1.3%)
Longer outbreak 2021 emissions: up 0.8% (down 2.6% to up 4.2%)
Longer and new outbreak 2021 emissions: 4.4% (down 7.7% to down 1.2%)

Emissions reductions in 2020 will vary significantly across countries. In general, advanced economies will see the largest reductions, with more modest reductions in poorer countries that see a smaller reduction (or modest increase) in economic growth. The figure below shows the likely change in emissions between 2019 and 2020 across major-emitting countries — as well as the rest of the world — along with their uncertainties. These take into account the variability in historical rates of decarbonization; the US, Canada, and the EU all have smaller uncertainties because they have a much steadier rate of decarbonization than China, India, the UK, or Japan. Country-level emissions forecasts are only available for the IMF base case, unfortunately, as the other scenarios do not provide country- or region-level GDP projections.

^{Country-level 2020 CO2 emission change forecasts for the IMF base case GDP scenario.}

We project that the UK will have the largest reduction in CO2 emissions of any country in 2020, reflecting both its rapid rate of historical decarbonization and relatively large expected GDP drop of 6.5%. Emissions will likely fall between 2% and 24%, with a central estimate of 13%. EU emissions will fall by around 11% (8.1% to 13.9%), while US emissions will fall by around 9% (4% to 14%). This US emissions reductions forecast is larger than the EIA projection of 7.5% released earlier this month, reflecting a larger fall in GDP in the new IMF report.

China will see an emissions reduction of around 6%, with a large uncertainty ranging from a 17% drop to a 5% rise. This uncertainty reflects the high level of year-to-year variability in the rate of decarbonization in China over the past decade. India will likely see relatively flat emissions, with a central estimate of 0% change (ranging from an 8% drop to an 8% rise). Both China and India are expected to see a slight overall GDP growth in 2020 in the IMF base case, though the difference between this and their normal growth rates of around 7% is notable.

Growing Estimates of COVID-19 Emissions Impacts

As the full scope of the COVID-19 epidemic has unfolded in recent months, estimates of the effect on 2020 CO2 emissions have notably increased. The figure below tracks various estimates made by groups between early March and this latest analysis.

^{Timeline of published estimates of 2020 CO2 changes.}

The first estimate of likely COVID-19 impacts on 2020 CO2 emissions came on March 16th, one of the early days of the pandemic. Glen Peters of CICERO in Norway used early estimates of economic impacts from the OECD to suggest that global emissions would likely decline by 1.2% (down 2.3% to up 1.2%). The second published estimate was Breakthrough’s earlier effort, which used JP Morgan’s mid-May GDP forecasts to estimate a likely emissions decline of between 0.5% and 4.1%, depending on the speed of the recovery and the relationship between GDP and CO2. The same day, the energy analyst Michael Liebreich released a blog post giving a rough estimate of a likely 5% CO2 reduction, a guess that proved rather prescient given more modest assessments of economic impacts available at the time.

In early April, Stanford University’s Rob Jackson provided a similar 5% estimate in an interview with Reuters. The next week Carbon Brief published an estimate of a 4% decline, based on a bottom-up estimate of forecasts of different fuels (coal, oil, natural gas) rather than using GDP. They updated their estimate to 5.5% the following week based on more pessimistic oil forecasts. Around the same time, the Université Paris-Dauphine released a report suggesting emissions reductions might range between 3% (in a short lockdown) to 14% (in an extended one).

Finally, in mid-April, Glen Peters released a revised estimate of a 5.7% emissions reduction (ranging from 4.2% to 7.2%) based on the just-released IMF April World Economic Outlook base case GDP forecast and the global 10-year trend in decarbonization.

The 4.8% drop in the IMF base scenario we find is a bit smaller than the 5.7% drop that Glen Peters calculated. This is because using the global average rate of decarbonization obscures the fact that different countries are likely to experience very different GDP changes in 2020. Countries with the fastest historical reduction in the CO2 intensity of their GDP — such as China — are not experiencing nearly as large GDP declines as countries with slower absolute decarbonization such as the US and EU. This means that while the world as a whole has been decarbonizing by close to 3% per year on average over the past decade, our model suggests it will only decarbonize by 1.8% in 2020 — before going back up to 3% in 2021.

Minimal Effect on Climate Change

Because atmospheric CO2 concentrations that drive global warming are a result of cumulative emissions, a 5% reduction in current emissions will have relatively little effect on the climate. The figure below shows the UK Met Office projection of likely 2020 CO2 concentrations, and our analysis of how they would change with 5% less emissions in 2020.

^{Forecast for 2020 CO2 concentrations as measured by the Mauna Loa Observatory in Hawaii from the UK Met Office prior to the COVID-19 pandemic, and our assessment of concentrations after a 5% emissions reduction in 2020.}

Meaningfully altering atmospheric concentrations of CO2 — and meaningfully “bending the curve” away from high warming outcomes — requires sustained year-over-year emissions reductions rather than temporary drops during economic crises.

The drop in emissions due to the economic damages from COVID-19 also illustrates the staggering cost of emissions reductions through decreasing economic activity. In the IMF base case, the effective “cost” per ton of CO2 reduced is around $1,750, vastly exceeding the mitigation costs of virtually every clean energy technology.

The fact that the biggest global economic contraction since the Great Depression will not make a dent in future warming should be sobering. It highlights the fact that we need to change the way we build human prosperity — by replacing fossil fuels with clean energy — rather than purposefully shrinking the economy if we want to make a sustainable, long-term reduction in CO2 emissions.

***

_Methodology

^{We built a model that combines 10-year trends in the carbon-intensity of GDP for each country on Earth with the April 2020 IMF World Economic Outlook GDP projections to forecast country-level CO2 emissions in 2020 and 2021 along with their uncertainties.}

^{The code for our analysis is available in a Jupyter Notebook on Github here: https://github.com/hausfath/covid_co2/blob/master/COVID%20CO2%20update.ipynb}

^{Supporting datafiles are here: https://github.com/hausfath/covid_co2}

^{Specifically, we combined three distinct datasets:}

^{Historical country-level territorial emissions through 2018 from the Global Carbon Project.}
^{Historical country-level GDP (in constant 2010 $USD) from the World Bank.}
^{Major country- and region-level 2020 and 2021 GDP forecasts from the IMF.}

^{For each country we estimated the likely 2020 and 2021 carbon intensity of GDP based on the trend over the prior 10 years (the 2009-2018 period, as 2019 country-level GDP and CO2 data is not yet available). We also estimated trend uncertainties for each. We then used the IMF 2019-2021 GDP forecasts to estimate country-level CO2 emissions for those three years (as CO2 = CO2/GDP * GDP).}

^{Global CO2 intensity estimates were calculated by a GDP-weighted sum of country-level projections, propagating uncertainty by assuming independence and a gaussian distribution. Global CO2 changes across the four IMF GDP scenarios were calculated based on the modeled global average CO2 intensity of GDP.}

^{Uncertainty values shown in all of the figures represent a 2-sigma (95th percentile) range. We also examined a variant of the model that used 5-year rather than 10-year CO2/GDP trends to predict 2020 and 2021 values, but the results were consistent at a global level.}

COVID-19 Could Result in Much Larger CO2 Drop in 2020

Apr 30, 2020

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