Growth isn’t possible, says New Economics Foundation report

Ongoing economic growth is not just questionable, but actually impossible in a world of climate change, says a new report from the new economics foundation.

Released to coincide with the economic forum in Davos, Growth isn’t possible: why rich nations need a new economic direction warns that developed countries face a choice between a safe climate or further economic growth. It is the complete opposite of what the government wants to hear:  as Gordon Brown said only days ago, “Going for growth is the government’s number one priority for this year.”

In order for growth to continue, economies need to drastically reduce their carbon intensity – the amount of CO2 released for every dollar made. Logically, efficiency would need to keep ahead of overall growth in order for CO2 levels to fall. And that’s the problem – while progress has been made in some developed countries, carbon efficiency is not high enough on the agenda and improvements are not nearly fast enough. A dollar of growth requires far less CO2 in the UK than in China, but so far no country has achieved a rate of reduction in carbon intensity that would keep climate change below 2 degrees of warming by the end of the century. As Professor Kevin Anderson of the Tyndall Centre for Climate Change concluded recently, “economic growth in the OECD cannot be reconciled with a 2,3 or even 4°C characterisation of dangerous climate change.”

Heresy it may be, but it’s really a simple matter of mathematics. In order to grow at the fairly low rate of 3% per year, rich countries would need to slash carbon intensity by 71% by 2050 – and that would still leave us with atmospheric concentrations of 500 parts per million of CO2, considerably higher than the generally agreed safe target of 350ppm.  To hit 350ppm would need a 95% efficiency target. And the news gets worse. Taking the global economy overall, carbon efficiency has essentially flat-lined since 2000. To avoid devastating climate change, says the report, the annual fall in the carbon intensity of the economy would need to improve 200-fold. It is on that basis that the authors conclude that growth isn’t possible.

The complications don’t end there, either. The report looks at carbon capture and storage, and biofuels – two of the best ways of driving that all important carbon intensity reduction. If the UK were to switch entirely to corn or oilseed rape biofuels, we would need 36 million acres to grow enough to meet our energy needs. That’s 650% more than all the arable land in Britain.

“Endless growth is pushing the planet’s biosphere beyond its safe limits, ” says report co-author Andrew Simms. “The price is seen in compromised world food security, climatic upheaval, economic instability and threats to social welfare. We urgently need to change our economy to live within its environmental budget.”

The report is the latest in a string of warnings that growth is an inadequate measure of a nation’s success, and that welbeing may be a far more profitable target for policy makers. Climate change and resource depletion are making ongoing economic growth increasingly precarious, but if recession is the only option, it is hardly surprising that the government remains committed to growth.

• For more on the growth dilemma, see our new website beyondgrowth.co.uk

• I’m reading a book at the moment that says the opposite, Lord Stern’s Blueprint for a safer planet, where he argues that climate change can create a new era of prosperity and growth. I’ll do a comparison when I’ve finished it.