Greenhouse response:
an opportunity for economic renewal
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Philip Sutton
Director, Policy and Strategy
Green Innovations Inc.
Tel & fax: +61 3 9486 4799
Philip.Sutton@green-innovations.asn.au
14 October 2000
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Paper marked up in HTML format
by Philip Sutton.

 

When the bombs stopped dropping on Germany and Japan, at the end of the Second World War, the scene was set for these economies to emerge from the ashes and take silver and bronze in the world competition for economic power.

My reason for beginning with this rather odd statement is to set the scene for an unexpected view of the greenhouse issue.

Business and other economic opinion leaders (and for that matter many environmentalists) see the greenhouse issue as one of the biggest threats to the economy that is on the horizon.  And if people were to feel, as I do, that what needs to be done to solve the greenhouse problem is to reduce greenhouse gas emissions effectively to zero over roughly a 25 year period starting now, then they might feel that the threat to the economy was even more grave than they first thought.

However, there is another way to look at the issue.  A robust greenhouse response strategy might in fact facilitate a beneficial process of profound economic renewal.

Business-as-usual change processes in the economy tend to favour incremental change - which if it goes on long enough can certainly result in significant increases in economic productivity.

But the biggest  increases in economic productivity emerge when leapfrog changes are also occurring.  So business-as-as-usual can actually hold back significant improvements.

When Germany and Japan were defeated and much of their capacity for physical production was reduced to rubble and their social relations were thrown into chaos they had to rebuild much of their productive capacity from the ground up. This gave them the opportunity to adopt much of the latest technology and management methods - and do it on a scale that meant that the bulk of their industrial structure was up-to-date at the same time.

This opened the way for synergies that meant that their economies soon surpassed most of those of the victorious allies.

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A strong response to the greenhouse issue means that within a comparatively short period of time industrial societies across across the globe will need to scrap much of their industrial

infrastructure:

- coal, oil and gas production will need to give way to renewable energy and conservation/efficiency

- conventional cars and freeways will need to give way to urban villages, the internet, public transport, hypercars, bicycles and walking

- much mining (and even other primary production) and virgin resource processing will give way to dematerialisation and closed-cycle production.

On the face of it, scrapping capital on this scale would be disastrous for the economy, surely?  But it depend what else happens at the same time. If investment in new capital keeps pace with the scrapping and the new capital is significantly more productive than the old - especially in combination - then the outcome might be positive in economic terms.

So if the scrapping of capital is being driven by greenhouse (and other environmental concerns) but the reinvestment is being driven also by the desire to create a much more effective economy in economic terms then, if the analogy with the wartime destruction of the German and Japanese economies holds, the greenhouse response might not cripple the economy. On the contrary, it might actually kick it on to greater heights.

What the real outcome will be will depend crucially on the mix of motivators driving and shaping the reinvestment.

So before we decide that a strong response to greenhouse is going to be a disaster economically, we should explore scenarios in which robust greenhouse responses are combined with a very strong commitment to economic renewal in broad terms.

 


 

Author:  Philip Sutton
First posted:  14 October 2000
Content modified: 14 October 2000 (second change of the day)
Feedback & Enquiries:   Philip.Sutton@green-innovations.asn.au


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