Building Back Better: Is Green Growth the Answer?



Jack Barrie, Patrick Schröder | Chatham House

This year has been coined a ‘super year‘ for the environment, meaning there has never been a better time to deliver a global green recovery. G7 leaders have committed to a new partnership to build back better for the world (B3W). For the partnership to become a progressive, future-proof alternative to China’s Belt and Road Initiative, it will need to develop real solutions that tackle climate change, build sustainable and inclusive infrastructure in low- and middle-income countries, and address growing social challenges.

Despite some progress, the G7 have so far failed to adequately commit to the urgent need to tackle ever growing natural resource consumption and generation of waste – the primary drivers of climate change, biodiversity loss and many other environmental and geopolitical challenges.

Looking beyond the G7 towards upcoming summits, such as COP26 and the G20, this article will outline three principles for a truly global green recovery: efficiency, sufficiency and fairness.

The climate emergency and COVID-19 pandemic have exposed and exacerbated major cracks in the foundations of the neoliberal economic model – the rise of nationalism and protectionism, growing wealth inequality, fragile global supply chains, uneven access to basic human needs and worker exploitation. It is no coincidence that society is experiencing them simultaneously as they are, by and large, symptoms of the same underlying cause – the global race to endlessly maximize and capture economic growth through resource consumption.

In 2019, for the first time in history, humanity consumed over 100 billion tonnes of the earth’s resources in just one year. Extraction and processing of natural resources is responsible for approximately half of the world’s carbon emissions and 90 per cent of biodiversity loss. Such high rates of resource consumption are causing, and will continue to cause, irreparable damage to ecosystems.

A green recovery from the pandemic is a ‘once in a generation’ opportunity to address these issues and to make the economic system greener, fairer and more resilient. The green recovery took centre stage at the G7 with the announcement of the B3W partnership and expressed support for the transition to sustainable management and use of natural resources. But what does sustainable management and use of natural resources mean in the context of a global green recovery?

Is Green Growth the Answer to a Green Recovery?

Many argue that the green recovery should be underpinned by pursuing green growth – in other words growing the economy while simultaneously reducing environmental impact through increasing material and energy efficiency. The EU’s €1.8 trillion post-COVID-19 fund and President Biden’s $6 trillion stimulus package proposal are prime examples of the green growth agenda, as is the B3W with its commitment to accelerating ‘clean and green growth’.

Assuming that all green recovery fiscal stimulus packages focus entirely on green investments – setting aside the fact that, to date, most of them have largely failed at this – there remains no empirical evidenceto suggest that green growth driven by efficiency gain has been – or can be – achieved anywhere near the scale needed to prevent dangerous climate change and other dimensions of ecological breakdown.

The reason for this is that efficiency gain is the driver of economic growth. The more efficient your economy becomes, the faster it grows and the more resources it consumes – otherwise known as the Jevons paradox.

For the G7 to keep their promise of ‘protecting at least 30 per cent of global land and at least 30 per cent of the global ocean by 2030’ and ‘support the transition to sustainable management and use of natural resources’ they must look beyond simply curtailing waste and consider how to absolutely reduce natural resource consumption in a fair manner.

The summation of all of this is simple but stark. A green recovery dependent on green growth may reduce carbon emissions, but it will continue to accelerate natural resource consumption and therefore the destruction of the natural world.

This poses a difficult but essential question for global leaders: how can B3W ensure sustainable management and use of natural resources under a growth-based scenario?

Three Principles for a Global Green Recovery

Many leading thinkers have sought to answer this question with ideas such as Doughnut Economics, Wellbeing economics, Degrowth or the Safe Operating Space. But despite increasing political traction, these ideas have yet to be translated into binding multilateral agreements. With 2021 being the ‘super year’ for the environment, there has never been a better time to convert these ideas into action. What is needed for a truly global green recovery are the principles of efficiency, sufficiency and fairness.

Efficiency: Circular use of materials and energy
There is no way the world can remain within the 1.5°C target or address biodiversity loss without massive resource efficiency gains. The G7 must reaffirm their commitment to the Bologna roadmap which aims to coordinate and progress actions to increase resource efficiency and transition to a more circular economy. The goal of the circular economy is simple: to design out waste and pollution by keeping products and materials in use for as long as possible. Resource efficiency and circular economy should be deeply integrated into the B3W initiative.

However, efficiency gain on its own is not enough to overcome the accelerated resource demand fuelled by the need for constant economic (green) growth – for that we turn to sufficiency.

Sufficiency: An adequate amount of something essential
Sufficiency means consuming the right quantity of material goods and services necessary for optimal health and wellbeing — avoiding underconsumption (poverty) but also conspicuous overconsumption (environmental destruction). Sufficiency is growth agnostic in that it promotes growth where it is needed to eliminate poverty and in economic activities which are beneficial to people and the planet, such as renewable energy or the caring economy. In this respect, the G7 commitment to support clean and green growth in low-income countries is commendable and essential. But to allow developing countries the space to grow within the planetary boundaries, developed countries must also significantly curtail their levels of consumption.

Achieving sufficiency is not necessarily contrary to proponents of green growth. If proponents of green growth are in fact correct, and it is feasible to decouple economic growth from material and energy consumption, placing a moratorium on resource extraction – like the cap on carbon emissions agreed through the Paris Agreement – will only serve to complement this goal. A multilateral agreement on a ‘Safe Operating Space’ is required to ensure fair and sustainable management of natural resources.

Fairness: Reduce inequality through redistribution
Critical to achieving sufficiency is fair redistribution. There is an urgent need to strengthen resource equality and redistribution, both within and across nations, to ensure that all communities have the necessary resources, capacity and material share to deliver wellbeing. Wealth accumulation also needs to be distributed fairly to those who contributed to it, including the public sector where it can be reinvested into more resource efficient public goods and services such as public transport, healthcare and education.

Finally, any global recovery must also put a just transition front and centre. Many people’s jobs and livelihoods – particularly the poorest – are, and will continue to be, affected by the transition to a wellbeing economy, as well as the effects of climate change. The $100 billion per year climate finance fund and financing for the Sustainable Development Goals to achieve the human development targets for 2030 should be substantially increased to support this transition.

In conclusion, the G7 have shown leadership in committing to the B3W partnership and recognizing the need for sustainable management and use of natural resources. But the question remains: what does sustainable natural resource management mean in the context of building back better? The principles of efficiency, sufficiency and fairness could serve as the framework for world leaders to address this question at the upcoming G20 and COP26 summits.

Dr Jack Barrie is an expert on the topic of the circular economy. He holds a PhD from University of Strathclyde on circular economy innovation policy, and previously held the role of Schmidt-MacArthur fellow with the Ellen MacArthur Foundation.

Patrick Schröder is a senior research fellow in the Energy, Environment and Resources department. At Chatham House he specializes in research on the global transition to an inclusive circular economy with a specific focus on collaborative opportunities between key countries, closing the investment gap and building an evidence base for trade in the circular economy.

To read the full commentary from Chatham House, please click here.