The global financial crisis is to some extent a crisis of the traditional development model that brought prosperity to the industrial world and which is now bringing ‘prosperity’ to the emerging world. Consumers in industrialised nations devour cheap goods that are often produced by developing countries in an emission- and resource-intensive way. As a result, developing countries achieve rapid growth through producing and exporting these emission-intensive goods. On the surface, it looks like a ‘win-win’ situation; the industrial world has high standards of living, and the emerging world has impressive GDP growth, foreign reserves and sovereign bonds. But this results in global imbalances, and these in turn have led to the global financial crisis.

There are two major reasons why green growth is difficult in this context. First is the failure of conventional analysis on climate change. This analysis sees carbon mitigation as conflicting with economic growth. It fails to recognise the possibility that mitigation may drive the economy to become even more competitive, such that countries undertaking strict mitigation policies will benefit economically. In this sense, mitigation could become a form of self-interested behaviour for key countries. Second, since green growth is not yet a widespread reality, policy makers usually see ‘green’ as a risk and are reluctant to take decisive action.

But mitigation and green transformation represent enormous opportunities. Green transformation is a comprehensive and fundamental transformation of the development pattern established during the Industrial Revolution. It includes social, economic, environmental and political transformations — not just the adoption of a few cutting-edge green technologies, as some seem to think.

Responding to doubt over green-growth potential requires us to revisit old energy debates. Most economists are not concerned about the eventual exhaustion of fossil fuels, since based on economic logic they believe there will be a strong incentive to invent or find alternative energy when fossil fuels begin to run out. These incentives will guarantee green growth in the future. But now, with the current climate and financial crises, we cannot afford to wait for green growth to occur organically further down the track — we need immediate action to find solutions. Global carbon mitigation will ensure the ‘natural process’ of green growth happens earlier, and this new reality must be addressed within established energy narratives.

In China, more and more people have realised the opportunities green growth represents. Green transformation is not just seen as a burden — it is also seen as a new source of growth. Compared to industrial economies, which to some extent are locked into a high-carbon economic structure, China can still gain the ‘late-comer’s advantage’ in avoiding lock-in effect and promoting green growth. This is the key message in a forthcoming green-growth report being jointly produced by the Development Research Centre (the Chinese government think tank) and the World Bank. And affected as we are by these twin crises, the world urgently requires a new breed of great thinkers and visionary politicians who are capable of moving beyond the current economic and political rut.

Yongsheng Zhang is Senior Research Fellow at the Development Research Centre of the State Council, China.