ECB President Mario Draghi, on September 6th, 2012, stated that
the assessment of the Governing Council is that we are in a situation now where you have large parts of the euro area in what we call a “bad equilibrium“, namely an equilibrium where you may have self-fulfilling expectations that feed upon themselves and generate very adverse scenarios. [see here]
At the same time, the current fossil-fuel-based economy, with its CO2 emissions, constitutes a “bad equilibrium” for the climate system. Green growth as a strategy to move from a bad equilibrium to a good one in these two dimensions seems a worthy research topic for global systems science. The Eurozone crisis and sustainability are largely discussed in disjoint debates. Global systems science could combine these two current challenges in order to identify cross-benefits between policies targeted at either one of them.
Germany’s “Energiewende” – a transformation towards an energy-efficient and green economy – could be an element of a strategy to move to a better equilibrium. Unfortunately, the recent public debate in Germany seems to be missing this point. Started off by the announcement that electricity prices will rise, due to a rising feed-in-tariff levy for renewable energy, the debate centers around these costs, and for the most part overlooks benefits that a consequently pursued green growth strategy would entail.
German Green Growth Model
We – the Lagom research group at the Global Climate Forum – are working on a model to study green growth opportunities, with a focus on Germany. The model shall be made available in a modular open-source framework, so that it can be combined with existing models providing more detail on particular sectors. By explicitly representing the possibility of multiple equilibria and corresponding growth paths for the economy in general, and the strongest European economy in particular, our research contributes important building blocks to the emerging Global Systems Science.
More detailed information on the project can be found here. The model development is based on a manifold dialogue with potential model users, experts of existing models, new economic thinkers and the general public. To extend this dialogue into the virtual world, we kindly invite comments, as well as a broader discussion of the arguments merely sketched above, on this blog.