Category Archives: environment

China COVID Lockdowns, Ukraine Invasion Sanctions Continue Shrinking Earth’s GDP

The latest view from the volcano points to a higher level of economic gloom for the global economy.

The explanation for that worsening situation is the same as last month: the expanding economic sanctions imposed against Russia following its invasion of Ukraine and, more significantly, China's government's continuing lockdown of Shanghai that threatens to expand to other areas of China.

We're seeing the effects of both situations show up at the remote Mauna Loa Observatory, located atop a volcano on the big island of Hawaii in the middle of the Pacific Ocean, which measures the concentration of carbon dioxide diffused in the Earth's atmosphere. The following chart reveals the sharp, steep decline in the pace at which carbon dioxide is being added to the Earth's atmosphere since February 2022.

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - April 2022

The following tool may be used to convert the decline in the rate of CO₂ accumulation into an estimate of the net GDP loss in the global economy associated with it. If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

Change in Atmospheric Carbon Dioxide
Input Data Values
Change in Carbon Dioxide in Atmosphere [Parts per Million]
World Population [billions]

Change in Amount of Carbon Dioxide Emitted into Atmosphere
Calculated Results Values
Carbon Dioxide Emissions [billions of Metric Tonnes]
Estimated Net Change in World GDP [trillions]

Using the default value of a -0.27 parts per million to account for the change in the rate of growth of atmospheric carbon dioxide since February 2022, we find the equivalent net loss to global GDP attributable to the spread of COVID in southeast Asia and to China's fossil fuel shortage is $9.0 trillion. Going back to the beginning of the coronavirus pandemic in December 2019, the reduction of 0.92 part per million in the rate at which carbon dioxide is being added to the Earth's air corresponds to a net loss to global GDP of $30.6 trillion.

Analyst's Notes

We've updated the population data entry in the version of the tool presented above to reflect Earth's estimated 2021 population. Otherwise, the methodology behind the tool is unchanged from when we first introduced it in 2020.

Meanwhile, since we've forayed into planetary level economic analysis, we should note it has been five months since we developed the first-ever estimate of Mars' GDP. We're about a month away from the end of the latest Martian quarter and our next estimate of Mars' GDP, which is coming due because Martian quarters are roughly twice as long as business quarters on Earth.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 5 May 2022. Accessed 5 May 2022.

U.S. Central Intelligence Agency. World Factbook. 1 July 2021 Population Estimate (World). [Online Article | Archived Document]. Accessed 8 May 2022.

Ukraine Invasion, COVID Spread in China Shrink World Economy

In just a month, the global economy has gone from showing signs of stalling growth to providing strong evidence the Earth's economy has resumed shrinking.

That's evident from the sharp drop in the pace at which carbon dioxide is increasing in the Earth's atmosphere recorded at the remote Mauna Loa observatory during the last month. The following chart confirms that outcome as measured by the trailing twelve month average of year-over-year change in the atmospheric concentration of carbon dioxide:

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - March 2022

There are two driving factors behind this development. First, Russia's 24 February 2022 invasion of Ukraine has disrupted coal, oil and especially natural gas flows from Russia to the European Union, as many EU nations are boycotting or have implemented economic sanctions against Russian firms.

The second major factor is China's increasing use of lockdowns as the government struggles to prevent the spread of COVID-19 within the country, which is also the world's largest emitter of carbon dioxide. The lockdowns have shut down the country's largest economic center and are now spreading to more regions along with coronavirus infections.

In terms of overall impact for the global economy, we view Russia's invasion of Ukraine as a secondary event, while China's ongoing use of lockdowns clearly represents a continuation of the global coronavirus pandemic recession that originated within the country in 2019.

Update 20 April 2022

Welcome MarketWatch readers! For those interested, we have created a tool to estimate how the change in atmospheric carbon dioxide translates into lost GDP for the planet. Here are the earliest and most recent posts from that series where we've put a number on that impact:

A quick back of the envelope calculation with a net reduction of -0.80 parts per million in the rate at which carbon dioxide is being added to the Earth's atmosphere from December 2019 through March 2022 puts the estimated net global GDP loss at $26.6 trillion. This estimate is likely on the high side of what the IMF and World Bank would estimate.

Reference

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 8 April 2022. Accessed 8 April 2022.

Signs of Stalling Growth for Earth’s Economy

The pace at which carbon dioxide is increasing in the Earth's atmosphere slowed significantly according to data recorded at the remote Mauna Loa observatory for March 2022. The following chart shows the latest development for the trailing twelve month average of year-over-year change in the atmospheric concentration of carbon dioxide:

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - March 2022

That change interrupts what had been a robust upturn in CO₂ emissions, driven primarily by China's record coal spree in recent months. The new change however coincides with indications that China's economic growth has sharply slowed in 2022, as indicated by its negative year-over-year growth rate for imports from the United States for December 2021 and January 2022.

Year Over Year Growth Rate of Exchange Rate Adjusted U.S.-China Trade in Goods and Services, January 1986 - January 2022

That reduction is attributable to China's ongoing struggle with COVID-19, which disrupted economic activity in the Earth's biggest emitter of carbon dioxide in both December 2021 and January 2021. Allowing for the lag in China's carbon dioxide emissions to diffuse into the Earth's air, we think that economic slowdown is now showing up in March 2022's atmospheric CO₂ measurements. With China's government still committed to its COVID-zero policies and still locking down millions of China's productive population for weeks at a time as coronavirus infections continue to spread in the country despite its measures, we anticipate reduced carbon dioxide emissions will show up in the Earth's air from the world's biggest carbon emitter over the next several months.

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 7 March 2022. Accessed 9 March 2022.

China’s "Record Coal Spree" Spurs Faster Pace of CO2 Buildup in Earth’s Air

China's fossil fuel shortage has fully reversed. Thanks largely to what is now being described in the media as a "record coal spree", the country is described as now having adequate supplies to get through the winter.

The Chinese government's "coal spree" has produced some stunning numbers for coal imports and domestic production. China's imports of coal sharply increased in 2021, as its imports dipped in December 2021 after peaking in November 2021 as China's domestic coal production soared.

China's fossil fuel shortage prompted officials to crank up domestic coal mining, resulting in record output from coal mines in both December 2021 and for the entire calendar year.

China’s coal output hit record highs in December and in the full year of 2021, as the government continued to encourage miners to ramp up production to ensure sufficient energy supplies in the winter heating season.

China, the world’s biggest coal miner and consumer, produced 384.67 million tonnes of the fossil fuel last month, up 7.2% year-on-year, data from the National Bureau of Statistics showed on Monday. This compared with a previous record of 370.84 million tonnes set in November.

For the full year of 2021, output touched a record 4.07 billion tonnes, up 4.7% on the previous year.

Since October, authorities have ordered coal miners to run at maximum capacity to tame red-hot coal prices and prevent a recurrence of September’s nationwide power crunch that disrupted industrial operations and added to factory gate inflation.

China hasn't let the additional coal it has bought and mined in panic sit around. Chinese power plants have been burning it in great quantities, which has resulted in a very noticable increase in the rate at which carbon dioxide is accumulating in the Earth's atmosphere.

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - January 2022

Given its coincidental timing with the waning of the global coronavirus pandemic, the environmental impact of China burning the coal it acquired through it's coal spree may also finally mark the bottom of the coronavirus pandemic itself.

Since we happen to be at an anniversary date for the data, we'll close by presented an updated version of this chart, which spans back to January 1960 to provide additional historic context.

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 1960 - January 2022

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 8 February 2022. Accessed 8 February 2022.

Atmospheric CO2 Trend Reverses on China’s Coal Panic

The first signs that China's efforts to address its dire fossil fuel shortage were gaining traction showed up in the Earth's atmosphere in December 2021.

Beginning in October 2021, China's government ordered Chinese coal miners to crank up their coal production. At the same time, the Chinese government ordered the country's coal traders to buy up as much of the world's available coal supply as they could from wherever they could buy it as China headed into winter.

That increase in coal mined and imported started in October 2021 was directed to China's coal-starved power generation plants and burned to produce electricity. The carbon dioxide emissions resulting from the Chinese government's emergency program to keep the country's lights on by burning more coal have diffused into the Earth's atmosphere in the months since. That additional CO₂ has started to become visible by interrupting and potentially reversing what had been a downward trend in the pace at which carbon dioxide is accumulating in the world's air. That change can be seen in the latest update to our chart tracking these monthly changes since 1960.

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - December 2021

Overall, roughly 60% of China's economy is powered by electricity produced in the country's growing number of coal-fired power plants. Looking ahead, China is not quite yet out of the woods because Indonesia, the source of over 60% of the country's imported coal, announced it would ban exports of coal to address its own potential fossil fuel shortage, caused in part by the Chinese government's response to its energy crunch. In China, the negative impact from Indonesia's export ban is being offset by Chinese miners producing record quantities of coal from their mines.

In any case, these developments mean that China will be paying more for coal, which in turn means that the world will be paying more for things produced in China using the energy produced in China's coal-fired power generation facilities.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 6 January 2022. Accessed 6 January 2022.

Previously on Political Calculations

Here is our series quantifying the negative impact of the coronavirus pandemic on the Earth's economy, presented in reverse chronological order.