Achieving net-zero CO₂ emissions can drive economic benefits

The 20th century was a fantastic century. Three quarters of the world’s population lived in extreme poverty in 1820, and by 2018, that share had fallen to 10% (share of population living on less than USD 2.15 per day). 

Economic growth is what made that immense improvement in people’s lives possible. That growth was generated by a number of factors, though two of the most important ones were the great advances made in transportation modes, including the wider use of jet engines for aircraft in the 1950s, and the prolific use of fossil fuels as a source of energy for nearly every industry. 

Now in the 21st century, we are still awaiting the broader commercialization of new forms of propulsion for aircraft, notably electric and hydrogen powered aircraft. But other forms of connectivity are now also contributing to productivity gains in addition to transportation connectivity, and they center on the internet and digital transfers. 

New economic infrastructure

Thanks to various developments, the composition of world trade is changing, and the share of services in global trade is rising. In fact, trade in services has grown from USD 7.1 trillion in 2005 to USD 17.6 trillion in 2022, including all modes of supply of services. On that definition, trade in services made up 42% of global trade in 2022, compared to 58% for goods. 

Limiting trade in services to those delivered cross-border, the value is around USD 6 trillion. On this more traditional basis, the share of services in total trade at around 22% in 2022 – still high given that services used to be considered as non-tradable. 

Growth in trade in services has played its part in shifting the whole global economy from “industrialized” to one that is dominated by services, which is now 67% of global GDP, more than double the share of industry at 29% in 2022. 

Manufacturing represented a mere 9.9% of GDP in the US in 2024, down from 28% in the early 1950s. China, too, is predominantly a service economy, with 55% of its GDP in this sector, compared to 37% in industry and the remainder in agriculture. Manufacturing has, of course, kept growing over time, but its growth has been outpaced by that in the services sector, and manufacturing’s share of the total has declined as a result. 

As tariffs are placed on goods, rather than on services, the diminishing share of goods in international trade and in the global economy does dampen the impacts of tariffs. However, if the trade war were to extend to services, the consequences would be amplified.

Hence, we recognize digitalization as a new form of “transportation” by means of which trade, particularly in services, can be amplified.

Rethinking energy for the next growth wave

On the energy front, we have exhausted much of the growth potential generated so very successfully by the production of fossil fuels. New energy sources are needed to make energy accessible to all, cheap, abundant, and renewable. 

The most formidable such energy source is of course the sun. In less than eight hours, enough sunlight hits the Earth to meet all of humanity’s energy needs for a year. But as long as we keep flying with jet engines, we still need liquid fuel for propulsion. 

The greatest challenge to realizing the energy transition in a systemic way is the vested interests in maintaining the status quo.

Such sustainable aviation fuels, or SAFs, can be produced from many origins, including waste and residue fats, oils, and greases, dedicated energy crops and other biomass sources, and synthetic pathways that use carbon dioxide, water, and renewable energy. This is where the next economic growth impetus will likely come from. 

We can manage our waste, improve our agriculture and soils, build energy independence, and reduce CO2 emissions, all at once. We can also generate jobs and prevent climate migration. Weening the global economy off fossil fuels and expanding the production of renewable energy in all its forms is the most formidable growth strategy any country can adopt today. 

Building a sustainable and inclusive future

Over 80% of global energy consumption relies on fossil fuels today, making this energy source wholly systemic. The solution to this problem must therefore also be systemic, and taking a segmented, per industry approach to the energy transition is sure to fail. 

Regarding the air transport industry, it uses only around 8% of global refined output (it is in the refinery that a barrel of oil gets transformed into different products, including diesel, and jet fuel). We then understand that if we manage to meet airlines’ renewable fuel needs, the vast majority of the benefits will go to other energy users.

The greatest challenge to realizing the energy transition in a systemic way is the vested interests in maintaining the status quo. Moreover, it will require putting the energy transition at the top of government agendas, and all parts of governments will need to collaborate. These are major challenges that could take the rest of the 21st century to work out. 

But if these challenges can be overcome, the 22nd century could be when we finally make it possible to leave poverty behind, without further deteriorating the quality of our home, Earth, upon which so much of our future growth depends.