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Decoupling Economic Growth and GHG Emissions

Syllabus:

GS 3: Environment

Why in the News?

Economic Survey of 2023-24 shows that India has achieved relative economic growth from reduction in GHG emissions, sparking discussions on sustainable development and environmental policy.

Introduction

• With impressive economic growth in recent decades, India is also concerned about rising greenhouse gas (GHG) emissions.
• However, according to the Economic survey (2023-24), India has experienced limited decoupling, with GDP growing faster than emissions.
• This raises important questions about the sustainability of this development and the path to a complete decoupling for long-term environmental and economic balance.

Decoupling economic growth and GHG Emissions

• India’s rapid economic growth is often associated with environmental challenges, especially rising greenhouse gas (GHG) emissions.
• However, the Economic Outlook (2023-24) shows that India has experienced decoupling, with GDP growing at a CAGR of 7% between 2005-2019, while emissions grew at a slower CAGR of 4%.

What is decoupling?

• Economic growth is closely linked to environmental degradation in the long run, as development often leads to greenhouse gas (GHG) emissions.
• However, the concept of decoupling provides a way to break this tie, enabling economic growth without further environmental harm.
• This concept has become essential in solving the climate crisis and sustaining global development.

Different types of decoupling

• Absolute decoupling: it occurs when economic growth occurs while GHG emissions decline.
• This represents an ideal situation where countries achieve economic growth without environmental degradation.
• Relative decoupling: Relative decoupling occurs when GDP and emissions increase, but GDP increases faster than emissions.
• While this shows progress, emissions continue to rise, underscoring the need for more efficient measures.

Importance of decoupling

• Decoupling provides countries with a framework for economic growth while improving quality of life.
• It helps reduce environmental damage and stabilizes economic growth.

Degrowth vs. Green growth debate

• Advocates of green growth argue that economic growth can be sustained by reducing environmental damage.
• Proponents of post-degrowth believe that economic growth is the main cause of biodiversity loss and should be limited.

Balancing economic growth and climate action

• Decoupling is important because it addresses the twin challenges of reducing GHG emissions and improving living standards.
• Degrowth ignores issues such as energy poverty and low living standards, which economic growth can help address.
• A balanced approach ensures that climate goals are met without compromising global progress.

Analysis of Economic Growth

• India’s decoupling scenario has been a major focus of the Economic Survey, which compares the average GDP greenhouse gas (GHG) emissions growth rate between 2005 and 2019.
• While the survey does not explicitly indicate that this decoupling is either absolute or relative, this study is based on OECD indicators (2002) a picture of economy wide and sectoral trends in the economy.

Economically-wide decoupling

Growth trends since the 1990s

• Since 1990, India’s economic growth has been consistent and robust, supported by greater trade liberalization.
• From 1990 to date, India’s GDP has grown six-fold, while GHG emissions have only tripled.

Relative decoupling

• Decoupling is not yet fully achieved in India, where emissions decrease as GDP increases.
• Instead, the economy shows signs of slight disintegration, with GDP growing faster than emissions.

Sectoral decoupling

Major contributors to emissions

• Agriculture and manufacturing sectors contribute significantly to GHG emissions in India.

Sectoral Analysis

• Decoupling is evaluated at the sectoral level by the rate of growth in gross value added (GVA) of each sector and the rate of increase in emissions
• Understanding local dynamics is essential for sustainable economic growth while addressing environmental challenges.

Path to Decoupling

• India’s progress in relative decoupling is commendable but it has not achieved the ultimate goal of complete decoupling.
• While emissions are increasing, they are growing at a slower rate compared to national economic growth.
• Achieving complete decoupling, with economic growth alongside emission reductions, remains a distant goal for India.

Present Situation in India

• In India, emissions are growing more slowly than GDP, indicating some fragmentation.
• This shows positive trend, although not enough to meet long-term climate goals.

Challenges of complete decoupling

• As a developing country, India is yet to reach record levels of emissions, which are expected to rise as the economy grows.
• Absolute decoupling, where emissions fall even as economies grow, is not possible in the near future.

Need for constant effort

• Absolute decoupling is essential to meet India’s climate commitments and ensure sustainable development.
• Achieving this requires significant policy reform and sustained effort over the long term.

Key measures to support decoupling

• Promote the adoption of renewable energy to reduce their dependence on fossil fuels.
• Emission reduction programs were implemented to curb the growth of greenhouse gases.
• Focus on sustainable development practices to balance economic growth with environmental protection.

Conclusion

India’s achievement in relative decoupling reflects progress in balancing economic growth and environmental concerns. However, ensuring that the transition to Complete Decoupling meets long-term climate development goals requires sustained efforts in renewable energy, carbon reduction and sustainable practices.

Source: The Hindu

Mains Practice Question:

Explain the concept of decoupling in terms of economic growth and greenhouse gas emissions. Evaluate whether the claims of India’s GDP growth from GHG emissions shows relative or absolute decoupling.