This is pretty basic stuff folks

The recession is threatening the vast investment needed in green housing, power and transport and could seriously undermine Britain\’s efforts to meet its targets for tackling global warming, the government\’s climate change advisers warn today.

Well, yes, of course it does.

I think we\’re all pretty much aware (well, I\’d hope we\’re all aware) that new technologies tend to be more efficient than old? So that as new technologies and installations replace old then the economy as a whole becomes more efficient?

We can even see this in the numbers: for example, we\’ve been using less energy per unit of GDP for a long, long time. Sure, total energy usage has been going up but only because GDP is going up faster than we are becoming more efficient at making each unit of it.

So, one determinant about how mush more efficient the economy is becoming is the rate of capital replacement (there\’s a technical term for that which I don\’t know, sorry). The faster we\’re tearing down the old stuff and replacing it with bright shiny new stuff the faster the economy is becoming more efficient (of any input, not just energy, but still…).

And when do we replace the capital structure more quickly? When we\’re growing more quickly. And as above, when we\’re not growing, we tend not to do much replacement.

Which leads to, despite what various green types try to tell us, that a fast growing economy is necessary to finance the changes in the capital base, the technological base, to beat climate change.

BTW, yes, this is incorporated into the economic models that underpin the IPCC reports. Faster growth will indeed lead to faster replacement of smoke belching industry.

1 thought on “This is pretty basic stuff folks”

  1. Faster growth will indeed lead to faster replacement of smoke belching industry.

    Does that mean we’ll be having general alections more often?

Leave a Reply

Your email address will not be published. Required fields are marked *