Opinion

Economic growth and carbon emissions: The link is beginning to weaken

Necessary technologies already exist: efficient solar panels, electric vehicles, advanced batteries, and smarter energy systems. The challenge lies in scaling them up

By Dr Sudeep Thakuri

Carbon trading. Photo Courtesy: Freepik

Global carbon emissions from fossil fuels reached a new record in 2025. According to the Global Carbon Project's 2025 report, carbon dioxide emissions increased by 1.1% to 38.1 billion tonnes. At first glance, this seems like bad news. However, a closer look reveals an important shift: the link between economic growth and emissions is beginning to weaken in many countries and sectors. These changes, often called 'structural breaks,' suggest that emissions can peak and even decline while economies continue to grow. Traditionally, higher economic growth (measured by GDP per capita) has been associated with higher emissions per capita. But this pattern is changing, particularly in wealthier nations. In some cases, emissions are stabilising or even falling despite continued economic expansion. This phenomenon is known as decoupling. Absolute decoupling occurs when emissions decrease while GDP increases, whereas relative decoupling happens when both grow, but emissions rise more slowly. In simple terms, countries are learning to produce more with fewer emissions. Recent figures are encouraging. In 2024, global energy-related emissions rose by just 0.8%, while the global economy grew by 3.2%, according to the International Energy Agency (IEA). More notably, advanced economies reduced their emissions by 1.1% even as their economies expanded. Analysis by the London-based Energy and Climate Intelligence Unit (ECIU) shows that between 2015 and 2023 – the period following the Paris Agreement – about 46% of the global economy achieved absolute decoupling. Further evidence comes from a 2024 article in Scientific Reports, which found that 49 out of 164 countries have successfully decoupled emissions from economic growth, while 115 have not. Most European and Oceanian countries have achieved this transition, whereas many countries in Africa, Asia, and the Americas are still in the process. In advanced economies, these structural breaks occurred decades ago and reflect lasting changes in energy production and consumption patterns. Germany is a good example. After reunification, it restructured its industrial base and invested heavily in renewable energy. The United Kingdom reduced its reliance on coal, while the United States shifted from coal to cheaper natural gas. Large developing economies present a mixed picture. China has demonstrated strong relative decoupling, with emissions in its power sector beginning to decline in 2025 due to rapid expansion of solar and wind energy. In India, emissions grew by only 0.7% in 2025 – the slowest increase in over two decades. These trends suggest that both countries could reach peak emissions within the next few years if they continue investing in clean energy. As a whole, more than 40 countries have achieved absolute decoupling, including not only advanced economies but also nations like Brazil and Colombia. However, in many poorer countries, emissions are still rising faster than economic growth. Progress varies significantly across sectors. The power sector is transforming most rap idly, as solar and wind energy become increasingly affordable and widely deployed. In 2025, clean energy additions in China and India were sufficient to offset rising electricity demand and limit emissions growth. Globally, clean technologies now prevent around 2.6 billion tonnes of emissions each year. Without them, emissions growth would have been nearly three times higher. This marks a clear structural break. Electricity generation, once heavily dependent on coal, is moving towards cleaner sources. In parts of Europe, renewables now account for nearly half of electricity generation. However, other sectors remain more challenging. Transport emissions continue to rise as more people travel and own vehicles. Heavy industries such as steel and cement still rely on coal and high-temperature processes. Buildings require heating and cooling, often when energy demand is highest. These sectors will require new solutions, including electric vehicles, hydrogen fuels, and improved material recycling. Progress is slower, but momentum is building. Electric vehicles are increasingly replacing internal combustion engine (ICE) vehicles, and new battery technologies are emerging. The evidence is clear: clean technology works, and decoupling is already happening in many parts of the world. Advanced economies and regions within China demonstrate that it is possible to grow while reducing emissions. For lower-income countries like Nepal, the challenge is different. They need space to develop but must avoid repeating the high-emission errors of the past. Without strong support, their development could lead to rapidly rising emissions. Learning from countries that have successfully decoupled growth from emissions will be essential. What should be done? First, governments must implement strong and consistent policies. Carbon pricing, clean energy subsidies, and efficiency standards can be highly effective when properly enforced. Second, advanced economies should support developing countries with finance and technology to enable clean development. This is a shared investment in global climate stability. Third, opportunities such as falling energy costs and technological breakthroughs should be used to accelerate the transition to clean energy. The good news is that the necessary technologies already exist: efficient solar panels, electric vehicles, advanced batteries, and smarter energy systems. The challenge lies in scaling them up. Political will and investment still fall short of what is needed, and emissions are not declining fast enough to meet global climate targets. The record-high emissions of 2025 should serve as a warning. The emerging structural shifts in many countries and sectors show that change is possible. If governments build on these successes and act decisively, the world could reach a peak in emissions within the next decade Thakuri is an Associate Professor at the Central Department of Environmental Science, Tribhuvan University, Kirtipur