UKL20: Net Zero By 2050?

 

An important goal of UK's A Green New Deal framework (see below) is to "decarbonize fast". The graphic above shows rapid reduction in CO2 levels after 2010 and a forecast (from the UKL20 Model) of Net-zero Emissions before 2050.

The second goal of UK's A Green New Deal framework (see below) is to "transform the Economy," particularly the Financial Sector. I cover that goal in another post, Shrinking the Financial Sector. The other three goals of A Green New Deal (Global Justice, Jobs and Protecting Nature) I will cover in future posts.

A reasonable hypothesis is that the UK is on the way to meeting it's Green New Deal goals in spite of Brexit, unless Neoliberalism reasserts itself and derails the project.

One material condition that would benefit A Green New Deal project is a Steady State Economy. For growth of the UK, the UK1 Model would require stabilization with possible input from the World System. CO2 stabilization would require creating reasonable Policy Wedges and the political will to take action where needed. 

The graphic above shows a Random Walk (RW) forecast from the UKL20 BAU Model starting after 2010 (dashed red line). The solid red lines show a 60% reduction Policy Wedge in CO2 Emissions. The UK Climate Change Act of 2008 required, by law, an 80% reduction in CO2 Emissions by 2050 (when the Act was first proposed, a 60% reduction was required).

The UK CO2 Emission reductions are generally considered a success. But,

UKL20 System Stabilization might not be compatible with "fast decarbonization" (see below).

I'll cover the "system stability" problem in another post (here). For further discussion of feedback loops see the UK Economy.

For my current and future posts see Blog Roll: The United Kingdom. You can run the  UKL20 BAU Model yourself on my Google site. For more information about this blog see the About Page. For more information about how the models were constructed and data sources, see the Boiler Plate and Blog Roll: Dynamic Component Models.

Notes

• A Green New Deal First Report of the Green new Deal Group
• Stern Review (2006): The Economics of Climate Change
• The Global Justice Report A plan for equality and prosperity within Planetary boundaries.
• Institute for New Economic Thinking UK economists and thinkers from a range of disciplines who challenge conventional wisdom and advance ideas to better serve society.
• Peak Oil Forecast and Global Warming A negative feedback loop for CO2 Emissions.
• A More Conservative Peak Oil Forecast No one knows the future!
• UK Climate Change Act of 2008 CO2 reductions mandated by law.
• Policy Wedges and State Space Simulation Models Policy wedges based on simulation models present a rational way of setting policy targets.

UKL20 TECHP Measurement Matrix

TECHP1 = (Q/N - L/N - CO2/N) Overall Productivity compared to Labor productivity and CO2 productivity. TECHP2 = (EG/N + CO2/N - L/N) Energy productivity and CO2 productivity compared to Labor Productivity. TECHP3 = (Overall Productivity Growth).

UKL20 CO2 Model

The model is stable.

UKL20 CO2 Model AIC Statistics

The best CO2 emission model for the UK takes TECHP (Technical Productivity) as input.

UKL20 Measurement Model

The UKL20 Measurement Model defines the state space of the UK DCM model: UK1 = (Growth-CO2-LU), UK2 =  (CO2+EG - LU - L)  UK3 = (LU + EG + N). Notice that (1) the component explaining the most variance (63.4%) is not an overall growth component but rather an historical growth controller, (2)  CO2 Emissions are important indicators in both UK1 and UK2 and (3) Both UK1 and UK2 are unstable components in the UKL20 model.

Stabilizing the UKL20 model requires reducing the responsiveness of UK1 and UK2 feedback loops to shocks. The rapid decline in CO2 emissions prior to 2010 was certainly a shock and if it was linked to a rise in Unemployment in Dirty Energy industries, it would have been a double shock to growth. 

 A Green New Deal is focussed on "rapid decarbonization," not system stability or coordinating the create of new "green" jobs or possible effects on Hardship Dynamics.

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US CO2 Forecasts: Will Trump II Make a Difference?

US President Donald Trump recently announced that he was pulling the US out of the Paris Climate Agreement. This is somewhat of a hollow gesture because he has done it before in the first Trump administration, only to be reversed by the next Democratic Administration. But, there are still strong indications that the Trump administration is no friend of environmental regulation and would like to undo regulations that restrain polluters (see Project 2025 below). We cannot know the future and we cannot know whether or not the Trump administration will be successful in their efforts to roll back environmental regulation, but we can make forecasts and then look back four years from now, after the Trump II administration, and see what effect their policies have had.

The time plot above is a forecast of US CO2 emissions out to 2040. The period from 1960 until the present shows how well the model works in tracking actual emissions (the solid back line). The dashed red line is the step-ahead forecast, the dashed blue and green lines are the 98% bootstrap prediction intervals. US CO2 emissions dropped in the 1980's but then continued climbing until a peak after 2000 (during the Bush II Administration). From there forward the model predicts a decline in CO2 emissions out to 2040 and to levels lower than in the 1960s. What causes the forecast decline?

The best model for US CO2 emissions is driven by dynamics in the World System. The best model was determined by comparing seven competitor models. The state of the World System is described by three state variables: (1) An overall state variable describing all the indicators, (2) A second independent state variable describing biodiversity and food production and (3) A third state variable dominated by world oil and agricultural markets. The effect of changes in the state of the World System on US CO2 emission can be seen from the shock decomposition diagram above. Growth of the World System and expansion of food production increase US CO2 production while increase in World oil prices decreases US CO2 production. 

The best way to limit US CO2 production is to allow world oil prices to increase and to stabilize the growth of the World System.

As growth of the World System stabilizes, there will be less demand for US industrial and energy production. Stabilizing world population will limit demand for agricultural products and destruction of biodiversity. Rising oil prices increase the attractiveness of renewable energy and will help build the infrastructure for electric transportation vehicles. The Paris Agreement may or may not have an impact on growth of the World System. However, US natural gas production through fracking has had an impact of keeping gasoline prices down, which is counterproductive.  

Unfortunately, US Oil Prices are controlled by the World Market. Any shocks to prices will increase inflation and create political problems for the administration in power. In a future post I will look at the World Oil Market and the expected future path for prices.

Project 2025

Project 2025 is a political initiative published in April 2022 by the American conservative think tank the Heritage Foundation (you can read the full report here). Somewhat surprisingly, in the 922 page report, CO2 emissions are only mentioned on page 378 under Conservative reforms for the Office of Energy Efficiency and Renewable Energy (EERE). Project 2025 calls for the EERE to focus on energy access and energy security rather than "entirely on the reduction of CO2 emissions." Project 2025 calls for the EERE to shift away from prioritizing "...decarbonization of the electricity sector, the industrial sector, transportation, buildings, and the agricultural sector". If the Trump Administration abolishes the EERE or changes it's mission without picking up the CO2 Emission priority in some other Federal Agency, any changes may or may not affect the trajectory of emissions which are on a strong anticipated downward path.

To put all this in context, the New York Times (here) also predicts that CO2 admissions for the EU, US, and China are reaching, at least around 2100, a steady state.