Is green growth possible?


This article is part of our special report Energising Tomorrow’s World.

SPECIAL REPORT: Clean tech jobs to power green growth is considered a no-brainer by progressive policy makers, NGOs and businesses, and the idea forms the core of the UN’s Year of Sustainable Energy For All (SE4ALL). But some economists, academics and environmental thinkers increasingly question its central premise.

Critiques of ‘green growth’ have often been articulated by business lobbies opposed to climate action, but also by environmentalists and socialists, who argue that infinite growth is impossible in a finite natural world.

One EU official speaking to EURACTIV on condition of anonymity said that achieving the emissions cuts needed to contain global warming to the UN’s 2 degrees Celsius target, while maintaining growth was an “outlandish” notion.

“If you want growth in the way that we define it as exponential – a year-on-year increase – and project it into the future, then you have an incredible gap between the increase in total economic output and the decline in total emissions that you rely on,” he said.

Indeed, many climatologists now see the 2 degrees target as doomed.

Last month, a report from Germany’s green Heinrich Böll Foundation argued that increased energy savings do increase productivity and result in income gains, but that these in turn also stimulate demand. 

Because this demand will be met by a still mostly-carbonised grid, ‘Green Growth Unravelled’ contends that the “fatal fallacy” of this kind of green growth is that its ‘rebound effects’ will actually increase CO2 emissions. 

For instance, increased airplane fuel efficiency may lower flight prices and lead more people to take long-haul holidays.

13 types of rebound

The Böll study considers 13 different kinds of rebounds – financial, material, psychological – and concludes that “energy efficiency improvements in an economic system will on average yield half the theoretical savings potential” and in some cases less than that.

Efficiency standards for appliances or production processes have the greatest rebound potential, while eco-taxes potentially harbour the least, the study finds. 

But the rebound theory has many environmental critics, who argue that the effects of rebounds are trivial, often positive, and decline over time.

In practice, critics of green growth sabotage the ‘only game in town,’ they say, not least because the Obama administration made a strategic decision in 2009 to downplay climate change statements in favour of green jobs advocacy.

“As the world goes through an economic recession, an efficient energy market can help wealthier nations recover and developing nations grow, by allowing the poor access to goods and services that they previously couldn’t have,” Marina Migliorato, head of corporate social responsibility for the Italian energy giant, Enel told EURACTIV.   

Universal energy access

Leading economists say that the SE4ALL goal of providing universal energy access to 1.3 billion people by 2030 need not greatly increase carbon emissions.

The International Energy Agency World Energy Outlook Report in 2011 argued that because of the low level of energy per capita in the developing world and the relatively high proportion of renewable energy involved, overall emissions rises would be limited.

The IEA estimated that the UN’s target would require an additional 220GW of electricity and so increase global CO2 emissions by a modest 239 million tones of CO2 in the year 2030.

“The biggest part of emissions comes not from Africa but from us,” Christophe Yvetot the representative of the United Nations Industrial Development Office (UNIDO) to the EU told EURACTIV.

Under the IEA’s SE4ALL scenario, 45% of additional electricity would be generated and delivered through existing national grids and 36% by mini-grid solutions. Around 60% of this total would come from fossil fuel sources, particularly coal. Incentives would thus be offered to help emerging economies use locally-based renewable energy sources, Yvetot said.

Rurally-located off-grid solar solutions such as panel systems can provide electricity during the daytime, without themselves increasing carbon emissions, and are expected to make up 20% of the SE4ALL total, according to the IEA.

“Maybe for the poorest of the poor we can support them going green,” Yvetot said. “They won’t be able to do it [on their own] in all cases so at the same time those polluting more should make the structural changes to move to carbon-free industries.”

“Apocalyptic implications?”

But Ulrich Hoffman, a senior economist at the United Nations Conference on Trade and Development told EURACTIV that this was irredeemably optimistic and the emissions increase from such a scenario would be higher than 20%.

GDP-per-capita growth and a predicted world population leap from 7 billion now to 9 billion in 2050 would make a decoupling of growth from CO2 emissions all but impossible, in his view.   

“With the benefit of hindsight, the arithmetic of growth does not suggest there are cases of such decoupling in absolute terms [having happened before],” he said, speaking in a personal capacity.

The “mammoth challenge” facing the planet could be illustrated by the fact that annual efficiency gains of 0.7%-1% over the last 25 years would need to increase ten-fold every year to 2050 to contain global warming to 2 degrees Celsius, he said.

“A purely arithmetical point of view would tell us that the techno fix can’t work,” Hoffmann added.  “I’m afraid to say that if trends continue unabated we are looking at climate change of between 4-6 degrees, which will have apocalyptic implications, and those who have contributed least to it will be the first and worst affected.”

Businesses which have begun moving away from fossil fuel investments, such as Shell, stress the potential for investment in the developing world to lift people out of poverty.

“In the next 20 years, demand growth is not going to come from Europe but from the world population going from seven to nine billion people, and three billion more coming out of poverty and joining the middle class,” Dick Benschop, Shell's Netherlands Gas Markets vice president, told EURACTIV. 

“I describe it as the moral demand for energy,” he added. “We have to cater for that growth with cleaner energy so that people can read at night and educate themselves away from biogas cooking, buy their first motorbike, fridge and everything, that’s where demand sits.”

“Not precisely a barrier”

However, Kandeh Yumkella, the chief executive of SE4ALL and director general of UNIDO in overall charge of the SE4ALL initiative acknowledged the rebound problem in 2011, when he signed off on a UNIDO energy efficiency report.

This paper listed the various energy savings policy ricochets  that “must be taken seriously” but said that they were “not precisely a barrier” to adoption.

“Rebound effects may be mitigated by gradually increasing carbon and energy taxes or imposing increasingly stringent cap and trade schemes,” the paper explained.

The trouble is that these may be precisely the sort of measures that face the greatest political opposition and are thus least likely to be incorporated into climate initiatives

Both the SE4ALL and UNIDO's papers argue that efficiency efforts alone will not reduce emissions, and that analysts and policy makers need to keep their eyes on the potential rebounds.

The UN’s Sustainable Energy For All initiative grew up at the same time as the EU’s Agenda For Change (SE4ALL) initiative in the Autumn of 2011, and the two projects quickly allied their forces. The UN’s secretary-general Ban Ki-Moon put the SE4ALL project under the control of the United Nations Industrial Development Organisation (UNIDO) chief, Kandeh Yumkella.  

The SE4ALL 2030 goals are to double the rate of improvement in energy efficiency, and the share of renewable energy in the global mix, and to provide universal energy access to 1.3 billion people.

The UN declared 2012 as the Year of Sustainable Energy For All and under this rubric, birthing public sector initiatives such as the EU’s Energising Development and private sector projects such as Enel’s Enabling Electricity alike.

* 2030: Deadline for UN SE4ALL goals to be met

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