Global Policy Forum

Can Economic Growth Stop Climate Change?

By Rajesh Makwana

May 26, 2009


Despite the scientific consensus on the urgent need to address the causes of climate change, a stubborn attachment to economic growth by policymakers threatens to disrupt any effective response to the growing environmental crisis. Interim updates in the run up to December's major Climate Conference in Copenhagen revealed that emissions and temperatures are accelerating more rapidly than expected - leading many to ask why governments and political leaders are doing so little to reduce emissions and mitigate climate change.[1]

This long-standing gulf between government rhetoric and action was preoccupying scientists attending the International Scientific Congress on Climate Change in the Danish capital during March, and many of these specialists have since engaged in activism of a kind not seen since the period of nuclear proliferation during the 1950s and 1960s. Acknowledging the failure of governments to date, experts at the meeting urged world leaders to resist the influence of vested interests and act decisively to avert a series of devastating ecological and social consequences.

Whilst Nicholas Stern, one of the UK's leading climate change scientists and author of the Stern report, berated the British government's failure to pursue strong and effective policies, other outspoken and prominent scientists took to the street in protest. Dr. James Hansen, head of NASA's Goddard Institute of Space Studies (GISS), joined more than 1,000 campaigners in Coventry (UK) as part of a Climate Change Day of Action in March.[2] Demonstrators similarly voiced concerns over government inaction at the Put People First and Climate Camp protests during the G20 Summit in London. Dr. Hansen, like many in the climate change movement, believes that our politicians are failing the planet, and that direct action through protests is now crucial in order to combat heavy lobbying from the business sector that has prevented the necessary legislative interventions.[3]

What these scientists-cum-activists now faced is the same barrier to progress that campaigners have expressed for decades: a stubborn adherence to economic growth and corporate welfare by policymakers. So entrenched is the attachment to continually expanding the economy that Gordon Brown, acting as 'chancellor' of the G20 Summit, made the resumption of global economic growth a key target for the meeting. Ministers hope that the trillion dollar stimulus that was agreed upon will go a long way to re-establishing economic 'normality'. More recently, the same ministers pledged billions to the world's lender of last resort - the IMF, to provide additional debt-based credit to stimulate growth around the world.[4] The underlying rationale behind these policies is that governments must preserve economic growth at all costs, and the best way to safeguard growth is by protecting those businesses that generate the most income.

Profiting from Climate Change

The danger of continuing such a 'growth at all costs' approach is amplified when only financially profitable solutions to the climate crisis are pursued by governments. In most industrialised countries the largest and most influential businesses are oil corporations and car manufacturers that wield significant lobbying power over governments, and a responsibility to their shareholders before any commitment to reduce CO2 emissions.[5]

Given both the overriding commitment by corporations to profit and a dependency by the population on the consumption of oil, there is little incentive for these industries to encourage people to consume less fossil fuel. As one example, car manufactures have traditionally prioritised speed and aesthetics over efficiency, and some of the most fuel efficient cars available today are less economical in fuel use than those available over two decades ago - particularly in the US.[6] Whilst this approach has contributed to gross domestic product (GDP) and generated huge incomes for the car industry, the average 'miles per gallon' usage in US cars is currently less than it was in the 1908 model T Ford.[7]

A spiralling level of economic and financial competition between nations is also stifling effective agreement and action on emission reductions, whilst continuing to aggravate the often-tense relationship between countries in the Global North and South. Given the competitive nature of the global economy, most governments resist enacting tough legislation to curb emissions in the fear of losing their competitive financial edge. They prefer instead to use less effective market-based mechanisms that will facilitate a continued prioritisation of economic growth.

Green taxes on driving cars or flying in airplanes discriminate against the poor and are only half measures compared to stricter legislation, such as outright bans on cars in cities or domestic flights. Despite being a key mechanism of the Kyoto Protocol, setting an agreed 'cap' on emission levels and then allowing some companies to 'trade' their allowances to other firms for profitdoesn't reduce emissions as effectively as simply legislating for larger reductions. Whilst strict legislation would force corporations to innovate greener technology, 'Cap and Trade' results in incremental and insufficient adjustments to emissions with a view to creating new markets and expanding profits. Carbon offsets are an increasingly popular way of reducing emissions, and present yet another business opportunity that contributes to GDP. Palliative measures such as planting trees or purchasing offsets sold by 'greener industries', while at the same time pursuing business as usual, does little to mitigate the unsustainable and damaging activities that emit greenhouse gases in the first place.

An understanding of how business opportunity has trumped effective policy can be drawn from a host of other market friendly solutions to global warming. Bio-fuel expansion accelerates climate change through increased deforestation, the destruction of ecosystems, peat drainage, and an increasing use of nitrate fertilisers.[8] Policies that encourage 'clean coal' production or carbon capture and storage (CCS) help governments to justify the continued building of coal plants, thereby appealing to the fossil fuel lobby and obfuscating the deeper issues. And the nuclear lobby is using climate change to revive their flagging industry despite serious concerns over hazardous wastes, a lengthy development process, and clear evidence of its marginal capacity to reduce emissions.[9]

Ultimately, none of these options addresses our over-reliance on fossil fuels, the problems with continued industrial expansion, or the need for more sustainable modes living and working. Instead of limiting advertising, restricting the overuse of pollutants or legislating for deeper cuts in emissions in key polluting industries, governments and corporations have adopted a strategy that leaves the average citizen feeling responsible for solving the climate crisis themselves.

The tendency of governments to trust business models and not strong legislation is skilfully masked by shifting guilt and responsibility onto 'consumers', and much of the public debate still remains focussed around recycling, changing light bulbs and re-using carrier bags. By reducing their carbon footprints and making choices that are more responsible in lifestyle and consumption habits, people in the developed world may try to live more sustainable lives. Whilst engagement by the public is crucial, and personal adjustments are necessary, consumer measures are limited in their effectiveness and generally only possible in the richest countries.

Moreover, the ideal of 'consumer choice' in goods and services is predicated on the continued consumption of natural resources, the pollution from which is one of the main drivers of climate change. By any assessment, it would take decades for consumer preferences to re-orient the current model of production and consumption that remains driven by the need to increase profit levels and share prices endlessly.

A more suitable strategy would be for governments to enact legislation targeting the source of emissions, for example by regulating the exploitation of natural resources by industrial producers, including the full environmental costs of production into the price of goods, and discouraging the all-pervading consumer culture that is increasingly the focus of life, even in the developing world. These and similar measures would shift the responsibility away from the end 'consumer' who is presently encouraged to continue over-consuming, albeit more conscientiously.

Revisiting the Limits of Growth

Endless economic growth is clearly unsustainable as GDP can only increase through the continued production and consumption of the world's resources. This paradigm, despite its application to almost all aspects of international and domestic policies, is inherently flawed since we only have finite resources and a limited capacity to absorb emissions. As the oft-quoted UK Interdependence report by the New Economics Foundation estimated, if all countries consumed as much as the US per capita, we would require over five planets worth of resources to survive.[10]

The relentless process of economic expansion largely relies on inputs from nature, and consequently ravages the environment whilst releasing huge quantities of CO2 into the atmosphere. A recent report by the Sustainable Development Commission in the UK summarised the conflict between growth and the environment, stating; "In the last quarter of a century the global economy has doubled, while an estimated 60% of the world's ecosystems have been degraded. Global carbon emissions have risen by 40% since 1990 (the Kyoto Protocol 'base year'). Significant scarcity in key resources - such as oil - may be less than a decade away."[11]

Writing previously in the New Scientist, Tim Jackson, the report's main author, equated emissions rates to consumption rates and calculated that, if we factor in moderate economic growth, the necessary cuts in emissions will require an 11-fold reduction in the current European average consumption rate.[12] Yet any coherent plan, requisite technology or financing to achieve this universal decarbonisation of the world's economy is still far from being realised.

There are wider social issues that accompany an entirely growth-based approach to economic development. For example, numerous studies have demonstrated that economic growth is not an adequate measure of wellbeing or happiness. As a society, despite a phenomenal increase in material wealth, we are no happier now than we were in the 1970s.[13] If fairly distributed, the proceeds from growth can be important, particularly in the developing world where it can significantly enhance wellbeing by helping to secure basic human needs. But once these needs have been met, as is largely the case in rich countries, increases in wealth cease to contribute significantly to wellbeing.[14]

Even as a means of poverty reduction, economic growth is extremely inefficient and uneven in its benefits. The proceeds of growth are not distributed fairly enough to justify an adherence to the 'trickle down' theory[15] and there is no coherent global welfare system to compensate the increasing numbers of 'losers' in the global market system. Not only has inequality in wealthier countries increased in recent decades, but levels of inequality between countries also continue to rise.[16] The minimal quantities of aid redistributed by donor countries to compensate those who cannot afford to pay market prices for their essential goods and services is also fast dwindling, as donor countries have fewer resources to spare in the wake of the worsening global financial crisis.[17]

The poor in the developing world also suffer disproportionately from the 'externalities of growth'. As demand for more goods continues to rise, and resources are extracted and then consumed as products - often many thousands of miles away - various hazardous by-products are created along the way.[18] These include toxic chemicals used by the extractive industries, chemical fertilisers used by agri-business and carbon emissions from machinery and transport.

Not only can poorer countries simply not afford to address many of the environmental consequences of this process, they will often be the first to be threatened by the consequences of climate change as it affects agricultural production. Up to 85 percent of the population in some of the poorest countries depend directly on crops, livestock, fisheries or forests for their daily income or sustenance,[19] and estimates suggest that crop yields could reduce by a third in many poorer countries by 2050 as a direct result of global warming.[20] Sub-Saharan Africa, the smallest contributor to CO2 emissions, will be the hardest hit.

There is a growing acknowledgement amongst scientists and campaigners that the only way out of the quagmire of growth is an immediate shift in policy to favour public and environmental interests over those of big business and the profit imperative. But it is also necessary to achieve a wider appreciation of how the pursuit of economic growth accelerates global warming and mitigates prevention - a basic fact that should play a key role in climate change campaigns. Without greater public awareness of the political and ideological obstructions to action, governments are likely to continue reinventing the same competitive, growth-centric policies that are the root cause of the climate crises.

Only public engagement can finally urge governments to act more decisively on climate change, although this involvement must go beyond individual efforts to recycle waste, buy responsibly or reduce carbon footprints. The media has already well documented the role of non-violent protests in reshaping public opinion and policy, and the recent heavy-handed approach by the UK government to squash the G20 protests signals a growing concern amongst policymakers of how informed citizens can quickly damage their political reputation. It is time to step up efforts to educate, engage and mobilise world opinion on the real causes and solutions to climate change, enabling the global public to take the lead in forcing governments to act.



[1] Share The World's Resources, Kyoto to Copenhagen: A Dangerous Gulf between Policy and Action, STWR, 2 April 2009.

[2] David Adam, Stern attacks Politicians over Climate 'Devastation', The Guardian (UK), 13 March 09.

[3] Tony Hake, NASA Scientist says Democratic Process not working in Fight on Climate Change, The Denver Weather Examiner, 19 March 09.

[4] Share The World's Resources, The IMF's New Lease of Life: A Bad Idea? , STWR, 28 April 2009.

[5] Fortune Magazine, Global 500, 2008.

[6] For more information see George Monbiot, Heat, London, Allen Lane, 2006, p155-156.

[7] George Monbiot, Heat, London, Allen Lane, 2006, p155-156.

[8] Almuth Ernsting, Deepak Rughani, and Dr Andrew Boswell, Agrofuels threaten to Accelerate Global Warming, Report from Biofuel Watch, UNFCC, Bali, December 2007.

[9] International Forum on Globalization, Keep Nuclear out of CDM: It's an Obstacle to Carbon Mitigation,  International Forum on Globalization.

[10] New Economics Foundation, The UK Interdependence Report, NEF, London, April 2006.

[11] Tim Jackson, Prosperity without Growth, Report from the Sustainable Development Commission, London, March 2009.

[12] Tim Jackson, Why Politicians Dare Not Limit Economic Growth , New Scientist, 15 October 2008..

[13] Hetan Shah and Jules Peck, Well-Being and the Environment: Achieving 'One Planet Living' and Maintaining Quality of Life , Report from the New Economics Foundation, London, July 2005.

[14] Richard Layard, Income and Happiness: Rethinking Economic Policy , Lecture given at the London School of Economics, London, 4 March 2003.

[15] David Woodward and Andrew Simms, Growth isn't Working , Report from the New Economics Foundation, London, January 2006.

[16] Giovanni Andrea Cornia (ed.), Inequality, Growth and Poverty in an Era of Liberalisation and Globalisation, Oxford, Oxford University Press, 2004.Can Economic Growth Stop Climate Change?

[17] ActionAid, Where Does it Hurt?, Report from ActionAid, London, March 2009.

[18] For further information see the Annie Leonard and Louis Fox, The Story of Stuff, 2007.

[19] C. Dolan & K. Sorby, 'Gender and employment in high-value agriculture industries', World Bank Agriculture and Rural Development Working Paper 7, Washington, 2003, cited in Power Hungry: Six Reasons to Regulate Global Food Corporations , Report from ActionAid International, Johannesburg, January 2005.

[20] Care International and UN OCHA, The Humanitarian Implications of Climate Change, Report from Care International and UN OCHA, Nairobi, August 2008.

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