Shift toward services industries won't end global warming

Sangwon Suh, an assistant professor in the University of Minnesota's bioproducts and biosystems engineering department, uses a “life-cycle assessment” approach to quantify the environmental effect of products and services, taking into account all the materials and energy used to create a product or a service throughout its life-cycle.

For this research, Suh analyzed 44 emissions generated by service industries – retail, hospitals or real estate, for example — which comprise more than 60 percent of the U.S. gross domestic product and are an increasingly large part of the U.S. economy. Some leading development economists pursue the idea that the total amount of greenhouse gases emitted will be reduced as the economy shifts toward more services and less heavy industry, because service industries are “cleaner.”

But Suh found that's not necessarily true. While service industries directly create only about 5 percent of total greenhouse gas emissions themselves, when the entire life cycle of a service-related product is taken into account, the picture changes dramatically. Such industries consume large quantities of electricity, natural gas, transportation, building installations and manufactured goods, which generate greenhouse gases.

In addition, while one service transaction may create only a small amount of GHGs, the increasing volume of transactions as the service industry expands means the total GHGs produced in the U.S. economy could go up.

Suh said his research shows that more practical and innovative solutions are needed to solve the global warming problem. Some economists are advocating that development is the answer to pollution and poverty in poor countries as service becomes the dominating sector in the course of development; if the United States, the most developed country in the world, is already the biggest greenhouse gas producer, then it doesn't make sense that development will be the answer to poor countries' problems, he said.