Institute for New Economic Thinking - June 24, 2019

... LP: What if we could acheive a radical break with the past? Could we then grow the global economy while reducing global CO2 emissions?

SS: Many scientists agree that the planet warming by more than 2 degrees Celsius above preindustrial levels will be catastrophic. So it’s useful to think of trying to stay within a range of 1.5 degrees warmer or less.

Let’s say we have some amazing technological breakthroughs and we reduce emmissions by 85% by 2050, which some optimistic scientists think would allow us to avoid that limit. Alas, we find that even in that perhaps overly-optimistic scenario, the global per capita income growth still has to be very low. Pretty close to zero. Is that even possible?

“Green growth” is a very tough goal. I think it’s the wrong thing to emphasize. It may be better to focus on radically decarbonizing our economies. If we do this, and it turns out that our economies can still grow, then that’s great. But if getting the carbon emmissions down means that we can’t also have global economic growth, then we’ve got to accept that.

LP: But does that mean we can’t have economic progress? No hope for people’s economic lives to improve?

SS: Not at all. Economic growth and economic progress are not the same thing. If we were to say that rich OECD countries should aim to avoid increasing the amount of stuff they produce, they could still have goals of economic progress. They could aim instead for more and better jobs, greater access to education, health, public transportation, lower pollution burdens, and clean energy sources. Things that would be great for the majority of the population.

The issue is one of better distributing our economic resources, possibly as part of some Green New Deal.

LP: You’ve noted in the past that President Obama was not realistic in arguing that the U.S. economy could keep growing without increasing CO2 emissions thanks to the rollout of renewable energy technologies. How do you assess the situation now under Trump? What about Europe and China? Is anyone being more realistic today?

SS: The outlook is not good. The Trump administration is not the only government announcing its withdrawal from the voluntarist Paris agreement. (I call it voluntarist, because the agreement concerns official pledges by countries to reduce CO2 emissions, but lacks enforcement mechanisms). The Bolsanaro government in Brazil, the new government in Australia, part of the Italian government, and more are threatening to do the same.

China has made huge advances in energy efficiency and has also started to decarbonize, but the scale factor of China’s economic growth is still more than offsetting the drastic improvements in energy and carbon technologies.

The European Union (EU) is not delivering and policies are often counterproductive. Look at the ‘Yellow Vests’ protests in France. French President Macron proposed a consumer carbon tax on (car) fuels, which will hit the incomes of people who aren’t wealthy and who already have to cope with all kinds of economic insecurities and downward mobility. The outcome is not just a populist revolt, but a major discrediting of climate change mitigation policies.

In the Netherlands, the center-right government proposed a carbon tax on consumers but not on major polluting corporations. In March 2019, voters revolted. The government parties lost the provincial elections to a new rightwing populist party, which says that climate change is just a Marxist plot!

The EU has to come up with climate policies which protect the lower- and middle-income groups as much as is possible from the costs of adjustments, while taxing carbon emissions at their source. That means taxing the 100 global corporations which together are responsible for around 70% of cumulative CO2 emissions. It means taxing the rich to bring about a more fair and politically acceptable burden of adjustment.

LP: Is there any new political momentum on climate change that could help? What about the Green New Deal embraced by many Democrats in the U.S.?

SS: The recent electoral successes of the Green Parties in Germany, the Netherlands, Finland and France do appear to suggest that there is a growing political momentum on climate change in the EU. But there is more than meets the eye.

The growing support for the Greens within the EU has come from voters abandoning the established center-left parties, like the social democrats. At the same time, there’s more support for populist center- or far-right parties, which deny or trivialize climate change and rally around a false dichotomy of “jobs” versus “the environment.” These politicians claim that they prioritize jobs, supposedly in contrast to the Greens.

Overall, the political landscape is becoming fragmented and polarized exactly at a time when we need collective, coordinated climate action. Attempts by President Macron and other governments to raise taxes on carbon-intensive consumption have seriously weakened popular support for climate mitigation. That gives the populist right a golden opportunity to beat the drum of climate change denialism. Scary stories about an impending end to life on Earth drive working-class people, many of whom have been facing existential economic insecurities for decades, into denial, and from there into the arms of the populist far-right.

The Greens have not yet convinced potential voters that there is no conflict between saving the environment and having good jobs, decent income, and high standards of living. ...
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