Is a decrease in pollution always good news?

Summary:

• The 20-30% reduction in pollutant emissions in Europe in 2010, compared to 2005, is thought to be due to the Europe 2020 strategy, but also to the economic recession observed in the European Union in 2009.

• The armed conflict in the Middle East reduced the region’s pollutant emissions by an average of 5% per year over the period 2011–2014.

• What could be the effect of the Chinese economic slowdown on pollutant emissions?

The COP21 conference in Paris raises questions about the link between economic growth and air pollution. In theory, there is a link. On both the supply and demand sides, increased energy consumption would result from increased production and/or increased domestic consumption, thereby boosting economic growth. Following this line of reasoning, we might ask ourselves whether a reduction in air pollution is good news. To answer this question, we will draw on three recent papers dealing with air pollution as seen through the economic crisis in Europe and Greece and the armed conflict in the Middle East. The authors of these papers used satellite data to study the spatial and temporal distribution of pollutants contributing to the greenhouse effect.

In order to study the relationship between economic growth and air pollution, we will mainly use two indicators: GDP, to measure economic growth, and nitrogen dioxide (), to measure air pollution. This gas is formed in the atmosphere from nitrogen monoxide (NO) produced by combustion engines and thermal power plants, contributing significantly to the greenhouse effect. It also has adverse effects on health. In addition to , three other pollutants are used to measure air pollution according to the agency responsible for monitoring air quality in the Ile-de-France region (Air Parif): ozone, sulfur dioxide, and fine particles in the air.

The Greek economic crisis seen through the reduction of airpollution

According to the European Commission, the Europe 2020 strategy aims to stimulate smart, sustainable, and inclusive growth. The « sustainable » component focuses this strategy on energy and climate through three objectives:

1. Reducing greenhouse gas emissions by 20% compared to 1990 levels;

2. Use renewable energy to account for 20% of the energy mix;

3. Increase energy efficiency by 20%.

This strategy, coupled with more stringent environmental measures for states and businesses, has contributed to a reduction in pollutant emissions. In their study, Castellanos and^Boersma (2012) observe a 20-30% reduction in pollutant emissions in Europe in 2010 compared to 2005. However, part of this decrease is thought to be due to the economic recession observed in the European Union in 2009 (5.7% decline in GDP). As explained above, the decline in economic activity may result from a demand shock and/or a supply shock. The contraction in private consumption (households use their cars less, consume less heating or electricity) has a direct impact on energy production. Similarly, the decline in industrial production leads to a decrease in energy resource requirements in the production process.

In their paper, Vrekoussis et al.⁽ 2013) expand on the study by Castellanos and Boersma (2012), focusing on the case of Greece. They find a positive correlation between economic growth and the level of pollutants in the atmosphere. According to the authors, a decline in pollutant emissions of 3 to 4% per year on average was observed between 2009 and 2012, while Greek GDP growth averaged -5.7% per year, compared with +6.8% from 2000 to 2007 (Eurostat data). During the same period, the level of o e fell by around 32%, the level of carbon monoxide by 25% and the level of sulfur dioxide by around 48%. Furthermore, from 2008 to 2013, total electricity production fell by 10.4% and final electricity consumption by 23.6%, including 26.6% in industry (according to the International Energy Agency). It should be noted that nearly 50% of Greece’s electricity is produced from coal, one of the most polluting fuels.

The implementation of environmental measures has helped to reduce pollutant emissions. However, the 2008 economic crisis also had an impact on air pollution. The relationship between economic cycles and electricity production/consumption on the one hand, and the positive correlation between air pollution and economic activity on the other, show that the contraction of the Greek (and broader European) economy over the period studied was accompanied by a decline in pollution levels. The economic crisis would therefore have a positive impact on the climate, enabling European countries to achieve the targets set by the Europe 2020 strategy, but at a significant social cost.

Armed conflict in the Middle East seen through the lens of declining air pollution

We have seen the impact of the economic crisis on air pollution. A more^{recent study3} links the armed conflict in the Middle East to pollutant emissions. We know that climate change can lead to armed conflict, particularly with issues related to access to water. Kelley et al. (2014)^{⁴ show}that the Syrian conflict is a consequence of climate change, particularly the drought observed before 2011. The inverse relationship also appears to hold true. In their paper, Lelieveld et al. (2015) observe that the armed conflict in the Middle East has an impact on pollutant emissions in the region. It should be noted that although nitrogen oxide is naturally present in the atmosphere, the combustion of fossil fuels (industry, transport) accounts for nearly 60% of its presence. As the Middle East is a region with low levels of natural nitrogen oxide, the combustion of fossil fuels therefore largely explains the presence of in the region.

Lelieveld et al. (2015) observed an increase in the level of of around 5% on average per year over the period 2005-2010, followed by a decrease of the same magnitude over the period 2011-2014. With 2011 marking the beginning of the Arab Spring, the decline in air pollution can thus be largely attributed to the armed conflict that has continued in the region since then. Among the many countries studied by the authors, let us focus on the two countries most affected by the conflicts: Syria and Iraq. In Damascus and Aleppo, Syria’s two main cities, e emissions have fallen by 40 to 50% since 2011, corresponding to the start of the Syrian civil war. In Iraq, e emissions have fallen by around 10% since 2011, coinciding with a drop of more than 50% in GDP. Conversely, nearly 1.5 million refugees have flocked to Lebanon, mainly from Syria and Iraq (source: UNHCR), leading to a 20-30% increase in emissions in the country in 2014.

The reduction in air pollution in the Middle East, particularly in Syria and Iraq, or conversely the increase observed in Lebanon, is therefore not good news. It is obviously not due to the start of an energy transition using more renewable energies, but rather to a human catastrophe. The decline in pollutant emissions is therefore only satisfactory in one sense: taking action against climate change would limit the risk of armed conflict.

Will the current economic slowdown in China lead to a reduction in pollution?

In addition to the economic implications of China’s economic slowdown, the climate implications are also worth studying. In the third quarter of 2015, China’s GDP growth in volume terms reached 6.9%, the lowest level recorded since 2009. The transition to the economic model desired by the government, i.e., an economy more focused on private consumption and services rather than exports and construction, would partly explain the slowdown in growth.

It is interesting to examine the indicators used to measure growth (imports, freight transport, electricity production/consumption, etc.). Let’s take electricity consumption as an indicator. Three-quarters of China’s electricity is generated by coal (according to the International Energy Agency), and consumption fell by nearly a third at the end of October 2015 compared with October 2014. Investment in coal fell by around 16% over the same period. As China is the largest emitter of CO2, a decrease (not measured here) in pollutant emissions, via reduced electricity consumption and therefore coal production, could have a significant effect on greenhouse gases in the atmosphere.

In addition to the directly observable effects in China, the fall in commodity prices (due to lower Chinese import demand) is also likely to have negative effects on mining industries and commodity-exporting countries (second-round effect). Take Australia, for example: 23% of its exports go to China, and three-quarters of its exports to China consist of iron ore, metals, and fuels. A decline in Chinese demand for these goods should in theory lead to a decrease in Australian exports of these products, thereby reducing their production and thus pollutant emissions. However, the latest available data show that iron ore production (representing more than two-thirds of Australian exports to China) remains constant, despite low prices. The world’s two largest mining groups (BHP Billiton and Rio Tinto), both Australian, have announced that they will maintain their production levels. A new player, Roy Hill, has also made a colossal investment of $11 billion, despite low prices. Production costs remain lower than the price of iron ore, thus maintaining the profitability of these companies. The Chinese economic slowdown is therefore only expected to have a positive impact on pollutant emissions in the medium term, as indicated by the peak in overcapacity expected in 2018 (source: Morgan Stanley).

Conclusion

The studies presented in this paper have shown a significant decrease in pollutant emissions in Greece and the Middle East (particularly in Syria and Iraq). Similarly, the current slowdown in the Chinese economy could have a significant impact on pollutant emissions. The link between economic growth and air pollution seems to be partially verified and is not necessarily good news.

However, the relationship is not always fully verified. A country can have sustained economic growth and at the same time reduce its pollutant emissions. Sweden is a good example: between 1993 and 2014, Sweden’s GDP grew by 68% while its greenhouse gas emissions fell by 22%. Furthermore, Sweden has committed to phasing out fossil fuels entirely by 2030, demonstrating that economic growth can go hand in hand with reducing polluting emissions. In this case, reducing air pollution is good news.