Low-carbon economy

A low-carbon economy (LCE), low-fossil-fuel economy (LFFE),[1] or decarbonised economy[2] is an economy based on low carbon power sources that therefore has a minimal output of greenhouse gas (GHG) emissions into the biosphere, but specifically refers to the greenhouse gas carbon dioxide. GHG emissions due to anthropogenic (human) activity are the dominant cause of observed global warming (climate change) since the mid-20th century.[3] Continued emission of greenhouse gases will cause further warming and long-lasting changes around the world, increasing the likelihood of severe, pervasive and irreversible impacts for people and ecosystems.[4]

Many countries around the world are designing and implementing low emission development strategies (LEDS). These strategies seek to achieve social, economic and environmental development goals while reducing long-term greenhouse gas emissions and increasing resilience to climate change impacts.[5]

Globally implemented low-carbon economies are therefore proposed by those having drawn this conclusion, as a means to avoid catastrophic climate change, and as a precursor to the more advanced, zero-carbon economy.

Rationale and aims

Nations may seek to become low-carbon or decarbonised economies as a part of a national climate change mitigation strategy. A comprehensive strategy to mitigate climate change is through carbon neutrality.

The aim of a LCE is to integrate all aspects of itself from its manufacturing, agriculture, transportation, and power-generation, etc. around technologies that produce energy and materials with little GHG emission, and, thus, around populations, buildings, machines, and devices that use those energies and materials efficiently, and, dispose of or recycle its wastes so as to have a minimal output of GHGs. Furthermore, it has been proposed that to make the transition to an LCE economically viable we would have to attribute a cost (per unit output) to GHGs through means such as emissions trading and/or a carbon tax.

Some nations are presently low carbon: societies that are not heavily industrialised or populated. In order to avoid climate change on a global level, all nations considered carbon intensive societies, and societies that are heavily populated might have to become zero-carbon societies and economies. Several of these countries have pledged to cut their emissions by 100% via offsetting emissions rather than ceasing all emissions (carbon neutrality); in other words, emitting will not cease but will continue and will be offset to a different geographical area. EU emission trading system allows companies to buy international carbon credits, thus the companies can channel clean technologies to promote other countries to adopt low-carbon developments.[6]

Benefits of low-carbon economies

Low-carbon economies present multiple benefits to ecosystem resilience, trade, employment, health, energy security, industrial competitiveness, and gender equality.[7]

Benefits to ecosystem resilience

Low emission development strategies for the land use sector can prioritize the protection of carbon rich ecosystems to not only reduce emissions, but also to protect biodiversity and safeguard local livelihoods to reduce rural poverty - all of which can lead to more climate resilient systems, according to a report by the Low Emission Development Strategies Global Partnership (LEDS GP). REDD+ and blue carbon initiatives are among the measures available to conserve, sustainably manage, and restore these carbon rich ecosystems, which are crucial for natural carbon storage and sequestration, and for building climate resilient communities.[8]

Job creation

Transitioning to a low-carbon, environmentally and socially sustainable economies can become a strong driver of job creation, job upgrading, social justice, and poverty eradication if properly managed with the full engagement of governments, workers, and employers’ organizations.[9]

Estimates from the International Labour Organization’s Global Economic Linkages model suggest that unmitigated climate change, with associated negative impacts on enterprises and workers, will have negative effects on output in many industries, with drops in output of 2.4% by 2030 and 7.2% by 2050. [10]

Transitioning to a low-carbon economy will cause shifts in the volume, composition, and quality of employment across sectors and will affect the level and distribution of income. Research indicates that eight sectors employing around 1.5 billion workers, approximately half the global workforce, will undergo major changes: agriculture, forestry, fishing, energy, resource intensive manufacturing, recycling, buildings, and transport.[11]

Gender equality

Countries can tap into hidden potential and make their transition to low carbon societies truly sustainable by actively engaging both women and men in all segments of society. Women often play a central role in sectors where emissions can be substantially reduced in tandem with development benefits. This includes efficient household energy use, supporting activities that generate income, and shaping consumption patterns towards low emission products. In addition, identifying women as active members of society and promoting their participation in new/nontraditional climate related job opportunities, for example as renewable energy technicians and entrepreneurs, will contribute to poverty reduction and economic growth.[12]

Business competitiveness

Low emission industrial development and resource efficiency can offer many opportunities to increase the competitiveness of economies and companies. According to the Low Emission Development Strategies Global Partnership (LEDS GP), there is often a clear business case for switching to lower emission technologies, with payback periods ranging largely from 0.5–5 years, leveraging financial investment.[13]

Improved trade policy

Trade and trade policies can contribute to low-carbon economies by enabling more efficient use of resources and international exchange of climate friendly goods and services. Removing tariffs and nontariff barriers to trade in clean energy and energy efficiency technologies is one such measure. In a sector where finished products consist of many components that cross borders numerous times - a typical wind turbine, for example, contains up to 8,000 components - even small tariff cuts would reduce costs. This would make the technologies more affordable and competitive in the global market, particularly when combined with a phasing out of fossil fuel subsidies.[14]

Energy policy

Renewable energy and energy efficiency

Worldwide installed wind power capacity 1997–2020 [MW], history and predictions. Data source: WWEA
Solar array at Nellis Solar Power Plant. These panels track the sun in one axis. Credit: U.S. Air Force photo by Senior Airman Larry E. Reid Jr.

Recent advances in technology and policy will allow renewable energy and energy efficiency to play major roles in displacing fossil fuels, meeting global energy demand while reducing carbon dioxide emissions. Renewable energy technologies are being rapidly commercialized and, in conjunction with efficiency gains, can achieve far greater emissions reductions than either could independently.[15]

Renewable energy is energy that comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable (naturally replenished). In 2008, about 19% of global final energy consumption came from renewables.[16] During the five years from the end of 2004 through 2009, worldwide renewable energy capacity grew at rates of 10–60 percent annually for many technologies. For wind power and many other renewable technologies, growth accelerated in 2009 relative to the previous four years.[17] More wind power capacity was added during 2009 than any other renewable technology. However, grid-connected photovoltaics increased the fastest of all renewables technologies, with a 60 percent annual average growth rate for the five-year period.[17]

Energy for power, heat, cooling, and mobility is the key ingredient for development and growth, with energy security a prerequisite economic growth, making it arguably the most important driver for energy policy. Scaling up renewable energy as part of a low emission development strategy can diversify a country's energy mixes and reduces dependence on imports. It can also lower geopolitical risks and exposure to fuel price volatility, and improve the balance of trade for importing countries (noting that only a handful of countries export oil and gas). Renewable energy offers lower financial and economic risk for businesses through a more stable and predictable cost base for energy supply.[18]

Energy efficiency gains in recent decades have been significant, but there is still much more that can be achieved. With a concerted effort and strong policies in place, future energy efficiency improvements are likely to be very large. Heat is one of many forms of "energy wastage" that could be captured to significantly increase useful energy without burning more fossil fuels.[15]

Sustainable biofuels

Main article: Sustainable biofuel

Biofuels, in the form of liquid fuels derived from plant materials, are entering the market, driven by factors such as oil price spikes and the need for increased energy security. However, many of the biofuels that are currently being supplied have been criticised for their adverse impacts on the natural environment, food security, and land use.[19][20]

The challenge is to support biofuel development, including the development of new cellulosic technologies, with responsible policies and economic instruments to help ensure that biofuel commercialization is sustainable. Responsible commercialization of biofuels represents an opportunity to enhance sustainable economic prospects in Africa, Latin America and Asia.[19][20][21]

Biofuels have a limited ability to replace fossil fuels and should not be regarded as a ‘silver bullet’ to deal with transport emissions. However, they offer the prospect of increased market competition and oil price moderation. A healthy supply of alternative energy sources will help to combat gasoline price spikes and reduce dependency on fossil fuels, especially in the transport sector.[20] Using transportation fuels more efficiently is also an integral part of a sustainable transport strategy.

Nuclear power

Nuclear power has been offered as the primary means to achieve a LCE. In terms of large industrialized nations, mainland France, due primarily to 75% of its electricity being produced by nuclear power, has the lowest carbon dioxide production per unit of GDP in the world and it is the largest exporter of electricity in the world, earning it approximately €3 billion annually in sales.[22]

Concern is often expressed with the matter of spent nuclear fuel storage and security; although the physical issues are not large, the political difficulties are significant. The liquid fluoride thorium reactor (LFTR) has been suggested as a solution to the concerns posed by conventional nuclear.[23]

France reprocesses their spent nuclear fuel at the La Hague site since 1976 and has also treated spent nuclear fuel from France, Japan, Germany, Belgium, Switzerland, Italy, Spain and the Netherlands.

Smart grid

One proposal from Karlsruhe University[24][25] developed as a virtual power station is the use of solar and wind energy for base load with hydro and biogas for make up or peak load. Hydro and biogas are used as energy storage. This requires the development of a smart intelligent grid hopefully including local power networks than use energy near the site of production, thereby minimising electrical grid losses.

Methane cycle

A further development of this is the use of the carbon capture, hydrogen and its conversion into methane (SNG synthetic natural gas) to act as a storage for intermittent renewables.[26]

CO2 + 4H2 → CH4 + 2H2O Sabatier reaction

This involves the use of the existing natural gas (methane) grid as the store. In this case, the carbon dioxide is given economic value as a component of energy carrier. This "solar fuel"[27] cycle uses the excess electrical renewable energy that cannot be used instantaneously in the grid, which otherwise would be wasted to create hydrogen via electrolysis of water. The hydrogen is then combined with CO2 to create synthetic or substitute natural gas SNG and stored in the natural gas network. The natural gas is used to create electrical energy (and the heat used as well in CHP) on demand when there is not enough sun (photovoltaic, CSP...) or wind (turbines) or water (hydro, ocean current, waves,...). The German natural gas grid, for example, has two months of storage, more than enough to outlast renewable energy low production points.


The proposed strategy of carbon capture and storage (CCS) - continued use of non-renewable fossil fuels but without allowing carbon dioxide to reach the atmosphere - has also been considered as a means to achieve a LCE, either in a primary or supporting role. Major concerns include the uncertainty of costs and time needed to successfully implement CCS worldwide and with guarantees that stored emissions will not leak into the biosphere.

Combined heat and power

Combined Heat and Power (CHP) is a technology which by allowing the more efficient use of fuel will at least reduce carbon emissions; should the fuel be biomass or biogas or hydrogen used as an energy store then in principle it can be a zero carbon option. CHP can also be used with a nuclear reactor as the energy source; there are examples of such installations in the far North of the Russian Federation.

Primary sector


See also: Low carbon diet

Most of the agricultural facilities in the developed world are mechanized due to rural electrification. Rural electrification has produced significant productivity gains, but it also uses a lot of energy. For this and other reasons (such as transport costs) in a low-carbon society, rural areas would need available supplies of renewably produced electricity.

Irrigation can be one of the main components of an agricultural facility's energy consumption. In parts of California, it can be up to 90%.[28] In the low carbon economy, irrigation equipment will be maintained and continuously updated and farms will use less irrigation water.


Different crops require different amounts of energy input. For example, glasshouse crops, irrigated crops, and orchards require a lot of energy to maintain, while row crops and field crops do not need as much maintenance. Those glasshouse and irrigated crops that do exist will incorporate the following improvements:[29]

Glasshouse crops

Irrigated arable crops


Livestock operations can also use a lot of energy depending on how they are run. Feed lots use animal feed made from corn, soybeans, and other crops. Energy must be expended to produce these crops, process, and transport them. Free-range animals find their own vegetation to feed on. The farmer may expend energy to take care of that vegetation, but not nearly as much as the farmer growing cereal and oil-seed crops.

Many livestock operations currently use a lot of energy to water their livestock. In the low-carbon economy, such operations will use more water conservation methods such as rainwater collection, water cisterns, etc., and they will also pump/distribute that water with on-site renewable energy sources (most likely wind and solar).

Due to rural electrification, most agricultural facilities in the developed world use a lot of electricity. In a low-carbon economy, farms will be run and equipped to allow for greater energy efficiency. The dairy industry, for example, will incorporate the following changes:[29]

Irrigated Dairy

Hunting and fishing

Fishing is quite energy intensive. Improvements such as heat recovery on refrigeration and trawl net technology will be common in the low-carbon economy.[29]


Main article: Wood economy

Protecting forests provides integrated benefits to all, ranging from increased food production, safeguarded local livelihoods, protected biodiversity and ecosystems provided by forests, and reduced rural poverty. Adopting low emission strategies for both agricultural and forest production also mitigates some of the effects of climate change.[30]

In the low-carbon economy, forestry operations will be focused on low-impact practices and regrowth. Forest managers will make sure that they do not disturb soil-based carbon reserves too much. Specialized tree farms will be the main source of material for many products. Quick maturing tree varieties will be grown on short rotations in order to maximize output.[31]


Main article: Gas flare

Flaring and venting of natural gas in oil wells is a significant source of greenhouse gas emissions. Its contribution to greenhouse gases has declined by three-quarters in absolute terms since a peak in the 1970s of approximately 110 million metric tons/year, and in 2004 accounted for about 1/2 of one percent of all anthropogenic carbon dioxide emissions.[32]

The World Bank estimates that 134 billion cubic meters of natural gas are flared or vented annually (2010 datum), an amount equivalent to the combined annual gas consumption of Germany and France or enough to supply the entire world with gas for 16 days. This flaring is highly concentrated: 10 countries account for 70% of emissions, and twenty for 85%.[33]

The top-ten leading contributors to world gas flaring in 2010, were (in declining order): Russia (26%), Nigeria (11%), Iran (8%), Iraq (7%), Algeria (4%), Angola (3%), Kazakhstan (3%), Libya (3%), Saudi Arabia (3%), and Venezuela (2%).[34]

Secondary sector

Basic metals processing

Nonmetallic product processing

Wood processing

Paper and pulp making

Food processing

Tertiary sector


Retail operations in the low-carbon economy will have several new features. One will be high-efficiency lighting such as compact fluorescent, halogen, and eventually LED light sources. Many retail stores will also feature roof-top solar panel arrays. These make sense because solar panels produce the most energy during the daytime and during the summer. These are the same times that electricity is the most expensive and also the same times that stores use the most electricity.[35]

Transportation services

Sustainable, low-carbon transport systems are based on minimizing travel and shifting to more environmentally (as well as socially and economically) sustainable mobility, improving transport technologies, fuels and institutions.[36] Decarbonisation of (urban) mobility by means of:

Sustainable transport has many co-benefits that can accelerate local sustainable development. According to a series of reports by the Low Emission Development Strategies Global Partnership (LEDS GP), low carbon transport can help create jobs,[40] improve commuter safety through investment in bicycle lanes and pedestrian pathways,[41] make access to employment and social opportunities more affordable and efficient. It also offers a practical opportunity to save people’s time and household income as well as government budgets,[42] making investment in sustainable transport a 'win-win' opportunity.

Health services

There have been some moves to investigate the ways and extent to which health systems contribute to greenhouse gas emissions and how they may need to change to become part of a low-carbon world. The Sustainable Development Unit[43] of the NHS in the UK is one of the first official bodies to have been set up in this area, whilst organisations such as the Campaign for Greener Healthcare[44] are also producing influential changes at a clinical level. This work includes

Some of the suggested changes needed are:

Initial steps

A good overview of the history of international efforts towards a low-carbon economy, from its initial seed at the inaugural UN Conference on the Human Environment in Stockholm in 1972, has been given by David Runnals.[45] On the international scene, the most prominent early step in the direction of a low-carbon economy was the signing of the Kyoto Protocol, which came into force on February 16, 2005, under which most industrialized countries committed to reduce their carbon emissions.[46][47] Importantly, all member nations of the Organization for Economic Co-operation and Development except the United States have ratified the protocol. Europe is the leading geopolitical continent in defining and mobilising decarbonisation policies.[48] For instance, the UITP - an organisation advocating sustainable mobility and public transport - has an EU office, but less well developed contacts with, for example, the US. The European Union Committee of the UITP wants to promote decarbonisation of urban mobility in Europe.[49] Although Europe is nowadays the leading geopolitical continent with regard to lowering emissions, Europe is quickly losing ground to Asia, with countries such as China and South Korea.[50] However, the 2014 Global Green Economy Index™ (GGEI) [51] ranks 60 nations on their green economic performance, finding that the Nordic countries and Switzerland have the best combined performance around climate change and green economy.



Australia has implemented schemes to start the transition to a low-carbon economy but carbon neutrality has not been mentioned and since the introduction of the schemes, emissions have increased. The Second Rudd Government pledged to lower emissions by 5-15%. In 2001, The Howard Government introduced a Mandatory Renewable Energy Target (MRET) scheme. In 2007, the Government revised the MRET - 20 percent of Australia's electricity supply to come from renewable energy sources by 2020. Renewable energy sources provide 8-10% of the nation's energy, and this figure will increase significantly in the coming years. However coal dependence and exporting conflicts with the concept of Australia as a low-carbon economy. Carbon-neutral businesses have received no incentive; they have voluntarily done so. Carbon-offset companies offer assessments based on lifecycle impacts to businesses that seek carbon neutrality. The Carbon Reduction Institute[52] is one such offset provider, that has produced a certification procedure to promote a low-carbon economy in Australia. Though the only true certified carbon neutral scheme is the Australian government's National Carbon Offset Standard (NCOS). Three of the four of Australia's top banks are now certified under this scheme and full list of compliant companies can be seen here http://www.environment.gov.au/climate-change/carbon-neutral/carbon-neutral-program/accredited-businesses#Certified_organisations . Businesses are now moving from unaccredited schemes such as noco2 and transitioning to NCOS as the only one that is externally audited. Most of leading carbon management companies have also aligned with NCOS such as Net Balance http://www.netbalance.com/ , Pangolin Associates http://pangolinassociates.com/sustainability-services/ncos-carbon-neutrality/, Energetics http://energetics.com.au/home and the big four accounting firms.

In 2011 the Gillard Government introduced a price on carbon dioxide emissions for businesses. Although often characterised as a tax, it lacked the revenue-raising nature of a true tax. In 2013, on the election of the Abbott government, immediate legislative steps were taken to repeal the so-called carbon tax. The price on carbon was repealed on the 17th July 2014 by an act of parliament. As it stands Australia currently has no mechanism to deal with climate change.


In China, the city of Dongtan is to be built to produce zero net greenhouse gas emissions.[53]

The Chinese State Council announced in 2009 it aimed to cut China's carbon dioxide emissions per unit of GDP by 40%-45% in 2020 from 2005 levels.[54] However carbon dioxide emissions were still increasing by 10% a year by 2013 and China was emitting more carbon dioxide than the next two biggest countries combined (U.S.A. and India).[55] Total carbon dioxide emissions were projected to increase until 2030.[56]

Costa Rica

Costa Rica sources much of its energy needs from renewables and is undertaking reforestation projects. In 2007, the Costa Rican government announced the commitment for Costa Rica to become the first carbon neutral country by 2021.[57][58][59]


Iceland began utilising renewable energy early in the 20th century and so since has been a low-carbon economy. However, since dramatic economic growth, Iceland's emissions have increased significantly per capita. As of 2009, Iceland energy is sourced from mostly geothermal energy and hydropower, renewable energy in Iceland and, since 1999, has provided over 70% of the nation's primary energy and 99.9% of Iceland's electricity.[60] As a result of this, Iceland's carbon emissions per capita are 62% lower than those of the United States[61] despite using more primary energy per capita,[62] due to the fact that it is renewable and low-cost. Iceland seeks carbon neutrality and expects to use 100% renewable energy by 2050 by generating hydrogen fuel from renewable energy sources.


Low carbon strategies for inclusive growth - An interim report (India), May 2011[63]


The Economic Commission for Latin America and the Caribbean (ECLAC) estimates that economic losses related to climate change for Peru could reach over 15% of national gross domestic product (GDP) by 2100.[64] Being a large country with a long coastline, snow-capped mountains and sizeable forests, Peru's varying ecosystems are extremely vulnerable to climate change. Several mountain glaciers have already begun to retreat, leading to water scarcity in some areas.

Peru brought in a National Strategy on Climate Change in 2003. It is a detailed accounting of 11 strategic focuses that prioritize scientific research, mitigation of climate change effects on the poor, and creating Clean Development Mechanism (CDM) mitigation and adaptation policies.[65]

In 2010, the Peruvian Ministry of Environment published a Plan of Action for Adaptation and Mitigation of Climate Change.[66] The Plan categorises existing and future programmes into seven action groups, including: reporting mechanisms on GHG emissions, mitigation, adaptation, research and development of technology of systems, financing and management, and public education. It also contains detailed budget information and analysis relating to climate change.

In 2014, Peru hosted the Twentieth Conference of the Parties of the United Nations Framework Convention on Climate Change (UNFCCC COP20) negotiations.[67] At the same time, Peru enacted a new climate law which provides for the creation of a national greenhouse gas inventory system called INFOCARBONO.[68] According to the Low Emission Development Strategies Global Partnership (LEDS GP), INFOCARBONO is a major transformation of the country's greenhouse gas management system. Previously, the system was under the sole control of the Peruvian Ministry of the Environment. The new framework makes each relevant ministry responsible for their own share of greenhouse gas management.

United Kingdom

In the United Kingdom, the Climate Change Act 2008 outlining a framework for the transition to a low-carbon economy became law on November 26, 2008. This legislation requires an 80% cut in the UK's carbon emissions by 2050 (compared to 1990 levels), with an intermediate target of between 26% and 32% by 2020.[69] Thus, the UK became the first country to set such a long-range and significant carbon reduction target into law.

A meeting at the Royal Society on 17–18 November 2008 concluded that an integrated approach, making best use of all available technologies, is required to move toward a low-carbon future. It was suggested by participants that it would be possible to move to a low-carbon economy within a few decades, but that 'urgent and sustained action is needed on several fronts'.[70]

In June 2012, the UK coalition government announced the introduction of mandatory carbon reporting, requiring around 1,100 of the UK’s largest listed companies to report their greenhouse gas emissions every year. Deputy Prime Minister Nick Clegg confirmed that emission reporting rules would come into effect from April 2013 in his piece for The Guardian.[71]

In July 2014, the UK Energy Savings Opportunity Scheme (ESOS) came into force.[72] This requires all large businesses in the UK to undertake mandatory assessments looking at energy use and energy efficiency opportunities at least once every four years.[73]

The low carbon economy has been described as a "UK success story", accounting for more than £120 billion in annual sales and employing almost 1 million people. A 2013 report suggests that over a third of the UK's economic growth in 2011/12 was likely to have come from green business.[74]


Companies are planning large scale developments without using fossil fuels. Development plans such as those by World Wide Assets LLC for entire cities using only geothermal energy for electricity, geothermal desalination, and employing full recycling systems for water and waste are under development (2006) in Mexico and Australia.


The University of Reading has a Renewable Energy inc. a carbon management module MSc

The University of Edinburgh has a Carbon Management MSc. As well as a Carbon Finance MSc.

The University of East Anglia has a Strategic Carbon Management MBA.

The myclimate climate education[75] offers capacity building tools like exhibitions, games, schoolbooks and courses for young people, adults and businesses.

The London School of Business and Finance has an MBA specialisation in Carbon Management.

See also

External links


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