The path to a sustainable economy

How do we have to change our economic system to produce sustainably? The economist Holger Rogall explains.

 Germany obtains 42 per cent of its electricity from renewable energy.
Germany obtains 42 per cent of its electricity from renewable energy. picture alliance / blickwinkel/S. Ziese

Mr Rogall, what does the term “sustainable economy” stand for?
Sustainability has three dimensions: ecology, economy and the social-cultural sphere. In order to change something sustainably we have always to consider all three dimensions. If a confederation of states like the European Union wants to act sustainably, it must always think about combating poverty and strengthening education as well as about ecological change.

What has to happen for the market economy to become sustainable?
Operating on the principles of short-term profit maximization, the market economy can solve humanity’s major problems only if it moves within ecological guidelines. These guard rails or rules steer the development of business and technology and thus set a direction. For this we need a creative state that directs the transformation process towards sustainable management. Let’s take the energy transition as an example. Only if we succeed in converting the energy industry to 100 percent renewable energies by 2050 can global warming be kept to a tolerable level. This won’t work by relying exclusively on voluntary changes of market forces.

Holger Rogall leitet das Institut für Nachhaltige Ökonomie (INÖk) und war bis 2018 Direktor des Instituts für Nachhaltigkeit an der Hochschule für Wirtschaft und Recht in Berlin.
Holger Rogall heads the Institute for Sustainable Economy (INÖk) and was
Director of the Institute for Sustainability at the Berlin School of Economics and Law until 2018.

What can states do about it?
If there had been no coronavirus, the EU would have shown the way ahead with the Green Deal. The states have to shift spending to where it promotes sustainable business. They have to take away all subsidies from businesses that use fossil energies and don’t promote sustainable growth.

What role does Germany have in this development?
Germany has been driving the expansion of renewable energies worldwide. Within 20 years, the value of renewable energy in Germany rose from three to over 40 per cent. There are many countries that look very closely at Germany and then replicate the techniques developed here. We have to show that you can also live well with a sustainable economy.

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