The Economic and Environmental Nexus: Exploring GDP and CO2 Emissions

When the GDP decreases, so does carbon dioxide emissions. One significant event that is emphasized is the Great Recession in 2009. As GDP tremendously dropped in 2009, emissions also decreased. With people losing their jobs, the need to commute decreased. Consequently, people weren’t purchasing gasoline for their cars. With demands low, fossil fuel companies weren’t pumping oil, resulting in less carbon dioxide emissions. Additionally, individual car emissions decreased since people weren’t commuting.

According to the New York Times, greenhouse gas emissions in the United States declined in 2009 for the second consecutive year, reflecting the impact of the recession on industrial production and overall energy use, the federal government reported (Broder 2017).

Ultimately, it comes down to demand. With people not having jobs, there is less demand for fossil fuels and other industrial products.

This exact trend is also being repeated right now with the Covid-19 situation. GDP is decreasing due to less demand, and so are carbon dioxide emissions, allowing the environment to show signs of recovery. Due to reduced demand, there is less industrial production in China. An example is this image from Wuhan, China.

According to China’s Ministry of Ecology and Environment, the lockdown has improved the air quality. “Satellite images released by NASA and the European Space Agency show a dramatic reduction in nitrogen dioxide emissions — those released by vehicles, power plants, and industrial facilities — in major Chinese cities between January and February. The visible cloud of toxic gas hanging over industrial powerhouses almost disappeared. From February 3 to March 1, CO2 emissions were down by at least 25% because of the measures to contain the coronavirus, according to the Center for Research on Energy and Clean Air (CREA), an air pollution research organization” (Wright 2020). With China being the world’s biggest polluter, its significant reduction in emissions is beneficial for the environment. According to CREA, it is equivalent to 200 million tons of carbon dioxide.

Analysis

As demonstrated, there is a correlation between the economy and the climate. When the economy isn’t performing well, the climate tends to improve as carbon dioxide emissions drop. Conversely, when the economy thrives, the climate often worsens as carbon dioxide emissions increase. This dynamic represents a fundamental tension between economic growth and environmental sustainability.

When businesses make a profit, they tend to build upon that profit. They endeavor to create new and improved products for consumers or manufacture more products at reduced costs. Although these actions drive economic progress, they also have environmental consequences due to pollution. The Cap and Trade policy attempts to regulate this by setting a limit on emissions for companies. However, while it aims to limit pollution, it falls short of adequately addressing the issue. Companies often maneuver around these laws to maximize profit.

This brings us to a critical issue: the actions of large corporations, especially within the fossil fuel industry, which prioritize profit over environmental regulations. Climate policies that impose more regulations and taxes are viewed as obstacles to profit. As discussed in a literature review, climate change is already impacting the economy, with increased losses from natural disasters exacerbated by climate change. Additionally, dwindling natural resources threaten future economic stability. Despite these challenges, fossil fuel industries persist in their environmentally detrimental practices. They are aware of the damage they cause yet continue to prioritize profit, even lobbying politicians to maintain the status quo.

Shell Corruption

For instance, in the 1980s, oil companies like Exxon and Shell conducted internal assessments of the carbon dioxide released by fossil fuels and forecasted the planetary consequences. In 1982, Exxon predicted that CO2 levels would reach around 560 parts per million by about 2060, pushing global temperatures up by about 2°C over then-current levels. A 1988 Shell report projected similar effects, even suggesting CO2 could double by 2030 (Franta 2018). Their assessments indicated rising temperatures, sea levels, and the disappearance of specific ecosystems (Glaser 1982). This information was available for decades, yet companies rejected it for profit.

These companies refused to take responsibility. Shell argued that the “main burden” of addressing climate change rests not with the energy industry but with governments and consumers (Glaser 1982). Ironically, they continue to mislead the public about climate change and actively prevent government action. According to InfluenceMap, Shell spent $22 million in 2015 on lobbying against climate policies, alongside companies like Exxon, IBM, Total, and Pfizer, negatively impacting climate policy. Moreover, these companies often evade taxes, a common practice among major corporations in American capitalism.

Political Lobby

Political lobbying is a major reason behind inaction on climate change. The Paris Agreement was an initial step for the U.S. to engage in addressing climate damage, but President Trump withdrew, prioritizing economic gains over environmental commitments. Reports indicate that over 55 percent of Republicans have expressed reluctance to support climate change policy, largely due to the influence of fossil fuel interests. These lobbyists support politicians by funding their projects and campaigns, ensuring opposition to climate change bills. Consequently, meaningful action remains elusive. Numerous climate-related bills have been undermined by lobbyists, largely unknown to the public. The Paris Agreement is one example that gained public attention due to its significance.

Corruption

Corruption operates through political influence. Corporations may invest in politicians’ campaigns, expecting favorable legislation in return, or engage with the American Legislative Exchange Council (ALEC), a private political lobbyist organization. ALEC collaborates with politicians and corporations to draft bills that politicians can present as their own. This process allows corporations to exert significant influence over lawmaking, often overshadowing public interests. Notably, ALEC proposed the Electricity Freedom Act, advocating the repeal of renewable energy mandates. Prominent fossil fuel companies such as Pfizer, ExxonMobil, and Koch Industries are involved in ALEC, perpetuating corruption to protect their interests.

Conclusion

Tackling climate change requires addressing corruption at its roots. Exposing corruption alone is insufficient, as political lobbying persists. Legislative efforts to curb lobbying face challenges due to the financial transactions justified as “donations” by politicians. Fossil fuel companies prioritize lobbying to avoid regulations that could hinder their growth and profitability. However, implementing laws that limit profits through taxes or caps could counteract corporate greed. Socialism may offer a solution by redirecting profits toward climate research and infrastructure.

Yet, overcoming the influence of powerful corporations requires collaborative global efforts. Incentivizing fossil fuel companies to adopt sustainable practices through tax incentives can drive positive change. Additionally, international cooperation is essential. A unified climate action plan involving multiple countries could compel companies to comply, as challenging such cooperation would be difficult. This approach resembles the Paris Agreement, but with stronger leadership, significant progress could be achieved.

Ultimately, socialism could serve as a catalyst for climate activism, paving the way for comprehensive climate action. Limiting profits can curb corporate greed, empowering governments to invest in climate solutions. As a passionate advocate for climate change, I have shared this vision with fellow students across New York through social media and climate marches. The idea garners widespread support, particularly among younger generations. Although challenging to implement now, as Millennials and subsequent generations enter politics, socialistic elements may become foundational for future legislation, addressing climate change effectively.

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