Economists for Future: Why is it important that economists pay attention to the relationships between energy use and well-being?

Lina Brand-Correa: Energy is usually described as facing a trilemma: energy must be sustainable, affordable and secure, in the broad understanding of those terms. However, at a more fundamental level, I think energy faces a dualism instead: it is absolutely vital for the current functioning of our societies and for our wellbeing, while at the same time it is also impeding on our wellbeing now and in the future (for example through emissions, or through energy-dependent practices that are detrimental to wellbeing). It is in that dualism that I see the importance of paying attention to the relationship between energy and wellbeing.

However, the way economists usually understand wellbeing does not help untangle the dilemma. Economists think of wellbeing from a hedonic perspective, following a Benthamite tradition of maximising pleasure and minimizing pain, which was then mathematically operationalized into utility maximization of preferences, efficiently achieved in perfectly functioning markets. Preferences are assumed to be commensurable, continuous and transitive, and based on potentially infinite and insatiable individual wants. This understanding of wellbeing has several consequences related to sustainability in general, and energy use in particular:

  • Every act of consumption, and of use of energy, is justified in terms of individual wellbeing. I.e. if you are satisfying your preferences/wants in a perfect market, you are maximizing your utility and thus achieving wellbeing. There is no room to ethically question any form of consumption, and thus any limits on consumption (or energy use) are perceived as limits to wellbeing.
  • Ever increasing economic activity, measured by GDP growth, becomes a logical and necessary policy goal to provide the greatest amount of opportunities for preference satisfaction and utility maximization.
  • The only option left for striving for a more sustainable world is to change people’s utility function. You just need to convince people that other elements beyond consumption can lead to wellbeing. You might do this through nudges, or through proposals such as alternative hedonism. However, these still focus on the individual as the unit of analysis and tend to ignore socio-material constraints that often lock people into unsustainable lifestyles.

In contrast, I argue that a eudaimonic understanding of wellbeing is much better suited to tackle the energy dualism. This is for two main reasons. First, eudaimonic wellbeing focuses on the individual in the broader context of her society, allowing for inter-generational considerations as well as political, infrastructural and economic ones, thus opening the space for alternative ways of organizing society. Second, eudaimonic wellbeing focuses on people flourishing, rather than on people satisfying wants. There are several dimensions necessary for people to flourish (sometimes called capabilities, sometimes called human needs, amongst other names), and these dimensions can be fulfilled in many different ways, including ways that are compatible with alternative patterns of resource use, for instance patterns that include upper limits to consumption and lower energy use.

E4F: There is clearly a need to rapidly improve access to affordable energy for much of the world’s population, especially for those living in the Global South. How can this be squared with the need to scale down global fossil fuel consumption and transition to renewables?

LBC: Part of my research interests lie around the concept of energy poverty, which is defined as “a set of domestic energy circumstances that do not allow for participating in the lifestyles, customs and activities that define membership of society”. Energy poverty is prevalent in many countries of the Global South, where over three quarters of a billion people lack access to electricity (defined as 4 hours per day for lighting and phone charging…) and over three billion people do not have access to clean cooking fuels. The situation is not perfect in the Global North either, where large proportions of the population are in energy poverty due to a combination of factors, including: high energy costs, low incomes, inefficient housing conditions, and increased energy needs (e.g. the elder, disabled, children).

So of course increasing access to affordable energy is paramount in many places in the world, but we shouldn’t generalize. The need to increase access to energy should not be defined geographically (for a country or a particular set of countries), but rather by sections of the population. And the flip side is also true: reducing excess and luxury energy consumption is paramount in many places in the world. This gets to the root of the problem, as well as solution: inequality and redistribution!

The levels of inequality in energy use worldwide are stark, both between and within countries. If Global South countries were to follow the “development” path of Global North countries, then the circle of your question is going to be very difficult to square. Research has shown that a more equal world would be easier to decarbonize, despite requiring a small overall increase in energy use, mainly because there would be a reduction in excess and luxury energy use. We need to consider what energy is for, rather than meeting unquestioned projections of energy demand, so we have a chance to square that circle (and this relates to the previous question around wellbeing).

E4F: What are ‘consumption corridors’, and how do you go about quantifying them?

LBC: Consumption corridors are a concept proposed by Antonieta DiGiulio and Doris Fuchs. According to these researchers “such corridors would be defined by minimum standards, allowing every individual to live a good life, and maximum standards, ensuring a limit on every individual’s use of natural and social resources in order to guarantee access to a sufficient level of resources (in terms of quantity and quality) for others in the present and in the future.”

The proponents of sustainable consumption corridors base their understanding of a “good life” on the eudaimonic tradition, which is compatible with upper limits to consumption. They also state that establishing the exact contours of the consumption corridors should be done through participatory processes, rather than through top-down imposition. This is because the current and future ways in which people and societies satisfy their needs is culturally specific and dependant on available resources and infrastructure, and thus a top-down imposition would not make sense. A participatory and bottom up questioning of how we currently achieve a good life, or not, is very much in line with the work of Manfred Max-Neef, who has been a key influence in my work.

So when it comes to sustainable consumption corridors, it’s not so much about quantification, but more about participation, and deepening of democratic processes. It is about providing the spaces and places for people to reflect about who a good life looks like, what role (if any) do limitless wants and market capitalism play in that, and in what other ways can wellbeing be achieved. It is hard and time-consuming work, but it is vital work.

E4F: Your research seems to suggest that transitioning the global energy system to renewables is not enough to ensure environmental sustainability. You argue that we must actively decouple energy consumption from the pursuit of human well-being. How can this be achieved?

LBC: Many researchers have pointed out that we need to look at the demand of energy in order to be able to stay well within 1.5 degrees of average global warming. Continued energy demand growth makes a transition to renewable energy much more difficult. Renewables would have to increase their share in the global energy supply mix in an ever-growing supply pie, which has proven difficult in the last decade, despite huge increases in renewable capacity.

It has been argued that renewables are not replacing fossil fuels globally, but merely meeting increasing demand. Renewable energy capacity has grown at an impressive rate, but so has economic activity (at least until very recently). More recent research confirms that there is little evidence of absolute decoupling of economic activity and GHG emissions, with most of the evidence related to relative decoupling. Absolute decoupling (increasing of economic activity with decreasing GHG emissions) is what is urgently required to achieve net zero, while relative decoupling (increasing economic activity with a reduced rate of increasing GHG emissions) is only slowing the pace at which we approach irreversible climate impacts.

Clearly, we need to reconsider what we are aiming to decouple from what. It is well understood that ever-increasing GDP growth as the measure of societal progress is insufficient at best, misleading and wholly inadequate at worse. When we switch from thinking about GDP as the main political and economic goal of most nations worldwide, to thinking about wellbeing for everyone, then we can realise that many energy uses are unnecessary and possibly counter-productive. For instance, do we really need huge SUVs and pick-up truck for our wellbeing? What is the impact of car use, space for cars in cities and car culture for the wellbeing of people driving them and living around them? It is these types of question, I believe, that will truly allow us to limit our environmental impact without feeling limited, and – why not- challenge the economic priorities that capitalism imposes on us.

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