Ecological economic growth

A clear path to escaping global climate catastrophe and pursuing sustainable Ecological Economic Growth (EEG) and not the increasingly popular gnashing of teeth calling for so-called degrowth, meaning economic contraction.

The message from Donella Meadows, a Limits to Growth author, questioning “growth of what, and why, and for whom, and who pays the cost, and how long can it last, and what’s the cost to the planet, and how much is enough?” has been replaced by a slogan “degrowth”.

Meadows’ concern with paying careful attention to the quality and consequences of economic growth has become an assertion that economic growth means inescapable negative consequences.

Meadows’ analysis is far more nuanced. “Growth has costs as well as benefits, and we typically don’t count the costs — among which are poverty and hunger, environmental destruction, etc. — the whole list of problems we are trying to solve with growth! What is needed is much slower growth, many different kinds of growth, and in some cases no growth or negative growth. The world’s leaders are correctly fixated on economic growth as the answer to virtually all problems, but they’re pushing with all their might in the wrong direction.”

Degrowth is, at the bottom, a response to business and economic growth as usual. Global poverty and deepening inequality combined with worsening ecological pillage and the consequences of climate change is the basis for questioning the value of economic growth. Degrowth is a cri de coeur lamenting the current state and injustice of business as usual and considers ecological economic growth as an impossible grand illusion.

Degrowth as policy

Degrowth as a guide for politicians, policymakers, investors, bankers, business people, scholars, workers, and citizens is a perplexing and paralyzing message without detailed clarification. Degrowth as a slogan will not magically lead to human betterment and ecological improvement any more than the belief that an increase in GDP is necessarily beneficial.

In the pursuit of sustainability and profit, businesses variously plan how to reduce costs, increase quality, reduce waste, meet profit hurdle rates, follow regulatory and market rules, focus action by spinning off subsidiaries, concentrate on specific market segments and areas, reduce pollution, depletion, and ecological damage, work to restore habitat and so-called natural capital, support expansive stakeholder value and social and ecological justice. Generic degrowth has little relevance for such complex market paths and goals.

Further, the pursuit of social justice globally is inextricably connected with ecological and business transformation. This is a complex amalgam of a global convergence on sustainable norms for all. For example, a sustainable per-person average carbon dioxide emissions, around 2.5 metric tons per person per year, will require a dramatic reduction of emissions by the rich. Justice means a fair share of the social product for all, manifest as a Basic Income Grant or Negative Income Tax and shared work to eliminate unemployment.

21st-century tools for social justice and an ecological turn will depend upon, of course, democratic insistence from millions at the ballot box and in the streets. This can mean, for example, a legal redefinition of fiduciary responsibility for both businesses and non-profits to require the development of business plans to make economic growth mean ecological improvement as well as supporting social and ecological justice. According to anthropologist Jason Hickle, degrowth is predicated on the systematic reduction of resource and energy use and emissions, particularly by high-consuming nations, while improving people’s well-being. But degrowth is more than just simply reducing the “bads “and advancing the “goods” ecologically and socially.

The clear implication is that conventional economic development and pollution, depletion and ecological damage is a constant, resistant and almost impervious to change whose negative consequences rise and fall with GDP and the pursuit of growth imperatives and profit. This means that serving basic human needs and, at the same time, stopping our economy from transgressing the sustainable bounds of climate change, ocean acidification, biodiversity loss, ozone depletion, chemical pollution, and more must require a radical reduction in economic growth as opposed to a radical transformation in actions that dramatically reduce negative ecological consequences. The realistic choices we face are between an ecological turn dramatically healing the biosphere in the pursuit of sustainability and ecological economic growth and the self-destructive ongoing pursuit of business and pollution as usual whose consequences will be global collapse and degrowth in the least desirable fashion.

Ecological economic growth

Ecological market rules, ecological tax signals, regulations and laws can transform the economy by price and profit signals for ecological improvement and social and ecological justice. In an ecological economic growth system sustainable goods and services cost less, gain market share, and become more profitable sending clear messages to producers, consumers, investors, and workers.

Growth becomes a force for ecological improvement and a global convergence on sustainable norms. It’s simply a fallacy to assume that monetary growth is the same as growing ecological pillage. It could be. The challenge is to make sure it does not. This means a systematic and comprehensive change in behavior. If these changes are made then our global economy can be sustainable, more prosperous, and fairer.

An example of ecological change is global action to reduce CFC ozone destruction by mandating, under the Montreal Protocol, refrigerant chemicals less chemically reactive in the upper atmosphere, and now replacing CFCs, which also contribute to climate change, by ammonia and carbon dioxide driven cooling. The solution to CFC pollution is not to reduce air-conditioning, but to reduce the damage from CFCs through chemical engineering, and using new chemistries, not just for cooling, but in air source heat pumps providing heating and cooling, reducing by a factor of three or more the consumption of fossil fuels due to the higher efficiency of the Carnot refrigeration cycle. There is, of course, the need for enforcement and monitoring to make sure the rules are being followed.

Ecological economic growth: falsification of the degrowth hypothesis

Enormous increases in ecological economic growth and wealth that can be broadly distributed are possible with a very substantial net reduction in pollution, depletion, and ecological damage.

One: renewable energy development

First, is the replacement of fossil fuels and nuclear power with renewables. On a global scale, Oxford University researchers in a peer-reviewed study in the journal Joule found that a decarbonized energy system by around 2050 will save the world at least $12 trillion, compared to continuing current fossil fuel use.

I am working on plans in MA for speedy conversion to 100% renewables; 50% solar with each Town in the Commonwealth building its fair share of solar, and 50% from offshore wind. Renewables are combined with green hydrogen production through renewably powered electrolyzers, energy storage and grid improvements. This is billions of productive investments leading to an enormous reduction in greenhouse gases and ecological damage. This will be productive, job-creating, and ecologically beneficial and help swell GDP in dollars.

Yes, ecological care must address all aspects of this plan on an ongoing basis. The ownership and control of the system should include policies to make energy users owners of renewable energy systems. This can be accomplished through the purchase of the system by the energy users after-tax equity is exhausted using the stream of income from their energy purchases plus low-interest revenue bonds.

The global renewable transformation is, at the bottom, a political and bureaucratic problem to overcome the inertia and power and influence of business and pollution as usual. There has been, for example, a consistent overestimation of the costs of renewables by the United Nations’ Intergovernmental Panel on Climate Change (IPCC), the U.S. Energy Information Administration (EIA), the European Commission, the Indian government, the International Energy Agency (IEA), and the International Renewable Energy Agency (IRENA).

Physicist Amory Lovins, starting with his 1976 Foreign Affairs article, “Energy Strategy: The Road Not Taken” has made clear the consistent underestimation of renewable energy and its power for global transformation. Lovins' purpose was to “explore such basic concepts in energy strategy by outlining and contrasting two energy paths that the United States might follow over the next 50 years”. The world would not be facing climate catastrophe if we had heeded Amory Lovins’ sage advice 56 years ago.

The problem of downplaying renewables and efficiency continues today. Aarhus University professor Marta Victoria and other scientists have shown how the IPCC 2050 integrated assessment modeling (IAM) scenarios have underestimated PV over the past 14 years, confirming research at the University of Geneva. “Our paper reaches similar conclusions that the paper by [Marc] Jaxa-Rozen and [Evelina] Trutnevyte [did] ...But we focus more on explaining the reasons behind that, which means the limitations of the model.”

And how will degrowth respond to the consequences of reducing expenses on fossil fuels (a positive for degrowth) accompanied by massive productive investments in renewables (a negative for degrowth) and substantial zero carbon energy sales displacing carbon pollution (a negative for degrowth) and potential monetization of positive ecological value (a negative for degrowth)? This makes no sense, unless, of course, degrowth thinkers make conditional exceptions for renewable development.

But this is precisely what Ecological Economic Growth (EEG) means. But EEG’s focus is on ecological consequences, the real-world results of economic activity and not on the measurement of aspects of GDP without knowledge of consequences.

Two: trade-in information

Second, is the trade in information on a renewably powered world wide web. This can range from trade-in computer plans to build a wide range of useful products through 3D printing using sustainable input materials, to trade-in online avatars, to streaming entertainment videos with actors performing in front of a green screen. This trade-in of dematerialized information can be enormously profitable and result in ecological improvement. Information is already the high-profit center for the 21st century for good reason.

Three: ecological value

Third, is the creation and monetization of ecological value and improvement into ecological wealth that sends powerful market signals for further ecological development. For example, the value of the displacement of a metric ton of carbon dioxide equivalent emissions by renewables has a value, estimated, based on the work of the US National Academy of Sciences, of $150 dollars a metric ton. This value can be monetized on the books of banks as paid-in capital and as cash through the creation of a regulatory asset such as a Sustainability Credit (SC). The 37 gigatons of fossil fuel carbon dioxide emissions represent the yearly potential of $5.5 trillion of ecological wealth creation on the books of investment banks, green banks, credit unions, and community development financial institutions.

The $5.5 trillion as banks own capital becomes at least $50 trillion dollars annually through the ordinary ability of banks to make investments 10 times greater than their capital. The simple requirement would be an investment of this money in further productive renewable development and sustainability tasks.

SCs will be created on the basis of metered and certified renewable energy carbon dioxide displacement. The capital created on bank balance sheets will become part of the Federal Reserve or other central bank regulation subject to usual monetary supply and credit controls. SCs are not helicopter money. They are for productive investment in more renewables and other transformative ecological measures.

The monetization of ecological value can represent a fundamental shift in market behavior and the pursuit of profit conditioned to meet ecological ends. It will help make ecological economic growth become a high-profit center that does not require social theory to understand and parse.

Ecological value is real value, the new gold. It rewards the positive results of sustainable conduct, and changes markets from acting as externality machines gaining from pollution, depletion and ecological value to the opposite.

Ecological growth not degrowth

Consumers, investors, and producers respond quickly to price signals. But price signals are not enough. The elasticity of demand for products like gasoline is limited absent alternatives. It’s easier to stop using gasoline at $4.00 a gallon if you can use an equivalent dollar-a-gallon electric car instead.

The role of government is to advance comprehensive efforts to support the development of an industrial ecology aimed at zero pollution and zero waste where all output becomes inputs for other products. Car manufacturers already have zero landfill standards. What’s next is complete recycling and reuse and zero operational pollution with the battery systems on cars becoming an integral plug-in to help grid energy needs.

Chemical, mechanical, electrical and industrial engineering can transform manufacturing processes such as current high carbon pollution concrete production and steel manufacturing slashing pollution, and the use of wood in large building construction.

An ecological growth transformation must be comprehensive and address agriculture, aquaculture, forestry, as well as industry. Agriculture can slash carbon emissions through perennial growth development and a wide range of sustainable practices including dual-use agricultural solar making farms a resource for solar and providing when needed, shade to help adjust to rising temperature, and drought and improve the effectiveness of drip irrigation. Aquaculture can cultivate large-scale kelp and Azolla growth for carbon reduction, food, and energy production. Forestry can both, through aggressive reforestation, increase the total tree coverage and through breeding and genetic engineering increase root carbon storage and sequestration.

We need to make it clear that fundamental and rapid improvement in ecological quality and sustainability is the basis for ecological economic growth and profit in the context of social and ecological justice in the 21st century and beyond.

This is a matter of necessity and an enormous opportunity for all. We must become participants in global efforts for sustainability and ecological economic growth and the pursuit of social and ecological justice for all.

We need to recognize ourselves as self-conscious participants in the global dynamic of the ecosphere’s response to all influences to help maintain conditions favorable for all life. Crafting the framework of ecological market rules, ecological taxation, valuing and monetizing ecological wealth, regulation, and law is the basis for building an ecological growth system. Ecological economic growth is a great and globally transformative adventure in which we can all take part.