Is green growth the future?

Kate Raworth and Sam Fankhauser discuss the limits of economic growth, the challenges of climate change and what a prosperous life really looks life

Ellen Halliday, deputy editor: We’re facing a huge challenge: to simultaneously make people’s lives better and address the causes and consequences of climate change. Is enough consideration being given to both these concerns?

Sam Fankhauser: I would start off by saying that planetary boundaries are real and they often get ignored. The reality is that economic growth isn’t something that will happen in a 4° or 5° warming world. I make a pitch for green growth, but that green growth isn’t deregulation-driven, it is growth that is well regulated and respects planetary boundaries.

Ellen: Kate, are we thinking enough about both making people’s lives better and securing a sustainable future?

Kate: Not at all. Economics is the mother tongue of public policy but it does not begin as it should, in every academic course, by recognising the state of humanity and the living world. In countries rich and poor, billions of people are unable to meet their most essential needs. 

And at the same time we are overshooting at least six of the nine planetary boundaries, on which all life utterly depends. The question that should be front and centre of not only economics courses, but courses of any policy focus, is: how do we create an economy, politics, business, a legal system, a media system that actually helps to turn this around?

Sam: This is something we agree on. The economics profession has really underperformed when it comes to the environment. That hasn’t always been the case—the economists of the 19th century were aware of environmental constraints and the role of the environment in prosperity—but it’s something that we have lost in economic thinking and have to relearn.

Kate: I agree. I half-jokingly say that if aliens wanted to take down life on this planet, they would only need to convince us to talk about the damage that we do to the rest of the living world as an “environmental externality”—just as most economists currently do. I think that is a devastating mindset to be taught to students in these times of crisis.

Sam: The externality concept is the language that decision-makers tend to understand. It nudges them in the right direction. But we do have to think in terms of systems rather than marginal changes, that’s absolutely right.

Ellen: In this country, the Conservative government is focusing heavily on conventional growth, as is the Labour party. But there are environmental voices starting to talk about this concept of “green growth”. What does green growth mean to policymakers and to both of you?

Kate: Are we talking about green growth globally or are we talking about here in the UK and in other high-income countries? 

Ellen: Do you think those are very different things?

Kate: I do. I think the prospects for where growth might occur and how green it could be are very different in different places. First, when I’m talking about “growth”, it’s the growth of GDP or national income, which is the total financial value of goods and services that are bought and sold in an economy in a year. For me, “green” has to mean whatever it takes for that country to come back within planetary boundaries at the speed and scale required to protect the life-supporting systems on this only known living planet in the universe. And I personally do not believe it will be possible for high-income countries to continue having a rising national income while coming back within planetary boundaries. So I do not believe “green growth” is the future for countries like the UK. 

In this country there are only a couple of politicians—Caroline Lucas, Clive Lewis—whom I’ve heard question, challenge and speak to a different vision. We urgently need to create a language that invites more politicians to speak to the vision that I’m sure they encounter on the doorstep: “My kids want a stable climate, we want healthy air, I want jobs and community and stability.” That is what we ultimately value and it’s not going to be wrapped up in a future that is labelled “growth”.

Sam: I would agree that the growth narrative in this country is simplistic, and misguided in the sense that it is about the growth of GDP as the value of the pile of things we produce. That’s not going to give us sustainability. But GDP can be measured in more than one way. It can also be the sum total of all the incomes that this economic activity produces—all the wages, rents, interest, taxes. That income is actually correlated with people’s prosperity and wellbeing. So when we promote growth, it should be growth of prosperity—I believe we can decouple our environmental footprint from our prosperity.

Ellen: Are there particular places where that’s happened? 

Sam: There are 20-plus countries now where GDP is still going up and carbon emissions are coming down. In the UK since 1990, emissions have come down almost by 50 per cent. GDP is up by something like 70 to 80 per cent. If you translate that into a carbon footprint, we need three times less carbon per unit of GDP than we did in 1990. That is an encouraging trend.

If you reduce the amount of carbon that is embedded in our energy and reduce the amount of energy per unit of GDP, that starts decoupling the GDP-emissions link. We’re getting out of coal, we will be getting out of oil and gas, renewables are getting cheaper. That transition is real and, I would argue, past the tipping point.

That’s important because projections say that we will need an electricity system twice the size of today, if we are to have a zero-carbon economy. We have to clean up the [electricity system] we already have and build another alongside it. That requires a huge amount of investment, which is easier if it comes from a sizable economy rather than from a shrinking one. 

Equally importantly, we cannot achieve this against the will of the people. We have to bring people with us. If you tell them a story that says saving the environment comes at the expense of their living standards, you will lose them. And then, all of a sudden—this is where I disagree with Kate—this becomes the slower route. 

Ellen: Kate, how do you respond to Sam’s idea that radically rethinking this idea of growth might be hard to sell?

Kate: There’s a generation that’s growing up being told that the climate is destabilised, that the Earth is dying, that they’ll never be able to afford a home. Today’s high-income countries are richer than any have ever been, and yet our politicians and economists say the solution to our problems lies in yet more growth, endlessly. There’s an insanity in that.

On decoupling, here we can agree there is some cause for celebration because it’s going to be essential. But the 20-plus nations that Sam mentions, over about 20 years, have achieved around 1 to 3 per cent annual reduction in their consumption-based carbon emissions. Here’s the rub: it needs to be falling at around 10 per cent per year. So it’s important to distinguish between absolute decoupling, which is simply carbon emissions going down, and sufficient absolute decoupling, which means coming back down at the speed and scale required to get back within planetary boundaries in time. And we are very far from that.

Think of it this way. If I say: “Hey, our train leaves in three minutes, we are going to have to sprint to make it”, and you break into a slow jog, then, I’m sorry, you might be running but you ain’t going to make that train. That’s what I feel like we’re doing in parliaments and institutions around the world when people are triumphing green growth. It’s a slow jog. And if we don’t get there, it’s not just, “Oh dear, we missed that train.” That was the only train, the only chance, and now we’re stuck in a hothouse Earth. The inadequacy of speed is critical to the point.

And here we’ve still just been talking about carbon, whereas we both agree that the Earth is a holistic, delicately balanced living system. We need the renewable energy revolution, but renewables require resources often mined in countries that are not only politically unstable and highly prone to climate-change impacts but home to many of the richly biodiverse ecosystems that are essential for life on a thriving planet. So if we focus only on decarbonising, and not on reducing total material demand, we risk destroying ourselves in another way. We simply have to transition away from thinking that we can grow endlessly. 

Ellen: What levers can we pull to change the way people think and governments build their economies?

Kate: In high-income countries like the UK, which massively and wastefully use energy and materials, we need to reduce energy and material use to make space for others whose share of energy and materials we’ve been over-consuming for decades. How do you do that? You invest in public health, education, transport and housing that are low-carbon and low-material use. We need to reclaim that concept of prosperity from thinking it means somebody’s income rising 3 per cent every year. We need to come back to what a good life is and how we provision for that collectively. To me, right at the heart of it is redesigning business itself, so that it is not driven to endlessly extract profit—which shows up as growth—but rather business is run to create value for communities and the living world.

Ellen: That’s a big challenge.

Kate: Trying to get green growth is, I think, a bigger challenge. I can’t see it working. There’s also an ethical issue in aiming for something with our fingers half-crossed, relying on technologies that don’t exist or the forerunners of them that look extremely unreliable and dangerous. There’s a huge obligation to take a precautionary approach, which is to not only decarbonise as much as possible, but to remove the inbuilt growth dependency that’s been written into our economies over the past 100 years.

Sam: Let’s bank a few more things that we agree on. We agree that wellbeing is the objective we should try to strive towards, rather than material wealth. We also agree that speed is absolutely essential. But that drives me towards using solutions that are on the shelf. Young people are a beautiful, empowering force for good, but we can’t wait for them to be in decision-making positions. We have to work around the mindset of the current decision-makers. For me, accepting that there’s room for growth and prosperity is an easier story to sell. It also happens to be true empirically. 

Also, who is that population group that will have to reduce their income? Who are the people who have to “degrow” as it were? It can’t be developing countries because they have a lot of catching up to do in terms of living standards and health and social outcomes. But when you look at this country [the UK], few people would say to those who are worried about the costs of living: “Take it on the chin, it was good for the planet.” The question is, whose income can we ethically reduce?

Kate: Worldwide, as national income rises from around $1,000 up to around $15,000 per person, it has a very strong correlation with better health and education. Beyond that point, factors other than average income start to determine whether people’s lives get better. So let’s talk about wealth. The richest 1 per cent of people own half the world’s wealth, and what generates their income is rent based on what they already own. The “Doughnut” (see glossary, p75) is about meeting the needs of all people, ensuring that everybody has decent housing, food, education, healthcare—and that means reducing the wealth of the super wealthy, the top 1 per cent.

Sam: I agree that income distribution, certainly in this country, isn’t fair and that affects cohesion and affects people’s wellbeing. People are happier in places that have a more equal distribution. But if you just think about the numbers of redistribution, you talk about [targeting] the 1 per cent, or if it is the CEOs, they are actually the 0.1 per cent. The 1 per cent in the UK probably have a median income of somewhere above £150,000 or so—huge amounts of money. But if you take a fraction of that away, and you share it with the other 99 per cent, it becomes small. 

Kate: Focusing on literally taking money from one pocket and putting it into another will inevitably seem inadequate. I’m talking about investing in a society that provides good health, good education so that everybody has a strong start in life. Predistribute the sources of wealth creation: transform the economy so that it doesn’t throw up these great inequalities in the first place. I’m also sure, Sam, that you don’t disagree with the importance of redistributive policies in such an extraordinarily unequal time.

Sam: No, I agree with that, and the plea for investment in all those good things. But for me, that plea of investment is a facet of what makes you grow, that grows you as a society.

Kate: Some sectors will grow but wasteful energy and material consumption just shouldn’t exist. Let’s edit out those sectors, like luxury air travel, and let’s edit in the things that we do want, such as effective public transport. Yes, we could go through a phase of seeing rising investment, and a nation’s GDP could grow as a result, but to me that’s a transitionary phase not a new paradigm.

I still hear from the mainstream, “don’t worry, we can still have growth, we’re still in a growth-based world.” I believe we’re not. In the future, GDP may go up or down or stay steady. The point is, it needs to become an adjustment factor, rather than what we’ve got, which is GDP being the headline that steers governments.

I personally don’t tend to use the word “degrowth” because I find it’s very often misunderstood or misused in public debate and that’s confusing. But when I listen to degrowth scholars such as Jason Hickel or Timothée Parrique define it, they don’t mention GDP or whether income is going up or down. I think you and I both want the essence of what they’re calling “degrowth”: for high-income countries to come back within planetary boundaries in a democratic way that meets the needs of all people. The difference is that you, Sam, believe it can be done with a growing GDP. They would say it can’t. I’m also hugely doubtful—and that is why we must end our economy’s structural dependency on endless growth. 

I agree there are many ideas on that shelf that we can use, such as employee-owned, cooperatively owned enterprises. And yes, we can agree that we need massive investments in renewable energy and in public transport—build those bike lanes, put in dedicated bus lanes, we need good railway systems so that people stop travelling by car—but I also think we need regulations and resource caps, because when energy is used more efficiently and therefore becomes cheaper, people just leave the lights on longer. This is the Jevons Rebound Effect and it’s partly why worldwide energy demand just keeps going up and up and up.

Ellen: We’ve talked a little bit about political possibility. At which level can the most progress be made? Are we talking about individual cities, states, nations? Can international organisations have an effective role?

Sam: It has to be all of the above. We have to push at that problem at the international level through the UN conventions, at the national level in this country, at the devolved levels and then go down to the cities and the communities. I think Kate is right, this is not something that will solve itself through voluntary action. This needs a strong state, this needs clear regulatory signals. 

Kate: After I wrote Doughnut Economics, politicians in local government started getting in touch and saying: “Could we do the Doughnut here?” Today over 70 city and regional governments worldwide are now engaging with the concept in practice. Amsterdam was the first and then they inspired Brussels, Barcelona, Copenhagen, Glasgow, Ipoh in Malaysia and El Monte in Chile. Cities become a site of experiment. And I think national governments can see that. I did a webinar with the New Zealand Treasury last week. We’ve had conversations with the UK’s Number 10 data unit, with the governments of Bhutan and Canada. Officials in the European Commission have been engaging with Doughnut Economics because they see it popping up in many of their biggest cities. “Living well within the means of the planet” is becoming of interest to nations because it’s been made safe, possible and aspirational by localities showing that people want it.

Sam: Two observations on decentralisation, because I grew up in Switzerland, which has thought the concept through to its logical conclusion. First, decentralisation in the UK is very dysfunctional, in the sense that cities and local councils have been hollowed out. They have next to no resources, next to no capacity. A lot of decisions are best made at the community level, but you have to empower them. This country hasn’t done that. 

The second thing is that if you decentralise decision-making, you have to live with the decentralised decisions that are made. Not everywhere is a liberal Amsterdam-type society. I grew up in a farming village and that’s an inherently very conservative place. If you empower those people, they may not make the decisions that we actually think are right. You have to bring those people along.

Kate: One of the ways that people can be brought along is through the rise of deliberative democracy. At climate assemblies and biodiversity assemblies that bring together 100 randomly chosen people from all of those diversities of views, evidence shows that people come up with extraordinarily farsighted and thoughtful recommendations that enable politicians, or challenge politicians, to go beyond what they would have done. 

Sam: I’m a big fan of climate assemblies, I think they really work. The UK-wide climate assembly was almost like an educational tool. People who didn’t engage with climate change or environmental problems were forced over a series of weekends to look deep into it. And that changed their worldview. People say that the sixth carbon budget we now have—setting our carbon targets for the mid-2030s—was made easier through the climate assembly.

Kate: Yes, they are moving the Overton window. Ordinary residents are showing that it is possible and desirable to have a politics that actually responds to people’s conception of wellbeing and the future we know we need to create.

Ellen: What’s the most effective strategy that you together can present to challenge those who rely on the current economic system and the extraction of resources, to reach that end goal that you both want?

Sam: I take the small victories because, for most of the 30 years in which I’ve been doing this stuff, the argument was “climate change is real and dangerous” versus “I’m sceptical about that”. We have won that fight. We are now arguing about the way in which we solve the problem. And that for me is a big step forward. Where the respectful disagreement comes in is that I have more faith in the power of innovation [to help solve the problem].

Kate: The big win for me would be to convince Sam to use the word “prosperity” differently. Tim Jackson, when he wrote Prosperity Without Growth, said that prosperity means that which we hope for. So what are our hopes and dreams? In this era, I believe they are not financial, they are social and ecological. Prosperity today is about humanity and the rest of the living planet thriving. That’s what kids march in the streets for. We can’t risk the future saying: “Well, let’s go for green growth, I’ve got my fingers crossed, let’s hope for it and see how it goes.” I believe there’s so much evidence to tell us that that plan is not going to go well and the cost of failure is existential. It’s time to learn not to grow, but to thrive.

This transcript has been edited for length and clarity. You can listen to a version of this conversation on the Prospect Podcast.