Economic growth that is environmentally sustainable
Green growth is a concept in economic theory and policymaking used to describe paths of economic growth that are environmentally sustainable. It is based on the understanding that as long as economic growth remains a predominant goal, a decoupling of economic growth from resource use and adverse environmental impacts is required. As such, green growth is closely related to the concepts of green economy and low-carbon or sustainable development. A main driver for green growth is the transition towards sustainable energy systems. Advocates of green growth policies argue that well-implemented green policies can create opportunities for employment in sectors such as renewable energy, green agriculture, or sustainable forestry.
Green growth and related concepts stem from the observation that economic growth of the past 250 years has come largely at the expense of the environment upon which economic activities rely. The concept of green growth assumes that economic growth and development can continue while associated negative impacts on the environment, including climate change, are reduced – or while the natural environment continues to provide ecosystem services –, meaning that a decoupling takes place.
On the subject of decoupling, a distinction is made between relative and absolute decoupling: Relative decoupling occurs when environmental pressure still grows, but less so than the gross domestic product (GDP). With absolute decoupling, an absolute reduction in resource use or emissions occurs, while the economy grows.
Further distinctions are made based on what is taken into account: decoupling economic growth from resource use (resource decoupling) or from environmental pressure (impact decoupling), different indicators for economic growth and environmental pressures (e.g. resource use, emissions, biodiversity loss), only the domestic level or also impacts along the global value chain, the entire economy or individual sectors (e.g. energy, agriculture), temporary vs. permanent decoupling, or decoupling to reach certain targets (e.g. limiting global warming to 1.5 °C or staying within planetary boundaries).
The term “green growth” originates from the Asia Pacific Region and first emerged at the Fifth Ministerial Conference on Environment and Development (MCED) in Seoul, South Korea in 2005, where the Seoul Initiative Network on Green Growth was founded. Several international organisations had since turned their attention to green growth, in part as a way out of the financial crisis of 2007–2008: At the request of countries, the OECD in 2011 published a Green Growth Strategy and in 2012, the World Bank, UNEP, OECD and GGGI launched the Green Growth Knowledge Platform (GGKP).
The related concepts of green growth, green economy and low-carbon development are sometimes used differently by different organisations but are also used interchangeably. Some organisation also include social aspects in their definitions.
The report "Growth Within: A Circular Economy Vision for a Competitive Europe" predicts that there are many opportunities in recycling, producing longer-lasting products and offering maintenance services from the manufacturer.
According to the International Labour Organization, a shift to a greener economy could create 24 million new jobs globally by 2030, if the right policies are put in place. Also, if a transition to a green economy were not to take place, 72 million full-time jobs may be lost by 2030 due to heat stress, and the temperature increases will lead to shorter available work hours, particularly in agriculture.
According to a 2020 report by the Green Alliance the job-creation schemes with the best value for money in the UK are: retrofitting buildings and creating cycle lanes; followed by electric ferries, battery factories and reforestation; and that these would create more jobs than proposed road-building schemes. They also say that new investment in nature recovery could quickly create 10,000 new jobs.
One metric commonly used to measure the resource use of economies is domestic material consumption (DMC). The European Union, for example, uses the DMC the measure its resource productivity. Based on this metric, it has been claimed that some developed countries have achieved relative or even absolute decoupling of material use from economic growth. The DMC, however, does not consider the shift of resource use which results from global supply chains, which is why another proposed metric is the material footprint (MF). The MF aims to encompass the resource use from the beginning of a production chain to its end, meaning from where raw materials are extracted to where the product or service is consumed. Research based on the MF indicates that resource use might be growing similarly to GDP for a number of countries, as for example for the EU-27 or the member countries of the OECD.
Green growth as a policy strategy
Organizational efforts on green growth
IEA: In 2020 the IEA published a strategy towards a "Clean Energy New Deal", which is being strongly promoted by executive director Fatih Birol.
China: since at least 2006 (with its 11th 5-Year Plan), China has been committed to achieving a green economy. Emissions growth in recent years has decelerated sharply, underpinned by tighter environmental regulations and massive green investments, including in renewable energy and electric vehicle infrastructure. China's national emissions trading system (ETS) — which will be rolled out to the power sector in 2020 — could help facilitate the shift to cleaner energy. For price signals to be effective however, power producers need to compete, allowing less polluting and more efficient ones to trade freely and expand their market share (which has not yet been the case in 2020.) China also has an impact on the implementation of environmental technologies throughout Asia, via its Belt and Road Initiative International Green Development Coalition.
EU: In 2010, the EU adopted the Europe 2020 strategy for “smart, sustainable and inclusive growth” for the 10-year period 2010–2020. In 2019, the European Green Deal was launched as “Europe’s new growth strategy” with the aim of making the continent's economy sustainable. Eastern European businesses currently fall behind their Southern European counterparts in terms of the average quality of their green management practices, notably in terms of specified energy consumption and emissions objectives.
South Korea: Green growth is being discussed in the National Assembly in 2020.
United States: President Barack Obama took several steps toward green growth. He believes that by investing in the future, energy production will not only reduce the dependency on foreign energy sources but will also create jobs and a 'clean-energy economy'. Obama had a goal of installing 10 gigawatts of renewable projects by 2020, doubling the wind and solar energy production by 2025, and to develop such policies, which will help to shape the nation's green economy. A 2014 report by the Center for American Progress quantified the levels of investment necessary for the US to attain green growth, while meeting the levels of emission reduction spelled out by the Intergovernmental Panel on Climate Change (IPCC). In 2019, Democratic members of Congress introduced the Green New Deal resolution to create an umbrella for future government programs.
Japan: In 2021, the Ministry of Economy, Trade and Industry proposed the "Green Growth Strategy Through Achieving Carbon Neutrality in 2050” plan achieve carbon neutrality by 2050. There are 14 growth sectors identified in the strategy, categorized into 3 main industries: the energy-related industries, transportation/manufacturing-related industries, and home/office-related industries. Furthermore, this strategy established a Green Innovation Fund worth 2 trillion JPY (18.2 billion USD) that aims to fund research and development and social implementation, as well as hoping to inspire private companies to also invest in their green growth R&D.
Green Growth in Developing Countries
Developing countries tend to have economies which are more reliant on exploiting the environment’s natural resources. Green technologies and sustainable development are not as affordable or accessible to them. At the same time, they are less able to protect themselves from the adverse effects of climate change and environmental degradation. They can face adverse health effects of polluted air and water, for example. Therefore, Green Growth could help improve the livelihoods and wellbeing of those in developing countries by protecting the environment and fostering economic growth.
In 2012, the Organization for Economic Co-operation and Development (OECD) drafted a report on Green Growth and developing countries as a summary for policy makers. This report outlines a policy framework that can be used by developing countries to achieve environmental and socio-economic goals. It also notes some concerns for Green Growth held by developing countries such as its ability to address poverty in practice and possible high cost barriers to green technologies.
Requirements of Green Growth
Energy sources that meet the requirements of green growth must fit the criteria of the efficient use of natural resources, affordability, access, the prevention of environmental degradation, low health impacts, and high energy security.Renewable energy sources, including nuclear power, increase the power supply options for our current and future populations, and meet sustainable development requirements. While solar, wind, and nuclear energy have nearly no negative interactions with the environment when generating electricity, there is waste and emission connected to material extraction, manufacturing, and construction. Overall, all renewable energy sources are a fundamental part of a nation's green growth strategy. Nuclear, wind, and solar energy can all be beneficial and used together to combat climate change and kickstart green growth.
There are several limits to green growth. As described by the European Environmental Bureau (EEB), seven barriers could make green growth wishful thinking.
- Rising energy costs. The more natural resources are needed, the more expensive it will be to extract them.
- Rebound effects. Improved efficiency is often accompanied by the same or higher consumption of a given good or service.
- Displacement of the problem, all technological solutions lead to environmental externalities.
- Underestimated impact of services, the service economy is based on the material economy, so it will add a footprint rather than replace it.
- Limited recycling potential.
- Insufficient and inappropriate technological change. Technological progress is not disruptive and does not target the factors of production that matters for ecological sustainability.
- Cost shifting and decoupling phenomena have emerged, but they are characterised by the externalisation of environmental impact from high-consumption countries to low-consumption countries.
A 2020 two-part systematic review published in Environmental Research Letters analyzed the full texts of 835 papers on the relationship between GDP, resource use (materials and energy) and greenhouse gas emissions. The first part found that "the vast majority of studies [...] approach the topic from a statistical-econometric point of view, while hardly acknowledging thermodynamic principles on the role of energy and materials for socio-economic activities. A potentially fundamental incompatibility between economic growth and systemic societal changes to address the climate crisis is rarely considered." The second part concluded "that large rapid absolute reductions of resource use and GHG emissions cannot be achieved through observed decoupling rates, hence decoupling needs to be complemented by sufficiency-oriented strategies and strict enforcement of absolute reduction targets."
A 2020 paper by Jason Hickel and Giorgos Kallis published in New Political Economy concludes that "there is no empirical evidence that absolute decoupling from resource use can be achieved on a global scale against a background of continued economic growth" and that "absolute decoupling from carbon emissions is highly unlikely to be achieved at a rate rapid enough to prevent global warming over 1.5°C or 2°C, even under optimistic policy conditions." It thus suggests looking for alternative strategies.
The Degrowth movement is opposed to all forms of productivism (the belief that economic productivity and growth is the purpose of human organization). Because of that it is also opposed to Green growth concepts.
Another 2020 study shows that the pursuit of ‘green growth’ would increase inequality and unemployment unless accompanied by radical social policies.
^Parrique T., Barth J., Briens F., C. Kerschner, Kraus-Polk A., Kuokkanen A., Spangenberg J.H., 2019. Decoupling debunked: Evidence and arguments against green growth as a sole strategy for sustainability. European Environmental Bureau.