A Greener Footprint for Industry, A Greener Footprint for Industry, and Policies to Make It Happenand Policies to Make It Happen
Ernst Ulrich von WeizsäckerCo-Chair
1. Let us first ask what triggered the financial crisis.
2. Let us then ask how we best get out of it.3. Then comes the bad news about climate.4. It will allow us to understand what needs to be
done and how much time we have.5. We then shall look at options to respond to the
challenge.6. Then I am opening a window into an absolut-
ely exciting technological universe.7. Finally, let us talk about policy options we have
to make it happen.
The media portrayed it all as a matter of deregulation of the financial sector plus
greedy and arrogant bankers
OK, that‘s correct, at the surface.
But the real reasons go deeper and have to do with cheap energy.
1. Let us first ask what triggered the financial crisis.
Tumbling oil prices and opposition in the USA to gasoline taxes created an optimistic feeling of ‚cheap gas forever‘, leading to
• the creation of a new car fleet, the gas guzzling SUV‘s, and Hummers;
• accelerated urban sprawl and a near doubling of typical commuter distances.
The Hummer H1, a fortress on wheels, and a gas guzzler
During a mere 5 years, urban sprawl madly grew in many areas
Source: Anand Prasad, US Forest Service, 2002 [email protected]
Long distance commuting became a nightmare
Houses lost value
Mortgage loans above home values got non-performing
Collapse of Fannie Mae, Freddie Mac, Countrywide and later Bear Stearns, Lehman Bros., Merryll Lynch, AIG, General Motors etc.
And then came 2007. Oil prices skyrocketed.
2. Let us now ask how we best get out of the
financial crisis.
Optimistic stock markets are not enough.
We should avoid the squandering of energy that was at the roots of the crisis.
There are, of course, strong forces, mostly from sunset industries (and their politicians) saying
Let‘s deal with the economic crisis only and return to the environmental agenda once we are back to a very robust economy.
More forward looking, Achim Steiner, UNEP‘s Executive Director is callingfor a
Global Green New Deal
(‚quoting‘ Franklin D. Roosevelt‘s New Deal of 1932, which helped pull the USA out of the big Depression)
That‘s obviously also the idea behind our conference
It is also at the core of the mandate of the
Two Asian countries made their stimulus package very green
Source: DIE, German Institute for Development
Some Silicon Valley‘s venture capitalists (here: John Doerr of Kleiner Perkins, Al Gore‘s new firm) are moving into green investments
The next Kondratiev Cycle has to be “green”(after Charlie Hargroves, Brisbane, Australia)
Mechanization
Steel &railroads
Electricity,chemicals,cars
TV, aviation, computers,
BiotechIT
Resource productivity, renew. energy, green system design.
3. Now comes the bad news about climate.
Let me show you some pictures that should make you think.
Na
Munich Re‘s Natural desasters map, 2008
Earthquakes, volcanoes
Storms
Floods
Droughts, wildfires
Asia saw many desasters in 2008, many climate related
Come sea level rises, desasters get much worse!
Italy during the .... and during the lastlast Ice Age (20 000 Hot Age (2 millionyears ago) years ago)
Areas in red are at risk from rising sea levels in Bangladesh
East and South Asia‘s agglomerations arehighly vulnerable to sea level rise
Sea level rise can take catastrophic speed! (after Michael Tooley. Global sea-levels: floodwaters mark sudden rise. Nature 342
(6245), p 20 - 21 1989)
.
Presently we are destabilizing Greenland! (Freshwater coverage during Summers 1992 and 2002)
4. This should suffice to understand what needs to be done and how little time we have.
Stern Review: BAU (blue) vs. stabilising at 450 ppm CO2 (red)
The longer we wait, the more radical changes are needed
Source: Investing in Cimate Change 2009 (Deutsche Bank, October 2008)
Let us perhaps save what we consider worth saving.
Noah‘s Ark, 2009
Why are so many people thinking we should first become rich and deal with climate problems later? It is the
convenient paradigm of the Kuznets curve of pollution
Conventional wisdom: More wealth, more carbon intensity
Escaping from this mindset means we need a „Kuznets Curve“ of decarbonization!
„rich and carbon free“
Three options exist:
•Reduce carbon intensity of energy
•Reduce energy intensity of wealth
•Reduce wealth
5. Let us now look at options to respond to the challenge.
The Panel‘s Biofuels group has looked into the scope (and problems) of biofuels. Report being published soon.
Certain biofuels are ecologically worse than fossil fuels
From IPSRM Biofuels Report, 2009, after Zah et al, 2007
Global warming potential Smog potential Eutrophication
Up to 90% biodiversity losses from agrofuels plantations
From IPSRM Biofuels Report, 2009, after Eickhout et al, 2008
Source: MacKinsey & Vattenfall 2007
The win-win options relate to efficiency. And efficiency has a lot to do with greening industry!
More promising perhaps: Decoupling wealth from greenhouse gases and resources. First Decoupling report nearing peer review phase.
Absolute Decoupling: mostly for the rich countriesRelative Decoupling: mostly for developing countries
6. Now let us open a window into an absolutely exciting technological universe.
Imagine a bucket of water weighing
ten kilograms.
How many kilowatt-
hours would you need
to lift that bucket from sea level up to the top of
Mount Everest?
Knowing that one Watt-second (Ws) is equivalent to one Newton-meter (1 Joule),
the answer is:
One quarter of a kilowatt-hour!(= 900.000 Ws)
1 kwh
Amory Lovins’ “Hypercar”: 1,2 l/100km
Today’s fleet6-12 l/100km
House in the Alps Amory Lovins‘ Rocky Mountain Institute
“Passive houses”: a factor of ten more heat efficient
Refurbishing existing buildings
Upper row: PhotographsLower: Thermograms
LED replacing incandescent bulbs: a factor of 10
From urban sprawl to high density cities
From rotten trains to high speed trains
Carbon efficiency
From Portland cement to geopolymer cement
Also networks of industry can help decarbonise our wealth.
The (Danish)Kalundborg „industrial ecosystem“
“Developing the World's Best Energy-Efficient Appliances”: Japan's "Top Runner“ Standard
7. Finally, let us talk about policy options we have to make it happen.
The first step sounds „philosophical“: Changing technological paradigms
Old:
Increasing labour productivity
New:
Increasing resource productivity
Labour productivity has increased twentyfold since 1850. It is not utopian to think of resource productivity increasing
tenfold in 100 years and fivefold in 50 years!
Labour poductivity rose in parallel with labour costs
This suggests a strategy of actively elevating energy prices in parallel with energy productivity increases
High price elasticity for electricity – comparing countries
Source: Jean-Philippe Barde, 2008
High price elasticity for petrol
per capita and year fuel comsumption in kg
Prices of industrial commodities & energy, in constant dollars
However, for 200 years resource prices were falling. Recent price hikes just brought us back into the lower confidence interval!
2000-2004
02
7
11
0
9
11
14 15
0
2 34
7
5
31
1412
13
54
+1515
13
5
3
+18
2
-21994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Ecotaxes can reverse the trend in fuel consumption
Reference: UNFCC 2005
Ecological Tax Reform
Percent changesagainst 1994
High energy prices need not hurt the economy. Japan blossomed during the 15 years of highest
energy prices.
Predictability is perhaps the strongest signal to investors.
So I believe that a predictable trajectory of rising energy prices will attract immense investments into the efficiency revolution.
To make this trajectory socially acceptable and good for industry,
I am suggesting to raise prices in proportion with measured average increases of energy productivity.
Meaning the driven mile or industrial energy services would not become more expensive as prices rise.
I suggest that we now know how to kick it off!
Mechanization
Steel &railroads
Electricity,chemicals,cars
TV, aviation, computers,
BiotechIT
Resource productivity, renew. energy, green system design.