Can economic growth continue without fossil fuels?
Graham Palmer
9021

Thank you, Graham, for your perceptive article. It is indeed true that economic growth is an input to the IPCC’s climate models. It is my impression that many climate scientists, and even many environmental NGOs, support economic growth publicly in order to reassure business and government that business-as-usual can continue in a sustainable energy (renewable energy + energy efficiency) future. However, some of them admit privately that a transition to a steady-state economy is necessary.

Fortunately, a few scenario studies have begun to explore low-growth or no-growth economies combined with large reductions in greenhouse gas emissions (e.g. via transitioning to renewable energy): notably Peter Victor’s macro-economic study for Canada and Graham Turner’s study of Australia’s biophysical economy. Both studies address the vitally important issue of maintaining employment in a steady-state economy; both find that, with an appropriate combination of policies, maintaining employment is possible, although simply stopping economic growth and doing nothing else would create huge unemployment.

I have just one quibble with Graham Palmer’s analysis: his uncritical adoption of the claim that “the countries with the highest penetration of wind and solar per-capita tend to have the highest residential electricity prices despite falling per-kW installation prices”. This misleading claim has been disseminated by campaigners for nuclear power and other renewable energy critics who are trying to tarnish Denmark’s success as a model of large-scale implementation of renewable electricity. The claim is based on comparing retail electricity prices that include taxes. Denmark’s electricity price has a very large tax which goes into consolidated revenue. However, when one compares untaxed retail electricity prices across Europe, Denmark’s is in the middle.

Furthermore, there is evidence from Denmark, Germany and South Australia that their large contributions to electricity supply from renewable energy have actually reduced their wholesale prices of electricity. This is a result of the Merit Order Effect. However, these reductions have not been passed on to retail prices.

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