Our series of seminars with economic experts kicked off last July with a discussion on green growth with Dimitri Zenghelis, co-head of climate policy at the Grantham Research Institute at the LSE.
In our discussion I took the role of a sceptic, looking at critiques of the notion of green growth from different perspectives, ie environmental: challenging the need for growth; and economic: whether greening policies will actually stymie growth. In response Dimitri took the role of a proponent, making the positive case for how we can grow our economy and be green at the same time, so that green growth need not be an oxymoron. (1.55 mins)
So many interesting issues emerged during the seminar that we decided to repeat our discussion so we could record and share it. Below is a brief overview, divided into short audio clips. You can also listen to the full discussion (1 hour 9 mins).
The value of GDP to measure growth
We began with an exchange of views on GDP as a way of measuring economic growth. GDP has some clear flaws in that it does not cover many desirable things related to the quality of life are not covered, whilst consequences of some undesirable things are included, such as spending to repair environmental damage. It is also a flow measure that does not say anything about sustainability. But it doesn’t do a bad job of measuring and reflecting a number of things we care about and is produced using standardised and internationally comparable and accepted techniques. (3.29 mins)
What is green growth?
We then moved on to what drives growth. Dimitri stressed the key role that technological improvement and innovation can play in enabling growth which can be environmentally sustainable. (4.01 mins)
He saw green growth as a broad concept, potentially encompassing developments in many activities not always seen as ‘green’, provided that they yield significant environmental improvements. (3.15 mins)
He said it was important to not see the transition to green growth as one that always involved short term pain for long term gain, as studies have shown that there are many benefits that could be felt in the short to medium term. (4.25 mins)
I asked about what sorts of actions would be required to bring about green growth. Dimitri saw the need for an array of policies addressing each of the specific market failures, but emphasised the requirement that these policies should be credible, serving to channel expectations, and not seen as vulnerable to political risk. He particularly stressed the importance of sending appropriate market signals through the price of carbon. (4.09 mins)
Picking up on the market failure justification, I asked whether this was enough or whether there was also a need for a mission-orientation as suggested by Mariana Mazzucato at another of our seminars. (7.09 mins)
I asked whether the whole notion of green growth runs the risk of accepting a dangerous fixation with growth that we need to abandon if we are to live within planetary limits. Dimitri noted the importance of consumption growth in many chronically poor parts of the world, but said there was a need to ensure that we only increase consumption as fast as the pace of our innovation in resource efficiency allows. (8.39 mins)
Consumption, debt and the need for investment
At a recent seminar in our series Dieter Helm made a link between the increase in government and private debt to finance consumption and the degradation of natural capital, which he saw as part of a wider trend of excessive consumption and under investment. Dimitri agreed with this, but still saw positive examples of the ability of our political system to make long term investments, for instance in education, so long as there is a common understanding of the need and a system which holds political representatives accountable. (4.51 mins)
When I pushed whether any of this was realistic in the context of current concerns about living standards, Dimitri argued that it was mainly a failure of political economy rather than the concerns of the ‘hard pressed consumer’. (4.38 mins)
Other benefits of green growth
As many supporters of green growth paint a very positive picture of both short and long run gains, I wondered whether this was over egging it somewhat. Surely, if it were not for climate change we could happily go on burning fossil fuels and reap the benefits from current low energy costs? Dimitri argued that, although there would be an initial investment cost, many of the measures make sense in their own right even in the short run. He pointed out that often having a ‘challenge’ provides the necessary spur to important innovations, such as Apollo missions and defence spending. (10.41 mins)
We rounded off our discussion with an exchange of views on the labour market aspects of green growth. Dimitri felt that encouraging labour productivity growth was hugely important and that the environmental transition should be integrated into the whole structural reform process to reap the broadest societal benefits. (11.26 mins)
