Is democracy compatible with economic growth?

Are economic growth and climate protection compatible?

From Claudia Kemfert

Our emissions budget will soon be exhausted. According to the WBGU (Scientific Advisory Board on Global Change, which advises the Federal Government), emissions rights of only 750 billion tons will be available worldwide by 2050. On the basis of the same global per capita emission rights, this results in an emissions budget of nine billion tons for Germany alone. At the current level of emissions, these would be used up in ten years. So the question arises: is the steady growth approach the right one? Can we still afford constant economic growth? Can our economic system even solve this problem? Is our current economic system even capable of increasing and maintaining global prosperity across the board?

From an economic point of view, the system of the social market economy is very well able to increase prosperity. Even free world trade can help countries around the globe to prosper and prosper. However, the financial crisis has also made it clear that unbridled greed, unfavorable or even wrong rules of the game and excessiveness have resulted in the system leading to greater inequalities and thus to a crisis.


The question is: what is growing?

It is not growth in itself that is problematic, it is a question of what is growing. Unbridled economic growth, which unilaterally consumes finite fossil resources, is wrong. More and better environmental protection, health, broader access to clean drinking water and clean energy, on the other hand, are important and right. The growing use of renewable energies, climate-friendly mobility, increasing health care and technologies for producing clean drinking water can ensure growing prosperity. And that is exactly what it must be about if we want to solve the global problem of climate change with economic growth. We have to decouple economic growth from fossil fuel consumption. And we have to get used to defining economic growth as a measure of prosperity.

Climate change continues unabated as the share of fossil fuels in energy production continues to increase. Rapidly growing economies such as China, but also Russia and India, are consuming more and more fossil fuels. About three quarters of the world's greenhouse gases are caused by the developed economies such as the USA, Europe and Japan. In particular, the sharp rise in coal consumption is causing greenhouse gases to rise inexorably. It is not uncommon for the consumption of fossil energy to be subsidized, which leads to a waste of energy.

In China, for example, an average of one coal-fired power plant is connected to the grid every week. These coal-fired power plants will continue to cause climate-damaging emissions over the next 40 to 60 years. In addition, the transport sector and, above all, motorized private transport are growing incessantly, which leads to increasing gasoline consumption. In China, 18 million people move from the country to the city every year. Over the next 30 years, 200 mega-cities will be built there. H. Cities with over a million inhabitants, of which Europe only has 35. In addition, four out of every 100 people in China currently own and drive a car, in the USA and Europe it is 80 out of 100. This development shows how rapidly greenhouse gases will increase in strongly growing economies.
In absolute terms, China has already replaced the USA as the number one global greenhouse gas emitter. However, the per capita emissions of China and India are still far below those of the industrialized countries. The USA in particular still consumes the most energy per capita and could easily and cost-effectively reduce greenhouse gas emissions by being more economical.


Cooperation and innovation

China will continue to grow and is dependent on new technologies. And here lies the key to solving the problem: cooperation and innovation. The energy supply and mobility must be environmentally friendly. We urgently need a CO2-free, secure and affordable energy supply, as well as innovative fuel and technologies. Germany can research these technologies and offer them to the world.

Climate protection is the solution and the way out of the problem, because climate protection creates growth and jobs. And here the financial crisis has a good thing, yes we can be glad that the crisis hit us now and not later. Because the financial crisis has made it clear that the market does not regulate itself and that in the event of market failure, we need smart political decisions. We should have started much earlier to research and bring to market technological innovations and sustainable mobility concepts that make us independent of fossil fuels. However, it is not too late, on the contrary. Now we can kill three crises with one stone: the financial, energy and also the climate crisis. However, it is important that politics pave the way for an energy-efficient, sustainable and climate-friendly business world. Renewable energies must continue to be promoted; financial incentives for energy saving should be created.


The right incentives

In the building sector in particular, there is unimagined potential for energy savings. The right signals can be sent here through targeted financial support, tax savings and improved options for passing on costs for property owners. There is also a lot to be improved in the area of ​​mobility: Rail transport and local public transport must be given strong support, air traffic must be included in emissions trading and the German car industry must be made future-proof. Instead of paying scrapping premiums for old cars, the car companies should be given direct financial support when launching innovative and climate-friendly products and fuels.
The current EU presidency, Sweden, is pushing for more climate protection and wants to make the entire energy supply independent of fossil fuels in a few years' time, England wants to double the share of renewable energies, even the USA is spending 150 billion euros on the expansion of renewable energies and is actively promoting it Climate protection. And China also wants to significantly expand the share of renewable energies and is cooperating with the USA on climate protection. They all understood that politicians must now provide the right incentives.


Climate-conscious business models

The entrepreneurs have long since embarked on climate-conscious business models. However, companies also need reliable framework conditions in the long term. Germany is - still - the world market leader, particularly in the field of energetic renovation of buildings, renewable energy technology, environmentally friendly coal technology and sustainable mobility. That can change quickly because the global race for the most innovative approaches has begun. Economic growth actually offers the best prerequisites for this, because it creates enormous investment opportunities - investments in energy efficiency, circular economy, sustainable water management, climate-friendly energy technologies, fuels and sustainable mobility.

We will exhaust our emissions budget, but we will not get a loan. It is therefore all the more important to start today, because we are facing climate bankruptcy and nobody is giving us a loan. The financial crisis is our final wake-up call. We have ten years to bring the innovations and technologies to market. Climate protection is the way out of the crisis. Climate protection is the economic engine and creates jobs. Then we can get by with the emissions budget allocated to us. Climate protection is our chance, maybe our last.


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Claudia Kemfert has been head of the Energy, Transport and Environment department at the German Institute for Economic Research (DIW Berlin) since 2004. She is Professor of Energy Economics and Sustainability at the Hertie School of Governance in Berlin and advisor to EU Commission President José Manuel Barroso on issues of energy and climate change. Your most recent publication: "Use the crisis now ", Murmann 2009.


Saxon energy-saving communities
"Energy-saving municipality" has been the name of the unitary municipality of Zschadraß in Saxony since 2007. The award was given to a total of four Saxon municipalities by the Saxon Energy Agency - SAENA GmbH for three years. Since then, over twenty cities and municipalities have tried to optimize energy consumption. Other municipalities are about to decide whether to participate.
"In Zschadraß, we were already thinking in 2000 about how we could relieve the chronically clammy municipal coffers through more efficient use of energy. Our concept," says Chief Office Manager Hans-Peter Kiesel, "envisages the entire energy requirement for all public and private buildings by 2050 to win regenerative sources ". Since then, Zschadraß has been going systematically step by step: from one to four o'clock at night the city lights are switched off, the gym is heated in a CO2-neutral manner, photovoltaic systems are on the buildings of the community ... and private individuals are following suit.

Green New Deal / Great Transformation