Right before the recent UN climate change summit and shortly after the Leipzig Degrowth-Conference, international media, governments and the United Nations enthusiastically welcomed a new report entitled “Better Growth, Better Climate” and trumpeted its central message around the globe: that economic growth and tackling climate change can go hand in hand.
While the report, released by the Global Commission on the Economy and Climate, is supposed to drive climate-action by world leaders, business executives and investors, critical scientists fear that its central message will open the door for business-as-usual approaches and play down the urgency of immediate and far-reaching action.
Accordingly, University of Melbourne´s Samuel Alexander points out that “while the report has some merit insofar as it highlights the importance of energy efficiency, pricing carbon, investing in renewable energy, it fails miserably to justify its core conclusion.”
The report fails miserably to justify its core conclusion
He argues that analyses of various carbon budget scenarios show that “the developed nations must reduce their emissions by 8-10% every year over the coming decades, in order to keep within their fair share of the global carbon budget. However, Nicholas Stern – who chaired the Economics Advisory Panel in the ‘Better Growth’ report – has stated that emissions reductions of more than 3-4% per year are incompatible with economic growth.”
“We simply can’t cut emissions by 8-10% per year – as the carbon budget says we must – purely through energy efficiency and transitioning to low-carbon energy, especially if we keep growing our economies. Such significant emissions reductions will also require us to use considerably less energy. And because energy use and economic activity are intimately related, less energy means less production and less consumption. It therefore follows that developed nations should immediately give up the pursuit of growth and initiate a strategy of planned economic contraction – or degrowth – with less energy and resource use.”
“Fortunately,” Alexander adds, “the extent of wasteful overconsumption in the developed nations means that degrowth can actually be in our own interests, if we manage the transition wisely and equitably.”
It ignores the implications of its own GDP critique
Alexander sees another flaw of the report “in its failure to appreciate the implications of its own critique of GDP. The report wisely points out the gross limitations of GDP as a measure of progress, and calls for more inclusive accounting metrics to be used, such as the Genuine Progress Indicator. These ‘alternative indicators’ to GDP attempt to measure the true costs and benefits of economic activity – rather than simply measuring the total monetary value of domestic product. But the studies that have used the Genuine Progress Indicator radically undermine the continuous pursuit of GDP, because they show that GDP growth in the developed nations has become ‘uneconomic’, in the sense that the costs now outweigh the benefits. This critique of growth supports the more general ‘limits to growth’ analysis.”
He concludes that “growth fetishism will lead directly to a carbon budget blowout, and that means a world increasingly unsuited for human inhabitation. Climate stability demands nothing less than a wholesale economic paradigm shift – moving beyond growth and into a culture of consumption based on sufficiency.”
André Reichel, professor at the International University Karlsruhe, Germany, has another take on the report and emphasizes that the era of growth has come to an end anyway.
The era of growth as come to an end
“When looking at the ‘Big Four’ economic regions of the planet – the EU, the US, China and Japan, making up for almost 60 per cent of global GDP – we see a lost decade in Europe, recovery in the US almost over, diminishing growth rates in China, and Japan on the brink of state bankruptcy. Looking beyond to the other supposedly emerging ‘powerhouses’ of global GDP growth, we see a faltering Brazil, a Russia in reverse, leaving all hopes to India, but with huge demands on (resource-intensive) infrastructure and education spending.
The general outlook of global GDP growth, not just in relative percentage, but in absolute additional real income generated, is grim. Even the OECD has to concede that future global growth rates in the so-called developed world will more like be between 0.5 an 1%, with global growth not much more than 2.5 per cent. According to the scenario analysis from Jørgen Randers serious, global GDP growth will also be more likely below 2 per cent, somewhere in the range of 1 to 1.5 per cent.
All these outlooks point into a direction of a radical change within the fundaments of economic action. The growth era we are used to is about to end – mostly for economic reasons as portrayed by Robert J Gordon of Northwestern University for the US, but also due to serious environmental limitations and a squeeze on resource prices, directing more and more investment into resource exploration and extraction as can be seen by the investment folly of fracking. Especially the latter development is perfectly mimicking the collapse dynamics of the World3 model used in the original ‘Limits to growth’ study in 1972, a model whose business-as-usual scenario discomfortingly fits actual data.”
A post-growth transformation will be inevitable
Reichel concludes saying “In one way, this is good news for the climate: less economic output always equals less carbon emissions and other ecological impacts. However, the current economic system and its associated political systems – like taxation, social security, pensions, healthcare – are inherently growth-dependent. Postgrowth today manifests itself as crisis, unemployment and civil unrest. The policies within ‘Better Growth, Better Climate’ do not change anything about that. What is needed desperately is a ‘Plan P’: growth ‘agnostic’ policies for a postgrowth environment.”
He explains: “The ‘Degrowth’ movement encapsulates some of this by emphasizing redistribution of income, wealth, and paid work via reduction of working hours; by re-evaluation the means of production towards reproduction, towards re-use and repair, and more localized subsistence; a stronger focus on social cohesion, social capital and alternative monetary systems; a circular economy running on renewables, but with a drastically reduced physical scale; and technology being embedded into deliberate democratic processes. Unless our policy reports become agnostic about growth – it might occur, it might even bee ‘green’, but we cannot be sure and therefore cannot rest our hopes on it – we will replicate our crises and endanger the well-being of all humanity today and in the days to come.”
“The report is an assault on the need for change in our political and economic systems”
Clive Spash, chair of Public Policy and Governance at Vienna University of Economics and Business, considers the report an “assault on the need for radical change in our political and economic systems”. He says “the arguments presented are an apologia for the continuity of a capital accumulating political economy that has reeked environmental destruction and not addressed poverty. The rhetoric is one of concern for climate change and the poor, but the essence is to maintain business as usual in a structurally unchanged political economy of war, imperialism and exploitation.”
While Spash acknowledges that “the report recognises the need for mitigation and actually preventing greenhouse gases from getting into the atmosphere in the first place”, he finds it “backs away from strong mitigation at various points, pushing research and development and end of pipe techno-‘solutions’, like carbon capture, so that the strong mitigation statements get watered down.”
In line with this, he criticizes the reduction and conversion of the terms of debate into mainstream economic thinking: “Strong uncertainty becomes weak risk assessment, cost shifting becomes externalities, nature becomes capital, poverty becomes income level, intergenerational ethics become discounting, and loss of life becomes lost GDP.”
Essential issues are omitted
“The total lack of any mention of the power and influence of the multi-national mining and resource extracting corporations or their role in obstructing policy on greenhouse gas mitigation is astounding”, Spash explains. He also misses “the recommendation of any hard-line policies to address the phase out of coal, gas and oil”, as there is “hardly any mention of oil and none of the political reality of current government actions, backed by military concerns over security and demands to maintain the fossil fuel industry.” He adds: “there is no discussion of wars, military intervention or land grabbing and no mention of tar sands, pipelines or fracking; there is a brief mention of shale gas and the positive contribution to the energy portfolio offered by developing “unconventional oil and gas”.
“The analysis is amazingly poor given the supposed body of experts”
He finds the overall analysis “amazingly poor given the supposed body of experts, as there is no mention of energy return on investment. That is the simple point that more and more energy is being used to get less and less back. The double talk of increased efficiency and productivity and falling prices fails to even address the basic physical reality. Similarly, the rebound effect from lower prices increasing demand is just dismissed.”
Spash further criticizes that, apart from energy, “the report makes no mention of other low entropy sources essential for the growth economy, namely minerals” and adds: “They also happen to be finite and some of them very rare. Yet there is not one single mention of any issues relating to the materials necessary to make Green Growth operational, let alone ‘sustainable’.” He adds, “No mention of airplanes, airports or flying, not to talk about the wealthy, excessive consumption, income inequity, the super rich or redistribution.”
The ultimate objective is growth, not tackling climate change
He concludes: “Well, apparently the ultimate concern is not the threat to people and planet but to the growth economy itself, and that is what needs protecting. As the report makes clear:
“In the long term, if climate change is not tackled, growth itself will be at risk.”
Niko Paech, professor of Economics at Oldenburg University and Germany´s best-known advocate for a post-growth economy, sees green growth and climate protection as principally incompatible. He argues that the idea of decoupling economic performance from environmental impact – the basis of any green growth strategy – will fail as long as it is possible to use the growth-induced additional income for “purchasing any goods that are not completely dematerialized.”
Further to the above, there are many others who also analyzed the report with critical eyes: Tim Jackson, author of “Prosperity without Growth” refers to its core message as “dubious claim that we can eat our cake and still have it”. Jeremy Williams, co-founder of the Post Growth Institute, writes: “The Commission hasn’t been able to prove that we can have economic growth and avoid dangerous climate change. All they’ve said is that you can have economic growth and ‘action on climate change’”.
So other than suggested by Sir Nicholas Stern, co-author of the report, the controversy around economic growth is no “pissing contest”. According to Naomi Klein, it is the core conversation of our time and will determine our and our children´s future: To conclude with Stern´s own words: “Are we going to look our grandchildren in the eye and tell them that we understood the issues, that we recognised the dangers and the opportunities, and still we failed to act?”