The unrealistically Malthusian Limits to Growth study illustrates the worst-case outcome from unleashing limitless material desires on a finite planet | Wikipedia Commons

Hopes were high when 2020 rolled around. “It will be the Roaring Twenties 2.0,” they said. We were on the cusp of a shining era of high-tech prosperity where bright green industries effortlessly blow away the foul fossil fuel smoke that carried us this far.

Reality had other ideas, though. Before the new decade had even opened its eyes, the Covid-19 pandemic hit, followed by the invasion of Ukraine two years later. Since then, it has been a tale of stagflation and polarization, driven by a preceding decade of persistent underinvestment in a range of traditional industries we deluded ourselves into thinking we need no more.

The 2020s will go down in history as the decade when humanity finally understood the results of unleashing infinite material desires on a finite planet. It was a sobering experience we should take very seriously.

But there is hope. While the green growth fantasy of the 2020s was flawed from the start, the emerging high-tech dematerialization trend gives a solid and fundamentally sound sense of promise to the new decade.

What comes next in humanity’s colorful history? Time will tell.

The 2020s Man

No one embodies the spirit of the 2020s more than Elon Musk. His green tech visions inspired millions with an almost religious belief that our consumption of ever-bigger and ever-shinier gadgets can continue to grow unabated. Instead of driving around in oil-powered gas guzzlers, we would be driven around in far cooler autonomous electric cars powered by an endless supply of dirt-cheap and crystal-clean renewable energy.

Not only can our personal consumption keep growing, but so can our numbers. Indeed, Musk still advocates for more procreation, an ethos he follows wholeheartedly through his large (and complicated) family.

As the foremost emblem of infinite innovation-driven economic expansion (the capitalist investor’s wet dream), Musk became the world’s richest man by a solid margin. But then reality hit.

Rampant global inflation from years of underinvestment in traditional industries collided with the slew of fundamental problems facing green tech (e.g., renewables and electric cars) to spoil the narrative behind Musk’s fortune. Despite governments around the world rolling out generous support packages to sustain the green growth fantasy (which is pure gold to any ambitious politician), the illusion never recovered its luster.

Although far from his former glory, Musk remains an influential and polarizing figure. Some maintain that his visions, although late, will still come true. Others suggest that he did great harm by directing sentiment, innovation, and investment to the wrong places. The numbers seem to support the latter proposition.

Key Global Trends

The history of the 2020s is one of rising energy and raw material costs stifling economic development and poverty alleviation. The following four graphs tell the story.

Poverty alleviation stalls

The United Nations set an ambitious goal to eliminate abject poverty by 2030. It looked promising for a while as Asia continued its rapid coal-fueled development. But Africa got left behind, and with the pandemic closely followed by a prolonged period of global inflation, the number of global citizens living below the appalling 2.15 $/day threshold stagnated.

Global poverty trends | Developed from a World Bank assessment

Asia’s continued development helped more people across the 3.65 $/day line as the decade progressed, although at a slower pace. Stagnation also took place at the 6.85 $/day (still just 205 $/month) threshold.

The social poverty line, a blend of absolute and relative poverty, swallowed up more people as rising costs of basic necessities increased inequality within most countries.

Economic development slows

Gross domestic product (GDP) per capita increased by just 8% across the decade, with the majority of growth concentrated in Asia. The West stagnated under the combined effects of inflation and demographics, with Europe contracting under its very high energy cost burden.

Economic growth trends | Developed from World Bank data

The long-term trend of declining global growth rates remains intact, suggesting complete stagnation around mid-century. With the continued erosion of free trade under the growing East-West divide, some believe we will reach this stagnation point even earlier.

Energy-related investment grows strongly

The energy transition continued across the 2020s, doubling the need for energy investment capital. Overall, the world now spends almost 2% of GDP more on energy than it did at the start of the decade, consuming most of our economic growth potential.

Inflation drove a significant portion of the rapid investment growth shown below. Persistently high energy and commodity prices, combined with energy security concerns, public resistance, and labor shortages, inflated the cost of most technologies, solar PV being a notable exception.

Global energy investment trends | Developed from IEA data

Fossil fuel investment remained robust in a highly antagonistic policy environment, but it was never sufficient to meet true demand. In a twist of bitter irony, the high prices caused by this chronic underinvestment made the 2020s by far the most profitable decade the fossil fuel industry has ever experienced.

Clean energy supply investments doubled, and due to continued price declines of solar PV, annual new capacity additions almost tripled, although retirements started to curb overall capacity growth. Wind and solar reached 5% of the global final energy supply, up from 2% in 2020.

High energy prices strongly accelerated investments in efficiency, and policy support for the electrification of various end-use sectors, especially transportation and space heating, remained robust. However, even as these market segments grew by 150%, the decline in global energy intensity stagnated as the embodied energy involved in the rapid expansion of capital-intensive clean energy infrastructure pulled forward a considerable amount of energy demand.

The expansion of wind and solar power drove a doubling in grid and storage investments, adding significant costs to the energy system. With many markets reaching variable renewable energy market shares where integration challenges start to mount, investment in this sector is set to grow even more rapidly in the 2030s.

Finally, the state of rapid flux in the energy sector introduced various additional costs, such as community compensations for early phase-outs and retraining millions of workers to meet new labor requirements.

Greenhouse gas emissions keep growing

Despite the rapid rise in clean energy investment, global greenhouse gas emissions continued to grow. The 1.5 °C CO2 budget was officially depleted last year, and global CO2 emissions have not even peaked yet.

That said, the low-carbon energy rollout and slowing global growth did cause CO2 emissions to plateau, and there is realistic hope for a decline in the next decade, helped by the CO2 capture and storage industry finally gaining real momentum toward the end of the decade.

Global greenhouse gas emissions trends | Developed from IPCC data

However, growth in other greenhouse gases canceled out most of the progress with CO2. Land-use change emissions remained almost unchanged as reforestation efforts in richer economies were canceled by accelerated deforestation elsewhere, especially Africa. A 26% increase in the African population demanded rapid expansions in cropland and increased use of wood as fuel, accelerating deforestation.

Despite progress in curbing emissions from oil and gas operations, global methane emissions continued to rise with the growth in meat consumption and waste generation.

Other emissions increased by 50%, driven mainly by fluorinated gases linked to the boom in air conditioners, heat pumps, refrigeration, and electricity grids in developing nations with less stringent regulatory frameworks.

The policy battle for curbing non-CO2 emissions is heating up, but there is little indication that these emissions will decline in the foreseeable future. Thus, greenhouse gas emissions seem destined to continue rising over the coming decade despite the projected peak in CO2.

Besides greenhouse gas emissions, concerns are also mounting about the socio-environmental effects of the booming mining and material refinement sector serving the clean energy industry. Stricter regulation and trade tariffs already present significant investment hurdles, causing uncertainty about future supply that keeps prices elevated.

Dematerialization Trends Give Fresh Hope

There is no point sugarcoating it: The 2020s was a lost decade. Global economic development and poverty alleviation stalled, while environmental degradation continued unabated.

Still, the economic contraction in some wealthier nations did not cause the expected drop in wellbeing, largely thanks to high-tech dematerialization. Converging trends of high energy and material costs, rising environmental consciousness, gradual improvements in city design, and advances in telecommunications technology (especially virtual reality headsets) all contributed to a marked decline in material intensity.

In many communities, it is now aspirational to live car-free in a small apartment located in a clean and (naturally) green neighborhood. Telecommuting facilitated this trend after it got a fresh boost from crossing the technology threshold where the virtual reality meeting experience surpassed that offered by standard video calls.

These dematerialization trends are still young and bound by infrastructure constraints in most world regions, but they do point to a brighter and more sustainable future. That said, most of the world still needs vast energy-and-material-intensive infrastructure expansions to meet the basic needs of about 6 billion world citizens who remain below decent living standards.

Wrapping Up

This article was an interesting forecasting exercise, and I look forward to seeing how it holds up as this decade progresses. Of course, I will be wrong on several points (I especially hope I’m wrong about the stagnation in global poverty alleviation). But my finger is constantly on the pulse of the global energy industry, and I sense that we’re in for a decade of relative energy scarcity that will have substantial negative socio-economic implications.

So, what do you think? Am I wrong to foresee a lost decade of stagnating economic upliftment amid accelerating environmental degradation? Any positive rebuttals are more than welcome!