Growth as we’ve known it is over, Paul Gilding and Richard Heinberg told a Climate One audience in San Francisco on November 7. Confronted by resource constraints and crippling debt, nations must instead focus on growth that respects nature’s limits.
“The idea that we can keep on growing the economy up against the physical limits of the Earth” – water, oil, and land – “is not physically possible,” said Paul Gilding, Professor, University of Cambridge Program for Sustainability Leadership, and author, The Great Disruption.
“We’re in a trap really. If we grow the economy, then we’ll hit those limits again. Prices will go up. Oil prices will go up. Food prices will go up. And the economy will go down,” he said. “If we don’t grow the economy, we’re going to drown in debt. We’re going to take a while to find our way out of this morass that we’ve dug ourselves into.”
Richard Heinberg, Senior Fellow, Post Carbon Institute, and author, The End of Growth, has written that it took decades for nominal GDP to recover after the Great Depression. But the fallout of the Great Recession, he said, will be much worse. “I don’t think we’ll ever see growth the way we experienced during the decades of the 20th century. If we’re thinking of growth in terms of increased consumption, then I think it’s all over.”
“We have to create an economy that exists within nature’s limits,” he said. “We’ve been borrowing from the past, by way of fossil fuels. We’re also borrowing from future generations, by way of debt – all so that we can consumer as much as possible right now.”
“But there’s only so long you can continue borrowing from both the past and the future to fund present consumption,” he said.
Gilding stressed that he and Heinberg are not advocating against capitalism, or suggesting growth itself is bad. “This is not about the end of capitalism, or the end of business, or the end of change,” he said.
Indeed, for some companies, the future holds promise. “We’re going to see amazing technologies come to the fore. And we’re going to see certain companies grow in very exciting ways, and produce wonderful new products that will make our lives a lot better,” said Gilding.
Gilding highlighted one industry, solar, for which projections are increasingly optimistic. Globally, the industry is growing 40 percent each year, he noted, and every time the industry doubles, the price per watt falls by 20 percent. By 2020, he expects solar to be cheaper than coal. “If you applied that to any other industry, you would say, ‘We know where this is going. That looks like mobile phones, digital cameras.’”
That’s not to say that energy incumbents will be easily swept aside. Oil firms are using every known trick, and developing more, to secure new deposits, Heinberg said. “It’s true we are finding new oil. We are replacing giant deposits of high-quality, cheap-to-produce, quick-to-produce oil with deposits of low quality, hard to access, expensive, and slow-to-produce oil.”
“We’re getting better and better at scraping the bottom of the barrel,” he said.
“They are fighting tooth and nail,” said Paul Gilding. “They are going to do whatever it takes to defend their cash. It’s up to government to overcome that, and to have the courage to stare them down and to enforce the change.”
Such a stand is underway in Gilding’s native Australia, where parliament just passed legislation placing a price on carbon. Yes, the legislation is a compromise, with some carve-outs for energy-intensive industries, said Gilding, but “the key thing is that we’re going to cross that dreaded line that you haven’t crossed yet, which is that we’re saying nationally: you have to deal with the issue.”
“The point is that you now have a price on carbon, or soon will be in Australia, which means that every balance sheet shows the price of carbon. It means we no longer have a debate about whether we should act on climate. We only have a debate on how we should act, and how fast we should act,” he said. “I think our country has a larger capacity for denial,” said Richard Heinberg, an understatement that drew laughs. “I think we’re going to have to hit the wall before we see fundamental change.”
– Justin Gerdes
November 7, 2011
Photos by Steven Fromtling
The Commonwealth Club of California