Degrowth and the Carbon Budget: Powerdown Strategies for Climate Stability – Part 2

September 4, 2014

NOTE: Images in this archived article have been removed.

Image Removed

Ed. note: This post is excerpted from a paper which can be found on the Simplicity Institute website here. We published Part 1 of the paper on here.
5. Powerdown: Degrowth Strategies for Climate Stability
While Anderson and Bows (2011) have presented a robust case for degrowth based on climate science, the challenge that flows from this is to begin to outline the overall shape of an integrated decarbonisation policy framework consistent with the scale and speed required to stay within the constraints of carbon budget targets, and consistent with democracy, political and social stability, and equity. The following sub-sections aim to contribute to that enormous task, while acknowledging that this preliminary discussion is likely to raise as many questions as it answers.   
5.1. Strengthening public understanding of the full implications of carbon budget analysis
In order to fully understand the necessary scale and speed of action required to significantly reduce climate change risks, citizens and governments must first understand the full extent and implications of the carbon budget challenge.  This includes broadening the recognition that, even if most existing decarbonisation policies and plans were immediately implemented, they would still fail to sufficiently address the core problem (i.e. they would not keep us within the carbon budget).  The economic growth implications of carbon budget analysis therefore need to become a central element in informed public debate about climate change solutions and strategies.
5.2. Identify and adopt ‘post-growth’ macroeconomic indicatorsas a key step towards the implementation of post-growth economic paradigms and policies
Once the case for degrowth is understood (both in terms of carbon budget analysis and the more general ‘limits to growth’ critique), it follows that different macroeconomic indicators will be required. Currently, growth in GDP is the most widely used measure of politico-economic success, but for decades scholars (especially ecological economists) have shown that GDP is a fundamentally inadequate measure of genuine progress (see generally, Daly and Cobb, 1989; Daly and Farley, 2004; Lawn, 2005; Stiglitz, Sen, and Fitoussi, 2010; Kubiszewski, et al. 2013). GDP measures the benefits of economic activity in monetary terms, but does not account for most social and ecological costs (it even treats those costs as benefits!). This can lead to ‘growth’ that is ‘uneconomic’, in the sense that the overall costs of growth outweigh the benefits (see Daly, 1999). What are needed are macroeconomic indicators such as the Genuine Progress Indicator that better account for the full social and ecological costs of economic activity. This will help explain and communicate why degrowth, far from being a retrograde strategy, is actually what ‘genuine progress’ now looks like, at least in the most developed nations of the world. Assessing degrowth policies through the conventional lens of GDP will look absurd, whereas those same policies when seen through more inclusive indicators will look necessary and sensible, while uneconomic growth will look absurd. Although far from being a sufficient public policy innovation, post-growth indicators of progress will be a necessary part of the macroeconomic paradigm shift required.  
5.3. Introduce an appropriately robust price on carbon
According to neoclassical economic theory, for a market economy to function in a roughly ‘optimal’ way, the full costs of productive activity need to be ‘internalised’ to the productive process, not ‘externalised’ to society as a whole (see generally, Clarke, 2011). While this is extremely hard to do (providing grounds for doubting purely ‘economic’ solutions to social or ecological problems), it makes good sense to try to ensure prices accurately reflect full social and ecological costs (including the full, long term costs of climate change and of not staying within the carbon budget).  Given that currently the costs of climate change are widely ‘externalised’, it follows that a part of the response to climate change requires putting an appropriate price on carbon (see generally, Tietenberg, 2013). There are two main ways to do this:  either through a Pigouvian ‘carbon tax’ or through an emissions trading scheme (ETS)1
The great advantage of a carbon tax is that it is relatively simple and direct, even if it is also something of a blunt instrument. By taxing emissions, the price of carbon goes up for producers, a cost that is then passed onto consumers, thus incentivising businesses and individuals to reduce carbon consumption and invest in efficiency improvements (see Meltzer, 2014). Furthermore, as noted above, by making fossil energy more expensive, renewable energy sources become more price-competitive, which would encourage fossil energy being replaced with renewable sources. The revenue from taxing ‘bads’ (fossil energy) can also be used to fund ‘goods’ (renewable energy, efficiency improvements, or assistance for low-income households).
The alleged advantage of an ETS is that it would achieve the same ends as a carbon tax, but at a reduced socio-economic cost (see generally, Betsill and Hoffmann, 2011). In theory that might be true, but the realities of ETSs have been that they are very complicated to design and operate successfully, creating much room for the schemes being abused. They can also create counter-productive incentives, as reductions in one area of society can be increased elsewhere.  While a carbon tax is arguably the better mode of pricing carbon, due to its relative simplicity and directness, the main point for present purposes is that carbon has to be priced appropriately somehow if economies are to have price signals that incentivise reduced carbon consumption. Currently, fossil fuels are artificially cheap (due to their costs being externalised), thus leading to their overconsumption and producing a grossly sub-optimal economy. Indeed, climate change is fairly characterised as the global economy’s greatest ‘market failure’.
While pricing carbon is a necessary part of the transition to a low-carbon economy, it must not be assumed that it is a sufficient policy. Both carbon taxes and ETSs are market-based mechanisms that seek to achieve decarbonisation through the incremental effects of prices. But such incremental mechanisms will be insufficient to produce deep and rapid decarbonisation of 8-10% p.a. Pricing carbon must therefore be deemed only one string on the bow of broader decarbonisation and degrowth strategies.
5.4. Abolish fossil fuel subsidies and divest from the fossil fuel industry
How we spend our private and public money is akin to voting for what kind of world we want to live in. Accordingly, if we seriously seek a low-carbon economy we must stop ‘voting’ for a carbon-intensive economy, and this means stopping subsidising and investing in the fossil fuel industry. The IEA (2013b: 1) notes that the ‘global cost of fossil-fuel subsidies expanded to $544 billion in 2012 despite efforts at reform’, adding that ‘financial support to renewable sources of energy totalled $101 billion’. These figures alone show how misguided the existing climate response is. Abolishing subsidies would help ‘price’ fossil fuels more accurately, meaning that the price of fossil energy would increase. It would also incentivise reduced consumption (through efficiency gains and the substitution effect) and make renewables more price competitive, encouraging an investment switch. As well as abolishing subsidies, individuals, communities, financial institutions, and governments should be encouraged to progressively ‘divest’ their existing financial support from the fossil fuel industry and refuse to provide financial support, permits, or a ‘social license’, for new fossil fuel projects and infrastructure.
Promisingly, an international ‘divestment’ campaign is currently under way, led by  (McKibben 2012) and other activist organisations (see generally, Alexander, Nicholson, and Wiseman, 2014). Notably, the fossil fuel divestment movement is founded, in large part, upon carbon budget analysis. Participants in the movement argue that approximately 80% of fossil fuels must remain in the ground if the world is to keep within the 2°C temperature threshold (similar conclusions have been reached by the IEA (2012a). Since all fossil fuels are currently valued as if they will all be burned, this suggests that there is a vast ‘carbon bubble’ which is at risk of popping and rendering most fossil fuel resource ‘stranded assets’ of ‘unburnable carbon’ (see Carbon Tracker and Grantham Institute, 2013). This provides an additional more self-interested, financial argument for divestment, adding further weight to the already compelling scientific and moral case.2
5.5. Rapidly accelerate a comprehensive switch to renewable energy
The most important corollary of the moral and financial arguments against subsidising and investing in fossil fuels is to shift that financial support toward renewable energy systems and other low-carbon technologies. Existing subsidies for fossil fuels provide significant funds to get this transformation of energy systems underway. This spending shift could be achieved without finding new investment funds, although significant additional investment funds (both public and private) will need to be reprioritised in order to fully implement the switch to renewable energy  (see Wiseman, Edwards, and Luckins, 2013). It is imperative to point out, however, that renewable energy systems are not on their own a climate change ‘silver bullet’. While they are of course a necessary part – indeed, the foundation – of any transition to a low-carbon economy, it is a mistake to think that the world can just transition to renewable energy systems and otherwise carrying on within the same growth-based, industrial paradigm.
First of all, climate change is only one environmental problem among a whole host, so decarbonising the existing economy without otherwise changing its nature would leave other significant ecological problems, such as the profound threats to biodiversity, unresolved (see generally, Turner, 2012). Secondly, when a full lifecycle analysis of solar and wind is undertaken, they often are shown to have far lower energy returns on investment (EROIs) than previously thought (see, e.g. Pietro and Hall, 2013 Palmer, 2013), suggesting that it will be extremely difficult to run a growth-orientated industrial civilisation on renewable energy. Finally, the intermittency of most renewable energy sources means that huge amounts of expensive storage or redundant plant would be required to cover the base loads of a growing, globalised industrial economy (see Trainer, 2013a; Trainer, 2013b; Honnery and Moriarty, 2012).
Even if electricity could be provided by 100% renewable energy (or even nuclear), electricity only constitutes around 18% of global final energy consumption (IEA, 2012b: 28), leaving unresolved (among other things) the problem of replacing liquid fuels for transport and machinery, especially. This is perhaps the largest challenge to decarbonisation. While electric vehicles may go some way to mitigating this problem, the fact that there are currently about one billion fossil-fuel powered vehicles on the road suggests that any transition to an electric fleet is going to be slow, exceedingly expensive, and resource intensive. The solution, I suggest, lies not so much in running a globalised transport system on biofuels or electricity, but in driving less and in other ways reducing oil dependency (e.g. growing food organically and localising production). In short, the challenge of rapid decarbonisation cannot be solved purely from the ‘supply side’ (i.e. transitioning to renewable energy systems), partly because such a transition will inevitably be slow (requiring a decade or two, at least), even if undertaken with ‘war mobilisation’ urgency (Smil, 2010; Smil, 2014). More specifically, Annex 1 nations could not decarbonise at 8-10% p.a. purely by transitioning to renewables. In order to transition rapidly to a low-carbon economy, we must also decarbonise from the ‘demand side’ too, by increasing efficiency and, most importantly, by simply consuming less energy and less energy-intensive products and services. This means that any degrowth transition to a low-carbon economy means adjusting to a prolonged period of planned ‘energy descent’ and creatively adapting to post-consumerist, moderate-energy lifestyles (Alexander, 2013).  
5.6. Greatly increase efficiency through incentives, subsidies, regulation, and education
There is enormous scope for significantly decarbonising and dematerialising our economies through efficiency gains (see, e.g. Weizsacker et al, 2009). By exploiting the best low-carbon technologies and designs, human beings will be able to lead high quality lives at a fraction of the carbon-intensity of lifestyles in developed nations today (see, e.g., Druckman and Jackson, 2010). Efficiency can be promoted through incentives (such as a carbon tax); subsidies (for such things as energy efficient fridges or bicycles); regulation (such as minimum standards for products, especially energy consuming products); and education (showing individuals and businesses the easiest ways to lower their carbon footprints). While some will argue that this process should be left to the market, given the urgency of the challenge, government policies can also play a crucial role in driving efficiency improvements. In China, for example, the government has enforced efficiency improvements in 1000 of its state-owned enterprises contributing to a 20% improvement in efficiency in the last five years. According The Economist (2013), this is ‘arguably the single most important climate policy in the world’.
Once again, however, the risk of promoting efficiency as a stand alone solution is that people can assume that efficiency will be enough to decarbonise at 8-10%p.a., without requiring deeper changes to the way we live. Efficiency gains will never decarbonise or dematerialise economic activity enough for a global population to be able to live affluent, consumer lifestyles in a growing economy (particularly an economy operating in ways consistent with carbon budget constraints). This means efficiency gains have to be complemented by lifestyle and structural changes that significantly reduce energy and resource demands compared to levels prevalent in ‘developed’ economies.  
 5.7.Introduce diminishing resource and energy caps to contain the ‘rebound effect’
Although efficiency gains are a necessary part of any transition to a low-carbon economy, there is great risk that all or some of those efficiency gains will be lost to the ‘rebound effect’ unless measures are taken to contain that phenomenon (Herring and Sorrell, 2009). When efficiency is increased, this can provide more income or productive capacity that can easily be redirected back into energy or resource intensive consumption or production. In fact, as W.S. Jevons (1865) argued long ago, efficiency can actually increase overall resource or energy consumption, by making certain products cheaper and therefore more available or affordable to a wider group of people. In order to contain this well documented phenomenon, diminishing resource and energy caps – or ‘impact caps’ – should be introduced to ensure that efficiency gains are directed into reducing resource and energy consumption, not directed into consuming more stuff with the same amount of (or even increased) resources or energy (Alcott, 2010). In an age of gross ecological overshoot, what are needed are absolute energy/resource reductions (absolute decoupling), not merely decreased energy/ resource costs per unit (relative decoupling) (see Jackson, 2009: Ch. 4). This could be achieved either (1) through Pigouvian taxes (such as a carbon tax discussed above), which would make carbon sufficiently expensive that sustainable levels would not be exceeded; or (2) through direct regulation, which would legally prohibit more than a set amount of fossil fuels being produced each year (Alcott, 2010). By capping impact, the rebound effect would be avoided. Whichever approach is taken, it could be introduced over a specific timeframe (say, over ten years) to allow markets and culture to adjust, although the detailed institutional design of such policies requires careful consideration (Kallis and Martinez-Alier, 2010).[3]
5.8. Rethink budget spending to facilitate low-carbon infrastructure
If governments decide to take climate change seriously, this will require a huge investment in low-carbon technologies (especially renewable energy systems), but it will also require huge investment in ‘greening’ the infrastructure of our carbon-intensive urban centres. This point highlights the fact that our consumption practices do not take place in a vacuum. They take place within structures of constraint, and those structures make some lifestyles options easy or necessary, and other lifestyle options difficult or impossible. Currently many people find themselves ‘locked in’ to high-consumption lifestyles due to the structures within which they live their lives (see Sanne, 2002). To provide one example: it is very difficult to escape a culture of driving if there is poor public transport or no bike lanes. Change the infrastructure, however, and new lifestyles would be more easily embraced. New infrastructure and systems are required to make low-impact lives easier. Given that public funding is far from limitless, this will require a significant revision of conventional spending patterns for most societies. Treating climate change as a ‘security threat’ and, on that basis, taking a significant portion of military spending is one path to funding low-carbon infrastructure, but deeper revisions may be needed in other places in order to fund these projects. There is no universally applicable method for determining how best to do this, and each national or local government will have to address the question in relation to their unique contexts and financial capacity. But the longer we wait before beginning this task, the harder and more urgent it becomes (see Murphy, 2012).
5.9. Ensure an equitable pathway to global decarbonisation by resourcing transfer technologies and climate resilience strategies in non-Annex 1 nations
While the Annex 1 developed economies must take responsibility for the majority of historic emissions it is also the case that future projections show that non-Annex 1 nations are set to become the highest overall emitters in the foreseeable future. What is necessary is that those non-Annex 1 nations are given increased support to create low-carbon economies now, rather than have them follow the conventional, industrialised development path which is at real risk of creating infrastructure and cultures that essentially ‘lock’ societies into decades of high-carbon living. Exactly how to do this, of course, is an extremely complex issue which cannot be addressed here, but one way to assist in this post-industrial development is for the Annex 1 nations to freely share their technological know-how and design methods with the non-Annex 1 nations to help them ‘leap frog’ an industrial phase of development and move more directly to an economy that meets basic needs for all with low-carbon emissions. This is one way the Annex 1 nations can pay back some of their ‘ecological debt’ (Simms, 2005) to the non-Annex 1 nations, to be supplemented by direct financial aid. A significant transfer of resources from developed to developing economies to support climate adaptation and resilience initiatives will be essential.
5.10 Reimagine and reinvent the ‘good life’ beyond consumer culture

Reimagining and reinventing the ‘good life’ lies at the heart of any degrowth transition to a low-carbon economy. High-consumption lifestyles simply cannot be universalised to seven, or nine, or ten billion people, while keeping within a carbon budget (to say nothing of the other limits to growth). Therefore, any sufficient response to climate change and other ecological limits requires a cultural paradigm shift that involves a significant shift away from high-consumption lifestyles towards ways of life informed by principles and practices of material sufficiency.

The ‘degrowth’ principles of increased frugality, moderation, and sufficiency need not necessarily be seen as principles of hardship or deprivation. A strong socio-psychological case can be made that income has diminishing marginal returns, meaning that income is very important at low levels of income, but once basic material needs have been met, priorities other than income become increasingly important (e.g. social engagement, more meaningful employment, more time for private passions). In fact, the evidence suggests that high-consumption societies are widely mis-consuming, in the sense that many people could actually reduce their consumption while also increasing their wellbeing (see Alexander, 2012b; Bilancini and D’Alessandro, 2012). In this context, degrowth can be understood to mean trying to find that ‘optimal’ material/energy threshold.

In much the same way that carbon budget analysis must be the basis of a pro-active education campaign, so too should support for the goal of  ‘voluntary simplicity’ be built as an attractive alternative to consumer lifestyles. Such a campaign may need to begin at the grassroots level, where a cultural shift is initiated as more individuals and communities provide real-world examples of low-consumption, high quality living. This cultural transformation also highlights the point made above: that decarbonisation cannot be achieved simply from the ‘supply side’ but actually requires people to reduce the consumption of resources and energy from the ‘demand side’ too. This might mean driving less and cycling more; growing local organic food; putting on woollen clothing rather than always turning on the heater; taking shorter showers; flying less or not at all; making and mending things rather than buying new; and in countless other ways rethinking lifestyles in ways that reduce energy and resource burdens. This is an immensely creative challenge, which finds promising movements already underway based on notions of voluntary simplicity (Alexander, 2009), permaculture (Holmgren, 2002), and transition towns (Hopkins, 2008). It is highly likely that these types of social movements will need to expand if the policies outlined above are to find broad social support. Indeed, to the extent that governments refuse to act decisively, it follows that the transition to a low-carbon, post-growth economy will need to be driven ‘from below’, without much state support (see generally, Trainer, 2010).

It is also necessary to acknowledge, in closing, that the above proposals, bold though they are, would not, in themselves, be enough to produce a just and resilient degrowth economy (Trainer, 2012). The proposals above are focused primarily on the question of decarbonisation, but given how fundamental the transition to a low-carbon economy is, a wide range of broader social, economic, and political changes will also be required. For example, a degrowth economy will require new banking and financial systems that are not so dependent on debt or the expansion of the money supply through interest-bearing loans. Similarly, providing access to cheap and affordable housing, or sufficient job security, in a degrowth economy may require a fundamental restructure of existing property and tax systems (see Alexander, 2011; Kallis et al, 2012). Land use patterns will need to be revised in order to assist with decarbonisation too. This paper has not attempted to address these or other remaining complex issues, but I note them here as issues deserving of more attention by those who see the transition to a post-growth economic paradigm as a necessary part of any a low-carbon transformation. Whether ‘degrowth’ is the best term to describe this necessary societal transformation remains open to question. But that terminological debate is less important than the fact that this debate is occurring in recognition of the radical implications of carbon budget analysis and the broader limits to growth critique.

6. Conclusion

In order to have a reasonable chance of staying within carbon budget constraints and therefore of avoiding the most extreme global warming scenarios, this paper has argued that an integrated matrix of decarbonisation initiatives must be implemented which aim to initiate a rapid transition to a degrowth economy. In the Annex 1 nations, this would require a systematic, planned reduction in the consumption of energy and resources. The rapid and deep reductions in emissions required if the Annex 1 nations are to decarbonise at 8-10% over coming decades cannot be achieved merely with a ‘supply side’ transition to renewable energy, necessary though that transition is. It must also be supplemented by a ‘demand side’ reduction in carbon-intensive consumption and production. That means creating a fundamentally different kind of economy – one not based on limitless growth – and embracing ways of living far less impactful than high-consumption lifestyles.

While I am fully conscious of the challenges involved in building broad public support for this argument, I hope that the analysis presented here can contribute to a more informed public debate about the crucial contribution which the transition to a post-growth economic paradigm will need to make in achieving climate stability and a just and resilient future. After all, as Winston Churchill once noted: ‘it is no use saying, “We are doing our best”. You have got to succeed in doing what is necessary.’


1. Note that calling the former policy a carbon ‘tax’ is actually a misuse of the term, since it is really just internalising an externality. We do not, for example, say that a company is being ‘taxed’ when we expect it to clean up the river it polluted. We will, however, defer to convention and use the term carbon tax to differentiate this form of pricing carbon from an emissions trading scheme. 

2. In an important aside, if the world decided to take climate change seriously, one of the first investment changes necessary would be to stop financing new or existing infrastructure projects aimed at producing unconventional shale oil and the tar sands, as these oils are significantly more carbon-intensive as conventional oil (Hansen and Kharecha, 2008). Nevertheless, stopping production of unconventional oils would mean global liquid fuel production would immediately peak or even be in decline, despite demand growing, which would inevitability mean significantly higher oil prices (which are already at historically high trend levels). The further challenge this would raise, however, is that expensive oil has a suffocating effect on oil-dependent economies, inhibiting growth (see Alexander, 2014b). This is not an argument in support of unconventional oil, of course; it simply provides further grounds for decarbonising our economies and moving toward a post-growth macroeconomic paradigm that is far less dependent on cheap oil. 

3. As Kallis and Martinez-Alier (2010: 1572) note: ‘First there is the question of who and how is to decide on the proper caps. Second, there is the question of who and how is to enforce them.’  


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Samuel Alexander

Over the last ten years Dr Samuel Alexander has been a lecturer and researcher at the University of Melbourne, Australia, teaching a course called ‘Consumerism and the Growth Economy: Critical Interdisciplinary Perspectives’ as part of the Master of Environment. He has also been a Research Fellow with the Melbourne Sustainable Society Institute and is currently co-Director of the Simplicity Institute. Alexander’s interdisciplinary research focuses on degrowth, permaculture, voluntary simplicity, ‘grassroots’ theories of transition, and the relationship between culture and political economy. His current research is exploring the aesthetics of degrowth and energy descent futures. His books include Degrowth in the Suburbs: A Radical Urban Imaginary (2019, co-authored with Brendan Gleeson); Carbon Civilisation and the Energy Descent Future (2018, co-authored with Josh Floyd); Art Against Empire: Toward an Aesthetics of Degrowth (2017); Just Enough is Plenty: Thoreau’s Alternative Economics (2016); Deface the Currency: The Lost Dialogues of Diogenes (2016); Prosperous Descent: Crisis as Opportunity in an Age of Limits (2015); Sufficiency Economy: Enough, for Everyone, Forever (2015); and Entropia: Life Beyond Industrial Civilisation (2013); he is also editor of Voluntary Simplicity: The Poetic Alternative to Consumer Culture (2009) and co-editor of Simple Living in History: Pioneers of the Deep Future (2014). In 2016 he also released a documentary called A Simpler Way: Crisis as Opportunity, co-produced with Jordan Osmond of Happen Films. Alexander blogs at

Tags: carbon budgets, climate change, climate change mitigation strategies, degrowth, limits to growth