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FOR
We need a more sustainable economy
Jordan Hairabedian
Decarbonization Consultant and European climate policies at EcoAct (Atos group)
Today, economic growth does not worry about the environment
Economic growth, in the EU and elsewhere, is the increase in the production of goods and services from one period to the next. It is measured through one indicator: GDP (gross domestic product), which does not include any environmental parameters. This represents a major issue. As described by Stockholm Resilience Center, the concept of economic development only make sense within a society that is itself flourishing in a healthy environment. Without stable ecosystems, there can be no human society. And without a society, no economic system is possible.
The European Union, a laboratory of innovations to achieve a green transition
The European Green Deal has the merit of starting legislative work, helping our countries evolve towards an economy that would benefit the environment and our societies. We can focus on two examples. First, the EU taxonomy for sustainable activities is a classification system, establishing a list of environmentally sustainable economic activities. It uses criteria such as climate, water, biodiversity, air, circular economy and social impact. Since January 2022, over 11,000 companies and financial institutions have been using this reporting. This common framework, although imperfect, represents significant progress that has already inspired many other countries.
Second, the new Corporate Sustainability Reporting Directive (CSRD) will come into effect in 2024 and will progressively impact over 50,000 stakeholders. It introduces more detailed reporting requirements while capturing additional companies that will be required to report on sustainability issues such as environmental rights, social rights, human rights and governance factors. For instance, companies would need to communicate actions they will take to reduce their Greenhouse Gas emissions in order to reach the goals of the Paris Agreement, their strategies to adapt to climate change, and their actions to protect biodiversity based on the post-2020 Global Biodiversity Framework.
Rethinking the foundations of growth and of our economic system
The multi-criteria European approach of green transition is a positive signal, but it is necessary to go even further to face climate change, biodiversity loss, and water, air, and soil pollution. The current growth, based on the consumption of fossil fuels (coal, natural gas and oil) is doomed in a world where climate change is getting worse, and where energy is getting more and more difficult to extract. Our economy has to change its priorities to go back to its etymology : in Greek, oikos/nomos means “household management”. We should not only focus on capital growth, but also on regenerating damaged ecosystems, on moving from a linear production model to a local, low-carbon circular economy, and on well-being and social justice. In that regard, the Ellen MacArthur Foundation’s vision is interesting.
As such, rethinking the performance indicators of our economy is essential. The European Union has set a new course within the framework of the 8th Environment Action Programme. The actions are still to be carried out.
AGAINST
The myth of Green Growth
Can green growth be ecologically responsible? Words are important here. Growth is understood as the increase of economic flows, GDP, production and consumption. “Green” or “sustainable” as a state that does not harm the environment. In other words, that remains below the limits where life is possible.
Six planetary boundaries are already in overshoot
The limits of these planetary boundaries (the stability of environmental systems) on which we depend on are known and assessed (Steffen et al. 2015). Six of them are already overshot (and not only the climate change one). In order to consider a system that would be sustainable, we thus need to come back below these boundaries, and not only to reduce our impacts. Therefore, we need to develop activities, production and consumption systems that would “regenerate” natural systems.
The EU is promising us economic growth based on low-carbon energies, reduction of CO2 emissions, more recycling, sustainable agriculture, and “economic growth decoupled from resource use”.
A more intense economic activity requires more energy consumption
Energy consumption is related to changes in the state of a system: a more intense economic activity requires more energy consumption to transform more raw materials. Recycling and a “circular economy”, presented as miraculous solutions for our overconsumption of resources, can only lead to incomplete substitutions, especially in regard to the “dispersive uses” of matter and its entropy in the economic system (metals are used in alloys, often in very small amounts, they disperse while being used, etc). But also because of very low yields in the recycling industry, linked to short-term economic profits as well.
Generally speaking, the concept of “decoupling”, meaning the capacity of decoupling economic growth from environmental impacts, is a myth. If partial, local and relative decoupling might have been observed (Tim Jackson, 2009), our growing needs and activities have always been correlated with an increase in impact, although this increase in impact can sometimes be less intense than the acceleration of these activities. In short, we could pollute less for each unit of wealth created, but if we persist in always getting wealthier, we will continue to increase our impact.
It really is time for economics to take a real interest in its consequences on the environment
As it is fashionable to do so, we have to use an argumentation “in order of magnitude”: even a weak GDP growth rate, say 2%, involves doubling the economic activity in the next 35 years. This means the consumption of twice as much energy, metals and resources between 2025 and 2060 than we have used between 1990 and 2025 (that being tempered by the increase in value, not just volume, of the economy, i.e. the monetary inflation rate). Since resources are only available in limited amounts, this vision isn’t realistic, unless we achieve a technological leap. In other words, the advent of a new technological era. The bet is therefore hazardous and risky.
It really is time for economics to take a real interest in its consequences on the environment, and in the resources that enable the creation of wealth. We must indeed face a real “economic transition”.
