Is ‘Green Growth’ an oxymoron, a contradiction in terms making no more sense that ‘healthy poison’ or ‘dry water’?

Generally the term is used to describe investment in, and the growing production of, new technologies that use less energy (or are kinder to the environment in other ways) than the existing technologies that they replace. Examples are renewable energy, electric vehicles, home insulation. It is a popular political slogan with those who want to do something about the environment because it addresses the fear of job losses: don’t worry if the oil industry is shut down because there will be new jobs in wind and solar.

There’s another implication too: ‘green growth’ is good growth! It’s not like the bad old growth that was using up resources and harming the environment. So with green growth we can carry on growing for ever.

The purpose of this article is to ask if either of these is true. Can green growth provide sufficient employment? And is green growth harmless or even positive for the environment? We’ll tackle these in reverse order.

OK, so maybe that’s not such a big problem: “I’m happy with one car, I’ll just swap my diesel for an EV”. However that gives us a different problem – fairness. Most of the world don’t own anything like the number of cars that North Americans and Europeans do. We cannot expect people to accept that inequality in perpetuity.

Essentially we are saying that green growth is only green if it isn’t actually growth. Some authors insist this is wrong. “We can have lots more new products” they say, “but they will be services, or products with so little material content, that in total they’ll still consume less energy and materials than what we consume now.” Would that be possible? We’ll consider that next.

Can green growth create sufficient jobs?

Job creation in our present economy is driven by creating more and more products for the better off to consume. But as we have explained, replacing existing products with ‘greener’ ones won’t reduce the harm to the planet if we consume far more of them, and thus cancel out any savings in materials or energy. And if we don’t consume more, then it will be be difficult to maintain employment as automation advances, at least beyond a boost from the initial tooling up for new products.

So what about the idea of consuming more, but only of products with minimal material content, or of services that have almost no material content?

The difficulty here is that our current economy is grossly unequal with the bulk of the working population on modest wages, while the very rich have an extraordinary amount of wealth. Services can only form only a small part of an ordinary worker’s expenditure on consumption, since businesses have no incentive to pay more than the minimum, and in a world with surplus labour, that minimum will be something approaching subsistence – so only enough to buy basic material goods like food, housing, clothing, and the odd electronic gadget.

If workers cannot afford to create lots of employment by buying services, how about the rich? The very rich could in theory employ enormous numbers of service workers, but in practice nobody wants more than a certain number of servants around them, so the total amount of service employment the rich create is limited. The rich do however have an appetite for very expensive products whose manufacture will create employment: luxury cars, yachts, executive jets … and the sky isn’t the limit … there’s space tourism too! But growing that sort of consumption is clearly not ‘green’.

Suppose then, that we re-distribute wealth and achieve a far more equal society where everyone can afford life’s material basics with half of their salary, and still have the other half to buy services, thus creating the needed employment. How though, would you enforce that they spent that second half on services like theatre, haircuts, dance lessons, etc. and not on material goods like an extra car, a computer, or long distance travel by plane? We could design a new economy that had such mechanisms, but we don’t have that now … and that’s why green growth won’t work as things are. There is simply no mechanism to ensure growth in the consumption of material goods is halted or reduced, and only growth in minimal or non-material goods and services is allowed.

So the conclusion is?

‘Green growth’ is a useful slogan to encourage investment in for example, renewable energy, but it is not a sufficient policy on its own to achieve a sustainable economy. If all we do is promote greener (slightly less damaging) products, overall growth in consumption will in time, wipe out any gains; furthermore, there is no reason why there should be any more employment in manufacturing the greener products than there was in the non-green. To achieve a truly greener economy we would need to ensure that overall material consumption ceases to grow. And to provide adequate employment we would need to ensure that people could and would consume sufficient services or minimal-material-content goods, to provide the needed jobs. Designing such an economy, let alone achieving it, won’t be easy. But it’s time we got started.

References and more information

[1] ‘SUVs are setting new sales records each year – and so are their emissions’, The International Energy Agency (IEA), May 2024

This article is a shorter version of the analysis explored in 'An Economy of Want', which re-writes macroeconomics taking the physical world and environmental limits into account. The eBook is regularly free: see homepage of this website for dates.