Decarbonization vs. Degrowth - What's the Difference?

The Difference Between Decarbonization and Degrowth - This Week in Sustainability

The science is clear: the world is in climate crisis, our chance to limit global warming to the 1.5°C Paris Agreement target is slipping away, and systemic climate action and decarbonization needs to happen over the next ten years to dodge disaster. We have to change the way the economy works.

Within the climate action conversation, two approaches are gaining greater attention: decarbonization and degrowth. However, despite both being put forward as climate solutions, decarbonization and degrowth are quite different, and also interrelated.

Let’s quickly define each term, break those differences down, and explore their relationship.

What is Decarbonization?

Decarbonization means reduction of carbon. Specifically, carbon dioxide (CO₂), the greenhouse gas (GHG) most commonly used in emissions measurement. Carbon released into the Earth's atmosphere from manufacturing, industrial agriculture, burning fossil fuels, and other sources is the leading cause of climate change and global warming.

Established scientific and carbon accounting methods can convert other emissions like methane and nitrous oxide into carbon equivalents (CO₂e), another reason carbon's become the international standard for measuring a country or company's net emissions. Decarbonization is the process of reducing those carbon emissions through various strategies.

Common steps companies and countries take to decarbonize include:

1. Reducing energy consumption and usage through energy efficiency and smart grid improvements
2. Using clean energy (solar, wind, water, nuclear) instead of fossil fuels (oil, gas, coal)
3. Replacing fossil fuel transportation with electric vehicles
4. Reducing industrial agriculture and introducing more sustainable farming and land practices
5. Replacing inputs and raw materials with more sustainable alternatives
6. Value chain efficiency optimization and supply chain sustainability improvements
7. Improved circularity, re-use, recycling, and end-of-life treatment for finished and discarded goods and products
8. Carbon capture, tree planting, kelp farming, and other methods to remove and sequester atmospheric CO₂

Today, most companies and governments pursuing decarbonization use most if not all of these tactics to reduce their environmental footprint. And yet, at the same time, you'll be hard-pressed to find a country or company that isn't trying to grow. Therein lies the tension.

Logically, if a business, city, or country's already producing GHG emissions and then grows in size, all other things equal, the amount of carbon pollution it generates will also increase. This is why growth - particularly industrial growth - is often fundamentally at odds with decarbonization.

Absolute vs. Intensity Decarbonization

In business, this tension is frequently captured in the difference between absolute and intensity-based emissions targets. Absolute emissions reduction reduces total or net carbon. As a simple example, if our company emits 1,000 metric tons (MT) of CO₂e in 2021 and our goal is to reduce absolute emissions by 20% in 2022, we need to reduce annual emissions by 200 MT year-over-year from 1,000 to 800 MT of CO₂e.

By comparison, intensity decarbonization reduces carbon per unit of economic activity. Examples could be revenue-based (i.e., MT of CO₂ per million dollars in sales), per capita or per employee, per building or facility, or per unit or finished product. The physics problem with emissions intensity reduction is - from a climate change and global warming perspective - our planet and economy need governments and companies to achieve absolute reduction. Intensity reduction is like trying to walk down an escalator that's going up.

In this sense, a global company with a slower growth rate may have a clearer path to decarbonization compared to a fast-growing startup. A high-growth company might achieve intensity-based emissions reductions but still end up increasing its absolute GHG emissions at the same time, an overall negative for the environment.

One place intensity-based emissions targets can be beneficial for decarbonization though is operational clarity and tracking within an organization. If I'm a manager running a manufacturing line at one facility within a larger company, it may be easier for me to benchmark, baseline, and measure my own sustainability effectiveness using intensity indicators. Used thoughtfully, intensity-based emissions targets can be useful, but they should lead to - or be paired with - absolute emissions reduction.

So is sustainable or green growth even possible? Yes, it is, but decarbonization is much easier in a degrowth environment.

What is Degrowth?

Instead of prioritizing economic growth, degrowth advocates for economic contraction by reducing production and consumption, arguing this is possible without reducing prosperity or social well-being. Or, at a minimum, we keep economic growth flat and decarbonize the current economy as it exists today.

If the world's #1 priority is cutting emissions and reducing the harms of climate change (and today, clearly, it is not), the fastest way to get there is a combination of degrowth and decarbonization. The goal isn't to prompt a recession, but to curb economic activity in carbon-intensive sectors without harming public health or quality of life.

In a vacuum though, degrowth can also be problematic. Even in 2022, 66% of the world lives on less than $10 per day, according to Oxford University's Our World in Data project. If we need economic growth to help bring all those people out of poverty, degrowth harms the same marginalized communities who are vulnerable to climate change-driven food and water shortages. Damned if you do, damned if you don't.

There's also an inequality lens that's constructive to apply here. It's estimated there's around $91 trillion dollars in the global money supply (excluding cryptocurrency and physical wealth like real estate). Divided by a 7.9 billion person global population, there's roughly $11,519 per person if we divided everything and split it evenly. That amount wouldn't get you far in the United States, but you'd be fairly comfortable in a country like Mexico, Morocco, or Vietnam. Moreover, it would end extreme poverty worldwide, even in wealthy countries with a higher cost of living.

As we all know, the world doesn't work that way. Quite the opposite: today the global top 1% own roughly 43% of the world's wealth. Worse, a large percent of that wealth was generated by the same fossil fuel-driven industrialization that's fueled the climate crisis to begin with.

For degrowth to work in an equitable way for the world, income inequality needs to be reduced.

A Practical Degrowth Example

One of the leading proponents of degrowth is Jason Hickel, an author and anthropologist at the London School of Economics. One of Hickel's main arguments is that, for starters, rich countries like the United States don't get much for their money. The US economy is twenty times larger than Spain's, yet Spain has a better healthcare system, and Spanish citizens live on average five years longer than Americans. What's the point of additional economic growth - particularly if that wealth is accruing to so few people?

According to Hickel, the correlation between absolute GDP, economic growth, and social well-being is weaker than many think - particularly in wealthy nations. Yes, developing countries should pursue economic growth - and ideally power it with renewable energy, sustainable economic practices, and low-carbon technology - but in many ways we have the wrong mindset about economic growth as a society. Instead, Hickel advocates for longer-lasting, sustainable products and goods, living wages, shorter work weeks, better healthcare, public services, and social safety nets, alongside access to affordable housing. Higher taxes on the rich would help achieve broader equality, and create the foundation for climate-responsible degrowth that doesn't reduce quality of life. We can live without fast fashion.

Degrowth doesn’t mean we stop innovating and developing new low carbon technologies, goods, and services - but we should be much more thoughtful about how we do it and the resources we consume along the way.

Degrowth and GHG Emissions Decoupling

Let's now circle back to our earlier question: is sustainable, green growth possible? How do we decouple emissions from economic growth? And what are the consequences of green growth compared to decarbonization plus degrowth?

One encouraging example is the United Kingdom. The British economy's CO₂ emissions peaked in 1973 and declined significantly between 2003 and 2020, faster than any other major country.

How did the UK achieve such impressive decarbonization results? Primarily by using less energy, and more clean energy.

Transitioning from coal-fueled electricity production to (cleaner) natural gas and renewable energy accounted for 36% of the UK's decarbonization success. Reducing industrial and household energy usage contributed another 31%. Together, these two transition steps contributed more than two thirds of British decarbonization over one and a half decades. During this same period - outside the 2008-2009 financial crisis and 2020+ COVID-19 pandemic - the UK achieved steady 2-3% annual GDP growth.

These same decarbonization steps - greater energy efficiency, lower energy consumption, and increased use of renewable energy - can be achieved by companies as well, not just governments, with similar outcomes.

Worldwide, 32 countries have begun decoupling their emissions growth from GDP growth, including the US and Germany. But as scientists, researchers, and degrowth advocates note, the decoupling isn't happening fast enough. The global economy isn't decarbonizing as a whole. Atmospheric carbon is at record highs.

The Relationship Between Decarbonization and Degrowth

A recent study published in Nature looks at the relationship between degrowth and decarbonization.

"Thus far, the integrated assessment modelling community and the IPCC have neglected to consider degrowth scenarios, where economic output declines due to stringent climate mitigation," write the study's authors. "Hence, their potential to avoid reliance on negative emissions and speculative rates of technological change remains unexplored... Here we find that the degrowth scenarios minimize many key risks for feasibility and sustainability compared to technology-driven pathways, such as the reliance on high energy-GDP decoupling, large-scale carbon dioxide removal and large-scale and high-speed renewable energy transformation. However, substantial challenges remain regarding political feasibility. Nevertheless, degrowth pathways should be thoroughly considered."

Overall, moderate degrowth together with decarbonization leads to significantly lower global emissions compared to the IPCC's baseline scenario which only looks at decarbonization. The researchers' suggestion? Shrink the global economy by 0.5% a year, indefinitely.

Concluding Thoughts

At a time in history where we need every climate solution we can get, degrowth is another tool in humanity's toolkit on the path to securing a more sustainable, livable future for everyone. Degrowth is not the only answer, but it may well be part of the answer, given the physical limits of decarbonization and climate tech innovation. But, along the way, we need to confront the equity, fairness, and economic consequences of degrowth, as well as marshal the policy willingness and storytelling to make it viable. Degrowth economic planning will need to be as thoughtful and calculated as growth-oriented economic development - or perhaps even more so.

It's certainly a conversation worth continuing. After all, the slower emissions are growing - and the smaller they are to start with - the easier it is to cut our carbon.

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