Energy is an indispensable input to economic activity. Let’s take one second to consider the Industrial Revolution… Harnessing energy sources to replace manual and animal labour was the platform of the industrial revolution, which turned out to be a period of unparalleled economic and social development.
Now in the 20th century, the world population has grown about 4 times, economic output 22 times and fossil fuel consumption 14 times (UNEP, 2011).
As a result, the long term resilience of a wide range of environmental systems is now being tested by the energy demands of our ever growing global population and our increasing demand for higher living standards by way of electrification. Inadequate attention to this problem in the short-term will inevitably damage economic growth over the long-term.
It will threaten our basic elements of life; access to water, food production, health, use of land and physical capital. We need to act, and we need to act now. Tackling the strain on natural resources is a pro-growth strategy for the longer term, and it can be done in a way that does not cap the aspirations for growth of both rich and poor countries.
INVESTMENT + INNOVATION
In order to sustain the demands of our growing society, a major transformation is required in the way we produce, deliver and consume energy. To do this, society must dedicate more effort towards investment and innovation — which will underpin sustained growth and give rise to new economic opportunities. At SunContract, we believe that green growth is the best way to sustain this magnitude of growth and economic development.
So, what exactly is this “green growth”?
Green growth is about fostering economic growth and development while ensuring that our planet’s natural resources continue to provide the ecosystem services on which our well-being relies. Green growth can reduce the burden on land, air and water resources while creating expanded opportunities for gains in productivity, quality of life and social equity.
Energy use has direct and indirect effects on the environment and human health
Image Source: IEA (2010), Energy Technology Perspectives 2010: Scenarios and Strategies to 2050.
Below, we’ll disucss a few elements which provide an economic argument for applying green growth strategies to the energy sector:
Economic costs of environmental damage:
Our failure to manage natural resources efficiently and effectively poses risks to long-term economic growth.
Innovation to achieve environmental and economic objectives:
Innovation is paramount to the objectives of green growth in that it can help to dissociate environmental damage from economic growth. Innovation is also at the core of economic objectives such as productivity growth and job creation.
Innovation is particularly important in the energy industry, as we search for forms of energy that impose fewer environmental costs and for ways of improving efficiency in use as prices rise.
Opportunities for new markets and industries:
Shifting toward green growth in the energy sector will require new technologies, energy sources, processes and services like SunContract’s energy marketplace that are spurring new markets and new industries.
SunContract Launches the First P2P Energy Trading Marketplace - Slovenia, Bled
Firms like SunContract that are proactive in the face of these changes will be well-positioned to both contribute to and benefit from these new markets and industries. Additionally, countries as a whole can gain an advantage by being the first ones to take action and realising the benefits related to competition in widening international markets for green energy goods and services.