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 aprasad@fs.fed.us

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.