The Opportunities and Limitations of a Green Economy

GMF13-Foto Dr Ulrich Hoffmann

Ulrich Hoffmann is the chief advisor to the head of theTrade and Sustainable Development Section at the secretariat of the United Nations Conference on Trade and Development (UNCTAD) in Geneva. He is also the editor-in-chief of UNCTAD's annual Trade and Environment Review.

International business and trade are important factors in the context of globalization. How would you describe the economy's basic stance on a green economy and where do you see drawbacks?

In my opinion, the current forms of implementing green economics are nothing other than a new wave of technological changes that are basically concentrated on increasing material, energy and resource efficiency, using more renewable resources and changing the energy mix. That presents many opportunities for companies to develop in green markets, which are marked not just by relatively fast growth, but also promise attractive yields. Yet we shouldn't overlook the fact that at the same time, segments of the "brown" economy will have to shrink at the same rate. Some of them, such as mining, steel production and the textile industry, have already lost much of their meaning, but many of them have simply been shifted geographically - mainly to developing countries. So their environmental impact hasn't gone away. But to make full use of commercial innovation and investment capacity, there need to be clear regulatory frameworks, especially an ecological tax reform - one that is neutral on revenues for companies but shifts the tax burden away from wages and earnings onto the use of resources.

There has been renewed impetus in the debate about growth, fueled in part by a new report from the Club of Rome. Are the demands for a sustainable economy merely lip service or do you see a rethinking taking place?

The scale, pace and implications of climate change increasingly raise the question of whether the phenomenon is fallout from our economic progress, the result of over-consumption or incorrect consumption, or due to insufficient technological solutions. Or perhaps it's even the manifestation of the problem of our current economic system, which doesn't appear to be able to decouple economic growth from high consumption of finite resources, including using the Earth's atmosphere as a dump for greenhouse gases. To seriously cause a shift in direction, the future sustainable economy would have to be based on three principles: resource efficiency, subsistence (intelligent, constrained consumption) and consistency (appropriate use of nature).

Global governance has been gaining attention as a result of the debate on globalization. But its definition can vary greatly, depending on one's political standpoint. Is the principle of global governance a way to get a handle on the negative implications of global trade?

In fact, the opening of national markets and rollback of state regulations in the period of neoliberalism from the mid-1980's to the financial crisis in 2008 led to global governance being reduced to market expansion and preferably undisturbed interplay of market forces. Trade liberalization had no small part in facilitating an increase in labor productivity and resource efficiency. But through specialization, global trade has also led to much more production and consumption, and hence bigger use of resources. The Western lifestyle and non-sustainable use of nature and resources became more and more global. It's a legitimate question to ask whether the regulations in sectors directly related to climate and environmental protection, such as agriculture and agricultural trade, shouldn't be revised.