Three reasons a weak pound is bad news for the environment


Dragon Claws / shutterstock

The day before new UK chancellor Kwasi Kwarteng’s mini-budget plan for economic growth, a pound would buy you about $1.13. After financial markets rejected the plan, the pound suddenly sunk to around $1.07. Though it has since rallied thanks to major intervention from the Bank of England, the currency remains volatile and far below its value earlier this year.

A lot has been written about how this will affect people’s incomes, the housing market or overall political and economic conditions. But we want to look at why the weak pound is bad news for the UK’s natural environment and its ability to hit climate targets.

1. The low-carbon economy just became a lot more expensive

The fall in sterling’s value partly signals a loss in confidence in the value of UK assets following the unfunded tax commitments contained in the mini-budget. The government’s aim to achieve net zero by 2050 requires substantial public and private investment in energy technologies such as solar and wind as well as carbon storage, insulation and electric cars.

But the loss in investor confidence threatens to derail these investments, because firms may be unwilling to commit the substantial budgets required in an uncertain economic environment. The cost of these investments may also rise as a result of the falling pound because many of the materials and inputs needed for these technologies, such as batteries, are imported and a falling pound increases their prices.

Aerial view of wind farm with forest and fields in background
UK wind power relies on lots of imported parts.
Richard Whitcombe / shutterstock

2. High interest rates may rule out large investment

To support the pound and to control inflation, interest rates are expected to rise further. The UK is already experiencing record levels of inflation, fuelled by pandemic-related spending and Russia’s war on Ukraine. Rising consumer prices developed into a full-blown cost of living crisis, with fuel and food poverty, financial hardship and the collapse of businesses looming large on this winter’s horizon.

While the anticipated increase in interest rates might ease the cost of living crisis, it also increases the cost of government borrowing at a time when we rapidly need to increase low-carbon investment for net zero by 2050. The government’s official climate change advisory committee estimates that an additional £4 billion to £6 billion of annual public spending will be needed by 2030.

Some of this money should be raised through carbon taxes. But in reality, at least for as long as the cost of living crisis is ongoing, if the government is serious about green investment it will have to borrow.

Rising interest rates will push up the cost of borrowing relentlessly and present a tough political choice that seemingly pits the environment against economic recovery. As any future incoming government will inherit these same rates, a falling pound threatens to make it much harder to take large-scale, rapid environmental action.

3. Imports will become pricier

In addition to increased supply prices for firms and rising borrowing costs, it will lead to a significant rise in import prices for consumers. Given the UK’s reliance on imports, this is likely to affect prices for food, clothing and manufactured goods.

At the consumer level, this will immediately impact marginal spending as necessary expenditures (housing, energy, basic food and so on) lower the budget available for products such as eco-friendly cleaning products, organic foods or ethically made clothes. Buying “greener” products typically cost a family of four around £2,000 a year.

Instead, people may have to rely on cheaper goods that also come with larger greenhouse gas footprints and wider impacts on the environment through pollution and increased waste. See this calculator for direct comparisons.

Of course, some spending changes will be positive for the environment, for example if people use their cars less or take fewer holidays abroad. However, high-income individuals who will benefit the most from the mini-budget tax cuts will be less affected by the falling pound and they tend to fly more, buy more things, and have multiple cars and bigger homes to heat.

This raises profound questions about inequality and injustice in UK society. Alongside increased fuel poverty and foodbank use, we will see an uptick in the purchasing power of the wealthiest.

What’s next

Interest rate rises increase the cost of servicing government debt as well as the cost of new borrowing. One estimate says that the combined cost to government of the new tax cuts and higher cost of borrowing is around £250 billion. This substantial loss in government income reduces the budget available for climate change mitigation and improvements to infrastructure.

The government’s growth plan also seems to be based on an increased use of fossil fuels through technologies such as fracking. Given the scant evidence for absolutely decoupling economic growth from resource use, the opposition’s “green growth” proposal is also unlikely to decarbonise at the rate required to get to net zero by 2050 and avert catastrophic climate change.

Therefore, rather than increasing the energy and materials going into the economy for the sake of GDP growth, we would argue the UK needs an economic reorientation that questions the need of growth for its own sake and orients it instead towards social equality and ecological sustainability.The Conversation


This blog is written by Cabot Institute for the Environment members Dr Katharina Richter, Lecturer in Climate, Politics and Society, University of Bristol; Dr Alix Dietzel, Senior Lecturer in Climate Justice, University of Bristol, and Professor Alvin Birdi, Professor of Economics Education, University of Bristol. This article is republished from The Conversation under a Creative Commons license. Read the original article.

What global threats should we be most worried about in 2019?

The Cambridge Global Risk Index for 2019 was presented on 4 December 2018 in the imposing building of Willis Towers Watson in London. The launch event aimed to provide an overview of new and rising risk challenges to allow governments and companies to understand the economic implications of various risks. My interest, as a Knowledge Exchange Fellow working with the (re)insurance sector to better capture the uncertainties embedded in its models, was to find out how the index could help insurance companies to better quantify risks.

The presentation started with the Cambridge Centre for Risk Studies giving an introduction on which major world threats are included in the index, followed by a panel discussion on corporate innovation and ideation.

The Cambridge Global Risk Index quantifies the impact future catastrophic events (be they natural or man-made) would have on the world’s economy, by looking at the GDP at risk in the most prominent cities in the world (GDP@Risk). The Index includes 22 threats in five categories: natural disasters and climate; financial, economics and trade; geopolitics and security; human pandemic and plant epidemic; and technology and space.

Global Risk Index 2019 Threat Rankings (Cambridge Global Risk Index 2019 Executive Summary)

The GDP@Risk for 2019 for the 279 cities studied, which represents 41% of the global GDP, has been estimated to be $577bn or 1.57% of the GDP of 2019. The GDP@Risk has increased since last year by more than 5%, which was caused by both an increase in GDP globally and a rise in the chances of losses from a cyber attack and other threats to richer economies. Risk is becoming ever more interconnected due to cascading threats, such as natural hazards and climate events triggering power outages, geopolitical tensions triggering cyber attacks sponsored by states, conflicts worsening human epidemics, and trade wars triggering sovereign crises, which in turn caused social unrest.

Nonetheless, the GDP@Risk can be reduced  by making cities more resilient, that is improving the ability of a city to be prepared for a shock and to recover from it.  For example, if the worst off 100 cities in the world would be as prepared as the top cities, they could reduce their exposure to risk by around 30%, which shows the importance of investing in resilience and recoverability. This is a measure of what the insurance industry calls the “protection gap”, how much could be earned from investments to improve the preparedness and resilience of a city to shocks. How fast a city recovers depends on the ability to access capital, to reconstruct and repair factories, houses and infrastructure, to restore consumers’ confidence and to reduce the length of business interruption.

Global Risk Index 2019 Growth by Sub-Category ($, bn) (Cambridge Global Risk Index 2019 Executive Summary)

Natural catastrophe and climate

After a 2017 with the second highest losses due to natural disasters, 2018 saw several record-breaking natural catastrophes as well. This year we have experienced events from magnitude 7.5 earthquakes and tsunami in Indonesia, which caused more then 3000 deaths, to the second highest number of tropical cyclones active in a month, from Typhoon Mangkhut in the Philippines, to Japan’s strongest storm in the last two decades. Hurricanes have beaten records too, with hurricane Florence in North Carolina becoming the 2nd wettest hurricane on record, which caused $10 bn losses, and hurricane Michael in Florida reaching the greatest wind speeds ever recorded, which caused $15 bn losses.

Floods in 2018 caused heavy death tolls in Japan and south India, with 225 and 500 fatalities respectively, the former showing the weakness of an ageing city infrastructure, while the latter raising criticism on poor forecasting and management of water resources. Droughts raged in South Africa, Australia, Argentina, Uruguay and Italy reducing harvests, while wildfires in California were the largest on record, which caused $20 bn losses. Extreme events have made it to weather events too, with extreme heatwaves, as the hottest summer in the UK, comparable to the one of 1976, and the heatwave in Japan which hospitalised 35,000 people, as well as with extreme freeze, as the “Beast from the East” in the UK which caused losses estimated at $1 billion per day.

Extreme events are becoming ever more frequent due to climate change, with the next few years expected to be anomalously warm, even on top of the regular climate change. This hints that the rising trend in losses due to natural catastrophe and climate is not due to stop.

Devastation from the cyclone in Tonga, 2018.

Finance, economics and trade

Market crash is the number one threat for 2019, which could cause more than $100 billion in losses. Nonetheless global financial stability is improving due to increased regulation, but risk appetite has increased as well due to positive growth prospects and low interest rates, which increases financial vulnerabilities. Trade disputes between the US and China and the US and Europe are disrupting the global supply chains. The proportion of GDP@Risk has increased in Italy due to policy uncertainty and increased sovereign risks, while in countries such as Greece, Cyprus and Portugal sovereign debt risks have decreased following restructuring of their debt and country level credit rating upgrades.

Geopolitics and security

The risk from geopolitics and security worldwide has remained relatively similar compared to last year, with roughly the same countries being in conflict as in 2017. Iran’s proxy presence remains in conflicts in Yemen, Iraq, Israel, Syria and Lebanon, while social unrest has increased risk in Yemen, Nicaragua, Venezuela, Argentina, Iraq and South Africa. The conflict in Yemen has caused the world’s worst humanitarian crises in 2018, with more than 2 million displaced, with food shortages and malnutrition causing cholera outbreak. The total expected loss from this category is similar to the one from financial, economic and trade risk.

Technology and space

Technology and space is the category with the lowest expected GDP at risk. Nevertheless, the risk has increased over recent years, with cyber attacks becoming ever more frequent due to the internationalisation of cyber threat, the increasing size and cost of data breaches, the continued disruption from DDoS attacks, the threat to critical infrastructure, and its continuous evolution and sophistication. Cyber attacks have climbed one level in the ranking this year, assuring the 6th overall position. In 2017 the WannaCry ransomware attacks affected 300,000 computers across 150 countries disrupting critical city infrastructure, such as healthcare, railways, banks, telecoms and energy companies, while NotPetya produced quarterly losses of $300 million for various companies. The standstill faced by the city of Atlanta when all its computers were locked due to a ransomware attack in March caused £2.6 million to be spent, and another $9.5 million are expected. This attack highlighted the breath of potential disruption, with energy, nuclear, water, aviation and manufacturing infrastructure at risk. Moreover 66% of companies are estimated to have experienced a supply chain attack, costing on average $1.1 million per attack. In response to these threats, countries are increasing their spending on cyber offensive capability, with the UK spending hundreds of millions of pounds. Power outage, nuclear accident and solar storm are not at the top of the threats ranking globally, but solar storms could cause over $4bn of GDP@Risk in North American cities, due to their position in northern latitudes, leaving 20-40 million people without power.


Health and humanity

The greatest threat to humanity according to the UN is anti-microbial resistance, with areas in the world already developing strains of malaria and tuberculosis resistant to all available medicines. It is expected that over the next 35 years 300 million people will die prematurely due to drug resistance, decreasing the world’s GDP between 2 and 3.5% in 2050. Major epidemics have remained largely constrained in the same areas as last year, and are fuelled by climate and geopolitical crises which aggravates hygiene and public health, such as the Yemen and Somalia cholera outbreaks. Plant epidemics have not increased, with the ongoing problems of Panama disease in bananas, coffee and wheat rust, and the xylella fastidiosa still affecting olive plants in southern Europe.

Corporate innovation and ideation discussion

The panel discussed the importance of the Cambridge Global Risk Index to prepare companies for future threats. For example, for insurance companies including the index in their management of risk would allow them to be better prepared and more profitable. I found the words of Francine Stevens, director of Innovation at Hiscox, particularly inspiring. She talked about how the sheer volume of research produced is often too large to be digested by practitioners, and how workshops might help to bring people with similar interests together to pull out what are the most exciting topics and challenges to work on. As a Knowledge Exchange Fellow myself, this strikes a familiar chord, as it is my job to transfer research to the insurance sector and I have first-hand experience on the importance of adopting a common language and identifying how industry uptakes new research and methods.

Francine has also talked about the importance of collaboration between companies, a particularly sensitive topic in the highly competitive insurance sector. This topic emerged also at the insurance conference held by the Oasis Loss Modelling Framework in September, where the discussion touched on how non-competitive collaborations could bring the sector forward by avoiding duplication. Francine’s final drop of wisdom was about the importance of diversity to drive innovation, and how having a group of smart people with diverse backgrounds often delivers better results than a group of high-achievers with the same background. And this again sounded very familiar!

This blog is written by Cabot Institute member Dr Valentina Noacco, a NERC Knowledge Exchange Fellow and a Senior Research Associate at the University of Bristol Department of Civil Engineering. Her research looks at improving the understanding and consideration of uncertainty in the (re)insurance industry. This blog reports material with the consent of the Cambridge Centre for Risk Studies and is available online at

Dr Valentina Noacco

COP24: ten years on from Lehman Brothers, we can’t trust finance with the planet


Listen! Andy Rain/EPA

Lehman Brothers filed for bankruptcy on September 15, 2008. The investment bank’s collapse was the drop that made the bucket of global finance overflow, starting a decade of foreclosures, bailouts and austerity.

The resulting tsunami hit the global economy and public sector, discrediting finance and its attempts to extract large rents from every aspect of the economy, including housing and food. An alternative was urgently needed.

Ten years later, private finance and large investors will play a central role at the COP24 in Katowice, Poland, and in the full implementation of the 2015 Paris Agreement.

Representatives from pension funds, insurance funds, asset managers and large banks will attend the meeting and lobby governments, cities and other banks to favour investments in infrastructure, energy production, agriculture and the transition towards a low-carbon economy.

Has finance cleaned up its act?

There is a US$2.5 trillion gap in development aid which needs to be filled if poor countries can adequately mitigate the effects of climate change. With little enthusiasm among rich countries to stump up, the role of private finance is inevitable. Policy makers trust financial capital as our best hope of securing investment to avoid the catastrophic warming beyond 1.5°C.

This has been the case for a while – the first announcement came at the UN Climate Summit in 2014, when a press release on the UN website said the investment community and financial institutions would “mobilise hundreds of billions of dollars for financing low-carbon and climate resilient pathways”.

Since then, networks that stress the role of private finance in rescuing the planet have multiplied, including the Climate Finance session at the Sustainable Innovation Forum, which will also take place in Katowice, on December 9-10 2018.

It is difficult to ignore that a strong reliance on private finance means putting the future of Earth in the hands of individuals and institutions that brought the global economy to the verge of collapse. It may be partially true that some are divesting from fossil fuels and funnelling their money into better projects. But before we pin our hopes on finance to solve climate change, there are some things we need to ask ourselves.

Poor countries like Bangladesh have little responsibility for climate change and need significant investment to adapt to it. Suvra Kanti Das/Shutterstock

Difficult questions for COP24 negotiators

How did we get to a point in history where it is taken for granted that public money alone can never be sufficient to finance our transition from fossil fuels? Is it an objective condition with no clear causation and responsibility, or something else?

What about the fact that global military spending in 2017 reached US$1.7 trillion while poor countries promised funding for climate change adaptation and mitigation in 2015 are still waiting?

Read more:
COP24: climate protesters must get radical and challenge economic growth

What about the cost of bailouts to the financial sector, which in the UK alone has been estimated at US$850 billion? As Michael Lewis noted in his boomerang theory, states that have propped up financiers with public money are now asking those same financiers to step in and do the job that states should do. And this leads to the second consideration.

Climate change is historically, politically and socially complex. Although sustainable finance is not presented as the sole solution, analysing its role produces a series of strategic short circuits.

Read more:
Climate change and migration in Bangladesh — one woman’s perspective

It oversimplifies and depoliticises the response to climate change. It legitimises the idea that sustainability can be achieved within continuous growth and expansion, which are essential to the survival of the financial sector.

It rewrites the way we think about our planet in the vocabulary of finance and its obsession for a return on investment. It marginalises any claim to address climate change based on present and historical injustices, redistribution and bottom-up projects organised by ordinary people.

It accepts that the financial way of defining sustainability and its achievements are inherently aligned with the rights, interests and needs of people and the planet.

Finance may be a partner in the fight against climate change, but it is certainly not a partner motivated by altruism. It’s motivated by generating profit from the transition. It is therefore unsurprising that energy generation, railways, water management and other forms of climate mitigation have been identified as priorities for sustainable finance.

Action on climate change has to involve standing up to the Wall Street Bull. Quietbits/Shutterstock

Fighting climate change on Wall Street’s terms

Wall Street can find large returns by investing in the transition to “greener” infrastructure, including the not-so-green Chinese green belt and road and dams like the Belo Monte, a project that originally applied for carbon credits and was labelled as a sustainable investment. Green bonds can help cities finance projects to reduce their environmental impact or adapt to climate change.

However, if money is the driver, we should not expect private investors to have any interest in projects that won’t generate a sufficient return, but would benefit people or cities that cannot pay for the service or for the debt, or that would protect vulnerable people from climate change. If climate change is fought according to the rules of Wall Street, people and projects will be supported only on the basis of whether they will make money.

Ten years ago, the world saw that finance had permeated every aspect of the global economy. Back then, it was clear that financial interests could not build a better and different world. Ten years later, COP24 should not legitimise large financial investors as the architects of a transition where sustainability rhymes with profitability.The Conversation

This blog is by Cabot Institute member Tomaso Ferrando, a Lecturer in Law at the University of Bristol.  This article is republished from The Conversation under a Creative Commons license. Read the original article.

The new carbon economy – transforming waste into a resource

As part of Green Great Britain Week, supported by BEIS, we are posting a series of blogs throughout the week highlighting what work is going on at the University of Bristol’s Cabot Institute for the Environment to help provide up to date climate science, technology and solutions for government and industry.  We will also be highlighting some of the big sustainability actions happening across the University and local community in order to do our part to mitigate the negative effects of global warming. Today our blog will look at ‘Technologies of the future: clean growth and innovation’.

On Monday 8 October 2018, the IPCC released a special report which calls upon world governments to enact policies which will limit global warming to 1.5°C compared with pre-industrial levels, failure to do so will drastically increase the probability of ecosystem collapses, extreme weather events and complete melting of Arctic sea ice. Success will require “rapid and far-reaching” actions in the way we live, move, produce and consume.

So, what comes to mind when you hear carbon dioxide – a greenhouse gas? A waste product? You’re not wrong to think that given the predicament that our planet faces, but this article is going to tell the other side of the story which you already know but is often forgotten.

For over a billion years, carbon dioxide has been trapped and transformed, almost miraculously, into an innumerable, rich and complex family of organic molecules and materials by photosynthetic organisms. Without this process, life as we know simply would not have evolved. Look around you, – I dare say that the story of carbon dioxide is weaved, one way or another into all the objects you see around you in this moment. Whether it’s the carbon atoms within the material itself – or that old fossilised sourced of carbon was used to smelt, melt or fabricate it.

The great growth and development of the last two centuries has been defined by humanity’s use of fossilised carbon which drove the first and second industrial revolutions. But now – the limitations of those very revolutions are staring us in the face and a new revolution is already underway, albeit it quietly.

An industrial revolution is said to occur when there is a step change in three forms of technology, Information, Transport and Energy. The step change that I will discuss here is the use of carbon dioxide coupled with renewable energy systems to deliver a circular carbon economy that aims to be sustainable, carbon neutral at worst and carbon negative at best. This burgeoning field comes under the name carbon capture and utilisation (CCU). CCU, represents a broad range of chemical processes that will most directly impact energy storage and generation and the production of chemical commodities including plastics and building aggregates such as limestone.

In our research we are developing catalysts made of metal nanoparticles to activate and react CO2 to form chemicals such as carbon monoxide (CO), formic acid, methanol and acetate. They be simple molecules – but they have significant industrial relevance, are made on vast scales, are energy intensive to produce, and all originate in some way from coal. The methods that we are investigating while being more technically challenging, consume just three inputs – CO2, water and an electrical current. We use a device called an electrolyser, it uses electricity to break chemical bonds and form new ones. The catalyst sits on the electrodes. At the anode, water is broken into positively charged hydrogen ions called protons and oxygen, while at the opposite electrode, the cathode, CO2 reacts with the protons, H+, to form new molecules. It sounds simple but encouraging CO2 to react is not easy, compared to most molecules, CO2 is a stubborn reactant. It needs the right environment and some energy such as heat, electricity or light to activate it to form products of higher energy content. The chemicals that can be produced by this process are industrially significant, they are used in chemical synthesis, as solvents, reactants and many other things. CO for example can be built up to form cleaner burning petroleum/diesel-like fuels, oils, lubricants and other products derived by the petrochemical industry.

Formic acid and methanol may be used to generate energy, they can be oxidised back to CO2 and H2O using a device called a fuel cell to deliver electricity efficiently without combustion. One day we could see electrically driven cars not powered by batteries or compressed hydrogen but by methanol which has a higher volumetric energy density than both batteries and hydrogen. Batteries are heavy, too short-lived and use high quantities of low abundance metals such as lithium and cobalt – meaning their supply chains could suffer critical issues in the future. While the compression of hydrogen is an energy intensive process which poses greater safety challenges.

However, there are still many hurdles to overcome. I recently went to the Joint European Summer School on Fuel Cell, Electrolyser and Battery Technologies. There I learned about the technical and economic challenges from an academic and industrial perspective. In an introductory lecture, Jens Oluf Jensen was asked “When will we run out of fossil fuels?”, his answer “Not soon enough!”. An obvious answer but there is something I wish to unpick. The task for scientists is not just to make technologies like CO2 capture, CO2 conversion and fuel cells practical – which I would argue is already the case for some renewable technological processes. The greatest challenge is to make them cost competitive with their oil-based equivalents. A gamechanger in this field will be the day that politicians enact policies which incorporate the cost to the environment in the price of energy and materials derived from fossil fuels, and even go so far as to subsidise the cost of energy and materials-based on their ability to avoid or trap carbon dioxide.

Even without such political input there is still hope as we’ve seen the cost of solar and wind drop dramatically, lower than some fossil fuel-based power sources and only with limited government support. Already there are companies springing up in the CCU sector. Companies like Climeworks and Carbon Engineering are demonstrating technology that can trap CO2 using a process known as Direct Air Capture (DAC). Carbon Engineering is going even further and developing a technology they call Air to Fuels™. They use CO2 from the air, hydrogen split from water and clean electricity to generate synthetic transportation fuels such as gasoline, diesel or jet fuel. You may question why we should need these fuels given the rise of battery powered vehicles but a better solution for fuelling heavy goods vehicles, cargo ships and long-haul flights is at the very least a decade way.

In 1975, Primo Levi wrote a story about a carbon dioxide molecule and he said in relation to photosynthesis “dear colleagues, when we learn to do likewise we will be sicut Deus [like God], and we will have also solved the problem of hunger in the world.”. The circular carbon economy may still be in its infancy, but the seeds have sprouted. Unlike the first and second industrial revolution, the 3rd industrial revolution will not be dependent on one single energy source but will be a highly interdependent network of technologies that support and complement each other in the aim of sustainability, just like nature itself.

This blog is written by Cabot Institute member Gaël Gobaille-Shaw, University of Bristol School of Chemistry. He is currently designing new electrocatalysts for the conversion of CO2 to liquid fuels.
For updates on this work, follow @CatalysisCDT @Gael_Gobaille and @UoB_Electrochem on Twitter.  Follow #GreenGB for updates on the Green Great Britain Week.

Gael Gobaille-Shaw

Read other blogs in this Green Great Britain Week series:
1. Just the tip of the iceberg: Climate research at the Bristol Glaciology Centre
2. Monitoring greenhouse gas emissions: Now more important than ever?
3. Digital future of renewable energy
4. The new carbon economy – transforming waste into a resource
5. Systems thinking: 5 ways to be a more sustainable university
6. Local students + local communities = action on the local environment


Growth and energy use – a surprising relationship

One assumption that is often made in public discourse is that the size of the economy and the consumption of energy are firmly and linearly linked; the growth of one inevitably requires the growth of the other. But are things really that simple? I’m not so sure.A great place to start when considering a question like this is the excellent dataset maintained by the World Bank.  Let’s start in the UK: how does GDP relate to the usage and production of energy? These are plotted in Figure 1. The economy has grown steadily since 1960, but the same can’t be said of energy use or production; indeed, production can be seen to be in steep decline since 2000.

Figure 1


To get a clearer picture, let’s consider the relationship between UK energy use and GDP in Figure 2. Clearly, the trajectory is far from linear. In fact, since 2000 the UK economy has both expanded and contracted, whilst energy use has been in rapid decline in the same period. It’s likely that advances in energy efficiency and the decline of heavy industry in the UK may be responsible for this effect, but the fact remains that there is little evidence that a growing UK economy will always need more energy to sustain it. It may even be possible that a larger, ‘greener’ economy may need even less energy in years to come.

Figure 2

So, does that mean that humanity has finally broken free of its addiction to energy? Can the world economy grow without draining the Earth’s energy resources? I’d say no.

Before the industrial revolutions of the 19th century, the basis of a country’s economy was predominantly agrarian, and the engine of agricultural production was muscle power. This was replaced by mechanical fuel-driven devices as countries industrialised, and led to the strong correlation between growth and energy use. This effect is still very visible in the fast growing economies of recently industrialised nations. An excellent example is that of China, visible in Figure 3 and Figure 4.

Figure 3


Figure 4

While the UK does appear to have reversed the trend of energy usage, this is due to a large extent to globalisation. Today, we in the UK import a much larger selection of goods from overseas than we did before the industrial revolution. Industrial economies are often still shackled by the old linear relationship between energy use and economic output, and by purchasing goods from these countries we are simply ‘outsourcing’ our energy needs elsewhere. Perhaps nations that are in the process of industrialisation will eventually adopt more energy-efficient means than they currently use. But until then, my conclusion is that it is possible to grow the UK economy without increasing our energy use. However, we do so at a cost to world energy use, and perhaps that should be the statistic that we pay more attention to.

This blog is written by Neeraj Oak, Cabot Institute.


Neeraj Oak