‘Economic degrowth’ gains strength in the European Union – 05/31/2023 – Market

It is a sign of the times that a book entitled “How to Blow Up a Pipeline” [como explodir um oleoduto], in which Swedish climate activist Andreas Malm advocates the targeted sabotage of physical property, is getting the cinematic treatment. Even with the definitive support of the political and business classes in Europe for the decarbonization agenda, the hardliners of the climate change movement argue more and more loudly that this is not enough.

Advocates of “degrowth” argue that tackling climate change requires nothing less than a fundamental rejection of the entire principle of continued economic growth as a policy objective. Their concerns have slowly but surely left the margins of political debate in Europe to at least be heard in the institutions of the European Union.

Earlier this month, European parliamentarians organized the second edition of a conference entitled “Beyond Growth” (the first was in 2018). Philippe Lamberts, a Green Party European parliamentarian who attended both events, says he faced “a lot of resistance from the Commission [Europeia]” the first time around. The attitude then, he says, was that, “if I didn’t believe in growth, I should look for another job.”

Five years later, the story is different. Now, “the big shots” — the European Union’s top officials — “are playing the game” and participating in the debate, says Lamberts. European Commission President Ursula von der Leyen and several of her Commissioners and senior civil servants addressed the conference, as did European Parliament President Roberta Metsola and Frank Elderson of the Executive Board of the European Central Bank.

The fact that the European parliamentarian has not, in fact, called for an end to growth may help. Conference background material deliberately avoided the word “degrowth.” Lamberts says he prefers to speak of “shared prosperity within the confines of the planet”. He argues that we should debate which economic developments are compatible with this and act accordingly — “discussing these things is no longer seen as sacrilegious”. As for von der Leyen, his speech emphasized a vision of sustainable growth and drew applause by declaring that “a growth model centered on fossil fuels is simply obsolete”.

There are others, however, that go further. For example, in an article published in the scientific journal Nature last December, a group of ecologists, environmental scientists and economists wrote that “Rich economies must abandon gross domestic product growth as a goal, reduce destructive and unnecessary forms of production to reduce the use of energy and materials and focus economic activity on ensuring human needs and well-being. Degrowth is an intentional strategy for stabilizing economies and achieving social and ecological goals.”

But most economists do not accept any suggestion that pursuing GDP growth is an inherent problem. Sir Dieter Helm, professor of economic policy at the University of Oxford, insists that “a sustainable economy can grow because technical progress continues”. He points to the fact that “Energy demand and emissions have been falling in the UK regardless of the level of GDP”.

This divergence between carbon emissions and economic growth is known as “decoupling,” and disagreements over climate policy largely depend on the degree of decoupling that people find realistic to expect.

“If you can decouple GDP from material and energy use, then you can have growth,” agrees Lamberts. But “if not, what are the implications for fiscal policy, social security, labor markets and trade policy? That’s what we want to start a discussion about.”

Opinions like Helm’s still dominate this debate. The idea that we might have to reduce GDP “is still extremely controversial,” says Diana Urge-Vorsatz, professor of environmental sciences at the Central European University in Vienna and one of the authors of the Nature paper. Even so, she and her co-authors point out that mentions of degrowth and “sufficiency” have begun to be included in the reports of the Intergovernmental Panel on Climate Change —the UN body that assesses scientific knowledge about climate change— as possibilities that deserve be explored.

In Europe in particular, the debate was fueled by Russia’s war in Ukraine and the energy crisis generated by the weaponization of natural gas. Less than a year after the full-scale Russian invasion, the large countries of the European Union have reduced their consumption of natural gas by more than 20% compared to the five-year average, without a corresponding increase in the use of oil and coal. Its overall industrial production, however, remained strong.

The 2022 experience, in other words, has shown that big cuts in energy use and emissions are possible with concerted political action.

It is an open question whether this favors degrowth advocates or decoupling believers, who argue that decarbonization is perfectly compatible with growth. What is certain is that the past year will have changed expectations about what political action can achieve. There’s “enormous potential for more efficiency,” says Lamberts. “German industrialists now admit to me that gas was so cheap that there was no reason to save it.”

Translated by Paulo Migliacci