Diversifying the traditional way will have high environmental costs

This chapter highlights the historical perspective of successful economic diversification and its implications for energy use, emphasizing the need for CDDCs to transition to a low-carbon economy. It explores the relationship between economic diversification, growth, and energy intensity, using emissions-output elasticity estimates in an UNCTAD study. Even though the elasticity estimates need to be interpreted with caution, they provide information that emphasizes the challenge of balancing development goals with reducing GHG emissions. They also illustrate the complexity of the relationship between output and GHG emissions. It depends on the income level of a country, the type of commodity a country depends on, and the timeframe considered. The chapter suggests that CDDCs would need to put in place a green industrial policy framework that could help them to develop an alternative diversification pathway that is compatible with the energy transition imperative. The policy framework is the subject of chapter 5.

Sustainable Development Goals:

Affordable and Clean Energy

Decent Work and Economic Growth

Industry, Innovation and Infrastructure