What do we mean by a Green Economy?

The development of a green economy, or an economy that is environmentally sustainable, is imperative, given the need to reduce carbon emissions to minimise the risk of climate change and stop the over exploitation of resources and widespread environmental degradation, which is eroding the natural capital on which human well-being depends.

The good news is that recent years have witnessed a rapid growth in interest in the green economy, resulting in its incorporation in policy at local, national and international levels. Renewable energy is leading the way and has now become the largest source of new power generation capacity with costs continuing to fall. This interest is driven by an attractive idea, as outlined by Newton and Cantarello (2014):

“The green economy is widely seen as a potential solution to the current global economic and environmental crises and a potential mechanism by which sustainable development might be achieved in practice. Considerable investments are now being made in the development of green technology, renewable energy, biodiversity conservation, resource efficiency, recycling of materials and green infrastructure…

It offers nothing less than a better world for everyone. However, achievement of this vision will require unprecedented changes in our society and how we go about our everyday lives.”

The term ‘green economy’ only became widely used following the global financial crisis of 2007-2008. The financial crisis pushed many countries into recession at a time when debt levels where high. Job losses and business failures followed, and in many developing countries, food crisis were exacerbated, resulting in higher prices. These events coincided with increasing concern about the potential impacts of climate change and against a backdrop of widespread and intensifying ecological degradation (Newton and Cantarello, 2014).

This also happened at a time when economic inequality globally and within countries had been on the rise. Indeed, a UNEP report in 2009, titled ‘A Global Green New Deal’ outlined how the world was in the grip of multiple crises. The price of oil had hit nearly US$150 per barrel the year before, although the outbreak of the financial crisis and the ensuing recession brought a significant correction to below US$40 per barrel, a fuel crisis had set in.

The same report acknowledged that to feed a growing population, the world’s food production must double by 2050, but biodiversity and ecosystem services, which ultimately determine the future sustainability of agricultural productivity, were eroding rapidly. This erosion, it was noted, was particularly damaging for subsistence farmers and pastoralists who depended predominantly on ecosystem services such as the regular and free flow of water and nutrients from forests to aquifers to their fields.

Last, but not least, a persisting water crisis in which one in five people in the developing world lacks access to sufficient clean water. At the same time demand for water for competitive uses is growing and water availability in many parts of the world will increasingly be affected by climate change.

“Development of the green economy was widely seen as offering a potential solution to these multiple global crises. For example, the United Nations Environmental Programme (UNEP) promoted the idea of ‘green stimulus packages’ as part of the economic recovery efforts, involving large scale public investment in green technologies. In 2008, UNEP launched a ‘Green Economy Initiative’ to provide analysis and policy support for development of the green economy, and published ‘A Global Green New Deal (Barbier, 2009,2010). This identified the potential opportunity provided by these multiple crises, by supporting economic recovery while addressing other global challenges, such as reducing carbon dependency, protecting ecosystems and water resources, and alleviating poverty. This was identified as the only way of revitalising the global economy on a more sustained basis (Barbier, 2009). In 2011, UNEP’s Green Economy Initiative provided a detailed report on the green economy, with the aim of providing practical guidance to policy-makers (UNEP, 2011)

A number of other commentators similarly suggested that these events might offer an opportunity for a fundamental shift in the global economy (Homer-Dixon, 2007; Jones, 2009). At the same time, many authors have identified the numerous business opportunities that can be provided by the development of the green economy (Esty and Winston, 2006; Croston, 2008; Makower, 2009; Kane, 2010; Wybrecht, 2010). Today the green economy is growing rapidly through the development of environmentally enhancing goods and services, including cleaner and more efficient technology, renewable energy, ecosystem- and biodiversity-based products and services, chemical and waste management, and the construction or retrofitting of ecologically friendly buildings (UNEP, 2011).” –Newton and Cantarello, 2014

Low-carbon economy and green growth

Other terms and concepts have been widely used in addition to ‘green economy’, including ‘green growth’ and the ‘low carbon economy’.

The term ‘low-carbon’ is generally preferred by the finance sector and by politicians who are focusing on the growing low-carbon energy sector, whilst continuing to support economic development in all other sectors. It’s a convenient way to avoid the word ‘green’ which is associated with enviromentalism.

“The concept of low carbon development originates in the United Nations Framework Convention on Climate Change (UNFCCC) adopted in 1992. This is based on the approach of amending economic development planning to ensure reduced emission of greenhouse gases (GHGs), which are associated with anthropogenic climate change. Many individual countries have produced low-carbon growth plans, supported by international organisations such as UNDP, UNEP and the World Bank. “ – Newton and Cantarello, 2014

In 2010, the Global Green Growth Institute was established as a new international organisation dedicated to pioneering a new model of economic growth in developing countries. Founded on principles of social inclusivity and environmental sustainability, it’s goal is the advancement of economic growth, environmental sustainability, poverty reduction and social inclusion driven by the sustainable development and use of global resources.

“Similarly, at the G20 Summit in 2010, government leaders recognised green growth as an inherent part of sustainable development, focusing on creating enabling environments for the development of energy efficiency and clean energy technologies. These countries devoted some US$522 billion to such objectives as part of the fiscal stimulus measures undertaken in 2008-2009 (Allen and Clouth, 2012).” – Newton and Cantarello, 2014

A number of other international organisations have also focused on green growth, including the World Bank who published a report in 2012 titled ‘Inclusive Green Growth: The Pathway to Sustainable Development’, which made the case that:

“…spurring growth without ensuring equity would thwart efforts to reduce poverty and improve access to health, education and infrastructure services.”

They called on countries:

“…to make strategic investments and farsighted policy changes that acknowledge natural resource constraints and enable the world’s poorest and most vulnerable to benefit from efficient, clean, and resilient growth.”

It is important to differentiate between green growth and the concept of the green economy. Whilst the concept of green growth is not unreasonable when applied to developing countries, whether or not a green economy on the whole can be seen as compatible with economic growth is a major point of debate.

The OECD seem to use the terms ‘green growth’ and ‘green economy’ interchangeably in their 2015 report, ‘Towards Green Growth? Tracking Progress‘. The report summary states:

“It draws lessons from green growth mainstreaming across the OECD’s work programme, notably in terms of how governments can maximise institutional settings to seize economic opportunities surrounding the transition to a green economy, and considers ways to enrich the Green Growth Strategy based on work undertaken since its launch.”

So what is the difference between low carbon development, green growth and green economy?

“Allen and Clouth (2012) highlight the significant overlap that exists between the concepts of the green economy and green growith, including a shared focus on environmental protection, resource efficiency, ecological sustainability, human well-being and equity. Low carbon development can best be considered as a sub-set of both green growth and the green economy. However, definitions of green growth do not refer to ecological limits… The various definitions of low carbon development, green growth and green economy can be seen to cover a spectrum of different ‘shades of green’, from narrow concerns about climate change at one end of the spectrum to more extensive critiques of the environmental sustainability of modern capitalism at the other.” – Newton and Cantarello, 2014

Conclusion

There is no overall consensus in terms of definition. Some refer to the green economy purely in terms of private sector development of clean energy and energy efficient technologies. But UNEP and others refer to human well-being, social equity and environmental limits (or carrying capacity)

A key issue

Can an effective green economy be constructed within the current capitalist economic system? Or does the system need profound restructuring?

To say that an effective green economy can be constructed within the current capitalist economic system is based on the widely held view that green technology, such as forms of clean energy, are sufficient solutions to all our current global environmental problems, including widespread poverty and social inequality.

The explicit incorporation of social equity and environmental limits in many definitions of the green economy is evidence of a counter-view. My feeling at this stage is that an effective green economy can not be constructed without profound restructuring of our economic system, but I look forward to investigating this issue further over the coming months.

References

Newton, A. C. and Cantarello, E. 2014. An Introduction to the Green Economy. Science, systems and sustainability, Earthscan, London.

Further reading

Allen, C. and Clouth, S. 2012. A Guidebook to the Green Economy. Issue 1: Green Economy, Green Growth and Low Carbon Development: History, Definitions and a Guide to Recent PublicationsUN Division for Sustainable Development, Department of Economic and Social Affairs (UNDESA), New York.

 

 

Jon Crooks, updated 25 September 2016