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The False Narrative of Economic Growth vs. Environmental Sustainability

Jeff Siegel

Written By Jeff Siegel

Posted March 1, 2024

I saw an interesting chart the other day that I wanted to share with you. 

Check it out …

environvseconomy

While I can understand wanting to know how people feel about environmental issues as they pertain to economics, this chart presents a false narrative: that economic growth must somehow be hindered by embracing the basic fundamentals of environmental sustainability.

Economic growth and environmental sustainability are not mutually exclusive.  And industries and companies that create products and services that result in a cleaner planet and more socially just world can actually instigate economic growth – not impede it. 

Take Tesla (NASDAQ: TSLA), for instance.

Tesla is single-handedly responsible for launching the transition from internal combustion to vehicle electrification.  Something that has instigated a reduction in fossil fuel demand, carbon emissions and a variety of other water and air pollutants that have long been tied to internal combustion. 

While no form of personal transportation is environmentally benign, on a full lifecycle basis, EVs have proven to be less environmentally burdensome than internal combustion.

Tesla has also been a major job creator.

According to an economic impact assessment conducted by IHS Markit, an analytics company that recently merged with S&P Global, Tesla-supported California jobs (direct and indirect) exceeded 80,000 in 2021.  More than 43,000 of those jobs stemmed from $1.6 billion in expenditures with California suppliers. 

Here are a few other highlights from that report …

  • For every 100 direct Tesla jobs, 50 more were supported in the supply chain and 68 by follow-on consumer activity.
  • From 2018 to 2021, Tesla paid an average of $1 billion in federal, state and local taxes annually, with approximately $400 million going toward state and local taxes in 2021.
  • Tesla’s average contribution to the gross state product (GSP) rose by 42% between 2018-2021, while the state’s GSP grew by 16%.
  • Wages from Tesla and Tesla-connected jobs resulted in $16.6 billion in economic activity, or $44.4 million injected into California’s economy each day.

The solar industry is another example of how an environmentally superior form of electricity generation compared to fossil fuels, can support strong economic development.

In 2022, the solar PV industry supported nearly 5 million jobs worldwide.  Meanwhile, coal jobs – on a global scale – are declining. 

According to Bloomberg, approximately 400,000 coal jobs will be lost by 2035, with China and India likely to be hit the hargest by those job losses.  And that number is expected to rise by close to 1 million by 2050.

environvseconomy1

So while coal jobs are declining (primarily because the levelized cost of solar is much lower than that of coal, making coal economically inferior in a competitive landscape), solar jobs are increasing.  Not only is the solar industry providing jobs, but those jobs are countering job losses in the coal industry. 

Of course, these are only two examples, but it is clear that economic growth doesn’t have to be hindered by embracing environmental sustainability.  And in fact, when done right, it can actually promote economic growth.  

There’s a very interesting article penned by Steve Cohen at Columbia University, which goes deeper into this argument.  It’s called: Economic Growth and Environmental Sustinability, and you can check it out here

 

 

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