Analysis of Boyan Rashev for 3eNews and Dir.bg
In 1972, the Club of Rome in "Frontiers of Growth" predicted a sinister future for the world - overpopulation, depletion of resources and environmental degradation caused by economic growth. The global debate leads to the definition: "Sustainable development is one that meets the needs of the present without compromising the ability of future generations to meet their own needs."
In the 1990s, activists and governments rushed to devise policies for sustainable development, but quickly realized that only business could really lead the dance in this direction. Many frameworks, guidelines, contracts and regulations were quickly put in place to make it pay more attention not only to its economic performance but also to the social and environmental aspects of its work.
The business paid attention and continued to provide everything, striving to stay in the zone of sustainable development - the crossroads between economy, social and environment. I know this because I have been doing this for 15 years, trying to catalyze the processes in the companies in this direction and see how things happen from the inside.
Today, the world is many times more populated than 1972. Despite the forecasts, our lives have improved in all important respects. We live longer and are healthier, eat better, learn and travel more, and this trend is clearly visible on all continents, as shown by the Human Development Index. We consume much more energy, goods and services without running out of any resources. Moreover, the reserves and availability of all basic resources - fossil fuels, metals and minerals, water and food - are increasing. Or at least that was the development of the world until 2019.
Meanwhile, the topic of climate change came to the fore. Initially, it was only a matter of temporarily subsidizing renewable energy technologies so that they could enter the market. Little by little, however, the climate has gained so much precedence over all other global challenges that it has successfully displaced even the eternal hardships of humanity - poverty, inequality, discrimination, disease, pollution. The signing of the Paris Agreement at the end of 2015 and the subsequent European Green Deal of 2019 finally put the fight against climate change on a pedestal among global priorities. The latter clearly defines the Green Transition through its main goal - achieving zero net emissions by 2050. Not coincidentally, the entire European Sustainable Investment Taxonomy is based primarily on the criterion of carbon emissions, and all others (including environmental and social) are in the process of fabrication and doomed to remain in the background.
The financial world is not late and has put carbon reduction (so-called decarbonisation) at the heart of the ESG (environmental, social and governance) criteria. The entire industry of extraction, processing and production of conventional energy (coal, oil, gas, including nuclear energy), which is the basis for the huge improvement in the quality of life of people from the dawn of industrialization to today, has been condemned not only by activists and politicians, but also from global capital. Over the last decade, trillions of dollars have actively flowed from there in the direction of energy efficiency, renewable energy, biomass, electromobility, batteries, hydrogen and other technologies and industries that are seen as solutions to a wonderful new world.
Conventional energy production has been severely decapitalized and stagnant. However, green sources fail to replace it with available technologies, and energy consumption, incl. that of coal, oil and gas continues to grow. Despite all efforts, fossil fuels still provide more than 80% of humanity's energy. The corresponding carbon emissions at the global level are flying upwards, so there is no trace of the Green Transition. Instead, the world is facing an energy crisis that history does not remember. And no, neither Covid nor Putin are to blame, although the war in Ukraine has contributed to exacerbating the crisis.
This is not just my opinion. Even the head of the International Energy Agency, Fatih Birol, said it yesterday. People like him - incl. Presidents, commissioners and ministers - who for a decade have been urging states and companies to stop investing in fossil fuels - are now praying to sheikhs and dictators around the world to urgently increase production.
If we go back to the beginning and look at this whole story through the prism of the basic understanding of sustainable development, we can quickly see the problem - The green transition concentrates too much money and power on reducing carbon emissions. This is just one component of the "environment" dimension, where it competes with topics such as air pollution, water protection and biodiversity, and much more. The social and economic dimensions of sustainable development have been completely forgotten, because it is the poorest people who suffer the most from today's record energy and food prices.
Businesses, especially energy-intensive industries, are in shock. Investors want both growth in production and profits, as well as a sharp decline in energy consumption and corresponding carbon emissions. Everyone seeks salvation one by one, because national electricity systems are returning en masse to the cheapest, most reliable sources of abundant energy - coal. However, batteries, solar panels and wind generators are becoming more expensive at a rate unimaginable until yesterday, because their production requires large quantities of terribly expensive basic energy and raw materials. And interest rates have already gone up.
This is the situation. We can pretend not to notice it and talk good talk about a bright green future, but that won't help. The crisis is happening here and now, and tomorrow will be a disaster if we do not urgently come up with something better and do not adjust the course. We just need to restore balance and freedom. Because any transition to better can only be made by free people who want to live better and are aware of their personal responsibility and a free market that ruthlessly punishes any inefficiency, creates new technologies and solutions to every problem and provides the wealth that enables us to want, can and expect more.
* Boyan Rashev is one of the leading experts in environmental management in Bulgaria. Since 2007, he has been a managing partner at denkstatt, a consulting firm that helps businesses manage their impact on natural and social capital. His professional expertise is in the field of sustainable development, environmental management, valuation of ecosystem services, circular economy, air quality, natural resources management.
Boyan Rashev will be a special guest at the Green Transition 2022 conference. He will participate in the panel "Financial instruments for a fair transition". For the second year in a row, the event will focus the green discussion on how Bulgaria can successfully become part of the processes of transformation, sustainable development and decarbonisation - a goal important not only for Europe but also for the world if we want to protect our planet. "The Green Deal - Innovation, Investment and Fair Transition" will take place on June 10 at 9 am at the Sofia Event Center.
The conference is organized by Dir.bg and 3E-news in partnership with UBB, Aurubis Bulgaria, Philip Morris Bulgaria, European Investment Bank, Lidl, Dundee Precious Metals, FLAG Fund, Yettel, UniCredit Bulbank, Coca-Cola HBC Bulgaria, BFIEK, ProCredit Bank, Artex Engineering AD, Assarel-Medet AD, Schneider Electric, PwC Bulgaria, Platform Brown to Green, Geotechmin, NORD HOLDING, GCR AD, Bulatom - Association, Solvay Sodi, Glavbolgarstroy Holding, Bulgartransgaz, Edoardo Miroglio efficiency EnEffect, Orbico Bulgaria, ThingsLog.