The idea we can hit net zero targets and grow the economy just isn't real and will hit the wall
Opinion: In the old days when “greenies” talked about “limits on growth” and “peak” this and that, they were commonly dismissed as being dreamers or living in Fantasyland. Gradually it has become clear that though some of the timing may have been wrong, the direction was right.
It turned out to be true that human activity could negatively affect planetary conditions. That there were economic and physical cycles that were far from virtuous. That physics was real and not just speculation. That much economics was more speculation than real.
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* Climate Commission report: What you need to know
* A pathway out of environmental collapse
Unfortunately this message has not reached many political or business leaders, despite degrowth or post-growth scenarios increasingly present in serious sustainability and climate crisis work around the world. This was apparent in our two main party leaders muttering incoherently about recycling in the context of a debate question on climate crises. They are living in Fantasyland.
Sometimes it seems that there is no contortion that will be not attempted by business or political leaders to evade having to leave Fantasyland. They will happily repeat slogans and agree targets which do not withstand serious scrutiny.
One of the many glaring holes is that resources are in effect unconstrained in this Fantasyland. No shortages, no climate-induced calamities, no wars. Just that sweet tune of market forces in the background
My favourite this week was an effort from business cheerleader-in-chief McKinsey. It contributed to its fellow Fantasy dwellers a study on how we could achieve net zero and acceptable global living standards this decade. (That is not a mistype, they are serious.)
In Fantasyland, where all dreams come true, finance and technology come to the rescue. Or in consultant speak “Productivity-driven growth lifts incomes and raises living standards while unlocking the financing capacity needed for a low-emissions future.” You can smell the rich stream of fees on their breath.
It turns out that to achieve this fantasy you have to replace poverty with something called “empowerment”. This state depends on where you live but ranges from US$3 per person per day in Sudan and Afghanistan to about $45 in Aotearoa.
Achieving these giddy heights alongside the net zero targets does not all happen in Fantasyland by 2030 but big progress is made. Not only is this good for those “empowered” by these improvements in income but, even better, “They would also become consumers, fuelling future growth”. (McKinsey Newsletter August 2023.)
Something like three percent a year GDP growth could do this in Fantasyland where, it seems, income and wealth distribution concerns have been solved. Of course this growth does make reducing emissions harder, this is not Perfectland. But fortunately all the additional growth produces financial power which somehow miraculously transforms from extractive and carbon intensive in focus to reducing emissions. It “could” happen. There is only an investment “gap” if all goes well of about $40 trillion.
You know where this comes from? That’s right – the public. All is okay in this benign fantasy.
Now you may like this story – like any good science fiction fantasy it “could” happen. Kindly you may say it is improbable. You would not bet on it. It's like letting a meth addict loose with your credit card.
One of the many glaring holes is that resources are in effect unconstrained in this Fantasyland. No shortages, no climate-induced calamities, no wars. Just that sweet tune of market forces in the background.
If, for a moment, you were tempted to believe it you might look at how things are actually going in the real world. Fortunately someone has.
A major quantitative study of high GDP per capita countries published this month in Lancet Planet Health shows that, contrary to this fantasy, GDP growth and meeting 2030 carbon targets are not proving to be compatible. There is some “green growth” but at a rate that would take centuries (which we do not have) to meet globally agreed carbon goals.
The study concludes “high income countries will need to pursue post-growth demand-reduction strategies, reorienting the economy towards sufficiency, equity, and human wellbeing, while also accelerating technological change and efficiency improvements”.
It should be emphasised that a post-growth future is far from one in which living standards automatically reduce. You can reduce carbon emissions for example simply by reducing GDP (as in the pandemic lockdowns). Rather this future targets efficiency and sufficiency rather than growth as such. GDP as a measure might increase or decrease or be abandoned altogether .
As it happened this week I was able to participate in a post-growth economy webinar organised by the degrowth consultancy Heliocene alongside sustainability practitioners from KPMG and Grant Thornton. One of the realistic parts of such thought, as it abandons Fantasyland, is that it does not focus simply on GDP and carbon in isolation. Rather it considers economic activity in a balanced way across the group of “planetary boundaries” that define the ecological crisis, especially the material footprint of economic activity.
It was heartening to see the interest and consideration of these issues. They are a huge challenge to a worldview based on eternal compounding growth in financial value. Fantasyland is very comfortable for those who run it. But it is not real and it will hit the wall. We are all better off to face that earlier rather than too late.
