Sustainability and the New Economics: Boundaries which should not be broken

Suppose you were an Australian politician, very worried about climate change, and wanted to consult the country’s leading Earth systems scientist. You would turn once again to Professor Will Steffen. Will is an emeritus professor at ANU and was once a science adviser to the Department of Climate Change and a Climate Commissioner until such things were abolished by Prime Minister Abbott in 2013.

A reviewer and author of five IPCC assessments and special reports, between 2004 and 2018, Steffen alongside Johan Rockstrom in 2009 identified the nine planetary boundaries we must respect if we are to maintain a healthy biosphere. These are discussed in the recent Netflix documentary Breaking Boundaries – The Science of Our Planet. He also popularised the term Anthropocene to refer to our era when human activity is the driving force behind changes in global ecosystems.

Some think IPCC reports have been alarming enough, but they are filtered through a political process that can blunt their impact, and sometimes obscure the views of leading scientists. Moreover, a narrow focus on climate change can deflect attention from the evidence that we may be outside up to eight of the nine planetary boundaries Steffen helped to identify back in 2009 and we are almost certainly well beyond four of them. Carbon dioxide emissions are a symptom of a much larger problem, which is an urgent need to transition from our modern and financialised form of capitalism which is simply unsustainable, to something else – whether you want to call it another version of capitalism or post-capitalism- which can be sustained.

Reducing emissions should be the most important mission for any government

Where emissions are concerned, Steffen has carried out a detailed and easy-to-follow analysis and provided some confronting arithmetic in a chapter he contributed to a book published in 2022 - Sustainability and the New Economics: Synthesising Ecological Economics and Modern Monetary Theory - which ought to make policymakers in Australia and elsewhere sit up and take notice. Because it seems that no governments anywhere so far have even come close to an effective response to this obvious threat.

Making reasonable assumptions about non-CO2 greenhouse gases and climate feedback effects, and avoiding highly speculative optimistic scenarios for negative emissions technologies, he explains that globally we have almost used up our entire carbon allowance consistent with a 66% chance of limiting warming to 1.5 degrees, which is what politicians aspired to in Paris in 2015 and again in Glasgow in 2021. In Steffen’s words, ‘the only reasonable conclusion from this analysis is that the lower Paris target of 1.5 °C is now out of reach. Past inaction, and in particular, failure to begin significant emission reductions before 2020 have cost us dearly.’

We could just about limit global warming to 1.8 degrees with radical cuts in emissions and a transformation in our way of life, according to Steffen, but this requires the whole world to move towards net-zero emissions by the early 2040s and not 2050 or even later. A commitment of net-zero emissions in 2050 for the whole world would only allow global warming of below 2 degrees if the great majority of our emissions cuts were to happen in the next few years, which seems implausible – with the jump in emissions in 2021 suggesting that they may not yet have even peaked. And this is for the entire planet, remember – not for a rich country like Australia, which should be one of the first movers.

As for going beyond 2 degrees, that places us at such risk of triggering tipping points which could lead to further warming and potentially even what Will Steffen calls ‘Hothouse Earth’, that it should be unthinkable to unnecessarily take such a risk because it is unnecessary.

In the same volume, Mark Diesendorf, the former CSIRO environmental scientist and ecological economist, now an honorary associate professor at UNSW, shows that the resources and technology exist which would allow for rapid electrification of global energy systems with close to 100% renewable energy, but that this places limits on the scale of future economic activity and is not something which free-market capitalism will deliver. It requires leadership and planning by the world’s major governments. More like a war than a moonshot, but perhaps the most important mission any government have ever undertaken.

Philip Lawn, one of Australia’s leading ecological economists and an adjunct professor at Torrens University, alongside his co-author Stephen Williams, explains that a movement back within planetary boundaries requires us at the global level to stop emitting wastes at a rate faster than we can be safely processed within the biosphere; to stop using up renewables resources at a rate faster than they can be renewed; and to stop using non-renewables more quickly than we can develop renewable alternatives. Lawn and Williams suggest that physical laws imply an absolute limit to the macro scale of human activity which can be made consistent with ecological sustainability and suggest a transition from an economic system designed to maximise activity, as measured by gross domestic product (GDP), to one designed to maximise the impact of economic activity of human well-being, as estimated by a statistic called the genuine progress indicator (GPI).

Finding the money to build a sustainable economy and society is the easy part

My contribution to the book deals with modern monetary theory, explaining that our constraints are set not by a lack of financial resources – we can as a country find the dollars to do anything which is technically possible – but by our real resources, including our technology and human capital - and of course our remaining carbon budgets and other ecological budgets within which we must learn to live. As Keynes explained in a very different context in 1940 in his How to Pay for the War, the problem is not finding the money. Finding the money is the easy part.

Professor John Quiggin from the University of Queensland, perhaps the pre-eminent Australian academic economist of the past forty years, provides a chapter describing the nature and rise of neoliberalism – the economic philosophy which in its hard form guides the political right towards a pro-big-business agenda which makes effective action to address an environmental crisis much harder to imagine and in a softer form limits the political left to a somewhat passive acceptance of that agenda.

The myths of neoliberalism were cracked after the Global Financial Crisis of 2008-9 but have not yet completely shattered. However, the rise of populism on both the right and the left in many countries in recent years suggest that its days are numbered. The future development of dominant political narratives regarding the role of government and the higher purpose of economic activity is unclear. Social systems, like natural ones, are complex, with feedback effects, the potential for rapid change, and uncertain paths. The direction of our social system and our economics, not only in Australia but internationally, in the months and years to come, will determine the urgency of our response to the threat of climate change and ecological sustainability, with consequences that will be played out for generations to come.

Sustainability and the New Economics: Synthesising Ecological Economics and Modern Monetary Theory, edited by Stephen J. Williams and Rod Taylor, was published in January 2022 by Springer.

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