Commentary

Dialogues on Climate Change

1–5
The unequivocal case for net © The Author(s) 2024
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zero green growth sagepub.com/journals-permissions

DOI: 10.1177/29768659241293227
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Sam Fankhauser
Smith School of Enterprise and the Environment, University of Oxford, UK

Abstract
This paper makes the case for net zero (or, more broadly, green) growth. It argues that net zero green
growth is the most realistic strategy for halting global warming and meeting the objectives of the Paris
Agreement. Net zero growth is feasible technologically, economically and behaviourally. Credible decar-
bonisation paths have been modelled and the leading countries have already broken the link between emis-
sions and gross domestic product. Green growth, which emphasises economic opportunities, is the best
way to mobilise the clean innovation and investment that net zero requires, and it is the best strategy to
secure public support for rapid decarbonisation.

Keywords
Net zero, green growth, climate policy, carbon emissions

Introduction While the policy mainstream has coalesced around

net zero growth, the notion has come under attack from
Net zero emissions have become a matter of industrial
two very different quarters. Proponents of faster, more
strategy, as well as environmental policy. Most coun- aggressive climate action question whether net zero
tries with an explicit net zero target express their ambi- growth strategies will reduce emissions in time. They
tions not just in terms of reduced carbon emissions,
see degrowth as the only credible way to secure the
but also in terms of new economic opportunities. 1.5°C temperature target of the Paris Agreement (e.g.
The European Union wants to achieve net zero Hickel and Kallis, 2020). Right-wing climate sceptics,
through economic growth that is decoupled from
meanwhile, argue that rapid climate action of all kinds
resource use. China’s current Five-year Plan, like its will result in detrimental degrowth (Paterson et al.,
precursors, contains ambitious growth targets for net 2023). For them, net zero growth is an oxymoron.
zero technologies. The flagship climate law of the
In the face of such many-sided criticism, this
United States, the Inflation Reduction Act, is overtly paper reviews the evidence on net zero green
about boosting US industry. The implementation strat-
egy for reaching net zero in the United Kingdom is
called the Net Zero Growth Plan. Countries as
Corresponding author:
diverse as Rwanda and South Korea have passed expli- Sam Fankhauser, Smith School of Enterprise and the
cit green growth laws (see https://climate-laws.org/ for Environment, University of Oxford, UK.
data on climate policies and laws). Email: [email protected]

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2 Dialogues on Climate Change 0(0)

growth and reiterates the intellectual and practical store in reducing the carbon intensity of energy,
case for net zero policies that emphasise innovation, through technologies like renewable energy, electric
investment and opportunity. vehicles, green hydrogen and carbon capture and
storage (the first factor of the Kaya identity).
Net zero and (de)growth Degrowth advocates stress the need to reduce economic
activity (the third factor). Both sides agree on the import-
Before looking at the empirical evidence, it is worth
ance of reducing energy intensity (the middle factor),
recapitulating the conceptual links between carbon
and indeed resource intensity in general. However,
emissions and economic activity and the philosophical
they have different strategies for achieving it. Green
differences between green growth and degrowth.
growth economists see room for technical efficiency
Focusing on the 80% of emissions that emanate
improvements on the way to a ‘weightless economy’
from energy use, an instructive way to depict the
(Quah, 2019), while degrowth scholars emphasise less
relationship between emissions, energy use and eco-
resource-intensive consumption (Hickel, 2020).
nomic activity is the Kaya identity. (Economic
The Kaya identity provides a static picture that
activity, usually measured through gross domestic
holds true at any given time. In addition, there is
product, GDP, is a poor measure of human prosper-
also a dynamic relationship between the three com-
ity, although it is correlated with many relevant
ponents. Changes in one component may affect, or
metrics. I leave this important debate aside and
be affected by, the others. Two dynamic links in par-
accept the interest of policymakers in GDP).
ticular are worth noting (Figure 1).
Named after Japanese economist Yoichi Kaya, the
The first dynamic link concerns the role of economic
Kaya identity maintains that energy-related carbon
pursuit in bringing about net zero. Carbon and energy
emissions are the product of three factors (Figure 1):
intensity improvements require innovation and invest-
ment to build an effective zero-carbon infrastructure
• the carbon intensity of energy use (carbon/
(Songwe et al., 2022). This will have to emerge from
energy);
economic activity, including private entrepreneurship.
• the energy intensity of economic activity
Promoting innovation and mobilising investment is
(energy/GDP); and
easier in a thriving economy than a stagnating one – a
• economic activity (GDP).
key argument in favour of net zero growth.
The second dynamic link runs in the opposite dir-
Because it is an identity, this relationship holds by
ection. If decarbonisation imposes resource costs, they
definition. There are exactly three ways, and only three
will have to be absorbed by the economy and may
ways, through which carbon emissions can change.
reduce productivity. Conversely, if net zero invest-
Experts disagree about the relative importance of the
ment results in cost savings (as argued by Sudmant
three options. Proponents of green growth put much
et al., 2024 and Way et al., 2022) or fewer market dis-
tortions (as suggested by Stern, 2015), the economy
will get a boost. This more optimistic scenario is
sometimes called strong green growth, as opposed
to standard green growth, which merely maintains
that GDP will not fall (Jacobs, 2013).

Decoupling emissions and GDP

We know it is possible to break the link between
carbon emissions and economic output. Over 20 coun-
tries have already done so. Their emissions have
Figure 1. Carbon emissions, energy use and gross peaked, and their economies have continued to grow
domestic product (GDP). Source: Author. (Ritchie, 2021). The list includes many European
Fankhauser 3

countries, but also emerging markets like Mexico and The impact this structural change will have on aggre-
other high-income countries like Singapore. Emissions gate output depends on the ease with which production
have also peaked in the United States, highlighting the factors (capital and labour) can be redeployed. The net
fact that decoupling is not always the result of deliber- zero economy offers new areas of comparative advan-
ate climate policy. Market trends (in the US case, the tage for all countries (Andres et al., 2023), but the tran-
advent of shale gas) can also play a role. sition could be hampered by structural rigidities in
A key driver of falling emissions in these vanguard capital and labour markets.
countries has been the decarbonisation of power gener- The risks of stranded capital assets are by now well
ation, by phasing down coal and scaling up renewables. documented, both in fossil fuel extraction (van der
The resulting fall in the carbon intensity of energy, often Ploeg and Rezai, 2020) and fossil fuel use (Pfeiffer
aided by a reduction in energy use, has more than offset et al., 2018). While asset stranding could be costly
the growth in economic output (Le Quéré et al., 2019). for individual investors, concerns about systemic
Thanks to its virtually coal-free power sector, the UK risks to the economy are abating. Investors have had
now emits 3.6 times less carbon per unit of GDP than time to adjust, and the zero-carbon economy provides
it did in 1990. GDP is up by 80% over the period, and abundant new investment opportunities.
emissions are down by 50% (CCC, 2024). The impact of net zero on labour markets is more
The decarbonisation strategies of vanguard coun- complex. Degrowth scholars put much store in
tries closely resemble the recommendations of working time reductions as a safe way to curtail eco-
energy-economy models. Numerous decarbonisa- nomic activity and carbon emissions (e.g. Knight
tion pathways have been simulated, using different et al., 2013). Shorter working hours may well be
techno-economic assumptions and modelling welfare-enhancing, but their impact on emissions
approaches (Riahi et al., 2022). Despite their will be small (Collett, 2024). Net zero requires
variety, they all follow a similar blueprint. deeper changes than a small, uniform reduction in
Decarbonisation starts in the power sector, where activity levels. It calls for the wholesale redeployment
renewable energy is now the least-cost solution in of workers from high-carbon into zero-carbon jobs. In
most contexts. Cheap renewables can then be used to the short term, this may create a skills mismatch, which
decarbonise other high-emissions sectors, including will require policy attention. The net zero economy
surface transport (through electric vehicles), buildings poses higher demands on cognitive abilities and
(heat pumps) and parts of the industry (green hydro- problem-solving skills (Consoli et al., 2016), and the
gen). There is a balance between technological and geographic alignment between high-carbon and zero-
behavioural interventions. About 40% of decarbonisa- carbon jobs may not be perfect (Saussay et al.,
tion solutions entail clean technology (such as renew- 2022). However, there is no evidence that in the long
ables), 20% require behavioural shifts (e.g. on diet) run, net zero is associated with fewer jobs or lower
and 40% include both (e.g. on mobility, which features wages (Valero, 2024).
both electric vehicles and changes in travel behaviour) Environmental economists are excited about
(CCC, 2020). Resource efficiency is critical to minim- the multiple ways in which net zero could
ise the broader environmental footprint of the transition enhance economic productivity. Zero-carbon
(e.g. Walter et al., 2024 on battery minerals). investment can give a boost to an anaemic
These paths are feasible in the sense that they do economy (O’Callaghan et al., 2022). There may
not rely on solutions that have not at least been be fewer distortive subsidies (Coady et al.,
tested in pilot situations. 2018). Clean innovation may unleash a virtuous
cycle of ‘creative destruction’, investment and
renewal (Aghion et al., 2019). Cleaner, more live-
The impact of net zero on
able cities may boost physical and mental health
the economy (Avila-Uribe et al., 2024). We are starting to see
Building a net zero economy requires deep changes to some of these effects materialise, particularly in
the goods we consume and the way we produce them. transport and power generation.
4 Dialogues on Climate Change 0(0)

The need for speed Acknowledgements

The key requirement of a successful net zero strategy is My thinking on net zero and economic growth has bene-
fitted greatly from conversations with Alex Bowen, Max
that it reduces emissions rapidly and comprehensively
Collett, Cameron Hepburn, Ralf Martin, François
(Fankhauser et al., 2022). Progress so far has been Lafond and Emilien Ravigné and my respectful disagree-
much too slow. Global emissions have fallen by ments with Kate Raworth. However, the views expressed
<15%, relative to a no-policy counterfactual (Eskander here are mine.
and Fankhauser, 2020). This is easily the most funda-
mental criticism that can be levelled at current net zero Declaration of conflicting interests
policies.
The author declared no potential conflicts of interest with
Energy systems experts will counter that we are respect to the research, authorship, and/or publication of
only now reaching the steep part of the S-shaped this article.
logistics curve that characterises technology adoption
(Way et al., 2022) and societal tipping points (Farmer Funding
et al., 2019). Things will speed up. The remarkable
The author disclosed receipt of the following financial
progress in clean technology is indeed a cause for support for the research, authorship, and/or publication
optimism. The transition to renewable energy and of this article: This work was supported by the UK
electric transport now seems irreversible. Economic and Social Research Council (ESRC) through
However, rapid and comprehensive decarbonisa- the project Productive and Inclusive Net Zero (PRINZ;
tion will not happen autonomously. It has to be grant number ES/W010356/1). Additional support was
driven by leadership and public support. Leadership provided by the University of Oxford’s Strategic
and public support, in turn, require a compelling narra- Research Fund.
tive that can generate momentum. This is something
net zero green growth strategies can uniquely provide. ORCID iD
Climate policies that credibly offer net-zero prosper- Sam Fankhauser https://orcid.org/0000-0003-2100-7888
ity, economic opportunities and green jobs are much
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