How do we fuel sustainable growth?

Out of necessity this view is now slowly changing.

The challenge
Climate change poses a serious threat to the economic prosperity of many nations. The developing countries are most vulnerable to the consequences of climate change. But we all experience aspects of climate change, and have a common, differentiated responsibility to fight it. Most governments agree to combat climate change by reducing greenhouse gas emissions, but the central question is: Will we have to sacrifice economic growth to do it?

Proof in practice
Accumulating evidence shows that it is indeed possible to pursue economic expansion and at the same time stabilize energy consumption and safeguard the environment.

Experience in Denmark shows that economic growth and reduced greenhouse gas emissions can go hand in hand. Since 1980 the Danish economy has grown by approximately 70% while energy consumption has remained virtually unchanged.

From 1990 to 2005 the economy grew by more than 40% while total greenhouse gas emissions declined. Denmark has committed itself to a 21% reduction of greenhouse gases by 2012 compared to 1990 level.

At the same time Denmark has maintained its position as one of the world’s most competitive economies. In 2007 the Economist Intelligence Unit, together with Colombia University, ranked Denmark as the best place in the world to do business – now and for the next five years. Denmark currently enjoys a higher GDP per capita and lower unemployment than the average for EU-15 countries.
 
Denmark’s energy intensity is the lowest in the EU. The energy needed to produce one unit of GDP in Denmark is 40% lower than the average of other EU countries.

Can this be replicated?
The Stern Report in 2006 concluded that the global costs of stabilizing the climate are significant, but manageable. The costs are limited to around 1% of global GDP each year. In contrast the report estimates that if we don’t act, the overall costs and risks of climate change will be equivalent to losing at least 5% of global GDP each year. Globally, we can’t afford not to act.
 
Climate change is not the only driver for reducing emissions. The rising global demand for fossil fuels such as oil, coal and gas poses a threat to energy security and development. And air pollution from emissions poses an ever larger threat to human life and potential economic development.

Denmark might have had a good general basis for steering towards a sustainable growth pattern; however a main driver for change was increasing energy prices – a challenge facing all countries today. Harvesting the viable synergies from efficiency, security and technology development is relevant to all countries. The preconditions are not necessarily as important as the political determination.


Related Case: Danish energy sector
Denmark has demonstrated that through a persistent and active energy policy, sustainable growth is possible.