Is Green Growth a myth?

Green growth has recently been increasingly discussed as a solution to the socio-ecological crisis, for example in the context of international organizations such as the World Bank and parts of the UN. This crisis describes the inability of the Western development model to respond adequately to many global environmental problems, such as climate change, tropical deforestation and the overexploitation of soil and water. Planetary limits to material growth will soon be reached, and tolerable limits have already been partially exceeded. If the current trend of overexploitation of resources and pollution of the atmosphere and oceans continues, the livelihoods of many millions of people will be permanently threatened. The socio-ecological crisis is thus not only a question of the possibilities of growth, but also of international and intergenerational justice. For example, climate change, for which the rich nations of the global North are predominantly responsible, is very likely to cause the most damage in regions where people already have few opportunities to adapt and secure themselves against the changes.

The idea of green growth suggests that economic growth can be sustained through appropriate policies, solving multiple environmental problems without increasing the consumption of fossil fuels and energy. Green growth is supposed to be generated primarily through sustainable technologies, such as increasing energy efficiency, recycling raw materials, or substituting fossil fuels with renewable energy sources. In this context, proponents of green growth not only promise to solve sustainability problems, but also see opportunities for new growth impulses to help overcome social and political crises, for example by creating new jobs.

To promote green technologies, many economists rely on special markets that map the "true prices" of environmental effects (externalities) and thus make them perceptible and calculable for companies and consumers. Take climate change, for example: Since the space for emissions in the atmosphere is limited, tradable emission certificates are supposed to ensure an efficient distribution of emissions that can still be tolerated, so that CO2-intensive technologies become more expensive. However, if there is no international coordination of such policy measures, production shifts of CO2-intensive industries may occur. In the past, however, environmental policy measures in other areas have often resulted in problems being solved only locally and shifted to other countries.

In addition, many savings are partly used up again elsewhere. This so-called rebound effect is one of the reasons why we have so far only seen a relative decoupling of economic output (usually measured as gross domestic product) from resource consumption. Economists and environmental scientists still argue today about whether absolute decoupling is also possible, i.e. whether energy and resource consumption can decline despite a growing economy. Therefore, supporters of post-growth approaches rightly argue that we should not only consider how to channel private and public investments into the development and diffusion of green technologies, but also how economies beyond growth might work.

This text was initiated as part of a sticker campaign by the group Was ist Ökonomie? and produced for the Netzwerk Plurale Ökonomik. Many thanks to the Institut für Makroökonomie und Konjunkturforschung of the Hans-Böckler-Foundation for the financial support.