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Are We Achieving Green Growth?

by Oliver Ironside Africa Americas Asia Europe Oceania May 10th 202110 mins
Are We Achieving Green Growth?

Are we on track to achieve green growth? How feasible is it in the future? And are there any alternatives out there that we should consider? 

In the age of climate action, green growth is the key policy objective of many countries and organisations such as the OECD and the UN for both economic and environmental success. It is highly attractive to governments and leaders around the world as it appears to offer a win-win scenario: continued economic expansion (that our current system cannot function without), environmental sustainability, as well as limited disruption to the way we live our lives. 

The benefits of this objective are clear; however, green growth rests on the assumption that we can achieve a state of exponential GDP growth without (negative) environmental impacts. Not only this, but that we can achieve this state rapidly, globally, and permanently, as time is quickly running out. In essence, this assumption requires rapid global decoupling between GDP and environmental impact. Studies have shown there is no empirical evidence of global absolute decoupling happening at present, and no indication that we can achieve it in the short time we have left to avert an environmental crisis. 

So, what will our future look like? Can we achieve economic growth while living within our planetary boundaries, or is it time to rethink the goal of green growth?

Green Growth and Decoupling

Green growth has differing definitions, but broadly it is economic growth that limits or ideally reduces the negative environmental impacts caused by growth-making activities. More ambitious would be ‘growth that reduces, ideally to zero, the negative environmental impacts’ given the scale of environmental problems we have today. 

Historically, we have relied on harmful industries such as fossil fuels to spur growth, leading to emissions, pollution and the environmental crisis we face today. To achieve green growth, economic growth must be ‘decoupled’ from resource use, emissions and other negative environmental impacts. There are two types of decoupling: relative decoupling, which means a slower increase in resource use while we keep growing (less resource per $ of growth), and absolute decoupling, which means resource use decreases as we continue to grow.

Given the urgency of our current environmental crisis, it is clear that we must rapidly reduce resource use and environmental impacts, not only limit them. Net-zero targets set out by the Paris Agreement require reduction of emissions to zero. Large-scale absolute decoupling is necessary, and fast.

You might also like: Sea-Level Rise From Melting Land May Double if Paris Agreement Fails

Decoupling types, relative, absolute, and sufficient absolute, with increasing GDP [Source: Raworth 2014]

To achieve absolute decoupling, growth must result in less resource use, emissions and other environmental harm. In theory this can be done via a rapid green transition with an expansion in clean energy, electrification of transport, changing diets and adoption of new technology. Service economies (like finance, consulting, insurance, etc) that don’t rely heavily on physical resources should speed up decoupling. Efficiency gains are also useful for the areas of the economy that are hard to transition away from.

To maintain low emissions in the future while still achieving growth, a move to an ‘experience economy’ and embracing the digital world where we produce and consume less material goods may be the answer. 

Are We Decoupling So Far?

In the 20th century we were only able to achieve relative decoupling at the global level. GDP grew by 3%, compared to material footprint, a consumption-based measure of resource use that is widely used as an indicator of environmental harm, which grew by 2%

However, UN Stats show that global material footprint has outpaced GDP since the turn of the century, meaning there has been no decoupling at all since then on a global scale. 

Two academic articles from 2020 (here and here) summarising over 1000 academic studies, shed more light on the progress of decoupling at the global and national level. Their general conclusions of past decoupling are: 

Specifically, the articles point to the lack of accounting for embodied emissions from imports, as Vaden et al explains, “the general thrust … is that when trade and consumption-based indicators are taken into account the recent (post- 2000) global trend is a recoupling of material use and GDP. Notably, none of the reviewed articles presents evidence for global, economy-wide absolute decoupling, either with regard to environmental impacts or resource use.”

Finally, the T. Vadén et al. article concludes that “in the absence of robust evidence, the goal of decoupling rests partly on faith.”

Can We Decouple in Time?

Empirical evidence shows that we are not achieving green growth, which certainly casts doubt on whether it is achievable in the future. However, it doesn’t necessarily mean that we can’t. As the article above mentioned, ‘the goal of decoupling rests partly on faith’, this is faith in our innovative and creative capability to adapt and adjust. When it comes to the goal of green growth, it is important to consider not only whether it is possible, but whether it is possible in the time we have left to avert environmental ruin. 

The two articles discussed both project the empirical evidence forward to the future and explain that the shortage of past decoupling is reason to question our ability to achieve sufficient decoupling in future. Further, both articles present additional actions to green growth such as well-being and sufficiency-oriented strategies.

To assess the question of whether we can decouple in time, this paper summarises global scale models built to predict the capability of technical innovation and government policy on future decoupling. Only three such models exist for resource use, each with multiple scenarios of differing optimism. Various policy and technological assumptions are made, such as carbon taxes, uptake of resource efficiency best practices, and material efficiency improvement, to simulate future scenarios. Worryingly each of the models show only relative decoupling by 2050 in their most optimistic scenarios. The most pessimistic is the UNEP report from 2017 that explains their results by the ‘rebound effect’ where efficiency gain leads to cheaper production, lower prices and therefore increased quantity consumed. The authors of the UNEP report state that “resource efficiency alone is not enough. Productivity gains in today’s linear production system are likely to lead to increased material demand through a combination of economic growth and rebound effects.”

The authors of the above paper also review green growth from a CO2 emissions perspective, reviewing the rate of decoupling required, as well as unpacking the pathways assumed by the Intergovernmental Panel on Climate Change (IPCC) based on 1.5C and 2C targets. The IPCC’s Fifth Assessment Report (AR5) includes more that 100 mitigation pathways compatible with 2C heating, all of which are green growth scenarios and are generally heavily reliant on bioenergy with carbon capture and storage (BECCS) and other negative emissions technologies. According to the authors, BECCS is highly controversial among climate scientists as it is unproven at the scale required and allows governments to delay reducing carbon emissions. The scale of BECCS required in the AR5 pathways would require an area ‘two to three times the size of India’ raising issues of competing with food production and land availability. The reliance on BECCS stems from the fact that the pathways predict an overshoot of emissions, that require us to remove carbon from the atmosphere to prevent permanent overshoot. The authors also conclude that the rate of decoupling required with 2-3% growth is incompatible with best case assumptions of what is possible without BECCS. Therefore, the hopes of green growth from a climate perspective rely on unproven negative emissions technology.

A 2019 report called Decoupling Debunked lists seven major reasons to be sceptical about sufficient decoupling happening in the future. Among these are the aforementioned ‘rebound effect’; ‘cost shifting’ where increased imports hide the actual environmental cost of consumption in one country; and ‘the underestimated impact of services’ as service economies often add to material economies, not substitute them. Similar to the review articles above, the report calls for complementing efficiency-oriented strategy with sufficiency policy, steps to living on only what we need, and seeking alternatives to green growth.  

A 2020 article titled ‘Feasible Alternatives to Green Growth’ developed a model of France and studied future scenarios where green growth, social policies and degrowth were adopted. The article concludes that technological enhancement achieved in the green growth scenario causes worsening inequality, which is corrected for in the other two scenarios with social policies, leading the authors to conclude that “equivalent reductions in emissions can result in radically different consequences in terms of income distribution and employment.” They also conclude that green growth suffers from a paradox where “the effectiveness of GHG reductions depends on the failure to promote GDP growth.” In other words, ‘green’ only works without ‘growth’, and vice-versa. Ultimately the analysis concludes that radical social policies such as jobs guarantees and working time reduction are critical to keeping inequality and unemployment in check as we tackle the climate crisis, regardless of our approach to growth. 

The Green Growth Utopia

It is easy to understand why governments and leading institutions such as the UN are still pursuing green growth, despite the lack of evidence to support it. It requires the least amount of change. All it needs is a few incentives and innovation will do the rest. We can go on living as normal, perhaps with an electric car, while technology saves us.

While a green growth utopia of a technologically advanced, digital age sounds attractive, the evidence shows that prioritising growth makes staving off environmental ruin even more difficult than it already is, if not impossible. Perpetual and exponential growth means more emissions which means even more decoupling is required. Unfortunately, even green technologies (solar, batteries etc.) require material usage and cause some environmental harm. There doesn’t appear to be a silver bullet to achieve green growth and sufficient absolute decoupling in the time we have left. So, what do we value more: economic growth or the planet?

Beyond Green Growth 

It is important to note that none of this evidence says that decoupling and efficiency gains or technological progress should not be sought after. These are still necessary components to achieve a long-term sustainable level of resources use, but on their own are not enough. Instead, they need to be combined with a move towards ‘sufficiency’, particularly in wealthy nations. Sufficiency means we actively adopt low-impact lifestyles and live on what we need. It will mean slowing down and living more simply. This may sound like a retreat to the stone age, but as this paper titled ‘Providing Decent Living With Minimum Energy: A Global Scenario’ suggests, we can all prosper with much less energy use. In fact, the authors state that ‘sufficiency is far more materially generous’ than you may think. They calculate that with both advanced technological progress and sufficiency policies total energy can be reduced to 1960s levels in 2050 while still providing a decent living for all, despite a population three times larger.

Sufficiency would drastically improve our chances of averting the looming environmental crisis. Another benefit is it opens up exciting opportunities to rethink our societies, such as the combination of sufficiency with well-being to provide social benefits on top of the obvious environmental benefit.

This combination is exciting and possible, providing a real chance to change our societies to be simpler, happier and more resilient, while enabling a healthier planet. It is possible because pursuing sufficiency will require fundamental changes to our societies, including abandoning economic growth. The necessary changes offer us a reset and a chance to change our societies, hopefully for the better. In fact, sufficiency may not be possible without a well-being strategy, as we have all seen the damage done to people’s livelihoods by a recession, most recently seen with the COVID-19 pandemic. Sufficiency coupled with well-being, such as the framework offered in Raworth’s ‘Donut Economics’ offers a compelling alternative to green growth. 

Steps to Sufficiency and Well-Being 

A good demographic to start in the pursuit of sufficiency would be the wealthy. As Oxfam has noted, the global richest 1% of people cause double the emissions of the poorest 50% through high-consumption lifestyles. Tax on unnecessary luxury goods (SUVs, superyachts, etc.) would be a step in the right direction. A global wealth tax would be another crucial but politically difficult solution. 

To maximise well-being with less consumption and production, many social policies such as job creation in socially beneficial industries (e.g. healthcare and education), universal basics (income and services), reduction in working hours and a Green New Deal without growth will have to be on the table. A shift from economic efficiency to resilience will enable societies to downscale safely without the problems that a recession currently brings. Steps such as expanding the care and community economies will unlock this shift. Societal change on this scale will be tough, and grassroots movements will be pivotal to catalyse action. 

The Wellbeing Utopia

The goal of sufficiency and wellbeing strategies is a healthy and resilient planet inhabited by healthy and resilient societies, where we can work less, consume less, spend more time in leisure, engage in the caring and community economies and ultimately thrive, with much less environmental impact.

Sufficiency combined with policy to enhance well-being is the real win-win opportunity we can grasp from the environmental crisis.

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