Eco-capitalism: strengths, weaknesses and challenges

The concept of "eco-capitalism" has gained popularity. However, it also presents technical, financial, and social equity challenges. Barbara Antonioli Mantegazzini, an adjunct professor at the Faculty of Economics at Università della Svizzera italiana (USI) and deputy director of the Institute of Economic Research (IRE), shared her perspectives in an interview published in Corriere del Ticino. She explained the key aspects of the issue and discussed its potential and consequences for our future.

In a recent interview with the daily newspaper Corriere del Ticino, Professor Barbara Antonioli Mantegazzini discussed the interaction between the economy and ecology. She pointed out that our economic-industrial system was not originally designed to achieve environmental goals; rather, it was designed to maximise production, consumption, and overall well-being. Thus, she emphasised the need for a fundamental restructuring of the system's operating logic to incorporate ecological and environmental concerns.

We need to understand if these new goals align with GDP growth and if they can be pursued without compromising current economic well-being and comfort. According to Prof. Antonioli Mantegazzini, this issue, even though it is very timely, has been studied for many years. In the short term, more production leads to more pollution, all else being equal. "This is why it is important to encourage technological innovation as well as processes to improve efficiency, facilitating "green growth", which is reasoned and sustainable, and which incorporates the value of nature without compromising the well-being achieved." During this review process, however, companies and sectors will be required to make radical changes (think of steel mills, for example). It is crucial to prioritise safeguards for the workers and citizens most affected by these changes.

While these radical changes worry us, It is crucial to keep in mind that failing to take action to address climate change and thus neglecting ecological objectives can have serious economic consequences in terms of GDP. A recent study by ETH Zurich found that a 3-degree Celsius increase in global warming, along with its environmental impacts, would result in a 10% decrease in global GDP. "At the same time, preserving the current situation would still require investment: the federal government estimates a cost increase in the order of 10% for the Net Zero scenario (compared to maintaining the status quo), probably less than one might think," comments Barbara Antonioli Mantegazzini.

Ambitious targets have already been set at the policy level; the climate strategy aims to achieve net zero emissions by 2050. It is important to note that the attainability of these goals depends on the credibility of the policies and the actions taken to reach them. According to a recent study (published in Nature Climate Change), Net Zero is feasible, but the challenge lies in adopting the resulting policies. Ambitious targets indeed require significant changes. "It is evident that this acceleration is not primarily due to the normal progression of technology and economy, but rather a necessity to "fix" an already significantly damaged environment. Consequently, there are numerous obstacles to overcome. Foremost among them are the costs and the willingness of the affected citizens to accept and comply with required changes in behaviour." Moreover, the possible positive and negative effects on the economic, productive and social fabric must also be anticipated.

Some experts, however, caution that so-called eco-capitalism may be specifically designed for the ruling classes and could worsen inequalities within and between countries. According to Professor Antonioli Mantegazzini, the current economic disparities are already very pronounced, so it is crucial to avoid worsening the situation. "This is precisely why it is important to reiterate that although the energy transition and the fight against climate change entail significant costs for present generations, not taking this path could further widen inequalities. Thus, not investing in energy transition does not protect against inequalities but risks increasing them. "Finding the right mechanisms for burden-sharing and protecting the most vulnerable is important. We must ensure that "Just Transition" becomes a reality, enabling energy transition without leaving anyone behind," concludes Barbara Antonioli Mantegazzini.