Friday, 24 August 2012

Wealth and carbon emissions (in Sweden)

I was intrigued to read in New Scientist [1] that inequality helps the planet because rich people generate less greenhouse gas emission for their money than less rich people. This is clearly a fallacy since it relies on the erroneous assumption that if one person is £x richer, then other people must be £x poorer.* Be that as it may, it was not obvious to me that richer people would spend their extra money on relatively low carbon goods and services. What about air travel for example? Not everyone can afford weekends in New York when they feel like it - and luxury yachts are great fuel guzzlers.

The New Scientist article refers to a study by the Canadian Centre for Policy Alternatives [2] which reports that, in Canada, the most wealthy 20% of the population generate less than twice as much GHGs per person as the poorest 20%. I do not find this study convincing however. It uses real data for direct emissions (due to household energy use and personal transportation) and then estimates the indirect emissions (due to goods and services bought) by simply multiplying direct emissions by a constant factor. I suspect this is a gross over simplification of the problem.

I found a much more detailed spending study based in Sweden investigating whether or not shorter working hours would lead to less or more carbon emissions. This evaluates the balance of two conflicting effects - if you work less you will earn less and so have less to spend on goods and services but you will also have more leisure time. If your leisure activities are higher in GHGs than your work activities then you could end up generating more emissions overall. This study carefully evaluates how the extra wealth is spent and what people do when they have extra free time.  In fact, they found that the increased spending greatly outweighs the extra leisure time.


For the Swedes at least, the link between spending and GHGs is very strong (and also with energy use but I will stick with GHGs here for simplicity). The study used data on household budgets from a range of income levels and they found only a slight decrease in emissions per kroner  in the wealthier households on average (though there was a lot of variation).  The overall trend was that a doubling in spending generates roughly 1.9 times as much in GHGs.

Which brings me to the most interesting bit - what do wealthy Swedes spend their extra money on? Admittedly, here in Britain we probably behave a bit differently, but we aren't a million miles apart. The Swedish study looked at 104 types of goods and services and of these the biggest spend turned out to be - cars.  Nearly 20% of above average wealth in Sweden is spent on cars, plus another 4% on fuel for those cars and another 2% on maintaining those cars. In all, cars account for 26% of the extra cash and 32% of the extra greenhouse gas emissions.

After cars, the next biggest spend is package holidays - no surprise there - followed closely by food and then restaurants and cafes. I confess I find the food calculation suspect - the wealthy Swedes spent more money on meat, for example but this does not necessarily imply more in GHG emissions. Arguably they could have bought the same amount of meat in more expensive cuts - though the Swedish calculation would still be valid if you allocate the emissions for the carcass by value rather than quantity. (You may call this nit picking but it is the sort of problem that crops up constantly in carbon accounting and it can make a considerable difference to the results.) Electricity and heating energy are only a small fraction of the extra GHGs in Sweden because a great deal of their energy comes from renewable low carbon sources. Emissions from energy must be a lot more in the UK.

A big surprise to me was that gardening products and plants accounted for 4.2% of the extra GHGs, even though the spending was only 1.5%. Perhaps Sweden uses a lot of heated greenhouses. However, if you consider gardening similar to agriculture, then the GHG factors are similar in the UK. In the Swedish data, garden products were 0.108 kgCO2e/SEK which is about 1.1 kgCO2/£. From the Defra carbon accounting guidelines [4], UK agricultural products are 2.67 kgCO2e/£. Clothing on the other hand is a relatively low carbon spend - only 0.021 kgCO2e/SEK which is about 0.2 kgCO2e/£ - Defra says 0.29.

By the way, air travel was relatively insignificant, even though it is very high in GHGs because the Swedes only spend 0.5% of their extra cash on it. Perhaps they like Sweden too much to want to leave it.

The chart below shows the items I have mentioned, which together account for 55% of the extra spending and 76% of the extra carbon emissions.


Admittedly this study does not cover the super-rich, but it does suggest a very close connection between spending and GHG emissions, regardless of how wealthy or how poor you are. If you want to spend a lot of money without generating much in the way of GHG emissions you need to spend it on goods which involve lots of human labour but not so much energy such as handmade furniture or jewellery. When I looked at this sort of thing earlier  (Does saving energy reduce your carbon emissions? - avoiding the rebound effect) my favourite was having a drink in a pub.

* See wikipedia for how wealth is created. It is mainly to do with the fact that banks can loan more money than they have in reserves.




[1] Why Inequality Helps the Planet  New Scientist 28 July p43
[2] Who occupies the sky? The distribution of GHGs in Canada, Canadian Centre for Policy Alternatives 2011
[3] Would shorter work time reduce the greenhouse gas emissions - Working paper by Jonas Nassen (Chalmers University of Technology) and Jorgen Larsson (University of Gothenburg) 2010
[4] Guidelines to Defra/DECC GHG Conversion Factors for Company Reporting DECC 2012

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