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Global Economy Inches Up as Environmental & Social Concerns Mount

Washington, D.C. National progress is often measured almost exclusively by growth in the gross domestic product, or GDP. Yet as the global economy inches upward, actual social and environmental well-being lags. Alternative measures for gauging progress are needed to determine true prosperity, write Worldwatch’s Mark Konold and Climate and Jacqueline Espinal in the Institute’s latest Vital Signs analysis (bit.ly/VSOEcon).

Growing economy. The global economy grew moderately (at 4.49 percent) in 2013, resulting in a total combined GDP of $87 trillion for all countries in the world (Figure 1). Emerging markets accounted for a large part of the growth (representing 50 percent of the total), as an affluent middle class formed and young workers migrated into cities, encouraging business investment in developing countries.

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Growing inequality. Even as the global economy picks up, however, social challenges continue to mount. According to the United Nations Development Programme, average household income inequality in recent decades has risen in both industrial and developing countries. One billion out of 7 billion people live below poverty levels and experience most acutely the dark side of development, such as global climate change, water depletion, food shortages, and biodiversity destruction.

In 2013, nearly 202 million people worldwide were unemployed.

There also continued to be labor shortages, increased globalization, and mismatches between current skill levels and job requirements. Developing countries were faced with a growing pool of willing workers in 2013, but limited access to credit for many small enterprises contributed to a lack of investment and job creation in these markets. In 2013, nearly 202 million people worldwide were unemployed, a 6 percent unemployment rate.

Growing consumption. World population is expected to reach 9.6 billion people by 2050, with much of that expansion happening in developing countries. As the world’s population continues to grow, there is legitimate concern about depleting Earth’s resources faster than they can be replenished. The Global Footprint Network, an agency that tracks humanity’s ecological footprint and nature’s capacity to replenish its resources, estimates that the world is consuming resources at the rate of 1.5 planets per year.

Some studies have argued that the world must replace its growth economy with a steady-state economy, in which production is only replaced, not increased, while the economy continues to develop by improving and renewing its existing resources.

Measuring true progress. Studies suggest that although people’s level of happiness increases significantly when societies develop, high levels of uncertainty and social and economic inequality may run counter to this development. Measures such as the Genuine Progress Indicator account for the social, educational, economic, and environmental activities that contribute to economic growth but that go unnoticed in current national accounting frameworks.

Regional Highlights:

  • Although employment rates improved in the United States in 2013, much of the improvement is attributed to fewer people participating in the labor force—mainly newly retired Baby Boomers.
  • In the United States, Baby Boomers—individuals born between 1945 and 1965—continued to retire at an approximate rate of 10,000 per day. It is expected that in retirement, Boomers reduce their levels of disposable income, leading to a decrease in economic growth by as much as 0.7 percent.
  • In Japan, GDP growth between 2000 and 2013 shrank by 0.6 percentage points annually due to an aging population retiring from the workforce.
  • Worldwide, employment rates declined in all regions except South and East Asia, which continued to experience higher levels of growth through 2013.

 

Notes to Editors:     

Journalists may obtain a complimentary copy of “Global Economy Inches Upward as Environmental and Social Concerns Mount”  by contacting Gaelle Gourmelon at ggourmelon@worldwatch.org.

About the Worldwatch Institute:

Worldwatch is an independent research organization based in Washington, D.C. that works on energy, resource, and environmental issues. The Institute’s State of the World report is published annually in more than a dozen languages. For more information, visit www.worldwatch.org.

About Vital Signs Online:

Vital Signs Online provides business leaders, policymakers, and engaged citizens with the latest data and analysis they need to understand critical global trends. It is an interactive, subscription-based tool that provides hard data and research-based insights on the sustainability trends that are shaping our future. All of the trends include clear analysis and are placed in historical perspective, allowing you to see where the trend has come from and where it might be headed. New trends cover emerging hot topics-from global carbon emissions to green jobs-while trend updates provide the latest data and analysis for the fastest changing and most important trends today. Every trend includes full datasets and complete referencing. Visit http://vitalsigns.worldwatch.org to subscribe today to Vital Signs Online.

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China Takes Greater Steps to Reduce Climate-Altering Emissions

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In the first half of 2014, energy intensity in China declined 4.2 percent, and the carbon intensity of the country’s gross domestic product (GDP) fell 5 percent, compared with the same period in 2013. These are among China’s biggest “green” achievements since 2011, the first year of the 12th Five-Year Plan, which guides the nation’s economic development. According to the National Development and Reform Commission (NDRC), which announced the progress, slower growth of heavy industry and rapid expansion in the country’s service sector were the main forces behind these trends.

According to data released by China’s National Bureau of Statistics (NBS), industrial output continued to grow during the first half of 2014. However, the growth of some greenhouse gas emissions-intensive industries was lower during 2013–14 than during 2012–13. Among the major industries experiencing slower growth are paper making; oil processing; cement, glass, iron, and steel production; and automotive production. Some industries, such as crude oil and chemical fertilizer production, even showed negative growth. (See Figure 1.)

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Figure 1. Growth of Selected Greenhouse Gas-intensive industries In China, 2012–2014
Note: The Figure compares production data for the first two quarters of the given years. Oil processing includes the production of gasoline, kerosene, diesel, and coke.
Source: NBS China

Noticeably, the production of air pollution control equipment has grown dramatically in China. NBS data for the first half of the year indicate that production increased 8.0 percent between 2012 and 2013, but then surged more than 35-fold to grow 288.8 percent between 2013 and 2014. According to a report released by Zhiyan Consulting Group, growth in this industry comes mainly from flue gas desulfurization systems and particulate collection devices.

NBS data also show that, in the first half of 2014, the value-added of the service sector exceeded that of the manufacturing sector. (See Figure 2.) (The service sector overtook the manufacturing sector in annual total added value for the first time in 2013.) This also contributed to the reduction in energy intensity and carbon intensity, since the service sector was less energy-consuming in general. Data suggest that the main drivers behind the growth between 2013 and 2014 were the wholesale and retail industry, and the financial services industry.

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Figure 2. Value-added of China’s Manufacturing and Service Sectors
Note: The Figure compares data for the first two quarters of the given years.
Source: NBS China

Reduced growth in energy-intensive industries was accompanied by a greening of China’s overall energy mix. NBS data show that renewable energy sources—particularly wind and solar power—are gradually edging out fossil fuels in electricity generation. (Note that in the first half of 2014, curtailment of wind power was down 33 percent compared with the same period in 2013, saving 3.6 billion kilowatt-hours of electricity and ameliorating China’s wind curtailment problem; see the earlier Worldwatch post on this issue.)

If the trends in industrial growth and energy mix continue, China may be able to achieve its near-term goals for reducing climate-altering emissions. The country’s 12th Five-Year Plan aims for a 16 percent reduction in energy intensity and a 17 percent reduction in carbon intensity during 2011–15, with the goal of fulfilling a 2009 pledge to reduce carbon intensity 40–45 percent from 2005 levels by 2020. According to the NDRC, by 2013, China had achieved a 28.6 percent reduction in carbon intensity from 2005 levels, hitting 63 percent of its goal in just four years.

However, in one report, an NDRC official observes that further reductions remain challenging, and risks of rebound exist. Some regions that currently face the prospect of economic decline have plans for energy-intensive projects, and the per-unit energy consumption of some industrial products is likely to rise. Yet, from the national level to the enterprise level, China is making efforts to provide long-term momentum to the low-carbon transition.

Policies and legislation  

In August 2014, the NDRC issued the Method to Assess the Accomplishment of Unit GDP Carbon Dioxide Emission Reduction Goal. Consistent with the Work Plan of Controlling GHG emissions during the 12th Five-Year Plan Period, issued by the State Council in 2011, the Method builds a connection between a region’s carbon reduction outcome, its system for assessing integrated socioeconomic development, and the track records of local government officials.

This more-detailed scoring system represents a step away from China’s near-singular focus on GDP as a measurement of progress. Local governments can now earn credits for actions such as reductions in carbon intensity, increasing the share of the service sector in local economic growth, increasing the share of renewable energy in primary energy consumption (and reducing the burning of coal), forest planting, and capacity building. The local government must meet both the annual and cumulative carbon intensity goals in order to pass the assessment.

To provide a solid legal basis for these climate-related efforts, the NDRC has reportedly completed a draft of the Climate Change Response Act, which could be released next month for consultation. The draft is based on an earlier version of the Act released in 2012, following a two-year drafting process led by researchers from the Chinese Academy of Social Sciences. The latest draft highlights air pollution control as the major entry point to tackling climate change.

Local markets and standards

China has adopted carbon intensity goals, rather than absolute emission reduction goals. However, the country’s emerging cap-and-trade carbon market can act as a bridge between the two. The development of regional and national emission trading systems is on the agenda, with calls for comprehensive standards, industry leadership, and public engagement.

In April, to support development of the emission trading market, the Beijing Municipal Commission of Development and Reform released a set of standards called “Advanced Carbon Emission Intensity Values” for 23 major energy-intensive industries, including power generation, heating, paper making, automotive production, electronic devices/component manufacturing, food processing, brewing, and a variety of services. The mandatory emission trading system will allocate carbon credits to newly added facilities based on these advanced standards.

In December 2013, the World Wide Fund for Nature (WWF) China office released the country’s first ranking of enterprises based on their carbon intensities, to encourage non-fossil fuel companies to pursue higher energy performance and lower carbon intensities. When comparing the performance of WWF’s top-ranked enterprises with Beijing’s advanced values, most electronic device manufacturers on the list showed leadership, with carbon intensities 80 to 98 percent lower than the advanced value; however, the carbon intensity of even the best telecommunication services companies was 88 percent higher than the advanced value, showing significant room for reduction.

Carbon intensity, or absolute emission reduction?

Through its carbon market, China is implementing a system to encourage companies to make absolute reductions in their emission levels; however, it seems unlikely that a national commitment of this kind could be made at or before the informal United Nations climate summit on September 23. Although it was initially reported that China could introduce an absolute cap on its greenhouse gas emissions under the 13th Five-Year Plan, Chief Climate Negotiator Su Wei recently reaffirmed that the country would stick with the carbon intensity target, as China still expects significant economic growth in the future. Nevertheless, the country’s effort and accomplishment should not be underestimated.

According to PricewaterhouseCooper’s (PwC’s) Low Carbon Economy Index 2014, in order to keep the rise in global temperature below two degrees Celsius while maintaining economic growth, the world needs to reduce its carbon intensity by 6.2 percent annually through 2100. The current five-year worldwide average is merely 0.6 percent annually, whereas China’s average was 1.6 percent during 2008–13. During this period, none of the countries with the highest reduction rates had an annual GDP growth above 4.5 percent, whereas China’s growth was 8.9 percent. (See Figure 3.)

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Figure 3. Annual Average Changes in Carbon Intensity and GDP, World and Selected Countries, 2008–13.
Source: PwC

That being said, China still has the second highest carbon intensity among the Group of 20 countries, just below South Africa. As China adopts new policies and market systems in an effort to pursue less-energy-intensive economic growth, the effectiveness of its emission reduction initiatives remains to be seen.

Wanqing Zhou is an intern with the China Program at th Worldwatch Institute and an associate with Brighter Green.

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LEGOs, LEGOs, Everywhere, & a Partnership with Shell

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Fill ‘er up? (Image from Danjam via Brickipedia)

 

That LEGO is partnering with Shell is nothing new. From 1966 to 1992 LEGO regularly produced Shell-themed LEGO sets. You might even remember them from your childhood:

  • There’s the 1981 Shell Gas Pumps set;
  • And the Shell Service Station from 1983;
  • And then there’s the rare, cross-over Pirates/Town set, “The Shell Pirates’ Illegal Offshore Exploration Ship” (see below);
  • And the even rarer Shell Death Star commanded by Shell CEO Darth van Beurden.

Well, as you might have heard, LEGO has recently renewed its partnership with Shell, producing a new line of Shell branded LEGO sets. Fortunately Greenpeace has rocked the oil platform a bit with its excellent cartoon about Shell’s destruction of the Arctic (made with LEGOs of course), claiming that “Shell is polluting our kids’ imaginations”: Greenpeace’s cartoon and campaign raises the important question of whether LEGO should partner with an oil company or not. But without too much reflection it seems clear that this type of partnership is not appropriate—for the very simple reason that LEGO blocks imprinted with the Shell icon help create a positive association in children’s minds between Shell and the enjoyable hours spent playing with LEGOs. The more positively oil companies are viewed (at a primal, deep brain level) the harder it’ll be to convince people that fossil fuels (and the companies that profit from their extraction) are not compatible with a survivable future. So in other words, yes, Shell—and LEGO through its partnership—is polluting our kids’ imaginations.

Shell Pirate Ship-6285
“Ahoy maties! Let’s go find some new offshore oil deposits to exploit!” cries out Captain van Beurden from the crow’s nest.

 

So should parents stop buying LEGOs? Notice that not even Greenpeace suggests that—LEGO is a powerful brand, one that kids love. So parents would be reluctant to abandon this reliable brand, let alone try to explain to their kids why they can’t play with their LEGOs anymore. Probably why Greenpeace simply encourages parents to sign this petition to LEGO. Perhaps enough parental anger will make LEGO reconsider whether this brand taint is worth the $116 million its deal with Shell is estimated to be valued at. But then again, considering what LEGOs are made out of, I don’t imagine LEGO is really averse to oil drilling and might as well find a partner to make its company even more lucrative (at least until the end of the fossil fuel era takes it down). But yes, parents should probably think twice about supporting LEGO and honestly, all toy brands.

My son, Ayhan, is only 2 and already we have two big boxes of toys (and that’s with aggressive efforts to discourage people from buying us any new stuff). The key for me will be to redirect Ayhan beyond the exaggerated period of extended childhood that Americans prefer and get him playing with/building real stuff sooner. Why assemble LEGO sets when you can assemble a meal to serve to your family? Why arm a hundred LEGO knights when you can build your own bow and arrows? Why wage LEGO battles when you can hunt down a squirrel and make stew from its meat and a pouch from its hide?

Yes, Ayhan is a few years from that, but by six he should be a competent squirrel hunter or at least a squirrel trapper and at that point hopefully any LEGOs we’ve accumulated will be collecting dust in the closet. I admit all that sounds primitive, but then again, primitive skills will probably be an integral part of the post-oil, post-plastic, post-LEGO future that’s speeding toward us like a derailed LEGO train (probably loaded with unreinforced Shell oil tank cars). “All aboard! Next stop: New Miami” (since old Miami will be long submerged by then). —

Reposted from Raising an Ecowarrior

Vision for a Sustainable World