Ross Garnaut warned against over-playing the dangers of economic growth damaging the ecosystems AAP/Julian Smith
Economist Ross Garnaut has warned against over-playing the dangers of economic growth damaging the ecosystems that are important to life.
Current patterns of economic growth had those effects, he said, but “economic growth is not inherently in conflict with conservation of the natural environment”.
Garnaut, who did much of the groundwork for Labor’s carbon pricing, was launching a booklet of essays titled “Placing global change on the Australian election agenda”.
It has been issued by Australia21, a non-profit group, chaired by a former secretary of the defence department, Paul Barratt, that promotes research on big issues.
The aim of the booklet is to “stimulate a constructive discussion between voters and political aspirants from all parties about the kind of Australia we will leave to our children in an increasingly hazardous, globalised and resource-constrained world”.
The essays have a heavy emphasis on climate change but also cover such topics as defence, the global financial future and the threat from chemical and antibiotic overuse.
Garnaut said that increases in material wellbeing (“economic growth”) derived from increases in population, in the amount of capital each worker used and in productivity.
While an inexorable increase in population was by definition in conflict with finite natural resources, experience showed that rising living standards reduced fertility, in a process that was stronger “than the edicts of imans as well as popes”.
Increases in capital per worker could be resource-saving or resource-using – and he suggested China would provide an example of the former, Garnaut said.
The same went for productivity growth which came from technological change – much technological improvement resulted in less pressure on natural systems per unit of economic value.
“When we see economic growth in this light, we do not need to make enemies of the whole of the developing world’s people as they seek higher standards of living.
“When we see economic growth in this light, we recognise that the important thing is to make sure that we put in place policies that encourage resource-conserving and discourage resource-using capital intensification and technological change”.
That was what Australia had done in a small but so far effective way with its carbon pricing and associated clean energy policies.
He conceded that the linking of the Australian price to the European Union from 2015 would probably lead to lower carbon prices for a while and diminished pressure for the use of carbon-conserving investments and technologies.
“However, the pressure of the carbon pricing causes firms to consider the likelihood that European prices will rise in future, and to think twice about the carbon intensity of future output from investments that they are making now”.
In a shot at the opposition, which is pledged to remove the carbon tax, Garnaut said: “To expect Australians to put the welfare of future Australians near the top of their priorities may be too much to ask as we live through what I hope are the later days of the great Australian complacency.
“But surely it is not too much to expect that we will not make things worse, by retreating on the modest steps forward that we have made in addressing one of the great challenges facing our people”.
In the preface to the booklet Barratt and editor Bob Douglas, former director of the National Centre for Epidemiology and Population Health at ANU, have framed a dozen sets of questions that they hope “become part of the political discourse in the lead up to the election of our next government”.
If you want to grill your local candidates during this election, here are some of the questions. (Good luck with them.)
GREENHOUSE GASES. Do you believe we should radically curtail energy production from fossil fuels? If so, over what timeframe? Should we also curtail our mining and export of fossil fuels to other countries?
ECONOMIC MANAGEMENT AND GROWTH. Do we need to develop a more “steady state” approach to economic management, in which we can maintain full employment without rapid growth in the demands placed upon our resources and the biosphere?
DEFENCE POLICY. Are we spending enough on defence for the Australian Defence Force to be able to meet your expectations? Are you concerned about the prospect of strategic competition emerging between China and the US, and how should Australia respond?
FOOD FOR OUR FUTURE. What are the prospects of Australia feeding itself in the context of rising temperatures, declining extent and health of croplands, and rising food prices and international famine?
OUR DEPENDENCY ON OIL Should the government adopt policies to ensure we have specified stock levels of fuels and lubricants in-country?
PROSPECTS FOR THE GLOBAL ECONOMY What is the likelihood of another global financial crisis? What should we do to prepare for such an eventuality?
PROTECTION AGAINST TOXINS AND ANTIBIOTIC RESISTANCE. What role should government play in protecting the community against exposure to toxins and deterioration in antibiotic sensitivity?
THE VALUATION OF SERVICES PROVIDED BY ECOSYSTEMS. Should we include in our evaluation of proposed developments or changed land use the economic value of the services provided by local ecosystems to human communities and to industry?
ECOLOGICAL FOOTPRINTS AND EQUITY. How can we reduce our per capita footprint in a way that both assists developing countries and makes limited resources more equitably available to all Australians?
ENVIRONMENTAL REFUGEES. How should we best integrate provision for refugees from the results of climate change into our immigration policy?
DOMESTIC TRAVEL. Do you think that the rising demand for rapid movement between our major cities can be met into the indefinite future by increasing civil aviation capacity?
RESPONDING TO THE NEEDS OF THE COMING GENERATION. Is Australia preparing its younger population adequately for the likely risks ahead as climate change and resource scarcity challenge the conventional wisdom of endless economic growth?
Paul Gilding – March 20 2013
Paul is an independent writer, advisor and advocate for action on climate change and sustainability. An activist and social entrepreneur for 35 years, his personal mission and purpose is to lead, inspire and motivate action globally on the transition of society and the economy to sustainability. He pursues this purpose across all sectors, working around the world with individuals, businesses, NGOs, entrepreneurs, academia and government.
There are signs the climate movement could be on the verge of a remarkable and surprising victory. If we read the current context correctly, and if the movement can adjust its strategy to capture the opportunity presented, it could usher in the fastest and most dramatic economic transformation in history. This would include the removal of the oil, coal and gas industries from the economy in just a few decades and their replacement with new industries and, for the most part, entirely new companies. It would be the greatest transfer of wealth and power between industries and countries the world has ever seen.
To understand this incredible potential we first have to step back and understand the unique structure of this social change movement, which may rank among the most influential in history. It is simplistic to characterise it as an alliance of grass roots organisations and activists pitched against a rich and well connected adversary. While that is part of the story, it is more accurately understood as an idea whose tentacles reach into every tier of government, the world’s largest companies and financial institutions, and throughout the academic and science communities.
Because of this, it is winning the battle from within: Its core arguments and ideas are clearly right; being endorsed by the world’s top science bodies and any significant organisation that has examined them.
Far from being at society’s margins it has the support, to various degrees, of virtually all governments, and many of the world’s most powerful political leaders, including the heads of state of the USA, China and other leading economies. It counts the CEO’s of many global companies and many of the world’s wealthiest people as active supporters – who between them direct hundreds of billions of dollars of capital every year towards practical climate action. And of course, this comes on top of one of the most global, best funded, broadly based and bottom up community campaigns we have ever seen.
That is the reality of the climate movement – it is massive, global, powerful, and on the right side of history.
So why, many ask, has it so far not succeeded in its objective of reducing CO2 emissions? Much has been written on this topic but most of it is wrong. It is simply an incredibly big job to turn on its head the global economy’s underpinning energy system. And so it has taken a while. Considering how long other great social movements took to have an impact – such as equality for women or the end of slavery and civil rights movements – then what’s surprising is not that the climate movement hasn’t yet succeeded. What’s surprising is how far its come and how deeply it has become embedded in such a short time.
And now is the moment when it’s greatest success might be about to be realised – and just in time.
We are at the most important moment in this movement’s history – in the midst of two simultaneous tipping points that create the opportunity, if we respond correctly, to win – eliminating net CO2 emissions from the economy and securing a stable climate, though still a changed one.
I have come to this conclusion after reflecting on a year when an avalanche of new knowledge and indicators made both tipping points clear. The first and perhaps the best understood is the rapid acceleration in climate impacts, reinforcing the view many hold that the scientific consensus on climate has badly underestimated the timing and scale of climate impacts. The melting of the Arctic Sea Ice, decades before expected, was the poster child of this but extreme weather and temperature records across the world, notably in the USA, suggested this Arctic melting is a symptom of accelerating system change.
It also became clear that this was literally just the “warm up” act – that we are currently heading for a global temperature increase of 4°C or more, double the agreed target.
In response came a series of increasingly dire warnings from conservative bodies like the International Energy Agency, the World Bank and the International Monetary Fund. Perhaps most colourfully, the IMF chief and former conservative French finance minister, Christine Lagarde, said that without strong action “future generations will be roasted, toasted, fried and grilled”. The World Bank was similarly blunt about the economic consequences of our current path: “there is also no certainty that adaptation to a 4°C world is possible.”
These and other reports laid out the evidence that the only option was transformational economic change because the alternative was simply unmanageable. Action was no longer a preferred outcome but an essential one. As the World Bank said “the projected 4°C warming simply must not be allowed to occur”. Even the IEA, historically a kind of advocate in chief for the fossil fuel industry, came on board, pointing out that a stable climate and economy requires the majority of the global reserves of fossil fuels to never be burnt.
It is an extraordinary turn around when key mainstream economic institutions lay out the case for dismantling what is arguably the world’s most powerful business sector.
Of particular note in all this, observing both the message and the messengers, is that what was predominantly an ecological question is now primarily an economic one. This is a profoundly important shift, as economic risk is something society’s elites take very seriously. It also unleashes another major potential tipping point which we seen signs of but is not yet in full flight. When non-fossil fuel companies understand the broad economic risk posed by the lack of climate action, they will become genuine and strong advocates demanding climate action – in their own self-interest. This is one to watch carefully as it will see a major shift in the politics when it comes.
The second tipping point in 2012 was the clear evidence that a disruptive economic shift is already underway in the global energy market. There are two indicators of this, with the first being the much noted acceleration in the size of the renewable energy market with dramatic price reductions and the arrival of cost competitive solar and wind. It is hard to overstate the significance of this as it changes the game completely, as various recent reports have shown.
Rooftop solar for example has grown so fast it is now eroding the profitability of major utilities by taking away their high margin income – peak pricing – and reducing demand. This is already seeing major economic disruption to companies and national economic infrastructure as this report from UBSon developments in Europe shows, with major shutdowns of coal plants now inevitable.
Of equal importance, and partly triggered by these market shifts, is the awakening of the sleeping giant of carbon risk, with open discussion in mainstream financial circles of the increasing dangers in financial exposure to fossil fuels. This has been coming for several years because of the financial risk inherent in the carbon bubble. As Phil Preston and I argued in a paper in 2010 and I further elaborated in The Great Disruption, the contradiction between what the science says is essential and the growth assumptions made by the fossil fuel industry is so large it represents a systemic global financial risk. This has been well articulated and more deeply explored by groups like Carbon Trackerwho have been taking the argument to the mainstream finance sector.
In 2012 this hit home, with significant economic and financial players like the IEA, HSBC and S&Ptalking about the concept of unburnable carbon and the financial risks in both investing in fossil fuels and in lending to coal, oil and gas projects. HSBC forecast a market value loss of 40 – 60% for oil and gas majors if the world acted to keep below 2 degrees. The IEA forecast the revenue loss in that scenario for the global coal industry would be $1 trillion every year by 2035.
Combined, these two tipping points present the opportunity for the broad climate movement to achieve success, if they are understood and responded to appropriately by the activist, policy and business communities. But first they must be seen for what they are – indications we are poised on the edge of a truly historic economic transformation – the end of fossil fuels and the building of a huge new industry sector.
- To summarise:
- – The science shows how we are not just failing to slow down climate change, but are in fact accelerating towards the cliff.
- – In response, mainstream organisations focused on the global economy are becoming increasingly desperate in their calls for action, fearing the economic consequences if we don’t. They are arguing that the only way the world can avoid the risk of breakdown is to transform the economy urgently and dramatically.
- – Our capacity to do so is now real and practical, with the technologies required already being deployed at very large scale and at competitive cost. The size of the business opportunity now on offer is truly breathtaking.
- – In response, the financial markets are waking up to the transformation logic – if the future is based in renewables and these are price competitive without subsidy, or soon will be, the transformation could sweep the economy relatively suddenly, even without further government leadership.
- – This then puts in place an enormous and systemic financial risk – in particular investments in, or debt exposure to, the multi-trillion $ fossil fuel industry.
- – This risk is steadily being increased by activist campaigns against fossil fuel projects (worsening each projects’ financial risk) and arguing for fossil fuel divestment (putting investors reputation in play as well).
- – In response investors and lenders will reduce their exposure to fossil fuels and hedge their risk by shifting their money to high growth renewables.
- – This will then reinforce and manifest the very trend they are hedging against.
- – Thus it’s game on.
Is that it? Can we now sit back and expect the market deal with this?
Most definitely not. It is probably true that the market would sort this out by itself if we had 60 years for it to do so. But we don’t. The science is clear that we have less than 20 – and this is where the opportunity for the climate movement emerges and why the choice of focus and strategy is now is so important. The task at hand is clear for policy makers, for business and investors as well as for the activist community. It’s acceleration of existing momentum – to slow down fossil fuels and speed up clean energy. To make the 60 year process, a 20 year one.
It is now realistic to imagine removing the coal, oil and gas industries from the economy in less than 20 years. Doing so is required if we are to have an 80% or greater likelihood of preventing the climate warming past 2 degrees C, a point past where the system could spin out of control.
What we are now hearing from major international economic institutions is that this is a binary choice. Either this happens or we head for social and economic breakdown. As the World Bank argues, the latter “must not be allowed to occur”.
Timing is the key shift the world needs to make in its thinking – this is no longer about the future, it’s about now. We don’t have 20 years to decide to act; we have 20 years to complete the task. If we follow the science, then in 20 years we must have removed the coal, oil and gas industries from the economy and replaced them. It’s simple, it’s urgent and perhaps most importantly, it’s now achievable.
History gives us many examples of dramatic economic shifts – like the arrival of the computer chip and with it, the internet, the emergence of communications technologies and other facilitators of globalisation. We also have many examples of “whoops” moments – points when we realise after the event something was a very bad idea. Like tobacco, asbestos, lead in fuels and paint, ozone depleting CFCs and various other chemicals. Collectively, this tells us something very important. While each case is different, we are capable of transformational economic change and while it’s often disruptive and always fiercely resisted, we regularly do it. This is much larger in scale but the same processes apply.
We need to keep reminding ourselves that this kind of economic transition is OK. That’s how markets works and while it will be challenging and require huge effort, it will work out. Yes, huge amounts of wealth will be lost and gained in the process, industries, countries and cities will face massive economic and practical restructuring challenges and many people will suffer in the process. But that’s how market shifts happen.
Austrian economist Joseph Schumpeter coined the phrase “creative destruction” to describe this process and to explain why it’s the underpinning strength of capitalism, calling it: ”A process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”
But while we can be comfortable that this process will deliver the required outcome, it’s not going to be smooth or pleasant for many participants. It will rather be messy, highly controversial and see huge amounts of value and employment both destroyed and created as the economy restructures around the necessary reality of a post fossil fuel economy. I’m neither relaxed about this nor naïve about the scale of the challenge. I just accept that it’s now inevitable. I also know we can do it and that we simply have no choice.
Of course, the losers will fight all the way to the end, using every argument, manoeuvre and delay they can think of. We should expect nothing else of them and, realistically, most of us would do likewise faced with similar circumstances. But they will still lose.
I do not however think we should demonise the fossil fuel industry or the people involved in it. The job to remove this industry has to be done – the future of civilisation literally depends on it – but we can do this firmly and clearly without making it personal. As I’ve said in recent speeches on this topic – with some humour but a serious message – “we have to remove the coal, oil and gas industries from the economy with love and compassion.” This is the tough love of responsible parenting – the kids don’t like it but it’s still the right thing to do.
So with some surprise, this is where we find ourselves. It still won’t happen without focused and determined effort, but for the first time, we can envisage victory in the decades long fight on climate change. The science is clear, the technology is ready, significant sections of the elite are on side and the financial momentum is with us.
And this time, the economics is playing on the same side as the environment. Just in time.
29 January 2013, 6.38am AEST
Frederick Trainer does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations. The Conversation provides independent analysis and commentary from academics and researchers. We are funded by CSIRO, Melbourne, Monash, RMIT, UTS, UWA, Canberra, CDU, Deakin, Flinders, Griffith, La Trobe, Murdoch, Newcastle. QUT, Swinburne, UniSA, USQ, UTAS, UWS and VU.
It is technically possible to supply your own food, energy and shelter, without reliance on the grid.Moosicom/Flickr
My old house has never been connected to the electricity supply. It runs on a couple of photo voltaic (solar) panels and is warmed by firewood. All water used is rainwater.
I have a vegie garden, fruit trees and chickens. My pumps and machinery run on 12 volt solar electricity. I travel 25km to paid work once a week, by bicycle and train, and drive about 10km a week. I never go away on holidays. The average Australian household uses about one kilowatt of electricity; I use eight watts.
So isn’t downshifting to less consuming lifestyles the way to solve the greenhouse problem?
Emphatically, no it isn’t. It’s part of the solution but not the main part.
If you want to fix the climate, developing nations’ poverty, resource depletion and other environmental problems you will also have to totally scrap economic growth, and therefore capitalism, and largely scrap globalisation, centralisation, the market system, representative democracy, the financial system, big cities, modern agriculture and urbanism.
A little extreme? Here’s the core argument.
Everyone knows the basic facts and figures, but few face up to what they mean. To provide the average Australian with food, settlement area, water and energy now requires about eight hectares of productive land.
If by 2050, nine billion people were to have risen to the present Australian “living standard”, and the planet’s amount of productive land is still the same as it is today, the amount available per capita will be about .8ha. In other words Australian’s today are using ten times the amount that will be possible for all.
It’s much the same for all other resources. There are already scarcities regarding food in general, fish, water, most industrial minerals and petroleum, with estimates of peak coal occurring within a few decades. Only about one fifth of the world’s people have rich world consumption rates, and six times as many will soon be aspiring to them.
And yet, everyone is manically obsessed with constantly increasing “living standards”, production, consumption and GDP. At the standard 3% per annum growth rate, according to WWF figures we will need more than 20 planet earths to meet 2050 resource demands.
Living off-the-grid is not completely without a source of energy … solar panels are an integral part of the lifestyle. sridgway/Flickr
The glaringly obvious yet ignored point is that rich world per capita levels of resource consumption and ecological impact are far beyond levels that that are sustainable, or that could be made sustainable by any remotely plausible technical fixes.
People, including most of the green ones, do not grasp the magnitude of the overshoot, nor the significance of the change required to solve the big problems.
The problems are being caused primarily by our systems, not our lifestyles although these are far too affluent. It’s not possible to get resource consumption down to one-fifth or one-tenth of present levels, unless we not only shift to a zero growth economic system, but to one with a far lower level of GDP. That means an economy in which there can be no interest paid.
That means we have to scrap the present financial system, and the forces driving innovation, incentive, work and investment, and the quest for greater wealth. It means much more than scrapping capitalism; it means completely abandoning some of the fundamental ideas (like the definition of progress,) and values (such as getting rich) that have driven Western culture for 300 years.
We could do it, easily, if you wanted to.
My system, The Simpler Way (detailed in my book), is one whereby we transform our present suburbs and towns into highly self-sufficient and self-governing local and zero-growth economies, in which the quality of life would be higher than it is now in the consumer rat race.
Yes, an important part must be the willing acceptance of frugal, self-sufficient, cooperative ways at the level of the household and community. But it would not be necessary to go as far as I choose to on my bush homestead. We could still have electricity grids, (small) cities, (some) trade and heavy industry, railway networks, a (small) central state (under the control of town assemblies), universities and professional skills, and more socially useful high tech research and development than we have now. You might need to work for money only one day a week.
An ecovillage at Currumbin in Queensland. Flickr
But these very encouraging beginnings are not yet focused on the crucial goals.
If you really want to help save the planet don’t fret much about downshifting but join your local community garden, with a view to getting people there thinking more about the need to focus on us eventually achieving the big structural and cultural changes.
2012 Bellarine 2050,
OUR PLACE, OUR FUTURE
A BLUEPRINT for the future development of the Bellarine Peninsula will move a step closer to completion this week.
A forum on Friday, 4th July 2012 at the Clifton Springs Golf Club, hosted by the Committee for Bellarine, is the second phase in the drafting of the Bellarine 2050 Masterplan.
Committee executive director Tom O’Connor said forecasts of a population explosion on the Bellarine has added urgency to the drafting of a master plan.
The plan will detail a wide range of complex social, industrial and administrative challenges associated with the effects of future growth.
He said Bureau of Statistics projections show 140,000 people almost treble the current number will call the Peninsula home by 2050. The masterplan will examine how the various residential, industrial, education and recreational issues should be identified and dealt with.
Those attending the forum will include business and community leaders, local councillors, police and emergency services and members of community organisations.
Mr O’Connor said his group would also meet with experts from Marcus Oldham College to discuss future employment strategies.
“We need to develop job opportunities linked to the many strengths of the Bellarine,” Mr O’Connor said.
“It is important we recognise and preserve the natural resources of the peninsula and the offshore potential.”
He said the employment potential of the equine, agriculture and aquaculture sectors would be high on the agenda.
The committee is also due to meet with Planning Minister Matthew Guy later this week.
“We will be looking at the urban design framework as it applies to the various towns on the Bellarine,” Mr O’Connor said.
“The future requirements for retail and service industries, public transport and roads will form the basis of that discussion.”
Among the expert key note speakers due to address the forum is urban design consultant Professor Paul Carter.
Turning Paris into an open-air laboratory for innovation
By Bryan Pirolli | July 20, 2012, 1:22 AM PDT
PARIS – With the Grand Prix de l’Innovation currently in the final rounds, the French are putting more and more focus on innovation, especially in Paris.
With the 11th annual competition and 12,000 euros at stake, contestants are striving to raise the bar to rethink new technology in fields like service industries, ecology, and health.
Weblink (here) to the Committee for Bellarine & CleanGreenBellarine.com Groupsite FORUMS.
By the Committee for Bellarine (Inc.), which was formed to simultaneously promote the Bellarine region and encourage specific sustainability projects in the area.
The site is a public meeting place that provides members of Clean Green Bellarine & Committee for Bellarine with a shared calendar, discussion forums, member profiles, photo gallery, file storage and more. We encourage you to upload your photo, complete your profile and participate!
The Committee for Bellarine program has grown into a leadership network that supports and enables sustainable and appropriate growth for the existing community and its future communities. The network’s approach is based around four key environmental principles: Water, Waste, Energy and Biodiversity.
People and community adding social sustainability to the primary agenda.
Clean Green Bellarine is a program of the Committee for Bellarine.
Clean Green Bellarine
(www.)CleanGreenBellarine(.com) has been integrated into this site
Clean Green Bellarine is a leadership website program committed to encouraging a sustainable approach to growth on the Bellarine, growth appropriate for our existing and future communities.
We are community members, we are non-partisan and we work equally cooperatively with government, regulatory authorities, private and community partners.
Clean Green Bellarine encourages major projects on the Bellarine, with a focus on sustainable development that positively promotes the region.