Case  selection

The case selection is a crucial decision of every research project that strongly influences the research outcome and is in particular important when looking at a few countries. Analysing a small number of countries has the advantage of being case-oriented and allowing a more intensive concentration on case particularities (Landman, 2008). Theoretically, several points are of relevance when settling on the cases. First, selection bias and inference problems are avoided when cases are selected according to “the key causal explanatory variable” (King et al., 1994: 137). Hence, the dependant variable must differ within the chosen cases because otherwise no causal links can be established.

The selected political entities – China, the United States, and the European Union – stand at the centre of the issue: They represent the world’s three largest economies and GHG emitters (see below). Hence, if they do not reduce their GHG emissions, they will offset the efforts by a large number of smaller countries. In addition, they fulfil all criteria outlined above as they vary considerably in their social, economic and political structure. Hence, they form the basis for a most different research design that allows for analysis of transition processes from various angles. Given their various starting points, they are expected to choose different pathways towards the green economy. This has advantages when discerning which transition capacities are crucial under very different starting conditions.

A second, equally important decision is the topic of each case study. Since this doctoral thesis aims to analyse the transition to a green economy, and not the transition to electro mobility, renewable energy or smart grids, a range of topics is chosen for various reasons. First, looking at differing technologies and policy areas underlines various aspects of the green economy and exemplifies the broad scope of this transition process. Crucial aspects for a green transition amongst others are using renewable sources of energy generation, cleaner modes of

Governing the Transition to a Green Economy 33 transport, emissions reductions from housing, and increasing emissions-efficiency of

agriculture (German Advisory Council on Global Change, 2011, Mehling et al., 2010).

Second, the three areas chosen are all relevant for significant GHG emissions reductions.

Whereas the Chinese transport sector currently contributes relatively little to the GHG emissions total, it would be a significant factor when it reaches the level of industrialised economies. Hence, it would be an important step towards a green economy to find alternatives that can significantly reduce the emissions intensity such as electro mobility. Renewable energies in the United States can help reduce the output of the sector with the highest GHG emissions output by transitioning to cleaner alternatives. In the European Union the smart grid does not reduce GHG emissions by itself but is a key enabler for a variety of clean technologies that are gaining traction in the member states. Third, the case studies are focusing on areas on which the political entities are concentrating to transition to cleaner alternatives. In China, the political leadership strongly pushes electro mobility. In the United States president Obama has used the fiscal stimulus after the financial crisis in 2008/2009 to push forward renewable energies. The smart grid in the European Union is a key technology to integrate the European energy infrastructure and has entered the supranational policy realm for this reason.

Nonetheless, this approach faces a share of problems: The cases reflect various degrees of difficulty of achieving the three goals although they all represent an important part of the green transition and include a combination of industrial sectors. The US case looks at the most basic issue since the technology is already developed and only the infrastructure needs to change. The China case is more difficult because a new technology must be developed and the infrastructure must be adapted to changing needs. Finally, the EU case is most difficult because many of the technological fixes are not yet developed and it remains unclear how the future infrastructure will look like since little experience exists. Furthermore, the three cases are currently in very different stages of their socio-political and socio-economic development.

This reflects in their current GHG emissions trajectories, economic maturity and development as well as progress of decoupling economic growth from ecological destruction. Hence, this dissertation applies a most different research design with regard to the political entities.

1.2.1. Greenhouse  gas  emissions  trajectories  

Since 2007, when it overtook the United States, which had held this position for a long time, China has been the annual biggest emitter of GHGs. In 2012, China emitted 8.3 gigatons CO2

(26% of global GHG emissions), the United States 5.1 gigatons CO2 (16% of global GHG

emissions) and the European Union 3.5 gigatons CO2 (11% of global GHG emissions) (International Energy Agency, 2014).⁶ This means that the three entities are responsible for 16.9 of 31.7 gigatons CO2, more than 53% of the global total.⁷ It is of little surprise that the three entities are also the three biggest electricity producers and consumers as well as the consumers of the most refined petroleum products (Central Intelligence Agency, 2013). As a result, attempts to mitigate climate change without these three entities will have only moderate impacts on global GHG emissions totals. They easily offset even significant reductions by smaller countries when they continue with or even increase their current output.

While the latest global financial crisis starting in 2008 temporarily slowed global growth of GHG emissions, emissions output accelerated again in 2010.⁸ Pollution remains closely linked to economic development and a meaningful decoupling is not yet taking place.

The three entities are on diverging pathways: In the time frame 1990 to 2012 Chinese GHG emissions have increased by 262.2%, US emissions have increased as well, but only by 4.2%

while GHG emissions in the European Union have decreased by 13.8% (International Energy Agency, 2014). A different picture emerges when looking at per capita GHG emissions: the United States has by far the highest output of the three cases with 16.2 tons CO2 per capita in 2012 followed by the European Union with 6.9 tons CO2 and China at 6.1 tons CO2

(International Energy Agency, 2014). It is worth noting that all three are above the world average of 4.5 tons CO2 per capita. While China has the lowest per capita GHG emissions of the three, they have been rapidly increasing by 204.4% since 1990; in the European Union and the United States per capita GHG emissions have decreased by 17% and 18.9%

respectively during the same period (International Energy Agency, 2014). It seems likely that without far-reaching policy intervention future trajectories continue along these trend lines:

rapid Chinese economic growth will drive GHG emissions upwards; the European Union has enacted legislation to continuously reduce GHG emissions, hence, it probably proceeds with lowering overall emissions output; the development in the United States is less certain, but large changes in either direction appear rather unlikely.

6 The Chinese data – even though published by the International Energy Agency – needs to be treated with caution. Guan et al. (2012) have found large differences between regional and national reports of GHG emissions in China. However, in order to ensure comparability, the following relies on International Energy Agency data only.

7 In general, the responsibility for GHG emissions is put on the country in which they were produced and not consumed. However, in a highly globalised economy, trade causes the picture to look very different when responsibility is based on consumption. For example, China, the production hub of the world economy, exports a high percentage of products that caused GHG emissions (Peters and Hertwich, 2008).

8 This is the latest year for which reliable and comparable data is available.

Governing the Transition to a Green Economy 35

1.2.2. Economic  development  

While gross domestic product (GDP) is only an incomplete proxy for economic performance, it remains the most widely used indicator to compare the size of national economies.⁹ In 2011, the European Union generated the biggest GDP worldwide, followed by the United States and China (Central Intelligence Agency, 2013).¹⁰ However, the World Bank (2012) assumes that even with modest growth only, China becomes the world’s biggest economy before 2030.

This rapid growth comes at the price of increasing pollution as the Chinese level of environmental degradation and resource depletion is assumed to cost roughly 9% of gross national income (World Bank, 2012).¹¹

The situation is different when looking at a worldwide comparison of annual per capita GDP in 2012: The United States ranks 14^th with approximately 50,700 USD (38,702 EUR), the European Union ranks 41^st with circa 35,100 USD (26,794 EUR) and China ranks decidedly lower at position 123 with 9,300 USD (7,099 EUR) (Central Intelligence Agency, 2013).¹² This demonstrates a wide spread in economic development and living conditions. Whereas the United States and the European Union are industrialised economies, China is best described as a rapidly developing country. This is underlined by the yearly growth patterns:

China has experienced GDP growth rates of roughly 10% over the last two decades. In contrast, GDP in the United States and the European Union has been growing by less than 2%

annually over the last 10 years with negative growth rates during the last major global economic crisis.

9 Burda and Wyplosz (2009: 27) give three definitions: 1) “the sum of final sales within a geographic location during a period of time, usually a year”; 2) “the sum of value added occurring within a given geographic location during a period of time”; 3) “the sum of factor incomes earned from economic activities within a geographic location during a period of time”. Critics of GDP have pointed out that all the definitions focus on monetary values (Jackson, 2009) and ignore consequences of economic activities to non-priceable issues, such as the global climate. This means that GDP grows even though economies destruct their resources base to generate monetary values (United Nations Environment Programme, 2011). Proposals to improve the measure of GDP include “some account of positive benefits from things like household work, adjusting for the depletion of capital (both human-made and natural), substracting external environmental and social costs and taking account of defensive expenditures” (Jackson, 2009: 126). This would help to avoid the current misperception that the excessive use of natural resources results in positive economic growth numbers.

10 The presented economic data is based on the Organisation for Economic Co-operation and Development (2013) and Central Intelligence Agency (2013). Other sources either do not aggregate the data for the European Union (World Bank) or do not include China in their dataset (Eurostat).

11 Gross national income is closely related to GDP. However, the calculation is based on citizenship rather than territory.

12 The monetary values are always presented in the currency that the original source uses. Hence, they are either in USD, RMB, or EUR. In order to make them comparable, they are converted into EUR if this is not the currency they are presented in. The conversion rates are: 1 EUR = 1.31 USD and 1 EUR = 8.27 RMB – approximately the average exchange rates of the last two years (European Central Bank, 2013).

1.2.3. Linking  greenhouse  gas  emissions  and  economic  trends  

Theoretically, the ‘environmental Kuznets curve’ elaborates that the relation between income and environmental performance is an inverted U-shaped curve. With very low national income, environmental impact is low, as countries industrialise, they rapidly increase their pollution up to a turning point from where it falls (Tietenberg and Lewis, 2009). More investment by richer countries into pollution abatement and a higher ranking of environmental preferences explain this trend (Fiorino, 2011). In order to compare countries, the International Energy Agency (2014) has developed an indicator that measures the CO2 emissions divided by the national GDP based on purchasing power parity on a base year. Based on 2005 USD, China has the highest pollution intensity of the three cases. It is twice as high as in the United States and almost three times as high as in the European Union, which is currently the most GHG emissions efficient entity of the three. However, over the period 1990 to 2012 China has reduced its emissions intensity by 52.3%, the European Union by 40.6% and the United States by 39.7%. This means that certain decoupling is taking place in all three cases. However, this does not take rebound effects into account which describe an “overcompensation of the decarbonisation progress” (German Advisory Council on Global Change, 2011: 7) – the goods production emits less GHGs but more of them are bought resulting in an overall increase of pollution. While the economies become more efficient, higher consumption could result in an overall pollution increase. Table 1 gives an overview of key indicators.

Table 1: Comparison of economic and greenhouse gas emissions indicators China United States European Union Gigatons CO2 emissions in

2012 8.3 5.1 3.5

Change of CO2 emissions

between 1990-2012 in % + 262.2 + 4.2 - 13.8

Tons CO2 emissions per

capita in 2012 6.1 16.2 6.9

Change of per capita CO2

emission between 1990 and 2012 in %

+ 204.4 - 17.0 - 18.9

Governing the Transition to a Green Economy 37

GDP 2011 in billion USD¹³

11,300 (8,626 billion

EUR)

14,991 (11,444 billion

EUR)

16,455 (12,553 billion

EUR) GDP per capita 2012 in

USD¹⁴

9,300 (123) (7,099 EUR)

50,700 (14) (38,702 EUR)

35,100 (41) (26,794 EUR) Annual change of GDP

between 2001 and 2010 in % + 10.5 + 1.6 + 1.4 Change of GDP between

1990 and 2010 in % + 630.1 + 63.5 + 43.2

CO2/GDP (kgCO2 per 2005

USD) in 2012 0.62 0.36 0.25

Overall change of CO2/GDP (kgCO2 per 2005 USD) between 1990 and 2012 in %

- 52.3 - 39.7 - 40.9

Sources: Central Intelligence Agency (2013), (International Energy Agency, 2014), Organisation for Economic Co-operation and Development (2013)