Category: Climate business

The Clean Industrial Revolution

The Clean Industrial Revolution: Growing Australian Prosperity in a Greenhouse Age

The problem with cutting greenhouse gas emissions is that it will harm economic growth. Right? No, quite the opposite, says Ben McNeil in his book The Clean Industrial Revolution. It’s an age-old myth that doing good for the environment is bad for the economy. He’s addressing Australians, but what he has to say will arrest readers from many countries. It has certainly grabbed the attention of some prominent New Zealand businessmen who have presented every MP with a copy of the book and used it to back a call to the Prime Minister for a joint business/government task-force to focus attention on emerging clean technologies.

McNeil is a senior research fellow at the Climate Change Research Centre at the University of New South Wales. Besides a PhD in climate science he also holds a Master of Economics degree.  The two worlds are bridged in this energetic book.  Australia is very vulnerable to climate change through sea-level rise, rainfall changes, storms, and a decrease in food production. It is also highly carbon-intensive in its economy and its export industries will suffer as a consequence when the world starts to move heavily to reduce carbon emissions and impose carbon tariffs.

Such consequences can be pre-empted by a clean-energy revolution, one for which Australia is well-endowed. That hot arid interior is the potential source of vast quantities of high capacity solar power. The use of mirrors to concentrate sunlight so perfectly that the ultra-high temperatures convert water to steam is one way. Another, already under construction in north-west Victoria, uses mirrors to concentrate the sunlight on to high-performance photovoltaic panels. Solar power could replace the need for coal-fired power stations. A massive underground “hot rock” heat source can be tapped to create steam for power generation, a technique already being worked on by a number of companies at several sites throughout Australia. Wind power in the south could supply 20 percent of the country’s needs. Advanced biofuels that do not impact on food can be produced.  Biomass-fuelled electricity is already generated in some parts of rural Australia. Carbon capture and storage may hold some hope for the continuing use of coal, though not while coal companies put a miserly 0.3 percent of their production value into research, apparently believing that governments will do the work for them.

McNeil argues that Australia must take up a forefront position in the low-carbon economic future if it wants to remain prosperous. At the time of writing in 2009 he expected the emissions trading scheme to kick in, putting a price on carbon and pointing the economy towards investment in clean energy. This has been delayed, but even without it there is ample reason for the change of focus away from the carbon-intensive economy (carbon obesity he calls it).  The world will soon be crying out for clean energy technology.  Australia will continue to prosper in the future if it has used research and development to drive down the cost of renewable energy technologies, and investment to commercialise them and prepare them for export.

McNeil illustrates this with a striking imaginary scenario. A series of climate catastrophes hit the world in the 2020s. Global greenhouse gas sanctions quickly followed. Those nations with expanses of desert which had been working on the development of solar power became the energy superpowers of the 21st century. Australia led in the building of the Asia Pacific Electricity Grid following a breakthrough in transport efficiency for transmission cables discovered by Australian researchers. The grid connected Australian energy supply to its Asian neighbours.  The scenario is much more elaborated than this, but it all certainly sounded feasible.

Back to present reality. McNeil is adamant that there are solid employment opportunities in an economy focused on clean energy. More than offered by the present carbon intensive economy, and jobs which can’t be outsourced. Creating energy-efficient homes and buildings, for example, is a proven source of increased jobs. The European Commission suggests that energy efficiency creates three to four times the level of employment as an equivalent investment in a new coal-fired power station. Renewable energy requires two or three times more people for operation than an equivalent coal-based energy project. A comparison between Denmark’s wind industry and New South Wales coal industry clinches that. A renewables manufacturing industry is feasible kept based in Australia by a strong domestic market.

McNeil provides a wealth of illustrative material from many countries and forward-looking firms. He instances General Electric’s ‘Ecoimagination’ programme launched in 2005, aimed at developing low-carbon solutions. The company reports that it has never had an initiative that generated better financial returns so quickly. Cloudy Germany is the world’s largest market for solar energy and German solar manufacturing companies produce over half the world’s solar panels. German companies are positioning themselves for the burgeoning global clean-tech market. Tiny Denmark manufactures over half the world’s wind turbines, obtains 20 percent of its electricity from wind and plans to increase that to 40 percent. McNeil notes dryly that contrary to some prophesies Danes are far richer than Australians by GDP per capita, while cutting their carbon intensity by over one-third in less than ten years.

Innovation needs science, and McNeil titles one of his chapters “How Science Must Save Us”. If Finland can produce Nokia, Australia also can help shape the world, not by raw military or economic might but by “the seeding of ideas in an interconnected world.” Education and research funding are crucial for the development of science and he discusses how they can be expanded. Scientists and engineers will not only develop new generation clean energy but also seek to understand and monitor the effects of climate change on the natural ecosystems of Australia with its immense variety of specially evolved plants and animals. They will also continue to seek the development of techniques for reducing methane emissions from livestock, which produce 10 percent of Australian greenhouse emissions.

McNeil knows first hand how serious the implications of climate change are.  The disease has been diagnosed but his attention in this book is on the cure. He matches the environmental imperative of emissions reduction with the economic benefit of entering wholeheartedly into a new, clean, low-carbon industrial revolution. Climate change poses a great risk to the Australian economy, and so does their over-reliance on fossil fuels. They need to embrace the change to clean energy. The costs of not doing so will far outweigh the cost of making the change.

One doesn’t need to be an Australian to be cheered by much that the book has to say and the detail with which it is illustrated.  But the final sentence has to be conditional:

“If Australia sets strong greenhouse gas emission targets and invests in unleashing clean-technology innovation,…”

Unfortunately it’s still a big if, not only for Australia.  But here’s the rest of the sentence:

“…not only will Australia help the world as it makes the transition towards a low-carbon development pathway to solve climate change, it will bring new prosperity and employment growth to a country desperately needing economic reform in its energy policy.”

Note: There’s a short relevant interview with Ben McNeil here on YouTube.

[Check out this book at: Fishpond, Amazon.com, Book Depository]

Offshore wind beats oil

As the US counts the cost of offshore oil drilling Janet Larsen of the Earth Policy Institute has sensibly respondedwith a reminder of the advantages of offshore wind energy. Offshore drilling has tempered the rapid decline in US oil production which peaked in the early 1970s. But only somewhat and with increasing difficulty and apparently at a level of risk greater than credited until now.

“We should leave oil before it leaves us” was the advice of Fatih Birol, chief economist at the International Energy Agency.  Larsen points out that it’s not as if there aren’t other options. One is expanded public transport and better space for bicycles and pedestrians. That’s not an insignificant contribution to lowered use, though it’s not one that has any appeal for our Minister of Transport who is intent on starving public transport in favour of roadbuilding over the next few years. A second is the electrification of vehicles and powering them through renewable energy sources. Larsen points to the US Pacific Northwest National Laboratory estimates that the current electrical infrastructure could power over 80 percent of the US car fleet, relying largely on off-peak electricity as cars are charged at night. She notes that upgrading to a stronger, smarter, and interconnected national grid that taps into the country’s enormous wind, solar, and geothermal resources completes the transition. Here in New Zealand the positive possibilities of powering our entire car fleet from renewable energy sources have been canvassed with similar optimism.

Wind-sourced electricity has the potential to work particularly effectively in powering vehicles. The Edison pilot project in Denmark will aim at showing how:

“The basic idea is to charge the vehicles at night when the wind continues to blow, but when there is low demand for electricity. During the day, each vehicle will become a mobile electricity storage unit that can be plugged back in after the morning commute, potentially supplying energy back to the grid during times of peak demand, thus smoothing out energy distribution woes.

“Electricity charging stations powered by wind turbines will be installed in private homes as well as in corporate and public parking lots. Both fast-charging stations as well as battery swapping alternatives will be explored by the project.”

Back to Larsen’s article. A recent study published in the Proceedings of the National Academy of Sciences finds that the world’s top carbon emitters have enough wind energy potential to meet their current electricity needs many times over. When land-based sites are included, the total US potential from wind is estimated at 22 times current electricity use. For China the wind resource potential is 15 times greater than the country’s current electricity consumption, and for Russia, it is a staggering 170 times higher.

Offshore wind alone, Larsen points out, has the potential in the US to provide four times the nation’s current electricity use.  Looking at only the offshore potential she provides a graph of the ten top CO2 emitting countries.

To date most of the offshore production has been in Europe, but China and Japan have begun developing offshore farms and it seems possible that the US will soon join them. The recent approval of the Cape Wind project off the coast of Massachusetts and other proposals under consideration point in that direction.

Wind energy is still much disputed, including here in New Zealand.  This statement from the Wind Energy Association was issued in March in reply to what it saw as the failure of the Institute of Professional Engineers to understand the potential wind power offers. But for all the naysayers the industry is growing rapidly in many countries, including the US and China.

I liked Janet Larsen’s final paragraph:

“Unlike oil, wind is widely-distributed and clean; it does not spill or disrupt climate. It is also becoming increasingly cheap. With wind, we have a well that will not run dry.”

Tell that to Gerry Brownlee as we offer extended tax breaks for offshore oil exploration in New Zealand.

Prosperity without growth

Prosperity without Growth: Economics for a Finite Planet

I paused for a while wondering whether a review of a book on sustainable economics had a place in a website devoted to climate change. But only briefly. One can’t worry about climate change for long without considering the economies which have given rise to it and wondering how they will survive under the low-carbon regime which they must now adopt.  Anyway carbon emissions figure frequently in the course of Tim Jackson’s book Prosperity Without Growth: Economics for a Finite Planet. Published last year it was based on a report he wrote earlier in the year as Economics Commissioner of the Sustainable Development Commission, the UK Government’s independent watchdog. Increasingly climate change has imparted a new urgency to sustainability thinking. It sits as one of many issues, but it underlines the seriousness of the need to come to grips with the finitude of the planet.

The prosperity Jackson writes of is our ability to flourish as human beings. It transcends material concern. It has to do with such matters as physical and mental health, access to education, relationships and sense of community, meaningful employment and the ability to participate in the life of society. He argues that in the developed countries we can (and must) have such prosperity without the economic growth paradigm that currently rules our thinking.

Jackson recognises the difficulties of the situation we have landed ourselves with.  On the one hand growth is unsustainable, at least in its current form. The burgeoning consumption of finite resources and the heavy costs being imposed on the environment are accompanied by profound disparities in social well-being.  But on the other hand “de-growth’ is unstable, at least under present conditions. Declining consumer demand leads to rising unemployment, falling competitiveness and a spiral of recession. It adds up to a dilemma, but one which we must face and think through.

Some economists place hope in our being able to decouple economic growth from growth in physical inputs and environmental impacts.  Capitalism’s propensity for efficiency figures strongly in these scenarios. Jackson doesn’t think either the historical evidence or the basic arithmetic of growth can support the decoupling notion.  The deep emission and resource cuts needed can’t be achieved without confronting the structure of market economics.

He takes a closer look at this structure. The engine of growth is driven by the ability of the profit motive to stimulate newer, better or cheaper products and services through a continual process of innovation and ‘creative destruction’. This is matched by expanding consumer demand for these goods. A complex social logic drives this demand. Consumer goods have come to play a symbolic role in our lives.  Somehow, beyond the simple material needs they meet, they can become vehicles for our dreams and aspirations, however much they fail in delivering. The economic structure thus combines with our nature to “lock us firmly into the iron cage of consumerism”.

What we need, claims Jackson, is a new ecological macro-economics.  It will still include a strong requirement for economic stability, but it will add conditions that provide security for people’s livelihoods, ensure distributional equity, impose sustainable levels of resource throughput and protect natural capital. New variables need to be brought into play to complement and affect those already part of economic thinking. They will reflect the energy and resource dependency of the economy and the limits on carbon. They might also reflect the value of eco-system services or stocks of natural capital. Ecological investment will be important, and will mean revisiting the present concepts of profitability and productivity and harnessing them to longer term social goals. He urges the abandonment of the infatuation with increasing labour productivity in favour of high employment in low-carbon sectors.

We will need to be weaned from our dependence on consumerism, but he provides evidence that a less materialistic society will be a happier one and a more equal society a less anxious one. Greater attention to community and participation in the life of society will reduce the loneliness and unsocial behaviour which has undermined the well-being of the modern economy.

He argues that there is a clear case today for an increased role for government.  We have already seen an acceptance of this in relation to the 2008 financial crisis. The principal role of government is to ensure that long-term public goods are not undermined by short-term private interests and to deliver social and environmental goods. This role has been diminished by the need in the growth economy to support the consumerism which keeps the economy afloat.

Jackson is leery of revolution, but he proposes steps through which to build change. They fall under three main categories. First, changing the limits. Here he writes of caps on resources and emission, considers the contraction and convergence model, discusses emissions trading schemes and ecological taxes and emphasises the need for support for ecological transition in developing countries.

The second category of steps for change is fixing the economic model. The ecological macro-economics discussed above will lower expectations for labour and capital productivity and account for the value of natural capital and ecosystem services. Ecological investment in jobs, assets and infrastructure will include retrofitting buildings, advancing renewable energy technologies, redesigning networks such as the electricity grid, building public transport infrastructure, maintaining and protecting ecosystems, developing public spaces.  There will be increasing financial and fiscal prudence, including regulation of financial markets.  A Tobin tax on international currency transfers may be considered. Banks will be required to hold higher asset reserves. National accounts will be revised to be more robust than the present rough and ready GDP.

The third category is changing the social climate. Working time may be reduced. Systemic inequality will be tackled. Better measurements of prosperity will be found. Social capital will be strengthened. The culture of consumerism will be carefully dismantled.

Utopia? No, he says firmly. A financial and ecological necessity.

In a final chapter he faces the question of whether this spells the end of capitalism. Certainly growth would be slowed – labour-intense activities mean slower productivity growth, and ecological investment means a lower and longer return on capital. There would also be a larger role for the public sector in taking some ownership stake in the longer-term less productive investments. But capitalist economies often have elements of public ownership.  There is a wide spectrum of possibilities in a capitalist system.  There’s no need to polarize the debate.

I thought the book was splendid. Jackson’s writing is lucid and well organised. He has a gift for the telling sentence. (It was not altogether surprising to discover that in addition to his academic life he is a professional playwright for BBC radio.) He is cautious and sensible, not pretending that the transition to low growth is a doddle.  But he holds firmly to the conviction that it can be made and that the society which emerges will be better than the one we currently inhabit.

Copenhagen Accord puts world on pathway to 3ºC

German scientists have added up the emissions reductions pledged in the Copenhagen Accord and calculate that they put the planet on a pathway that misses the Accord’s stated 2ºC target, and only delivers a 50/50 chance of coming in under 3ºC by the end of the century. In an opinion article in this week’s Nature, Copenhagen Accord pledges are paltry, Joeri Roelgj et al show how the current emissions commitments amount to little better than “business as usual”, and effectively mean that global emissions will have increased by 20% by 2020. The key points in the article are:

  • Nations will probably meet only the lower ends of their emissions pledges in the absence of a binding international agreement
  • Nations can bank an estimated 12 gigatonnes of CO2 equivalents surplus allowances for use after 2012
  • Land-use rules are likely to result in further allowance increases of 0.5 GtCO2-eq per year
  • Global emissions in 2020 could thus be up to 20% higher than today
  • Current pledges mean a greater than 50% chance that warming will exceed 3°C by 2100
  • If nations agree to halve emissions by 2050, there is still a 50% chance that warming will exceed 2°C and will almost certainly exceed 1.5°C

A lack of ambition now means that countries will face steep emissions cuts in future. Co-author Malte Meinshausen told the BBC:

In an ideal world, if you pull off every possible emission reduction from the year 2021 onwards, you can still get to get to 2C if you’re lucky. But it is like racing towards the cliff and hoping you stop just before it.

Commenting on the article, Andy Reisinger of VUW’s Climate Change Research Institute told the SMC:

“This analysis shows that it is imperative to substantially strengthen the emissions targets for 2020 as part of a strong international agreement if the world is to have a realistic chance of limiting warming to 2°C. We are no longer gambling the future of the planet — if we stick with current emissions targets we are folding our cards entirely and leaving it to our (and other people’s) kids to pay our accumulated debts.”

VUW’s Martin Manning points out that politicians need to be given the mandate to act decisively:

It is becoming increasingly obvious that dealing with climate change is something that needs to become driven by society more broadly. People need to consider how much of a problem we want to pass on to our grandchildren and tell politics and industry to act accordingly.

The BBC coverage is excellent, dramatically illustrating the lack of ambition in European targets. Reports also at the Herald & Stuff

10:10NZ campaign launches

New Zealand now has its very own Ten-Ten campaign, part of a global effort to promote personal commitments to emissions reductions. Based on the hugely successful 10:10 campaign launched in the UK last year by New Zealander Lizzie Gillett (producer of The Age Of Stupid), the NZ campaign aims to get as many people as possible to commit to making a 10% reduction in their carbon emissions over one year, starting this year. Here’s Gillett on the scheme’s impact in the UK (from the press release):

In the UK, the 10:10 campaign aims to cut carbon emissions by 10% during 2010. It has amassed huge cross-societal support including Adidas, Microsoft, Tottenham Hotspur Football club, 55,000 individuals, 1,500 schools, and a third of local councils (representing 25 million people), all the cabinet and the Prime Minister.

I suspect the chances of getting John Key to sign up are slim, but if enough people demonstrate a willingness to make cuts it should show our politicians that this is not an issue that can be ignored or where action can be delayed. Cutting your personal emissions by 10% in a year is an easily achievable target for most people, as 10:10NZ spokesman Rhys Taylor explains:

It’s an easy figure to handle – for example 10% represents one of 10 weekday commuter journeys, either to or from work, switched from driving a car to walking or cycling. Walk or cycle both there and back one day in five to knock an easy 20% off fuel demand for that week’s commuting. If a bus traveller or car-sharer, your journey still requires fuel consumption, but significantly less per person than driving alone. Car sharing or using a bus to go both in and back on one day in five would achieve the passenger’s 10% drop in commuting fuel. That’s not hard to do, is it?

There’s more information on how to make cuts at the 10:10NZ site, including links to the interesting Project Litefoot. The campaign is currently focused on personal and household commitments, but there is also plenty of scope for businesses to join. And there’s the obligatory Facebook page.

Hot Topic is happy to endorse and support 10:10NZ: more news as the campaign develops.