In the week that Britain lost its triple A credit rating, a Chatham House hosted meeting on green growth offers clues for governments perplexed as to how and when to get the economy growing again – this time more sustainably.
Jointly sponsored with the Global Green Growth Institute (3GI – a newly-established inter-governmental body based in South Korea), the 100 or so delegates came from many parts of the world to share their experience, analysis and tactics for greening our economies.
One speaker quoted legendary investor Jeremy Grantham who, in his 4th quarterly letter to clients last year, said “you can have growth today, or sustainability forever”. And this clear statement of our choices became the leitmotif for much of the discussion: on time horizons, politics and interests, and what to do about ‘stranded assets’.
A hallmark of the green economy movement is its engagement with ministers of finance, business leaders and investors, rather than confining itself to ministries of the environment. Since the debacle at Copenhagen in December 2009, when it became clear that government leaders were unable to take collective action to cut greenhouse gases, many people have transferred their attention to the private sector. More pragmatic, interested in results, and less constrained by electoral cycles than our politicians, business leaders have been queuing up to show their sustainability credentials – Unilever always first amongst equals, but also Nestle, Puma, IKEA, Philips, and Siemens.
It is encouraging and impressive. And for a moment, you might think the battle is won. But speakers at the meeting reminded us that while the investment in new capacity for renewable energy, for example, is now almost equal to that for fossil fuels, there is a huge legacy of high carbon energy, transport infrastructure, and building. So we’re on track to hit 3-4 degrees Celsius overall warming this century.
Discussion of green growth tends to paper over several cracks. First, much of the language is of “win-wins” and sometimes even “triple win”. But if there were really so many easy opportunities (the famous ‘low hanging fruit’), surely there would be little opposition in the push for sustainability?
Similarities with slavery
The problem, as the discussion made clear, is the powerful incumbents in many high carbon sectors who fear they will find themselves holding stranded assets. How, if at all, should we compensate such asset holders for not being able to sell and burn carbon? When Britain abolished slavery enormous compensation was paid — not to the slaves for the wrong they endured, but to their former masters who had suffered ‘loss of property’. Do we think it right to do this again?
Second, because of ‘a fear of frightening the horses’, the debates play down the size, scale, and pace of change we need. A chasm yawns between those who say ‘Don’t worry, it’s easy, we can do it at little real cost’, and those, like IIED, who argue we have left things so late we must now urgently transform our systems. So how do we persuade people? Will we need a major shock before people see scale of change required?
Third, middle and low income countries, which have most of the interesting experience to share, do not feature enough in the discussions. Innovative activity in the informal economy, in the work of social enterprise and around land, water, and forests also needs to feature. By chance, Ecuador’s Deputy Foreign Minister was in London this week. He wanted to discuss ambitious plans to recognise global rights for nature, and find a means to generate value from Ecuador’s non-use of oil and gas reserves.
Overconsumption and inequality
Fourth, there is a fundamental issue around overconsumption and inequality, which needs to be front and centre. Yet business-friendly debate steers around these issues, unless you’re Warren Buffett complaining you’re not paying enough tax. We must help people recognise we live in a world of finite resources. After millennia of apparently open frontiers, we need to recognise planetary boundaries and how to get fairer shares within the whole.
So how do we address the asymmetries in lobbying power between a few big established fossil fuel companies and the many citizens who see their own and their children’s future being hocked for short term gain? Suggestions included hiring the top lobbyists and advertising agencies to work for sustainability instead of against; building long term thinking into all decisions; and investing in showing people the consequences of business as usual.
Tips for a Chancellor struggling to restore growth? Take a different but increasingly mainstream business track. We urgently need a high and rising price for carbon, to release a range of new energy options, make efficiency more profitable and re-establish confidence in the carbon market. For example, taking taxes off labour and putting them on resources would create jobs. Long term decision-making needs to be built into government choices (especially the Treasury discount rate) and how businesses behave. And we need transparent access to government and senior civil servants that shows particular interests don’t trump evidence when it comes to taking a new greener path.
Other web coverage of the Green Growth – transforming economies for competitiveness and resilience? meeting: Climate Conversations What does a "green economy" look like?