Aug. 1 is Earth Overshoot Day – the day the natural resources renewed within a year are used up. So is it time to say goodbye to the idea of growth? Today, Lukas Bayer analyzes the growing relevance of post-growth debates and looks at approaches that advocate less resource and energy consumption and promote sufficiency.
The United Arab Emirates certainly do not want to move away from growth with their Altérra fund announced at the last climate conference. On the contrary: The “world’s largest private investment vehicle for the climate” is intended to mobilize as much money as possible to promote energy transition, industrial decarbonization, sustainable living and climate technologies. The fund aims to boost investment in climate solutions in the Global South. Christian Mihatsch explains the innovative approach chosen by the Emirates and why investments in new gas projects are criticized.
Overcoming the climate crisis requires not only more money, but also new political approaches. In today’s News, we report, among other things, on what the German government could do about the stagnating expansion of offshore wind power, how it is putting new climate protection contracts out to tender and what decisions the G20 finance ministers have come to.
We keep our cool even when temperatures rise – and wish you an exciting read.
A good six months after its announcement, the “world’s largest private investment vehicle for the climate“, the Altérra Fund of the United Arab Emirates (UAE), has announced its first major projects – and at the same time provoked criticism of its work as a climate fund. At the beginning of July, the head of the fund and COP28 Secretary General Majid Al Suwaidi announced that the next round of investments was imminent. However, research by the British climate publication Climate Home shows that the fund is indirectly involved in financing new gas projects.
At COP28 in Dubai, the UAE was not sparing with self-praise at the launch of the Altérra Fund. This will help to “create a fairer system of climate financing”. The fund is to be endowed with $30 billion, mobilizing a total of $250 billion by 2030. Altérra is a “fund of funds” and invests in other funds in which other investors are involved.
One of these funds is the Blackrock Infrastructure Fund IV, in which Altérra has a stake of $650 million. According to Altérra, it has four key investment areas: Energy transition, industrial decarbonization, sustainable living, and climate technologies. However, the Blackrock fund invested a good $500 million in a gas pipeline in March. Together with US bank Morgan Stanley, the fund purchased the Portland Natural Gas Transmission System, a 475-kilometer-long pipeline system in the northwest of the USA. According to Blackrock, the fund is not only targeting solar and wind power plants, but also gas-fired power plants, liquefied natural gas terminals and airports – in other words, all infrastructure, whether green or not.
Altérra, on the other hand, claims to “focus exclusively on climate solutions”. And a gas pipeline fits poorly into this profile, says Andreas Sieber from the US environmental organization 350.org: “Financing infrastructure to burn more fossil fuels is the main cause of the climate crisis and the opposite of a climate fund.”
Altérra, however, told Climate Home that the investment was in line with its own goals of driving climate finance “quickly and on a large scale” and working with partners “who are investing in the energy transition and accelerating the move towards net zero emissions”.
This is to be achieved through innovative financial instruments. This includes a sub-fund of Altérra, Altérra Transformation (AT). This fund has one-sixth of Altérra’s resources, i.e. $5 billion, and is not aimed at maximizing profits. Instead, AT is intended to “incentivize investment in the Global South”.
Such incentives are also necessary, as 85% of investments in climate-friendly technologies are made in industrialized countries and China. If global warming is to be stopped at 1.5 degrees, much more money must therefore be invested in the “rest of the world”. But the cost of capital is too high there: in Africa, South America and Asia (except China), solar park developers have to offer their investors twice as much return as in industrialized countries, according to figures from the International Energy Agency (IEA). The reason for this is higher risks due to political instability or fluctuating exchange rates. Most considerations for reducing the cost of capital therefore focus on “de-risking”, for example by hedging exchange rates.
However, AT takes a different approach here: investors want to generate a return that is commensurate with the risk. AT starts with the return: To find other backers for these funds in addition to its own commitment, AT waives part of the return, which improves the return of the other investors. Specifically, the return for AT is “capped” at five percent and everything above this is distributed to the other fund participants. This increases their profits, which is why they are also prepared to accept higher risks. “This is new and a logical approach to implementing de-risking”, says Creon Butler from the British think tank Chatham House. This innovative approach is now also being overshadowed by criticism of Altérra’s indirect participation in a gas project – although the money to Blackrock does not flow from the AT sub-fund.
Altérra had started promisingly. At COP28, the host, the United Arab Emirates, surprised everyone with two announcements: The Emirates and Germany each provided $100 million to the UN Fund for Loss and Damage and the Emirates launched Altérra. The fund is headed by COP28 President Sultan Al Jaber and COP28 Director-General Majid Al Suwaidi. Meanwhile, the fund’s money comes from Lunate, an asset management company.
Lunate, in turn, was set up by Chimera Investment in September last year, three months before COP28. The latter is “a large conglomerate from Abu Dhabi, headed by national security advisor Sheikh Tahnoun bin Zayed Al Nahyan, the brother of the President of the Emirates”, writes the financial market publication New Private Markets. It is therefore unclear where exactly the money for Altérra is coming from.
Three partnerships were announced at the launch of Altérra: Blackrock, Brookfield and TPG, three large asset management firms. At the time, Altérra announced that it would invest $2 billion in cooperation with Blackrock, $3 billion with Brookfield, and $1.5 billion with TPG.
Aug. 1 marks the day when the world has consumed the natural resources that can be renewed within a year, according to the Global Footprint Network’s calculations. For several years, excluding the pandemic year of 2020, this symbolic day has fallen in early August; in 1971, it was in late December. The message is clear: The resource hunger of a growing global economy can be offset by efficiency gains but not reversed. So far, decoupling economic growth from emissions and resource consumption has not been achieved, leading to increasing emissions and shrinking available resources each year.
Proposals for a good life for all – without overloading the Earth – are increasingly coming from economic approaches like degrowth, donut economics and post-growth economics. These approaches emphasize sufficiency; in other words, living more frugally rather than consuming excessive amounts of energy and resources. Initially perceived as activist movements, these debates are now gaining traction. For instance, the EU Parliament held a conference on post-growth a year ago, followed by national conferences in five European countries, including Austria, where politicians also participated.
In Germany, the Advisory Council on the Environment (SRU) called for a broad debate on sufficiency in mid-March. The SRU primarily means “absolute savings in energy consumption” and “more frugal use of resources“. While the council’s position paper does not make specific recommendations, it emphasizes the need to reduce energy consumption. “Without avoiding waste, we will not achieve our climate goals,” says energy economist and SRU deputy chair Claudia Kemfert, as reported by Table.Briefings.
The SRU paper also refers to the German government’s sustainability strategy, which mentions planetary boundaries and a dignified life for all as “absolute guidelines for political decisions“. A spokesperson for the Federal Ministry for the Environment stated that scientific contributions like the SRU’s could make the debate on sufficiency more objective and enriching.
While the FDP and AfD reject a societal debate on sufficiency, the CDU is open to discussions. The CDU supports decoupling resource consumption from growth, focusing on a circular economy and a “sharing economy”. SPD climate policy spokesperson Nina Scheer mentioned that energy efficiency and savings are necessary, but fixed growth limits are not desirable since recycling and renewable energy industries also follow growth paths. The Greens are also open to the debate.
A societal debate might face resistance, the SRU paper suggests. However, a 2023 survey by the German Environment Agency shows that 77 percent of Germans agree with the statement, “There are natural limits to growth that our industrialized world has long since reached.” Additionally, 88 percent believe we must find ways to “live well independent of economic growth”.
In 2024, at least five countries in Europe – Italy, Ireland, Denmark, France, and Austria – will discuss living well without economic growth. These national conferences are direct offshoots of the “Beyond Growth Conference“, held in Brussels in 2023 at the invitation of the EU Parliament. In mid-May, around 250 guests, including researchers, activists and politicians, gathered in the Austrian Parliament in Vienna. NGOs like Global 2000 and Degrowth Vienna organized the conference, with the Greens and the SPÖ extending the invitation to the Parliament.
With the exception of the right-wing populist FPÖ, representatives of all parliamentary parties participated in the discussion, agreeing on at least two points:
But where to draw the line? Astrid Rössler, environmental spokesperson for the Greens in Austria, suggested a “halving of total energy consumption” to Table.Briefings. Lukas Oberndorfer also proposed a reduction of 40 to 50 percent through socially just policies. He heads the climate department of the Chamber of Labor, which represents the workers’ side and is close to the social-democratic SPÖ.
Michaela Schmidt, SPÖ spokesperson for the SDGs, sees planetary boundaries as the “maximum”. She calls for an investment program of up to 20 billion euros annually from both private and public investments. Representatives of the conservative ÖVP, which is in coalition with the Greens, also pointed to necessary investments during the debates, but concrete proposals were lacking.
From the liberal NEOS, environmental spokesperson Michael Bernhard stated that “individual and economic freedom cannot be greater than the planetary boundaries”.
The political debate was preceded by two scientific presentations. Economist Sigrid Stagl from the Vienna University of Economics and Business stated at the opening event that “green growth” is implied even in the most important climate treaties: The SDGs, the Paris Agreement, and the Green Deal. However, decoupling GDP growth from greenhouse gases would take 220 years at the current pace to reduce emissions to zero, according to a recent study. Additionally, the circular economy is shrinking worldwide instead of more materials being recycled, Stagl noted. Therefore, stronger regulations are needed. She expressed doubt about whether this is compatible with capitalism.
Andreas Novy, also an economist at the Vienna University of Economics and Business, proposed “consumption and production corridors”. These could be lower and upper limits to restrict excessive consumption and avoid poverty. He clarified the misunderstanding that post-growth and degrowth are solely focused on shrinking the economy: “In some areas, we need less, in others more,” said Novy – “such as in public services, local supply, health, and care.”
“I am a realist with a slight tendency toward optimism”, says Nils Aldag. Over the years, however, he has taken on the role of an optimist at Sunfire, says the co-founder and CEO of the Dresden-based electrolysis specialist. This sentence fits the 36-year-old very well. Especially because in 2010, when Sunfire was founded, it still looked as if Aldag and his co-founders were ahead of their time with the topic of green hydrogen. But the tide has since turned: “We are moving in an industry where all arrows are pointing upward”, says the Sunfire CEO. Over the past 24 months, he says, there has been a significant acceleration in the topic of renewable energies.
Then the Hamburg native tells his personal story. He talks about why it is a privilege to come from a family of entrepreneurs. Why, after studying business administration and commercial law, he first sought new perspectives and therefore decided to write his thesis on the subject of renewable energy technologies. And why he came to Sunfire as a “junior” – when Nils Aldag was just 24 years old. He speaks in a punchy, thoughtful manner, with a clear view of the world. And he is extremely modest: “My main concern is to create a sustainable company. I’m not vain, so I don’t care whether this company is still called Sunfire in ten years and whether I’ll still be there as CEO.”
Instead, Aldag has his eye on the big picture. He wants to make Sunfire the “next big success story”. He could be right about that, because the company is already being treated as the hidden champion of the energy transition. After all, the Dresden-based electrolysis specialist has already undergone rapid development – from a start-up to a medium-sized industrial company that, according to media reports, is about to be valued in the billions.
What is Sunfire’s core business? “It’s pretty complex, what we do here. Every machine we build is like a small chemical factory”, says Aldag. Still, he says, the business model can be summed up briefly and understandably: “We build machines – called electrolyzers – that split water into hydrogen and oxygen. To carry out this splitting, we need renewable electricity from sun and wind.”
The hydrogen produced with the help of the electrolyzers could be used either in pure form or combined with other molecules to replace everything that is currently produced from crude oil, natural gas and coal. Sunfire’s customers include utilities such as RWE, petroleum companies such as Total, and steel companies such as Salzgitter AG. The ultimate goal is to bring renewable energies everywhere they cannot go in electrical form, thus making natural gas, crude oil and coal superfluous.
What remains at the end of the conversation is this impression: Nils Aldag is not only a pioneer, but also a prototype for a new “green” generation of entrepreneurs. And he is extremely successful. With his company, the founder and entrepreneur is moving into a market that will soon be worth billions. In the EU alone, electrolysis capacities are expected to increase from the current 1,000 megawatts to 40,000 megawatts by 2030. Aldag: “We want to become a champion in this insanely exciting future industry.” Gabriele Voßkühler
Aug. 1 is Earth Overshoot Day – the day the natural resources renewed within a year are used up. So is it time to say goodbye to the idea of growth? Today, Lukas Bayer analyzes the growing relevance of post-growth debates and looks at approaches that advocate less resource and energy consumption and promote sufficiency.
The United Arab Emirates certainly do not want to move away from growth with their Altérra fund announced at the last climate conference. On the contrary: The “world’s largest private investment vehicle for the climate” is intended to mobilize as much money as possible to promote energy transition, industrial decarbonization, sustainable living and climate technologies. The fund aims to boost investment in climate solutions in the Global South. Christian Mihatsch explains the innovative approach chosen by the Emirates and why investments in new gas projects are criticized.
Overcoming the climate crisis requires not only more money, but also new political approaches. In today’s News, we report, among other things, on what the German government could do about the stagnating expansion of offshore wind power, how it is putting new climate protection contracts out to tender and what decisions the G20 finance ministers have come to.
We keep our cool even when temperatures rise – and wish you an exciting read.
A good six months after its announcement, the “world’s largest private investment vehicle for the climate“, the Altérra Fund of the United Arab Emirates (UAE), has announced its first major projects – and at the same time provoked criticism of its work as a climate fund. At the beginning of July, the head of the fund and COP28 Secretary General Majid Al Suwaidi announced that the next round of investments was imminent. However, research by the British climate publication Climate Home shows that the fund is indirectly involved in financing new gas projects.
At COP28 in Dubai, the UAE was not sparing with self-praise at the launch of the Altérra Fund. This will help to “create a fairer system of climate financing”. The fund is to be endowed with $30 billion, mobilizing a total of $250 billion by 2030. Altérra is a “fund of funds” and invests in other funds in which other investors are involved.
One of these funds is the Blackrock Infrastructure Fund IV, in which Altérra has a stake of $650 million. According to Altérra, it has four key investment areas: Energy transition, industrial decarbonization, sustainable living, and climate technologies. However, the Blackrock fund invested a good $500 million in a gas pipeline in March. Together with US bank Morgan Stanley, the fund purchased the Portland Natural Gas Transmission System, a 475-kilometer-long pipeline system in the northwest of the USA. According to Blackrock, the fund is not only targeting solar and wind power plants, but also gas-fired power plants, liquefied natural gas terminals and airports – in other words, all infrastructure, whether green or not.
Altérra, on the other hand, claims to “focus exclusively on climate solutions”. And a gas pipeline fits poorly into this profile, says Andreas Sieber from the US environmental organization 350.org: “Financing infrastructure to burn more fossil fuels is the main cause of the climate crisis and the opposite of a climate fund.”
Altérra, however, told Climate Home that the investment was in line with its own goals of driving climate finance “quickly and on a large scale” and working with partners “who are investing in the energy transition and accelerating the move towards net zero emissions”.
This is to be achieved through innovative financial instruments. This includes a sub-fund of Altérra, Altérra Transformation (AT). This fund has one-sixth of Altérra’s resources, i.e. $5 billion, and is not aimed at maximizing profits. Instead, AT is intended to “incentivize investment in the Global South”.
Such incentives are also necessary, as 85% of investments in climate-friendly technologies are made in industrialized countries and China. If global warming is to be stopped at 1.5 degrees, much more money must therefore be invested in the “rest of the world”. But the cost of capital is too high there: in Africa, South America and Asia (except China), solar park developers have to offer their investors twice as much return as in industrialized countries, according to figures from the International Energy Agency (IEA). The reason for this is higher risks due to political instability or fluctuating exchange rates. Most considerations for reducing the cost of capital therefore focus on “de-risking”, for example by hedging exchange rates.
However, AT takes a different approach here: investors want to generate a return that is commensurate with the risk. AT starts with the return: To find other backers for these funds in addition to its own commitment, AT waives part of the return, which improves the return of the other investors. Specifically, the return for AT is “capped” at five percent and everything above this is distributed to the other fund participants. This increases their profits, which is why they are also prepared to accept higher risks. “This is new and a logical approach to implementing de-risking”, says Creon Butler from the British think tank Chatham House. This innovative approach is now also being overshadowed by criticism of Altérra’s indirect participation in a gas project – although the money to Blackrock does not flow from the AT sub-fund.
Altérra had started promisingly. At COP28, the host, the United Arab Emirates, surprised everyone with two announcements: The Emirates and Germany each provided $100 million to the UN Fund for Loss and Damage and the Emirates launched Altérra. The fund is headed by COP28 President Sultan Al Jaber and COP28 Director-General Majid Al Suwaidi. Meanwhile, the fund’s money comes from Lunate, an asset management company.
Lunate, in turn, was set up by Chimera Investment in September last year, three months before COP28. The latter is “a large conglomerate from Abu Dhabi, headed by national security advisor Sheikh Tahnoun bin Zayed Al Nahyan, the brother of the President of the Emirates”, writes the financial market publication New Private Markets. It is therefore unclear where exactly the money for Altérra is coming from.
Three partnerships were announced at the launch of Altérra: Blackrock, Brookfield and TPG, three large asset management firms. At the time, Altérra announced that it would invest $2 billion in cooperation with Blackrock, $3 billion with Brookfield, and $1.5 billion with TPG.
Aug. 1 marks the day when the world has consumed the natural resources that can be renewed within a year, according to the Global Footprint Network’s calculations. For several years, excluding the pandemic year of 2020, this symbolic day has fallen in early August; in 1971, it was in late December. The message is clear: The resource hunger of a growing global economy can be offset by efficiency gains but not reversed. So far, decoupling economic growth from emissions and resource consumption has not been achieved, leading to increasing emissions and shrinking available resources each year.
Proposals for a good life for all – without overloading the Earth – are increasingly coming from economic approaches like degrowth, donut economics and post-growth economics. These approaches emphasize sufficiency; in other words, living more frugally rather than consuming excessive amounts of energy and resources. Initially perceived as activist movements, these debates are now gaining traction. For instance, the EU Parliament held a conference on post-growth a year ago, followed by national conferences in five European countries, including Austria, where politicians also participated.
In Germany, the Advisory Council on the Environment (SRU) called for a broad debate on sufficiency in mid-March. The SRU primarily means “absolute savings in energy consumption” and “more frugal use of resources“. While the council’s position paper does not make specific recommendations, it emphasizes the need to reduce energy consumption. “Without avoiding waste, we will not achieve our climate goals,” says energy economist and SRU deputy chair Claudia Kemfert, as reported by Table.Briefings.
The SRU paper also refers to the German government’s sustainability strategy, which mentions planetary boundaries and a dignified life for all as “absolute guidelines for political decisions“. A spokesperson for the Federal Ministry for the Environment stated that scientific contributions like the SRU’s could make the debate on sufficiency more objective and enriching.
While the FDP and AfD reject a societal debate on sufficiency, the CDU is open to discussions. The CDU supports decoupling resource consumption from growth, focusing on a circular economy and a “sharing economy”. SPD climate policy spokesperson Nina Scheer mentioned that energy efficiency and savings are necessary, but fixed growth limits are not desirable since recycling and renewable energy industries also follow growth paths. The Greens are also open to the debate.
A societal debate might face resistance, the SRU paper suggests. However, a 2023 survey by the German Environment Agency shows that 77 percent of Germans agree with the statement, “There are natural limits to growth that our industrialized world has long since reached.” Additionally, 88 percent believe we must find ways to “live well independent of economic growth”.
In 2024, at least five countries in Europe – Italy, Ireland, Denmark, France, and Austria – will discuss living well without economic growth. These national conferences are direct offshoots of the “Beyond Growth Conference“, held in Brussels in 2023 at the invitation of the EU Parliament. In mid-May, around 250 guests, including researchers, activists and politicians, gathered in the Austrian Parliament in Vienna. NGOs like Global 2000 and Degrowth Vienna organized the conference, with the Greens and the SPÖ extending the invitation to the Parliament.
With the exception of the right-wing populist FPÖ, representatives of all parliamentary parties participated in the discussion, agreeing on at least two points:
But where to draw the line? Astrid Rössler, environmental spokesperson for the Greens in Austria, suggested a “halving of total energy consumption” to Table.Briefings. Lukas Oberndorfer also proposed a reduction of 40 to 50 percent through socially just policies. He heads the climate department of the Chamber of Labor, which represents the workers’ side and is close to the social-democratic SPÖ.
Michaela Schmidt, SPÖ spokesperson for the SDGs, sees planetary boundaries as the “maximum”. She calls for an investment program of up to 20 billion euros annually from both private and public investments. Representatives of the conservative ÖVP, which is in coalition with the Greens, also pointed to necessary investments during the debates, but concrete proposals were lacking.
From the liberal NEOS, environmental spokesperson Michael Bernhard stated that “individual and economic freedom cannot be greater than the planetary boundaries”.
The political debate was preceded by two scientific presentations. Economist Sigrid Stagl from the Vienna University of Economics and Business stated at the opening event that “green growth” is implied even in the most important climate treaties: The SDGs, the Paris Agreement, and the Green Deal. However, decoupling GDP growth from greenhouse gases would take 220 years at the current pace to reduce emissions to zero, according to a recent study. Additionally, the circular economy is shrinking worldwide instead of more materials being recycled, Stagl noted. Therefore, stronger regulations are needed. She expressed doubt about whether this is compatible with capitalism.
Andreas Novy, also an economist at the Vienna University of Economics and Business, proposed “consumption and production corridors”. These could be lower and upper limits to restrict excessive consumption and avoid poverty. He clarified the misunderstanding that post-growth and degrowth are solely focused on shrinking the economy: “In some areas, we need less, in others more,” said Novy – “such as in public services, local supply, health, and care.”
“I am a realist with a slight tendency toward optimism”, says Nils Aldag. Over the years, however, he has taken on the role of an optimist at Sunfire, says the co-founder and CEO of the Dresden-based electrolysis specialist. This sentence fits the 36-year-old very well. Especially because in 2010, when Sunfire was founded, it still looked as if Aldag and his co-founders were ahead of their time with the topic of green hydrogen. But the tide has since turned: “We are moving in an industry where all arrows are pointing upward”, says the Sunfire CEO. Over the past 24 months, he says, there has been a significant acceleration in the topic of renewable energies.
Then the Hamburg native tells his personal story. He talks about why it is a privilege to come from a family of entrepreneurs. Why, after studying business administration and commercial law, he first sought new perspectives and therefore decided to write his thesis on the subject of renewable energy technologies. And why he came to Sunfire as a “junior” – when Nils Aldag was just 24 years old. He speaks in a punchy, thoughtful manner, with a clear view of the world. And he is extremely modest: “My main concern is to create a sustainable company. I’m not vain, so I don’t care whether this company is still called Sunfire in ten years and whether I’ll still be there as CEO.”
Instead, Aldag has his eye on the big picture. He wants to make Sunfire the “next big success story”. He could be right about that, because the company is already being treated as the hidden champion of the energy transition. After all, the Dresden-based electrolysis specialist has already undergone rapid development – from a start-up to a medium-sized industrial company that, according to media reports, is about to be valued in the billions.
What is Sunfire’s core business? “It’s pretty complex, what we do here. Every machine we build is like a small chemical factory”, says Aldag. Still, he says, the business model can be summed up briefly and understandably: “We build machines – called electrolyzers – that split water into hydrogen and oxygen. To carry out this splitting, we need renewable electricity from sun and wind.”
The hydrogen produced with the help of the electrolyzers could be used either in pure form or combined with other molecules to replace everything that is currently produced from crude oil, natural gas and coal. Sunfire’s customers include utilities such as RWE, petroleum companies such as Total, and steel companies such as Salzgitter AG. The ultimate goal is to bring renewable energies everywhere they cannot go in electrical form, thus making natural gas, crude oil and coal superfluous.
What remains at the end of the conversation is this impression: Nils Aldag is not only a pioneer, but also a prototype for a new “green” generation of entrepreneurs. And he is extremely successful. With his company, the founder and entrepreneur is moving into a market that will soon be worth billions. In the EU alone, electrolysis capacities are expected to increase from the current 1,000 megawatts to 40,000 megawatts by 2030. Aldag: “We want to become a champion in this insanely exciting future industry.” Gabriele Voßkühler
