The financial shock the UK has recently suffered is of course not good for green investment. The government led by Rishi Sunak is likely to use this crisis to push for further cuts in public spending that will prevent a truly transformative green agenda.
However, in my recent academic paper I argued that the economic barriers to effective decarbonization are much more deeply rooted than that. We can’t just blame a bad government budget or even the world market turmoil caused by Russia’s invasion of Ukraine.
Instead, the global economy has been stuck in a state of relative stagnation in growth rates, productivity, investment and profits since the 2008 financial crisis, with some scholars even dating the onset of the malaise in the 1970s. This so-called secular stagnation is a global trend, but the UK has fared particularly poorly.
This represents a big problem for mainstream visions of decarbonization. Most states, business groups and international organizations believe that this should be driven by a huge global boom in private investment in renewable energy and sustainable infrastructure – estimated from US $ 4.4 trillion a year until 2050 up to $ 9.2 trillion a year.
In this view, the role of states is to guard investors from “brown” fossil fuel assets and into green ones. The problem with this “green growth” vision is that for decades it has proven very difficult for states to generate any global, sustained growth in private investment – whether green or brown. .
There is no consensus on the causes of this long-term stagnation, with various scholars pointing to slowing population growth, anti-labor policy agendas, or industrial overproduction. Yet what is clear is that stagnation is acting as a fundamental drag on efforts to green the global economy. A few examples will 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 many 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 already ravaged by overproduction and weak profits. Reorganizing production and retooling factories around the world will require companies to make big investments, but heavy steel markets mean those investments are unlikely to pay off much. that we The stagnant state of the industry is therefore militant against rapid decarbonization.

At first glance, solar power seems like the polar opposite of an old, heavy industry like steel. The production of solar panels is literally a sunrise industry: from the early 2000s, when generous renewable energy subsidies were introduced in Europe, investment flooded in and created a boom.
And yet there are signs that this industry is also increasingly hampered by chronic overcapacity and lost profits. As production became increasingly concentrated in China, where it was most cost-effective, the industry was transformed by automation and large economies of scale.
It now resembles a typical commodity business with a high output of standardized products, and low prices and profits. As The Economist recently labeled the industry: “Good for the planet – but not a gold mine”. Many solar companies have gone bankrupt or simply left the sector.
There hasn’t been a slight slowdown in solar panel production in response to weak revenues, partly due to large Chinese subsidies.
Democratizing decarbonization
These dynamics can be seen in many sectors that require urgent decarbonization, from industry to energy to transportation. For those who think climate change can only be solved by markets and private investors, it is an existential threat to their worldview. However, the stagnation does not show that decarbonization is impossible, rather that it is difficult to do it through capitalist methods.

For this reason, it is important to take seriously radical visions of decarbonization that include the use of collective ownership and democratic economic planning to rapidly expand renewable infrastructure. Faced with an unprecedented environmental disaster and the inefficiency of private markets, why should major industries such as steel or solar be run according to the principle of profit maximization instead of the stability of climate?
Running in a collective and democratic way, the production of solar panels can be carefully managed to address a range of social concerns, from meeting carbon emission targets to protecting the communities where the quartz mining to ensuring fair labor practices in silicon factories. Deliberation between stakeholders replaces the blind imperative to make money.
While similar proposals can be found in some strands of green new deal and degrowth thinking, these measures remain marginal to the wider decarbonisation debate. Such a radical departure from contemporary economic orthodoxy is unlikely to be adopted by governments unless they are pushed by powerful social movements. Making such moves is the challenge of our time.
Jack Copley, Assistant Professor of International Political Economy, Durham University
This article is reprinted from The Conversation under a Creative Commons license. Read the original article.