Economic Growth on a Finite Planet

 

Can the economy keep growing forever? A sharp exchange between an investor in renewable energy and an ecological economist keeps the debate alive.

by Caspar Henderson

We tend to think of growth as a good thing. Consider a child, or the human mind.  We also know, however, that, past a certain point, growth in individuals and systems can become pathological. Think of cancer, or traffic.

Many of us also know that seemingly small increments of growth can, within quite a short span of time, lead to much bigger changes than one might expect.  At least we think we know this. In practice we often don’t get it.  So, for example, we might not have anticipated, or may be surprised to learn in retrospect, that the Chinese economy grew from smaller than Spain’s to become larger than that of the United States in about twenty five years.

The non-intuitive factor here is the compound nature of some kinds of growth — that is, those cases where the rate of growth, rather than just the amount by which something grows — continues, moment by moment or year by year. A 10% annual compound growth rate, for instance, results in a doubling in just 7 years, a quadrupling in 14 and an eightfold increase in 21.

It was this point — the surprising consequences of compound, or exponential, growth — that the physicist Al Bartlett hammered home in ‘Arithmetic, Population and Energy’, a lecture which he gave some 1,742 times before he died in 2013. The greatest shortcoming of the human race, he asserted, is our inability to understand the exponential function.

For many in Bartlett ’s generation, a matter of particular concern was the rapid growth of the global human population. Articulated starkly in Paul and Anne Ehrlich’s 1968 book The Population Bomb, and represented in images such as the one at the top of this post, the number of people on the planet was exploding  — set to double from three billion in 1960 to more than six billion before the end of the century.  If the trend continued, warned the Ehrlichs and others, very large numbers of people would likely starve to death, while the natural world would be greatly impoverished.

The mass starvation scenario looks less likely for now. The growth rate of the human population actually peaked in the 1960s, and has been falling ever since. So while the number of people continues to rise — by 83 million or so this year, to approximately 7.7 billion — it now looks as if, other things being equal, global population could stabilise at around 11.2 billion towards the end of the 21st century. This is a large number, but it is well under half what would have been the case had the 1960s rate of growth continued, and many analysts believe that, with feasible improvements in agricultural practice, it should be possible to feed everyone amply.

But population growth was not Bartlett’s only concern. It was, he said, also impossible for the consumption of resources to continue to grow indefinitely at the current rate. And for some analysts, this contention looks no less relevant today than it did three or four decades ago — not least because it has become increasingly evident that a full account of the impact of the consumption of resources, or ‘sources’, also requires an account of what happens to the resulting wastes, or ‘sinks.’

When it comes to those sinks, a particular concern is the global ocean and atmosphere into which humanity are pouring greenhouse gases by the Gigatonne.  The addition of these waste products of fossil fuel combustion, deforestation and prevalent agricultural practices is not itself growing at a compound rate, but climate scientists conclude that current annual increments are more than enough to pose serious and even catastrophic risks to the collective human future, and that emissions should be reduced to zero within at most a few decades. (See, for example, ‘Trajectories of the Earth System in the Anthropocene’ and the 2018 IPCC report.)

Many environmentalists, self-styled green economists and others argue that, given such constraints, the long-established and central political goal of maintain a compound rate of economic growth required by capital, and which we are so accustomed to hearing about in the form of a yearly rise in GDP, cannot be sustained. Some call for a transition to a steady-state, or regenerative, economy — or even what some call ‘degrowth.’

But others, including many who are deeply concerned about climate change and related environmental issues, argue that it is possible to uncouple economic growth from resource consumption and pollution.

So which analysis is most profound? A recent exchange between Michael Liebreich, an energy analyst, and Tim Jackson, an ecological economist, became quite heated, but also casts some light.

It started back in October with a post by Liebreich titled ‘The Secret of Eternal Growth.’

Liebreich, who is founder and senior contributor at Bloomberg New Energy Finance, emphasises that climate change is a real, serious, and urgent challenge. “Limiting its impact will require the application of technology, both new and yet-to-be-developed, on a heroic scale.” He is optimistic this can happen:

Dramatic progress in low-carbon technologies over the past decade – energy efficiency, wind, solar, batteries, electric vehicles – suggest the vast bulk of emissions from energy and transport can be eliminated over the coming few decades at modest or negative cost, even as modern energy services are cheaply brought to the last billion people on the planet.

But, Liebreich writes, the transition will not be achieved by limiting economic growth, which would rather “destroy…the ability of the world economy to deliver these solutions — the very opposite of what we should be doing.”

More provocatively, Liebreich argues that those calling for limits to growth do not understand a fundamental system condition: “The Earth… is not an isolated system. It may be nearly closed, exchanging limited matter across the planetary boundary, but it is far from isolated, as it receives a huge daily flux of energy from the sun and radiates almost as much away to space.” It is, therefore, possible to delink economic growth entirely from material and energy flows.

In the longer term, there is nothing in physics to stop the economy from growing forever. It’s not just that more and more of the economy will consist of services, though that is certainly the case, and more and more of them will be digitally provided by computer ‘bots’. The physical sectors of the economy will trend towards becoming entirely circular: material efficiency and recycling will improve indefinitely; the extraction of materials and production of pollution will first peak and then asymptote to zero. We will use unlimited knowledge and clean energy from solar or nuclear power to drive endless improvements in human wellbeing and flourishing.

He concludes with an observation from Ronald Reagan: “There are no such things as limits to growth, because there are no limits on the human capacity for intelligence, imagination, and wonder.”

In a response titled ‘How the Light Gets In’, Tim Jackson, a Professor of Sustainable Development at the University of Surrey, counters that Liebreich’s accusation that “the seminal tracts of the degrowth movement [are] based on fake science, right through to the present day” is “not even remotely true.”

“What’s mostly at stake here,” says Jackson, “is the extent to which it is possible to ‘decouple’ the economy as a system of monetary flows from the economy as a set of material and energy (and carbon) flows.” And Jackson is far less optimistic in this regard than Liebreich, writing that at present the decoupling “isn’t anything like so prevalent as Liebreich believes it is.”

Some relative decoupling has clearly taken place. The carbon associated with a dollar of global economic output, for example, has declined by 35% over the last half a century. But global economic output has increased five-fold over the same period, swamping those efficiency gains by a substantial margin.

This means, says Jackson, that the global economy is very far from delivering the rate of decarbonisation needed to make a meaningful reduction in the risk of dangerous climate change.

The rate…needed to deliver an emissions pathway capable of meeting the [IPCC’s] 1.5 ºC target is an order of magnitude higher than anything that has ever been achieved historically.

In answer to Liebreich’s accusation that so-called ‘anti-growth’ advocates do not understand a fundamental system condition, Jackson says that “we have to get beyond the simplistic maths of the planet’s energy balance”

Despite its energetic magnitude, ‘the flow of solar energy comes to [Earth] with an extremely low intensity, like a fine rain, almost a microscopic mist,’ …To be useful this energy must be concentrated and captured. To be captured we must use materials, the availability of which depends in its turn on high-quality energy. The solar flux is free. But capturing it has a cost, in terms of materials, in terms of energy, and in terms of economic resources.

It still isn’t clear that this immediately rules out some form of growth. But it’s clear that the larger the economy becomes the more difficult it is to decouple that growth from its material impacts. We don’t even need thermodynamics to make this point. A bigger economy implies a bigger capital stock. A bigger capital stock means higher depreciation.

Where to go from here? One factor among many that could make a difference for the better would be a rapid increase in the rate at which close-to-zero carbon energy technologies are deployed. In this regard the exponential fall in the price of PV  is a hopeful sign. Clearly, however, there are huge challenges ahead, not least in the vibrancy of sectors such as coal extraction (see ‘The World Needs to Quit Coal. Why Is It So Hard?’). Perhaps we should take both Liebreich’s positive thinking and Jackson’s misgivings to heart, mindful that our current economic system is already at a threshold that it will be foolish to cross. As the climate scientist Kate Marvel says, “there is no scientific [case] for inevitable doom.”

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