Degrowth responds directly to climate change and other sustainability and wellbeing issues, affecting energy and resource use. It is crucial not to overlook it when developing climate scenarios for the energy sector. The Aotearoa New Zealand Ministry of Business, Innovation and Employment (MBIE) has released Electricity Demand and Generation Scenarios, July 2024, reinforcing mainstream assumptions about the critical role of sustained economic growth in driving innovations and policy changes necessary for significantly reducing energy-related emissions. Scenarios are not predictions but they serve as tools to assess policy options under various plausible futures, directly influencing policymaking. Without consideration of degrowth, policymakers and industries are under-served and may miss vital indications of risk and opportunity.
Understanding the Scenarios
The MBIE report outlines five scenarios to evaluate future energy demands and the corresponding infrastructure needs.
- Reference (Business-as-Usual) Scenario: This scenario assumes a continuation of current economic, technological, and policy trends without significant changes.
- Growth Scenario: This scenario accelerates economic growth and energy demands, enabling higher green technology advancements and increased uptake of these.
- Constraint Scenario: This models ‘the inverse of the Growth scenario, as ‘adverse international trends negatively impact New Zealand’s economy’, leading to slower growth, lower technological change and lower incomes with lower uptake of green technologies.
- Innovation Scenario: Assuming the same rate of economic growth as the Reference scenario, this scenario envisions faster technological advancements and greater adoption of innovations.
- Environmental Scenario: This scenario, like the Innovation scenario, assumes the same economic growth rate as the Reference scenario but emphasises proactive government interventions enabling more technological availability and faster transition.
A Closer Look at the Constraint Scenario
The Constraint scenario models the least additional electricity, with demand increasing by 35.3%, necessitating 5.4 GW of new capacity (a 54.8% increase) by 2050. At the other end of the demand scale, the Innovation scenario models an 82.0% increase in demand, needing an additional 11.7 GW of capacity. Meanwhile, the Growth scenario requires an additional 153.0% in capacity, or 15.1 GW, through a substantial increase in solar generation. (See pages 1 and 39-40 of the report for details.) The Constraint scenario also predicts a smaller annual peak load compared to the other scenarios.
Thus, the Constraint scenario highlights the strong advantage of lower production in terms of being able to meet additional capacity and peak requirements.
Moreover, the Constraint scenario, along with the Growth and Reference scenarios, enables renewables to achieve more than a 96% share of electricity generation by 2050 (see page 43). It’s projected that 44.8% of energy demand would be met by electricity in the Constraint scenario, up from 26% currently, whereas the Innovation and Environmental scenarios both model around 55% of energy demand to be fulfilled by electricity (see page 31). The Environmental scenario obtains the greatest reduction in emissions, down to 1.6 Mt by 2050, with the Constraint and Innovation scenarios coming in slightly higher at 2.1 Mt and 2.2 Mt, respectively (see page 46).
This underscores the importance of technological innovation and policy shifts toward environmental goals for increasing the role of renewable energy and reducing total energy sector emissions by 2050. However, all these scenarios suppose this is possible only through economic growth through the next few decades of the century.
Towards a Degrowth Scenario
The Constraint scenario is portrayed negatively in the MBIE report, despite its potential benefits for New Zealand’s energy transition. This raises the question: Could a scenario referencing elements of the Constraint and Environmental scenarios and, to some extent, the Innovation scenario be developed as a plausible scenario?
A proposed sixth scenario—a Degrowth scenario—could explore this possibility. It might assume that a global collaboration between wealthy, nature-reliant, wellbeing-focused countries like New Zealand results in a coordinated policy-led shift to new economic settings that redistribute wealth, prioritise ecosystem regeneration and enhance human well-being. This may result in modest negative annual economic growth, supported by structural economic changes, such as changes to monetary and fiscal approaches.
This scenario could involve:
- Utilising sovereign funds for public sector investment in renewables technologies and uptake, while controlling inflation through wealth and land taxes.
- Aligning data centre expansion with domestic data service needs.
- Regulating commercial activities to operate within environmental limits and reorganising production to meet essential needs on a sufficiency basis, thereby reducing unnecessary output and its associated environmental impact.
These are just some ideas. Exploring a more detailed Degrowth scenario for national energy demand is crucial for developing a wider understanding of its potential impacts on energy and resource use, industry sectors and consumer living standards. Foundational elements seem present within existing scenarios; however, it’s vital to build a coherent set of metrics.
Policymakers must not shy away from investigating and developing an economically positive Degrowth scenario. Aotearoa’s energy integrity depends on embracing a broad spectrum of economic possibilities, including those that challenge traditional notions of economic growth.
Image by Erik van Dijk on Unsplash
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