Decarbonization and the Pace of Economic Growth

Summary:

We use an adaptation of a popular Integrated Assessment Model according to which
the carbon intensity, the rate of growth of the population and the cost of abatement
technologies all strongly fall with GDP per person to explore whether this implies that
the end-of-century temperature will be lower in states of high or low economic output
(whether a ‘climate Kuznets curve’ is predicted by the model.)

We find that, despite what we call the ‘technological optimism’ of the model, high (low) temperature outcomes are
strongly associated with high (low) states of GDP or GDP per person. Fast abatement
policies do not alter these findings. Given the ‘technologically optimistic’ nature of
the model, this makes the claim that we can grow our way out of the climate problem
more difficult to defend.

We also find that a robust abatement policy can effectively
reduce temperature increases even along paths of high GDP per person. Given the
well-documented non-climate-related positive welfare outcomes associated with a high
GDP/person, this strengthens the case for an aggressive abatement policy.