INSUBCONTINENT EXCLUSIVE:
The financial shock the UK has recently suffered is
of course bad for green investment
The Rishi Sunak-led government is also likely to use this crisis to push for further public spending cuts that will rule out a truly
transformative green agenda
However, in my recent academic paper I argue that the economic obstacles to effective decarbonisation are more deeply entrenched than that
Instead, the global economy has been trapped in a state of relative stagnation in rates of growth, productivity, investment and
profitability since at least the 2008 financial crisis, with some scholars even dating the onset of the malaise to the 1970s
This so-called secular stagnation is a global trend, but the UK has performed particularly poorly
This represents a colossal problem for mainstream visions of decarbonisation
Most states, business groups and international organisations believe it must be driven by a tremendous global boom in private investment in
There is no consensus on the causes of this long-term stagnation, with different scholars pointing to slowing population growth, anti-labour
policy agendas, or industrial overproduction
Yet what is clear is that stagnation acts as a fundamental drag on efforts to green the world economy
A few examples can illustrate this.Steel and solar The steel industry is a key driver of climate change and is responsible for around 7% to
9% of global carbon emissions
Currently, many steel plants burn coke to heat their blast furnaces, releasing carbon dioxide in the process
There are several ways to green this process, with perhaps the most plausible involving the use of green hydrogen and electric arc furnaces
The problem is that these green solutions are expensive, in an industry that is already wracked by overproduction and weak profitability
Reorganising production and retooling factories worldwide would require firms to make massive investments, but glutted steel markets mean
that such investments would be unlikely to yield high returns
China makes more than it can sell.chinahbzyg / shutterstock At first glance, solar power looks like the polar opposite of an old, heavy
The production of solar panels is literally a sunrise industry: from the early 2000s, when generous renewable energy subsidies were
introduced in Europe, investment has flooded in and generated a boom
And yet there are signs that this industry too is increasingly hampered by chronic overcapacity and vanishing profitability
As production has become increasingly concentrated in China, where it is most cost-effective, the industry has been transformed by
automation and massive economies of scale
It now resembles a typical commodities business with a high output of standardised products, and low prices and profits
Many solar firms have gone bankrupt or simply abandoned the sector
There has yet to be a grinding slowdown in solar panel production in response to these weak profits, partly due to massive subsidies in
China.Democratising decarbonisation These dynamics can be found across many sectors that require urgent decarbonisation, from industry to
means.The solar industry could be collectively owned and democratically run.ME Image / shutterstock For this reason, it is important to take
seriously radical visions of decarbonisation that involve using collective ownership and democratic economic planning to rapidly expand
Faced with an unprecedented environmental catastrophe and the inertia of private markets, why should key industries like steel or solar be
run according to the principle of profit maximisation instead of climate stability? Run in a collective and democratic manner, the
production of solar panels could be carefully managed to address a range of social concerns, from meeting carbon emissions goals to
protecting communities where quartz mining is located to ensuring fair working practices in silicon factories
Deliberation between stakeholders would replace the blind imperative of money making
While similar proposals can be found in some strands of green new deal and degrowth thought, these measures remain marginal to the broader
debate on decarbonisation
Such a radical departure from contemporary economic orthodoxy is unlikely to be adopted by governments unless they are pushed by powerful
Building such movements is the challenge of our time.Jack Copley, Assistant Professor in International Political Economy, Durham University
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