Degrowth Movement Would Abort Renewables Revolution

Part II of “Bestseller In Japan: ‘Degrowth Communism’ And Climate Change”

Source: Our World in Data at https://nyc3.digitaloceanspaces.com/owid-public/data/co2/owid-co2-data.xlsx

The price revolution in renewable energy provides the world with an unprecedented opportunity, one that would be missed if success came to the “degrowth” movement. It contends that countries have to stop growing to save the environment.

            What makes solar and wind power different is that they are cheaper than the fuels they are replacing. In countries with half the world’s population, it already costs less to build and operate new large-scale wind or solar plants than to operate an existing coal or gas-fired power plant, let alone build a new one. With each passing year, renewables’ cost advantage will grow.

            That was not the case in the past. Coal, for example, cost more than firewood at the start of the industrial revolution, but wood was becoming scarce, coal was more easily transported, and it could run at the higher temperatures needed by steam engines. Oil and gas cost more than coal. Nuclear plants were not only costly to construct but safety concerns (some real; some imagined) limited nuclear’s maximum share of global electric power to just 7% (in 2001) and now it’s down to 5%.

            This price revolution means the poorest countries can shift from dung and firewood directly to renewables. They can leapfrog over the carbon-intensive phases of coal, oil, and gas that past generations required. Middle-income countries—who, as we’ll see below, drive the most growth in emissions—can shift from coal to renewables and eventually electric vehicles, limiting the need for oil and gas. This is already beginning to happen. In 2020, renewables supplied more than 80% of the global growth in electric capacity. China increased solar and wind from 5% of its electricity output in 2011 to 24% in 2020. During the same period, the solar and wind share in India rose from 7% to 18%. In poorer sub-Saharan Africa, it increased much less: from 1% to 7%. Moreover, in 2022, about 25% of all cars being sold in China are electric vehicles (either battery-powered or plug-in hybrid), many of them priced as little as $5,000 to $20,000. There are now 4 million charging stations in the country.

            This burgeoning potential would be aborted if growth were to halt because billions of people are still too poor to afford clean energy. An estimated 3 billion still cook their food and heat their homes with animal dung and firewood. Firewood emits 100 times as much CO2 as a gas-fueled stove. The accompanying deforestation compounds the damage.

            Another 3 billion people still get the majority of their overall energy, as well as their electricity, from coal. Despite its progress in solar and wind, India generated more of its electricity from coal in 2021 than it did back in 1985 (74% vs. 62%). China, after letting coal’s share of electricity generation rise from 60% in 1985 to 80% in 2003, has come back to a still very high 63%. Coal emits twice as much CO2 as natural gas. Still, the fact that coal typically costs half as much as natural gas makes it attractive to developing countries striving to electrify.

            Despite immense progress in recent decades, a billion people still don’t have access to electricity, while for another 2.5 billion, the electric supply is unreliable, or they are too poor to afford to consume very much. Renewable-powered electricity requires not only costly investments in power plants, the grid, battery storage, and so forth, but also an increase in the income of its household customers.

As GDP Goes Up, Carbon Emissions Go Down

Even before the renewable revolution, the linkage was clear: if you want countries to emit less CO2, they need to become richer. From 1950 to 1921, as global per capita GDP (in 2015 dollars) quadrupled from a miserable $2,700 to $11,000, carbon emissions per dollar of GDP halved (see chart at the top). This was partly because richer countries need less energy to produce a dollar of GDP (for reasons to be detailed below) and partly because, as their income rises, they shift away from carbon-intensive fuels. The rise of renewables will accelerate this process.

            There is also a political factor. In more affluent countries where basic needs for food, shelter, appliances, and the like are satisfied, voters have both the economic wherewithal and the desire to reduce air and water pollution, as well as conquer climate change. A case in point is Japan’s famous “Pollution Diet” in 1970 which, under pressure from the public, passed, and then enforced, a series of pollution laws. China has faced pressure to cut the horrible pollution in Beijing. Similarly, investors in rich countries have put $2.7 trillion into ESG (Environmental, Social, and Governance) stock market funds in an effort to pressure companies on, among other goals, decarbonization (how successful they will be remains to be seen). The political factor explains the variation in renewables among rich countries. In Europe, solar and wind now provide 30% of all electric power, compared to 21% in Japan, and just 16% in the US where the political obstacles are higher.

Why Rich Countries Emit Less CO2

Poor countries don’t emit a lot of CO2 because they use so little energy . That’s a large part of what makes them poor. As countries get richer, emissions per person zoom as seen in the chart below (the chart at the top showed emissions per dollar of GDP). However, as shown by the trend line for 1990 and even more so in 2018, once a country reaches a certain level of affluence, emissions decelerate, then level off, and eventually start to fall. 

Source: see above

            Note in this chart that countries at a given level of per capita GDP in 2018 emitted a lot less emissions than countries at the same level did in 1960 or 1990. That’s because 2018 technology enables a steel plant, for example, to emit less CO2 than in the past. The advent of renewables will accelerate this process.

            While it’s obvious how technological progress drives growth, it’s also the case that growth drives technological progress. For one thing, richer countries can afford to educate the people and do the research and investment that has resulted in modern solar and wind power. More fundamentally, growth drives demand for technological improvements.

            As countries get rich enough, it’s not only emissions per dollar of GDP or per person that decline. It’s eventually the total amount of emissions (see chart below).

Source: see above Note: the chart ends in 2019 and so is not distorted by the Covid era

Why do richer countries emit less carbon? As countries get richer, a higher percentage of GDP is taken up by services, which are less carbon-intensive than manufacturing. Moreover, countries in the process of industrializing and urbanizing need an enormous amount of steel and cement to build infrastructure and buildings. Steel today accounts for a stunning 11% of global CO2 emissions. Cement adds another 8%. Once a country has built its basic infrastructure, buildings, and so forth, its need for steel and cement declines. So, in 2017, developing countries accounted for 39% of global GDP, but 74% of global steel demand. In contrast to industry, the entire service sector accounts for only 7% of total greenhouse gas emissions in the US, mostly due to its use of electricity from non-renewable sources.

Next: Economic Growth Necessary But Not Sufficient

While the economic and technological trends are going in the right direction, “business as usual” will not achieve net zero emissions by 2050. This issue will be detailed in the next posting.