Consuming less or consuming differently?
“We must not consume, we must consume less,” said a famous Flemish personality last week on a well-known TV programme. That something needs to change in the way we consume, because of the climate problem and our use of raw materials, is beyond dispute, but instead of talking about ‘consuming less’, we prefer to talk about ‘consuming differently’: in other words changing our consumption. Are we going to throw in the towel in the face of the enormous climate challenge, or take up the gauntlet to achieve ‘Green Growth’ in which we produce and spend our money differently. It is an expression of faith in human ingenuity and responsibility.
Uncoupling
An interesting way to look at the challenge is via a redefinition of the production of greenhouse gas (GHG) emissions (see box). GHG and its increase are the result of 4 factors: there is the population, the wealth of the population (the wealthier, the greater the emissions), the energy required for growth and the emission levels of energy. Let us take population growth and wealth (GDP per capita) as a given. GHG emissions increase and have to be compensated by the other two factors (energy use + emission levels = GHG emissions per unit of GDP). This requires a complete decoupling of GDP and GHG: GDP continues to rise but GHG emissions fall. Is that possible??
?Until now, GHG emissions per unit of GDP (-1.8% per year) did not fall enough to compensate for the increase in global GDP (+3.8% annually). To limit global warming to less than 2 degrees Celsius, annual GHG emissions must fall by 45% by 2030, go to zero by 2050 and be negative thereafter. Without a cap on population growth and projected welfare gains, this means an annual decline in GHG emissions per unit of real GDP of 9%, a five-fold increase over the contraction of the past 25 years.
Consume less
Impossible, say the No Growth group. To meet the targets, global growth and consumption must be limited or kept flat. The consumption of materials and energy, and the physical size of the economy must stop growing. Is this realistic? No, and for five reasons. One, the world needs growth. Families, businesses and governments have taken on debt because they are counting on growth in income, profits and tax revenues. Defaults increase during recessions so one can only imagine what would happen in a social model based on no growth. Two, in such a world, a huge shock would await investors who are trying to have enough capital for when they retire: stock prices would fall because there is no more growth, and then there is a trek through the wilderness in the absence of attractive investment opportunities. Three, there are huge questions marks over the viability of a no growth strategy. If only one country wants to do this, companies — and their employees — will move to neighbouring countries. Four, it is highly doubtful whether there is any public support, because it amounts to freezing what exists in terms of income and assets. Effort, hard work and the urge to innovate are no longer properly rewarded. Five, there is no international support for this either. We cannot expect governments of developing countries to deprive their people of the hope of increasing their prosperity, and similarly, would Western countries accept an even greater contraction in order to allow the developed countries to grow faster?
These considerations do not detract from the fact that the no growth group accuse the 'Green Growth’ camp of dreaming. According to the International Energy Agency (IEA), most technologies already exist to ensure the reduction of emissions by 2030. However, capital investment in energy will have to more than double from $2,000 to $5,000 billion per year and stay at that level until 2050. Technologies that are not yet mature, such as carbon capture and storage, green hydrogen and advanced batteries, will account for almost half of the emission reductions between 2030 and 2050. But given the uncertainty surrounding their economic viability, they should not be taken into account, according to the No Growth group. There is, therefore, no other option than to limit growth. However, this stifles innovation and with it the opportunity to deliver solutions using new technologies.
The IEA agrees that significant efforts are required to get these technologies up and running by 2030. However, one positive message from the Covid period should not be forgotten: technological innovation has made working from home on a large scale possible and, more generally, when enormous research and development funds are made available to solve a problem, human ingenuity knows no bounds.
?Consume differently
An absolute decoupling of growth and GHG emissions is not an illusion. In the European Union, CO2 emissions fell by 0.8% per year between 1990 and 2016, according to think tank Bruegel. GDP growth was lower than the decrease in greenhouse gases per unit of GDP. The decreasing energy levels required for growth, in particular, contributed to this, more than the emission levels of energy. This is a bit strange, because in the slightly longer term it will be energy that becomes completely carbon-free rather than growth becoming ‘energy-free’. The dramatic fall in the price of renewable energy technologies suggests that the accelerated decarbonisation of energy is possible. But again, massive investments in storage capacity and distribution are needed. And a change in behaviour, for example by making that trip to Barcelona by train instead of the much more polluting plane.
The same behavioural change must also ensure less energy-intensive consumption: more use of public transport, a larger sharing economy for cars and housing, more recycling. A changing economic structure towards a more intangible service-oriented economy — for example, mobility as a service — will also help. The carbon intensity of our food must also be reduced. Agriculture accounts for almost 20% of global emissions. But the technological cow has not yet been invented, with CO2 emissions per kilo of beef barely decreasing by 0.4% per year since 1990. Beef accounts for one third of total emissions from food production. Adjusting our diet and consuming a smaller share of meat is already a big step forward. Pricing plays a key role in influencing behaviour: the climate footprint of what we buy, how we move, how we travel is still not sufficiently reflected in the cost of the product or service. As is often the case, there is a huge challenge in implementing this because low-income families find it harder to bear such a burden. Another factor that can be worked on is awareness, something we have learnt since Covid-19 came into force: frequent information about new infections, signs indicating mouth mask requirements, etc. When we buy something, let us be clear about its carbon footprint.
The path of ‘Green Growth’ is one of massive investment, belief in new technologies and a change in our behaviour, based on awareness as well as price signals. As we learned from our parents, where there is a will there is a way.
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