Is the case for the green economy now unanswerable?

21 Feb 2011, 14:45

Given all the current turmoil in the Middle East, it is perhaps timely to trot out the old truism that all revolutions – democratic, military or industrial – look inevitable in retrospect. Peering back through the lens of history it is usually possible to identify the way in which the case for change had become so unimpeachable, so powerful, so right – that change simply had to come. All that is then required is a tipping point, an incident that makes the case for change so compellingly obvious that people take action.

In the case of the recent revolutions in the Middle East, the case for change has been made ever more unanswerable over recent decades by historical forces, such as the emergence of social networking, the reach of global media, western willingness to prop up corrupt regimes, and demographic developments that have left old elites alienated from populations where the majority of people are under 30. The tipping points were then provided by WikiLeaks' revelations of the lavish lifestyles and nefarious activities of many Middle Eastern leaders, and the reluctance of the Tunisian and Egyptian military to open fire on their own people.

Turning to the low-carbon revolution (which is in many ways directly connected to the recent wave of Middle Eastern revolutions given it is petro-dollars that have propped up totalitarian regimes in the region, and disruption to oil supplies and rising oil prices will do far more than fears over climate change to drive the transition to a low-carbon economy) it is clear that the case for the green economy is fast-approaching the point at which it becomes unanswerable.

The latest contribution to the green economy's intellectual armoury comes in the form of UNEP's Towards a Green Economy report – a lengthy analysis of the case for a more sustainable global economy that promises to become as influential (and as controversial) as 2006's Stern Review.

The report is extremely long and hugely detailed, but its central premise is remarkably simple: global GDP and GDP per capita will grow faster in a green economy that seeks to cut greenhouse gas emissions and limit environmental impacts than it will if we continue to pursue business-as-usual. Moreover, the transition can be delivered at a cost of just two per cent of GDP, approximately the same amount that the world hands out in subsidies to support unsustainable practices in the energy, fishery and agricultural sectors.

The central argument in the report, supported by an accompanying study from the Potsdam Institute for Climate Impact Research (PIK), goes further than the Stern Review by arguing that the low-carbon transition delivers net economic benefits rather than small costs. But it is also increasingly in line with much modern economic thinking and is extremely difficult to counter - although people will try.

The simple and largely uncontested realities are that investment in energy efficiency delivers net economic benefits within five to 10 years; low-carbon energy sources and business models tend to be more labour-intensive than business-as-usual models, creating employment opportunities; more sustainable approaches to agriculture, fisheries and resource extraction lead to reduced costs relating to degraded ecosystem services and reduced risks relating to resource depletion; and the initial costs of the transition are manageable when set against total levels of capital investment each year even given the current state of the global economy.

All these benefits are apparent even before you consider the fact that the green economy will help reduce risks associated with climate change and peak oil. Somewhat bizarrely the UNEP report demonstrates how you can support the development of a low-carbon economy and the economic growth that comes with it, even if you are sceptical about climate change science.

In many ways there is nothing surprising about this hypothesis: it stands to reason that a global economy that is clean, efficient, less resource-intensive, better insulated against oil shocks and generally more sustainable will experience better growth than a global economy reliant on volatile fossil fuel supplies, depleted resources and toxic externalities.

Valid questions remain over whether GDP growth can continue indefinitely in a finite world, and whether we need a better measure of economic progress, but in the meantime it is increasingly apparent that green growth is better and more sustainable than business as usual.

It is a crashing coincidence that this report should be released just two days after the Republicans voted through a spending bill that would gut clean air and water regulations, and reverse the small steps the US has taken towards adopting the kind of green economic policies the UN report recommends. But the Republicans and their allies in other countries trying to block the development of a green economy increasingly look like every other anti-progressive force since the Luddites.

When you look at the coalescence of economic forces driving the shift towards a green economy – climate change, rising oil prices, collapsing fisheries, depleted minerals, desertification, falling renewable energy costs, choking air pollution, the rise of emerging economies, stalled living standards in the industrialised world – it is clear that opponents of the green economy will be remembered in much the same way as those first Model T Ford customers who famously just wanted "faster horses", or the IBM chairman who once predicted there was a global market for five computers.

As the UNEP report makes plain, critics of the green economy are on the wrong side of the economic argument and the wrong side of history. The case for a green economy is increasingly unanswerable – all we need now are the tipping points that will help business and political leaders realise that this change is inevitable.

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Previously known as the BusinessGreen Blog, James' Blog features musings, observations and occasional rants from BusinessGreen editor James Murray

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