By Alessio Terzi and Gernot Wagner*
Improving energy efficiency is undoubtedly a good thing. But efficiency should not be confused – as it sometimes is – with sufficiency, which calls for limiting energy consumption and is thus closely connected to the degrowth movement. Tackling climate change means doing more with less, not simply doing less.
The idea that sufficiency, and by association degrowth, could serve as a blueprint for reaching our climate goals gained traction after the COVID-19 lockdowns, when humans retreated indoors and global carbon dioxide emissions fell sharply, and Russia’s invasion of Ukraine, which triggered energy-security concerns in Europe. In our hyper-consumerist society, the argument goes, consumption offers diminishing returns for human happiness, which implies that embracing minimalism would yield a double dividend: environmental preservation and improved well-being. Under this approach, wealthy countries would stop expanding their economies, while even the most strident degrowth advocates contend that poorer countries would still need to boost consumption and investment to escape destitution.
If this sounds too good to be true, that’s because it is. First, some clarifications. Degrowth calls for an absolute reduction in consumption, rather than merely a shift in its composition. But such shifts – such as ditching the car and commuting by bicycle – have been a constant throughout history, and are what green growth strategies aim to achieve. To be sure, there is nothing wrong with slowing down and choosing to earn less (and apparently achieving inner peace in the process). But one should not be led to believe that doing so holds the key to addressing the climate crisis.
Consider a simple thought experiment. Let’s start with the global economy in a steady state, neither growing nor contracting, and assume an annual decarbonization rate of 2.4% – our calculation of the average over the past two decades, based on IMF economic statistics and emissions data from the Global Carbon Project. In such a world, global CO2 emissions would fall by 48% by 2050. While far from reaching the goal of net-zero emissions, this hypothetical global economy would be nearly twice as carbon-efficient as today’s.
Now imagine if decarbonization were to depend entirely on decreasing economic output. To achieve the same outcome – almost halving global CO2 emissions – world GDP would need to shrink by 5% every year for the next three decades. To put this in perspective, global GDP contracted by 2.7% in 2020, at the height of the pandemic. As successful as lockdowns were at slowing the spread of COVID-19, they were a terrible way to cut CO2 emissions.
Limiting this thought experiment to rich countries – as degrowthers propose – makes a weak argument an absurd one. Economic output in the G7 countries would need to shrink 17% in 2024 alone, followed by an annual shock the size of the Great Depression. By 2030, purchasing power in the G7 would be roughly equivalent to South Sudan’s today. How many climate-conscious Western consumers would be willing to endure this?
What’s more, this thought experiment is necessarily limited. Our hypothetical began with a zero-growth economy, whereas over the past two decades global per capita GDP has grown by 6.8% annually. Coupled with an increase in population, this steady growth has contributed to rising, not falling, CO2 emissions. Nothing short of a clean-energy revolution, complete with clean transport systems and industry, will turn the climate ship around. Moreover, achieving net-zero emissions requires trillions of dollars in investment, which will add to, not subtract from, economic growth.
That is not to say that improving energy efficiency is futile. In 2007, the United States passed a law that helped phase out incandescent lightbulbs. As shown by McKinsey’s famous marginal abatement cost curve in 2010, there were large monetary savings associated with switching from incandescent to LED bulbs. But this does not imply that the change would have happened automatically. Instead, it shows that the policy paid for itself, with Americans free to spend or save the leftover money. Either way, economic growth was inevitable.
The growth potential for large-scale efficiency improvements is significantly greater than that from switching to LED lightbulbs. In fact, using limited inputs more efficiently is the definition of economic productivity – which, in turn, boosts growth. Moreover, the need to accelerate our economies’ decarbonization requires rolling out green technologies at a much faster pace. Staving off climate catastrophe will require more growth, not because ever-increasing GDP – itself a fundamentally inadequate metric – is the end goal, but because it is the result of cutting emissions fast enough.
Alessio Terzi, a lecturer at the University of Cambridge and Sciences Po, is an economist at the European Commission and the author of Growth for Good: Reshaping Capitalism to Save Humanity from Climate Catastrophe (Harvard University Press, 2022). Gernot Wagner, a climate economist at Columbia Business School, is the author, most recently, of Geoengineering: The Gamble (Polity, 2021).. Copyright: Project Syndicate, 2024, and published here with permission.
31 Comments
Great that they make the distinction between sufficiency and efficiency.
It is much easier to legislate/regulate for energy efficiency, than energy sufficiency. A good NZ example (of sufficiency) was Muldoon's carless days idea - and the authors example of regulating 'out' incandescent lightbulbs a great example of efficiency.
There are a lot of things that probably should be regulated 'out'.
Kate I'm interested in what you think should or could be regulated out. I still prefer the free market approach where consumers are given the choice though I realise some are slow to transition
IMO its good to be moderate and not extreme. An example of extreme is what grandstanding idiotic ardern did in taranaki when the country still depends upon those resources.
My first thought is fizzy drinks in plastic containers. They can be supplied in recyclable tin/aluminum (not sure what the metal is) cans.
Gone tomorrow with the stroke of a pen.
Then I'd go after fizzy drink itself :-) even though I am a Coke addict. So in that regard, I'd likely use an excise tax mechanism. We have an obesity/diabetes problem and a poor nutritional diet overall. Fruit and vegetable juices (and milk) should be cheaper than fizzy drinks in order to alter behaviour to improve health outcomes.
Then comes Tik Tok - if we have a problem with children's reading ability, no wonder!
I know banning it would be a super harsh measure (given there are other social media applications) but there is something about that one that I think we should look into and compare the effects of with the other SM apps that children commonly use. I just think the Tik Tok interface is more screen-addictive leading to much longer 'sessions'. The younger cohort (primary school age) use it a bit like Google (i.e., need a recipe, look for it on Tik Tok, and then it is all pictures, little reading).
I could go on and on about other things more law/government/regulation-orientated - I wrote a Top 5 for interest.co on the subject a while ago;
https://www.interest.co.nz/opinion/102433/katharine-moody-government-op…
It's a great question we as a society should ask ourselves more and more: "what don't we need"?
By a massive margin, the largest contribution individuals make to CO2 output is traveling in a private vehicle. It would be silly to expect people to stop doing that. But, consider that not that long ago it wasn't really practical to do something like purchase a large vehicle suitable for towing a boat some 50km from the suburbs, or pop off on a 300km jaunt for the weekend (75kg of CO2 btw). Ask anyone that isn't a tradie why they need such a large vehicle and you'll commonly hear things like "to tow my boat/caravan/horse float". Fine, but we should all realise that these options (and things like choosing to live 50km+ from your workplace) are choices that never used to exist and that just because something is now possible doesn't mean we should be entitled to do it because it is fun or convenient.
What new things are going to become possible that are drastically (but not visibly) detrimental to us all but will be cheap and attractive lifestyle options?
How does the market solve this entitlement/lifestyle creep issue? We live in a society where freedom to do things is valued highly so proper inclusion of externalised costs maybe? Good luck with that.
It's inevitable that we will need regulation that is going to be detrimental to people's perceived rights to 'live the lifestyle I want'. We live in what can only be a very brief self-centred era that is rapidly becoming more obviously ridiculous.
The microplastics coming out in your wash far exceed any in transport. But I guess you just push them out of sight out of mind eh. Microplastics only count when they relate to your pet peeve. Not the massive unrelenting amount we have already leached into the water table, ocean & land environments and reserve protection areas. This includes the ones that have far more significant effects on the environment and are also non degradable, toxic and deadly. The ones we can have significantly greater effect on if we aimed to do anything about them but nah, lets ignore the greatest issues and sources of pollution and instead push on the poor people who don't deserve transport, access to housing, work and living as much as you do eh? After all how dare they deem to live in areas you have already contaminated with toxic microplastics.
It is frankly hilarious we now have to go back to the Korean war era blood storage for sources of uncontaminated blood. How much more damage do you think you can do by continuing to ignore the major issues and sources for pollution and continue the wasteful lifestyle you lead by going outside and through the products, events and housing you buy. Think on all the food, clothing, products, tech you have from the last year. ALL of them contributed more harmful microplastics then those in tires & brakes. Your trips into wildlife contributed more pollution & harm to those environments then someone does traveling to work.
Sorry had to have a quick laugh when you mentioned tires and brakes but missed the fricken plastics in every other part of everything. It is like you are clueless as to how tires and brakes are made and the degradable chemical make up of them. Protip LOOKUP WHAT MAKES UP TIRES AND BRAKE PADS. I could safely eat brake pads & digest them, most people can, (one dude even consumed an entire train carriage), but plastic and processed foods would be dangerous for me, (most processed and vegetarian foods are deadly to me and many others, a significant % of population). Guess why there is such a distinction (tip it helps if you look into and know what things are made from and human physiology). Actually I could use some more brake pads in my diet, do you have any spare :) I have the stuff in liquid form but they flavoured the liquid to taste awful.
Correction the largest output is actually heating and cooking by a significant degree especially in countries that still burn for heating, cooling & power (still a significant issue in NZ and actually leads to NZ highest rates of respiratory conditions in areas with the worst burning for heating but the lowest transport emissions) but please continue to make simple mistakes. It is only easier to refute them when you fail to understand the basics.
It gets even easier when you also fail to account for food production & housing. It is like you completely ignore all of human activity outside of blinders you impose on yourself. Then you go on to suggest discriminatory genocidal policies. Can you guess why these never will work to do what you want and will never work for everyone.
You expend and release more CO2 in your favourite music festival then an entire family does for their entire year travelling for work, study & living needs yet I don't see you pushing for a ban on music festivals. Or on wasteful events. Could it be the bias you have is that the massive CO2 waste you do is ok but how dare those poor people deem to live serving you drinks, building your home, growing your food, providing you expensive clothing, cleaning up after your waste etc. One rule for thee and another for me eh? All animals are equal, except some animals are more equal then others.
Then you wonder why you don't have buy in from most the public who have to work for a living... yeah good luck with learning why.
Care to share your figures?
Here are some to back up my point (for the US, but will be roughly similar in NZ):
- Average per capita CO2 output is 14 tonnes (including industry).
- Typical private vehicle emits 0.25kg of CO2 per km.
- Typical distance driven each year is 20,000km which equates to 4 tonnes.
Thanks
https://ourworldindata.org/emissions-by-sector. There is even more when you drill down into generator use which is classed as private vehicle use in NZ data because we treat power generators as vehicles because they use fuel (easily seen in NZ reports when they consider all fuel use to be only private vehicles and not generators, farm equipment, logistics, emergency & medical services which use power for mobile operations, etc). Going to the major emitters of CO2 worldwide that difference factor between sectors is far larger which extends to affect NZs footprint considering most of our lifecycle emissions for manufactured goods occur overseas. Hence our housing & building sector alone has substantial emissions.
Then you seem to miss the massive emissions in the gigatons per year of our major manufacturing sources which will overtake all historical US emissions in a few years.
Then we have NZs respiratory health reports which show high increases & much higher % respiratory diseases in areas with the lowest private transport use and high air pollution from heating & residential activities. We actually have hard data in NZ that accounts for the sources and effects from air pollution and we know the sources of it yet in these same areas we have defunded all air pollution monitoring and responses. Councils with green branding have zero care for air pollution and the major sources for toxic air pollution with has directly led to more deaths. They literally canned air pollution initiatives and control measures. But nah you don't care about those struggling to breathe in NZ cities eh. Here is a clue they are not the crowd who are likely to be able to be near vapers & continue to breathe safely so you are less likely to care what they think or if they die.
Oh good grief.
There is a clear, measureable variable discussed in this article that we need to reduce very quickly indeed. That variable is 'carbon emissions'. There are lots of other things we need to address too - a myriad of variables that measure our over-consumption and our increasingly ecocidal way of life.
There is also a nonsense concept at the heart of this article, which mortally wounds any findings it makes - economic growth, GDP etc.
GDP is basically the difference between the price that a business pays for the goods and services it needs, and the sale price of its products at. If a business buys $100m of a thing from China, and then sells that thing for $200m in New Zealand, the business has added $100m to our GDP. Go NZ!
GDP also includes imputed rents - the amount that a home owner would have to pay to rent out a house similar to their own. Imputed rents make up about 8% of our GDP from memory. So, we can increase GDP by increasing rents. Go NZ!
We have boosted our GDP by using the money that flows from our banks into our housing ponzi (and then out into our economy) to increase our consumption. The more we buy, the more surplus businesses make, and the higher our GDP. Go NZ!
My point, basically, is that we should scrap GDP as a measure completely. GDP is meaningless in the modern world - it is basically a measure of how much surplus businesses can generate, which is a function of the increase in private + govt debt over the period. We need to start using metrics that really matter and switch our focus to defining and achieving a sustainable 'do no harm' model where we live in balance with our ecosystem. That doesn't mean being poor. It means being deliberate about living well.
I think the authors agree with you - as here's the linked article they embedded - and they make the point GDP is a poor measure;
https://www.scientificamerican.com/article/gdp-is-the-wrong-tool-for-me…
But I think they are trying to point to positive contributions to GDP (and more specifically energy efficiency measures) - i.e., insulation; non-meat high protein foods; LED lightbulbs; fixing water leaks on private property; immunization and other preventative health care initiatives; exercise; etc. etc.
We can spend money and contribute to commerce on good. I think that's the point being made by the authors - degrowth and only degrowth is too simplistic an argument. Do more with less is the way forward.
Degrowth will accompany FF reduction regardless - but there is nothing wrong with spending to prepare.
Thanks Kate.
This is the tension / inconsistency for me - the growth vs degrowth debate is meaningless when it becomes about increasing / decreasing GDP or variations thereof (eg green GDP, which is just consumption of less polluting stuff).
It feels like a distraction to me. We need to set out some clear goals for how we live sustainably and in balance with our ecosystem. Then set out to achieve them. I don't think GDP would figure as a measure in any of these goals.
I don't think GDP would figure as a measure in any of these goals.
Yes, again the 'growth vs degrowth' debate is normally conducted in the binary. That does a disservice to the actual goal we are trying to achieve (continued life/wellbeing on this planet).
I agree on GDP. Back when Pita Sharples was a co-leader of TPM, he put forward a legislative proposal (a ballet initiative that didn't get picked out of the box) for an alternate to GDP as our fundamental economic measurement tool. Can't find the article but I thought at the time, if one nation did it and was successful at it (i.e., made better decisions because of it), and stuck with it over a good period of time as a measurement tool/benchmark - then the world might follow.
There is no need for way out luckily for us we are already a carbon sink so we would need to generate more emissions to become net zero. But…..the greenies still want to punish everyone just cos…and from looking at the greenies performance over the last few months they are made up of abusers and thieves anyway, so not surprising. PDF will be along in a minute to rubbish this story anyway.
Greens abusers and thieves? Okay. If you say so. The immovable object that is the suit and tie masters of the universe brigade, screw the life support systems of the planet to line their pockets, while worshiping the yeasty growth god and are soooo shiny and clean.
Well, there are only a few of them in Parliament, and we have a thief (Golriz), an abuser (Genter), another abuser (Tana what’s her name - the immigrant abuser and tax avoider), then there is the other one that left not so long ago for abusing her colleagues. So, a high percentage of them are abusers and thieves. Maybe it’s just a case of realising what you believed for so long is actually a load of nonsense and we are seeing the meltdown when they start to throw the toys out of the cot and they are just really nice people. Three of them are already kicked out of Parliament (one died to be fair - and two more are about to be kicked out - Genter and Tana).
The growth potential for large-scale efficiency improvements is significantly greater than that from switching to LED lightbulbs. In fact, using limited inputs more efficiently is the definition of economic productivity – which, in turn, boosts growth
What about inflation?
Governments cause inflation and hurt bond investors
Exactly. In March 2020 the Fed literally set out to create significant inflation, and it was successful (using my QE2 proposal for deflationary situations when that wasn't the case, buying performing assets from non-banks at great volume, hiring Blackrock to help with the buying. Link
In May 2020, as I conducted my latest monthly analysis of the quantity of credit creation across 40 countries, I was startled to find that something extraordinary had been happening since March that year. The major central banks across the globe were boosting the money supply dramatically through a coordinated programme of QE.
This was the version of QE that I had recommended as the second policy step in Japan in the 1990s – namely, for the central bank to purchase assets from outside the banking sector. As these payments forced retail banks to create new credit in a massive burst of money supply not previously seen in the post-war era, firms and non-bank financial institutions that had sold to the Fed gained new purchasing power as a result.
Even the Bank of Japan, having previously argued for two decades that it could not possibly purchase assets from anyone other than banks, suddenly engaged in this unusual operation at the same time as other central banks, and on a massive scale.
The reasons for this coordinated policy are not immediately apparent, although there is some evidence that it was sparked by a proposal presented to central bankers by the multinational investment company Blackrock at the annual meeting of central bankers and other financial decision-makers in Jackson Hole, Wyoming in August 2019. Soon after this, difficulties in the Fed’s repurchase agreement (“repo”) market in September 2019, triggered by private banking giant JP Morgan, may have made up their minds.
Apparently agreeing with my critique that pure fiscal policy does not result in economic growth unless it is backed by credit creation, Blackrock had argued at Jackson Hole that the “next downturn” would require central banks to create new money and find “ways to get central bank money directly in the hands of public and private sector spenders” – what they called “going direct”, bypassing the retail banks. The Fed knew this would create inflation, as Blackrock later confirmed in a paper which stated that “the Fed is now committing to push inflation above target for some time”.
This is precisely what was implemented in March 2020. We know this both from available data and because the Fed, largely without precedent, hired a private-sector firm to help it buy assets – none other than Blackrock.
Having “cried wolf” about the inflationary risk of introducing QE in 2008, and following more than a decade of resolutely low global inflation, many banking and economic experts thought the Fed’s and other central banks’ similarly aggressive credit creation policy in 2020 would not be inflationary, again.
However, this time the economic conditions were very different – there had been no recent slump in the supply of money via retail bank loans. Also, the policy differed in a crucial aspect: by “going direct”, the Fed was itself now massively expanding credit creation, the money supply and new spending.
Meanwhile the COVID measures imposed by governments also focused on bank credit creation. In parallel with unprecedented societal and business lockdowns, retail banks were instructed to increase lending to businesses with governments guaranteeing these loans. Stimulus checks were paid out to furloughed workers, and both central banks and retail banks also stepped up purchases of government bonds. So both central and commercial banks added to the supply of money, with much of it being used for general consumption rather than productive purposes (loans to businesses).
As a result, the money supply ballooned by record amounts. The US’s “broad” money supply metric, M3, increased by 19.1% in 2020, the highest annual rise on record. In the eurozone, money supply M1 grew by 15.6% in December 2020.
All of this boosted demand, while at the same time the supply of goods and services was limited by pandemic restrictions that immobilised people and shut down many small firms and affected some supply chains. It was a perfect recipe for inflation – and significant consumer price inflation duly followed around 18 months later, in late 2021 and 2022. Link
BIS - Does money growth help explain the recent inflation surge?
Yes, different subject but hard to choose between which is more urgent (carbon reduction vs inflation reduction) :-).
I'd definitely go with the latter, but the global finance market has (in my opinion) been stuffed through competition. Too much market capitalism, perhaps? Only way to 'right' the boat might be debt forgiveness, but we need a 'great mind' to design that and a 'great leader' to sell it.
Biodiversity loss is a more urgent problem than CO2 levels. Restoring and increasing native bush areas and cleaning our waterways will have immediate benefits for the NZ environment and provide enjoyment to the NZ population. We can still enjoy swimming in waterholes and walking in forests in economic down turns. All this carbon trading has no tangible benefit to the general population and enriches investors without solving any environmental problems.
You’re exactly right. Well done. Native bush restoration is key, and it restores biodiversity that we want here in NZ. Pine trees are a fire risk and create no biodiversity, and so what do we do here, we plant pines of course and then blame climate change when they catch on fire all the time. All fully supported by the greens of course.
Always thought the Kyoto Protocol and its carbon offsets/carbon trading 'lead' was a mistake - agree no tangible benefits and for NZ plenty of downside.
Agree on biodiversity loss - its a crisis more so than the atmospheric CO2, but a bigger than GFC financial crisis is something we are really heading toward and globally ill-prepared for..
This sadly we have a large amount of diverse biodiversity areas to ensure protection for but are really bad with, e.g. ocean reserves still allowing catch, difficulty in setting up the Kermadec sanctuary, stripping bush and high areas for more pine plantations that will cause massive downstream destruction etc. We have trouble with both on shore and off shore protections and really poor public education & buy in e.g. many will walk straight past a no dogs sign with dogs off leash into a wildlife sanctuary and we are barely managing our way out of Kauri disease with most the joggers, day trippers, dog walkers and those with poor large animal management openly encouraging spread of it and ignoring simple preventative measures.
Mind you though the amount of human waste openly spread on the more managed tracks is pretty huge these days also (in all definitions of those words). There really is no real punishment or much monitoring at all. Whole coastlines are stripped of species by a few people in a matter of days and yet there is no response other then a warning. Perhaps instead of watching the world on fire we could start a fire in their hearts. Provide value in protection rather then allow the free consumption of native resources simply because it is cheap food, or a nice walk, or great outdoors experience, or traditional. Encourage people to stay in urban areas, with better food options that are farmed in contained environments that do not interfere with our very fragile ecosystems. Nature tourism and harvesting is most destructive when it encourages open access and use by humans in the area. Especially with the spread of dangerous organisms that humans do not care about. The tragedy of the commons.
If we want to protect an environment the best thing we can do for it is keep most the public out and only let in skilled researchers & reserve managers in.
In the case of ocean areas it is far more difficult to manage considering the range of species is far wider and the decimation of stock can be significantly greater then the replacement rates.
You raise some interesting points, philosophically I agree with you that nature has a right to exist for its own sake and we don't just maintain it for the water holes and walks. However people do need to experience nature in order to appreciate it. In the UK there is a right to roam and therefore many people have a deep connection to their local woodlands, rivers and hills. Shutting people out of nature could lead to even less concern for the natural environment. If people had more access to land they may be more willing to volunteer planting trees and restoring wetlands on private farms. Humans are not separate from nature, we are part of it. Restoring this connection will help both the environment and peoples mental health.
We can retain a "connection " with nature in urban centers much the same as we do now. People do not die if they cannot see a kakapo in person, in fact most of the funding for native bird support is by those who have never interacted with them in person. However we do have workers in the sector & volunteers who will still line up for the jobs of trap maintenance & waste clearing without ever having that interaction personally. You seem to think the sky would fall if people do not have direct contact when we have clear evidence all people really need is a picture or public campaigns. See NZ bird of the year competition. Most of the "connection with nature" folks are really pushing human activity in protected spaces with heavy development and human waste in the wake for no benefit to that nature and limited funding to manage that human impact without massive subsidization, (which no country has even those with trillions in FF income like Norway etc). We equally have urban parks so there is no effect to human wellbeing from not going for a hike in a protected reserve space. There are plenty of urban native tree spaces in parks with birds and even glowworms around. So the need for humans to invade protected reserve spaces with unmitigated wasteful damaging tourism is really just destroying a resource we cannot replace when we have developed the area, introduced threats & waste and spread a disease that kills most.
What you suggest is the same argument used for zoos (except zoos also manage breeding programs). So using the same logic we have parks with all the same elements for you to have a connection with trees to care about them. You do not need to leave an urban center to experience parks, in fact you likely do not even need to leave your suburb to have birds & tree visibility. Likewise you do not need to kill most the coastal species to be able to care about their protection. That is the thing you do not need to directly harm and kill nature with your presence to be able to care about biodiversity & species extinctions. The average person does not need to harm nature to care about it and if all that is need to increase visibility for public campaigns during key funding periods is a picture we don't even need humans to go get those pictures anymore. Set up an albatross camera permanently and watch the live feed. Likewise you don't need to travel to the great barrier reef or swim & boat close to dolphins to care about their existence. Humans have cared about other species & natural areas they will never see themselves for centuries.
You don't need to own or have a kauri tree close to you to care about protecting them. In fact that is kind of the point. Stay away from the trees!
This argument fails at the first hurdle. Energy use (and therefore GDP) will fall as resources become less available. There are no studies that show we can go on growing indefinitely. Green growth has also been shown to be a mirage. How's the global CO2 level tracking with all our growth-based efforts to date? Not just increasing but accelerating. Climate change is also the thin edge of the wedge of our issues - biodiversity loss, soil depletion, forever chemicals, plastic pollution, aquifer depletion.
The Degrowth movement is about managing the fall down the other side of the curve rather than unmanaged chaos. A lesser of two evils.
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