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Green revolution – how to take full advantage of it?

The whole world is in a deep crisis and many experts are wondering how to get out of it effectively. When browsing various articles, anti-crisis government programs or analyzing the statements of experts, one can get the impression that many see such an effective solution in the green revolution, in redirecting public and private funds to investment programs related to the environment. This is to provide a triple benefit: boost the economy, save the world from the effects of climate change and make it more livable for people. There will be a boom, there will be work, there will be cleaner air, it will be healthier … It sounds good, but it is worth asking a few questions about how to make the green revolution actually live up to the hopes placed in it.

In order to answer them, one must first deal with another question, about the most important challenges of the modern world. The answer is neither obvious nor simple. Yes, the pandemic (and its economic consequences) as well as climate change and overexploitation of nature are significant problems. However, the list does not end there. It is much longer. Certainly, it should also include: the growing concentration of income and assets, precarization of employment and the accompanying more and more frequent lack of meaning in life (being unnecessary), ineffective capital allocation system (increasing debt does not translate into GDP growth), unresolved problems of globalization ( no consideration of externalities, tax havens). It all boils down to one point: the world seems to be falling into chaos, because it lacks systemic solutions that would be a response to high uncertainty and volatility. All this leads to a shorter horizon of thought and action of people and companies, which in turn is deadly for the future. We function more and more often – we make our decisions – as if there was no future.

In the context of such – much broader – defined challenge, can the green revolution, narrowly understood as environment-oriented investment programs, turn out to be a panacea? Unlikely. For several reasons. First, if we focus changes in the world (and the financial funds that follow) to green projects only, it will hold our spending in a relatively narrow area and over a relatively short period of time. This will reduce their real impact on the environment and the economy – a large part of the expected impacts will be “eaten up” by price effects. The prices of certain services, materials, etc. will skyrocket, making that less can be obtained / realized for the same money. the scenario also means a sharp increase in the demand for many rare raw materials. According to the estimates of the World Bank, the demand for graphite.

Secondly, traditionally understood green projects do not solve any of the aforementioned social problems. A relatively small group of those who already make up the famous 1 percent of them will probably earn on them. the richest. As a result, global income inequalities will only worsen. On the other hand, from the point of view of jobs, the green revolution will largely mean cannibalization of the existing (“dirty”) jobs and their replacement with “green” ones. It is not clear why the “green” should be better for employees? It seems that the situation may be quite the opposite – global trends in the labor market indicate that relatively stable jobs in companies operating today can replace “flexible” (not to say “rubbish”). “) contracts in new ones.
Third, if we do not develop new financing solutions during the Green Revolution, the socio-economic system may collapse under the burden of debt, which sets new records year by year.
Fourthly and finally, if we focus on climate and ecology without noticing or even obscuring other important social problems of the world, we can lead to the spread of nationalist ideologies, and in an extreme scenario, even to armed conflicts.

So what would be the optimal approach? Making the green revolution one of the important driving forces behind overall change. Changes aimed at solving a wide range of socio-economic problems of the modern world. Changes consisting in introducing systemic changes, in labor-capital relations, in mechanisms of capital allocation, in institutional solutions, etc. Changes aimed at reducing uncertainty and stopping the accumulation of chaos.

With this approach, however, the green revolution should be properly “programmed” in such a way that it contributes not only to solving environmental problems. How? There are many ways, you only need a creative approach and the ability to ask the right questions, such as: the majority (and not only 1%) of the global society benefited financially from the green revolution? ii) how to make the jobs created as part of this revolution better jobs than nowadays? iii) how to promote a socially responsible model during the green revolution companies ?, iv) how to ensure that green projects do not generate divisions (which are not lacking any more), and build the necessary social capital) how to use the green revolution to direct research and development towards solving its challenges (e.g. looking for substitutes for scarce resources), etc.

The answer to these questions may be, for example, green capital programs for everyone (related to e.g. building retirement capital), distribution of EU green funds based on new criteria for companies (e.g. the requirement of specific certificates, such as B Corp), appropriately embedded incentives in the tax system, developing a new formula for social dialogue, mission-oriented research programs, etc.

Only when the issue of the green revolution is approached in such a comprehensive way, will it be able to become not only a driving force for investment, but also for comprehensive socio-economic changes, creating not only a cleaner, but also a better and better functioning world.

Published: Parkiet, 20.07.2020

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