Why degrowth won’t solve climate change: the case for green growth economics

  1. There’s a big positive correlation between GDP and greenhouse gases emissions. As GDP increases, emissions increase too.
  2. The “rebound effect” of technological improvements, e.g. if we invent more fuel efficient cars, we will drive more and this will compensate for the technological progress in fuel efficiency.
  3. So far we only have been able to achieve relative decoupling, no absolute decoupling. While emissions per GPD decrease, the total emissions are still rising.
  4. Technology is progressing only incrementally and according to the law of diminishing returns. We already plucked the low hanging fruit.
  5. The current climate policies are green growth policies. These policies are ineffective in reducing emissions, so a radical policy shift toward degrowth is needed.

Climate change is already happening

Greenland ice is melting, the temperatures are at a record high, storms an forest fires are increasing, drought is happening, islands are drowning in 2019. So, climate change is already happening and it will continue to happen for the following decades.

Against degrowth 1 - The mathematics: why degrowth isn’t enough

We know in order to stop CO2 emissions, in 2050 the CO2 net emissions should be 0. Now let’s write some mathematical equations:

Against degrowth 2 - The discounting effect

We know money now is more worth than money in the future. Therefore damages of climate change in the economic models can be discounted to calculate damages in net present value. This discount rate is higher with a growing economy. By growing our economy the amount of damages relative to the gross domestic product will be less in the future. E.g. if economic growth is 3% in 24 years we will double our economy, thus a climate damage of 1 million $ would be relatively half than if we the economy didn’t grow. Climate damages in 48 years would be only 1/4.

Against degrowth 3 - Politics and enforcement

First, it’s highly unlikely a degrowth politican will get in power, as people generally like progress.

Against degrowth 4 - The financial system

Even if degrowth can somehow be enforced, this will collapse the whole financial system. The current financial system is based on that money now (e.g. 1000 dollar) is worth more than money in the future (e.g. 1000 dollar in the year 2030). In a degrowth economy, the real value of money now will be less than in the future, and thus nobody would want to save or rent out money. So, in a degrowth scenario all banks would collapse.

The case for green growth

OK, to stop climate change, we won’t be able to count on degrowth. So what are the green growth solutions? And how can the green growth theory be improved by providing answers to the criticism of the degrowth movement?

Green growth solution 1 - Stop delving fossil fuels

CO2 emissions are increasings mainly by burning fossil fuels. So the solution is quite simple: if we limit and eventually stop the delving of fossil fuels, the CO2 emmissions will dissapear

Green growth solution 2 - The carbon tax

Carbon taxes and emission trading systems are the most superior and cost effective climate measures that can be taken within a free market system. Taxes should not be used to stop people working and creating (as is now the case), they should be used to stop people emitting CO2.

  1. The consumption effect: carbon consumption will decrease and the economy will shift to less pollution markets
  2. The innovation effect: companies will spend money innovating because they get a competitive advantage by limiting their emissions
  3. The revenue effect: the government gets additional revenue it can spend on public investment

Green growth solution 3 — Public infrastructure investments

The better the economy, the higher tax revenues and the more possibilities we would have to invest in these public green infrastructure projects.

Green growth solution 4— Green innovation

Degrowth thinkers believe technology is only incrementally improving and the progress rate follows the law of diminishing returns. This is a false claim, technology is actually exponentially improving over time. E.g. there was far less technological innovation between 1900 and 1920 than in the period of 2000–2020.

Green growth solution 5- Personal choices

Our personal choices can also affect the CO2 emissions. As we encounter the effects of climate change more and more, we will be more willing to change their behaviour. We can move the economy by our own choices from unhealthy excessive meat consumption to more vegetarian diets, from energy consumption to energy savings, from many cheap Primark clothes to few durable clothes, from cars to bicycles…

Does green growth actually work?

Degrowth activists claim that current “green growth” policies don’t work. But are the green growth policies implemented? Currently there is no such thing as a global carbon tax. The emission system is working in Europe, but is too limited in scope.

Conclusion

Climate change is a real problem and should be solved as effectively as possible.

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