The balance-of-emissions constraint on growth: pathways to net-zero greenhouse gas emissions in a simple post-Keynesian model

Despite scientific consensus on the need for net-zero greenhouse gas emissions by 2050, economists disagree on the best pathway. Among heterodox authors, there is debate over whether achieving net zero emissions requires negative or zero growth, as argued by degrowth advocates, or positive growth, as claimed by post-Keynesian green growth supporters. To address this, we develop a simple Keynesian supermultiplier model of the global economy where emissions depend on production capital and absorption on natural capital, formally demonstrating that net zero constrains global growth. We show this ‘balance-of-emissions constraint' is shaped by policy-dependent parameters such as public spending on natural capital, investment in low-emission technology, and tax rates. We model various pathways and find that an interventionist policy mix achieves net zero faster than even the most technologically optimistic laissez-faire scenario.