Economic Development and Sustainability

This essay by Stanley Godsal was the winning essay entered into the Lower Boy Geographical Prize 2021

What is the relationship between economic development and sustainability in the UK?

Economic development is typically referred to as the increase in the level of goods and services produced by an economy, measured using Gross Domestic Product (GDP). Sustainability can be described as meeting the needs of the present without compromising the ability of future generations to do the same. However, there are three main types of sustainability: economic, environmental and social, also described as profits, planet and people. Due to the unsustainable use of fossil fuels to further economic development and provide energy to our country, there has been an estimated 12,000 to 24,000 premature deaths in the UK every year from outdoor air pollution, which comes from the UK pumping 351.5 million tonnes of CO2, into the atmosphere in 2019, 3.9% lower than in 2018.

Firstly, the Industrial Revolution indicates how significant levels of economic development can result in poor sustainability. Figure 1 demonstrates how the Industrial Revolution had a significant impact on the English economy, most importantly, the increase in wealth, the production of goods, and the standard of living. People had access to healthier diets, better housing, and cheaper goods and the level of education increased during the Industrial Revolution. However, this economic development had very dire consequences on sustainability. During the peak of the Industrial Revolution, the UK emitted just below 700 million tonnes of CO2 emissions, which is double what we use each year now. This displays how that level of consumption is not sustainable, as if we had carried on with our former rate, we would have near to none, or no, resources left for future generations and ourselves to use. This shows that economic development and sustainability can often be mutually contradictory.

However, if you look at data up to 2018 (the most recent year available when the article was written), the UK has seen one of the fastest declining emissions of any major economy in the last decade (29% decrease), while the UK GDP has risen by 20%, as seen in Figure 2. Hence, although increasing economic development historically has resulted in high emissions, this is not necessarily the case anymore, given the emergence of green technologies and low-carbon alternatives.

Indeed, this phenomenon is demonstrated in the Environmental Kuznets Curve. This hypothesis was expressed by the economist, Simon Kuznets in the 1950s. Theoretically, the EKC states that as a country becomes more economically developed, initially leads to the degradation and deterioration of the environment but after a certain level of economic development a country will begin to develop more sustainably, because of changing preferences and the increasing affordability of green technology. At a certain level of income, individuals begin to consider the trade-off between environmental quality and consumption. Moreover, on the front of technological progress, companies initially concentrate on production as quickly as possible, but as technology evolves, production processes become cleaner and more resource-efficient and after having higher rates of economic development. Some critics may argue that there is no guarantee that economic development will lead to an improved environment. But based on evidence from the UK, it can suggest that economic growth will not always mean un-sustainability. GDP growth, environmental degradation, sustainability (from figure 2) before, during, and after the Industrial revolution reflect the EKC graph (figure 3).

Energy security is the “ability of a nation to secure sufficient, affordable and consistent energy supplies for its domestic, transport, industrial… etc.” The UK (after 25 years of being years as a net exporter of energy) became a net importer in 2004. The UK now imports around just under 40% of our total energy (figure 4), and our main source of energy, natural gas (40%), gas and oil make up 90% of imports, meaning that we are nearly entirely reliant on imports making the UK energy insecure. The UK has become increasingly more reliant on gas imports as the UK’s production from the North Sea. Despite the UK being reliant on gas imports, our second main source of energy is wind, which in 2019 made up 20% of our total energy use, which is all generated in the UK. Currently, the UK has around 11,000 wind turbines with a total installed capacity of over 24 GW, of which 12.6 GW onshore and 10.4 GW offshore. In 2020 Boris Johnson released a Green Energy plan, indicating that by 2030, offshored wind power would generate enough energy to power every UK home. The idea is to quadruple installed offshore capacity to 40 GW bringing the total capacity to over 50 GW. This indicates that the UK domestic energy supply could be completely powered by renewable and sustainable resources. While it is unlikely that the UK, or any country, could not be entirely reliant on wind, given that wind speeds vary daily, this could be complemented with alternative renewable energy sources. Of more importance to this essay is the understanding that economic development can be achieved using mostly renewable energy, and hence there is no clear trade-off with sustainability.

Indeed, the UK is considered one of the best locations in Europe for wind energy because of high winds, and significant potential for offshore wind farms: it is estimated to have over a third of Europe’s total offshore wind resources, which if fully exploited would be equivalent to three times the electricity needs of the UK at current rates of electricity consumption. Hence, if exploited, the UK would be able to sustainably source all its energy needs. As an example, Chris Goodall in his book ‘What We Need to Do Now,’ argues that 260 GW of solar PV and 350 GW of wind will cost around £800bn of investment. That spread over 20 years is 2% of the UK’s GDP, or £40bn a year. This is less than what the UK spends on fossil fuels a year, approximately £45bn a year. In the UK, the household price of gas (according to GlobalPetrolPrices) per kWh in June 2020 was around 3 pence. Comparatively, Solar PV prices are estimated to be 3 pence per kWh, and the latest government estimate is saying that offshore wind farms will be able to produce 1-megawatt hour for £57, therefore 1kwh = 5.7 pence. As well as lower prices, a wind turbine can power one average house for a day with one spin of the turbine. But as technology furthers, wind energy will become more efficient and cheaper, to the point where it will be the same price as gas and below. An example of how carbon-free energy sources are already cheaper than fossil fuels are electric cars. Although the cars are expensive to buy at the beginning, the fuel costs save drivers an average of £100 of diesel costs a week which adds up to £5200 saved a year. On top of the reduction of costs, as the UK imports lots of our fossil fuels, meaning we do not have many jobs employed in that sector (although those that exist are admittedly disproportionately located in certain regions). Across the UK there are almost half a million jobs in low-carbon businesses and their supply chains, the UK’s low carbon and renewable energy economy was worth £46.7 billion in 2018, up 15% from 2015 levels. The government sees decarbonisation as an opportunity to boost overall economic growth and further highlights the job potential in their 2020 Ten Point Plan and Energy White Paper. The plan indicates that there would be up to 250,000 jobs supported by 2030, in the Green Industrial Revolution. Another economic benefit of becoming net-zero and completely renewable would be that instead of importing as we are now, we could be exporting energy that has not been used.

In conclusion, it is clear that historically, economic development has been difficult to achieve in a sustainable fashion. Indeed, this is largely a problem of the Tragedy of the Commons, whereby it is economically sensible for individual actors to exploit the environment in order to promote their economic interests. However, this has been largely reversed due to increasing technological advancement in renewable energy and government policy to make it more financially sensible to be sustainable. Hence, while economic development and sustainability might historically have had trade-offs, this relationship has arguably broken down, with both being able to be achieved simultaneously.

Bibliography

What We Need to Do Now, By Chris Goodall

https://www.pnas.org/content/116/12/5233

https://www.pnas.org/content/115/38/9533

Click to access pb13390-economic-growth-100305.pdf

https://www.westerncity.com/article/sustainability-and-economic-development-go-hand-hand

https://www.economicshelp.org/blog/145989/economics/environmental-impact-of-economic-growth/