hbs: Why do you feel that there is a need to rethink traditional growth strategies?
Ralf Fuecks: We are confronted with two fundamental and contradictory developments. On one hand, we are living in an era of global economic growth, driven mainly by the transformation of agricultural societies in the former third world into industrialized countries, accompanied by rapid urbanization. Up to the middle of this century, the number of urban citizens will double from 3.5 billion people today to about 7 billion by 2050. Simultaneously, we are seeing a rapid increase of the global middle class. Every year, between 80 and 100 million people enter this modern lifestyle. This process is deeply correlated with global economic growth. Over the last twenty years, the global economy grew by 4 percent on average per year in spite of all crises and turbulences. And even if that pace were to slow down a bit, the global GDP is still set to double over the next twenty years. So, we are living in an age of economic growth, whether we like it or not.
On the other hand, the old paradigm of growth has proved to be environmentally destructive, leading to severe crises of the vital ecosystems that human civilization is based upon. Climate change is the tip of the iceberg in this regard. Beyond climate change, we are also confronted with massive losses of fertile soil and with an increasing water crisis in large parts of the world. Continuing this destructive trend will lead us to environmental disaster. This is why we have to look towards a third option that will change the patterns of growth away from growing at the expense ecosystems and to a new paradigm based on growth with nature.
How does energy factor into this process?
Energy is the driving force of industrialization. It was the driving force in Europe and the US in the 19th century and today is for many emerging economies, such as in China and India. There, economic development is driven by an increasing consumption of energy. As long as the entire growth model is based on fossil energies – coal, oil and gas – this process will lead to more and more greenhouse gas emissions, which will accelerate climate change, ultimately undermining the livelihood of billions of people. In fact, this old model of growth is linked to an enormous waste of natural resources. We are using nature as a deposit for all kinds of emissions. This has to change fundamentally:we have to decouple GDP growth from an increase in greenhouse gas emissions and from the consumption of limited natural resources. Energy is at the very core of this process. Achieving alternative, smart, green growth strategies is thus about an energy revolution away from fossil to renewable energies; it is the transition from a fossil-intensive society to a solar-based society.
What are some solutions to the problems you have raised; what are some opportunities for smart, green growth?
Up to now, the clean energy revolution has been driven by wind and solar, and this trend will continue over the next decades. The efficiency ratio of photovoltaics and the capacities of windmills are constantly growing. At the same time, we see a rapid decline in cost and are already approaching a breakthrough point as these renewable energies are becoming economically competitive with fossil fuels. Driving these green energy technologies beyond grid parity is crucial in order to deal both with the climate crisis and the economic needs of the developing world.
If you look at Germany and other advanced economies, solar and wind installations are already replacing coal and other fossil resources. Even in China you see a slowdown in building new coal-fired power plants, accompanied by a rapid surge in renewable energies. However, the story of green energy does not end here; rather it is an open process of innovation. We will see new applications of solar energy, for instance, transparent solar cells integrated in windows, or organic solar installations with living organisms—such as algae or other micro-organisms.
In the long run, we have to move towards an economy completely based on photo-synthesis. This is the basic process of all organic life on this planet: the transformation of solar light, water and CO2 into energy and carbon compounds. In the future, our economy and our lifestyle have to be based on renewable materials and energy sources. At the same time, we must make our economy much more resource- and energy efficient. Smart growth is about making more out of less.
Who do you see driving this change?
We need, and we are already seeing, a plurality of change agents for a smart, green economy. The first one is policy. Policy matters greatly. This applies to the whole range of policies from municipal policies to the United Nation’s Convention on Climate Change. We need to introduce environmental guidelines and regulations for markets. And we need to transform the ecological boundaries of growth into a regulatory framework for both companies and consumers, for example, by putting a cap on carbon emissions. We also have to restart the debate on green tax reform, by which we tax the consumption of natural resources instead of taxing labor income. One major root cause of environmental degradation is the externalization of environmental costs by producers and consumers alike. It is an old saying that “prices have to tell the ecological truth”.
The second change agent is civil society, a large part of which is increasingly using public pressure, be it on corporations or on the government and parliament. We need that kind of political pressure to push governments and enterprises in a sustainable direction. At the same time, civil society is a creative source for new solutions, for instance car sharing and the organic food movement. Changing our food habits is key, consuming 60 kg of meat per capita every year just isn’t sustainable. It is impossible to make that available for the billions of people on the planet. Thus, changing our diet becomes a political statement. Consumer responsibility is a very important aspect in the great green transformation we are talking about.
A third driver for change is the innovative private sector. We have to be aware that the main bulk of technical innovation happens within the private sector, not in state institutions or in public universities. It is happening within companies themselves, with their investment power, their R&D capacities and their enormous knowledge with respect to technological innovation. We therefore have to engage these companies and build alliances with pioneering businesses, be it start-ups or established companies ready to change their business model for a smart, green future.
A fourth driver is, of course, science. We need to redesign our production facilities, the energy system, urban development, agriculture, etc. on a broad scale, and this is about bringing in scientific-based innovation. We have to put greater emphasis on educating people in terms of knowledge and professional skills.
Between these four change agents, we need to create win-win alliances to overcome the resistance of the old economy, such as the coal & oil industry, which is trying to block – or at least slow down - sustainable change.
You had to rewrite some of the German parts of your book into English. Which parts and why did you have to rewrite completely? What would be the next language that you hope your book is translated into?
I did not have to rewrite whole chapters of the book. Going green is basically a global issue and a global debate. However, there are some specific elements in the German discussion, which are not very relevant to the international context. For instance, the whole idea of de-growth is very much related to the European and especially the German context. In the United States, China or India, there is a completely different discourse on this issue. But the general challenge – decoupling economic growth from CO2-emissions and environmental destruction, is a global challenge and therefore the solutions have to be global too. One of the main players in this regard will be China, so I would be thrilled to see a Chinese translation of the book. Germany and the United States have to offer a role model for this kind of alternative economic growth. They need to demonstrate that one does not have to choose any longer between saving the environment and achieving social and economic progress, that one can bridge these two major targets by showing they go hand in hand. The transition towards a green economy will be the ultimate economic success model for the 21st century.
This interview with Ralf Fücks was conducted by Alexandra Magaard, Energy and Ecology Intern at the Heinrich-Böll-Stiftung North America. 'Green Growth, Smart Growth - A New Approach to Economics, Innovation and the Environment' has been published June 2015.