SUSTAINABLE EUROPE
Energy productivity will decide earth’s fate
Autumn 2008
The sustainability of the planet, says Ernst von Weizsäcker, will depend on the speed with which a new industrial revolution does for energy productivity what the last 200 years have done for labour productivity and thus wealth creation
Are we any closer to saving the planet than ten years ago? The answer has to be both yes and no. Yes, we are closer, in the sense that throughout the 1990s an irritatingly optimistic mindset predominated, so much so that the expression “saving the planet” was not thought politically correct because it sounded “pessimistic”. The no, of course, is that the climate change problem is now much greater than it was.
What caused the optimism of the 1990s? The end of the Cold War was a great relief because allayed the fear of World War III and nuclear armageddon. With the collapse of the Soviet bloc and communism, capitalism was celebrated as the only remaining economic ideology, constituting Francis Fukuyama’s “end of history”. In its radical Anglo-Saxon form it was widely hailed as an engine of growth and therefore as a political cure-all. Slogans like “a rising tide lifts all boats” seemed a reassurance that all sections of society throughout the world would be beneficiaries. “Creative destruction” was deemed legitimate whenever some practice or institution still had a lingering smell of communism about it. But the outcome was, even though markets are both a growth engine and a healthy cleansing mechanism, that at least 2bn people around the world felt cheated and exploited as a result of capitalism’s triumph; they saw their economic boats sinking, not rising.
The world’s stock exchanges were another cause for optimism, for share prices seemed to rise without limits. This, too, was a deception, as the collapse in 2000 of the “dot com” bubble showed. As to the environment, the prevailing paradigm was the optimistic “Kuznets curve” of pollution, meaning that once countries became rich they would be able to spend adequate funds on pollution control, with the promise being that eventually almost all countries would end up rich and clean. In terms of localised pollution, the Kuznets curve has proved to be reasonably accurate, but when it comes to global warming and loss of biodiversity it has been dead wrong.
By the late 1990s, that widespread mood of careless optimism and the uncompromising arrogance it engendered, left me and many other scientists with a sense of helplessness at the impossibility of raising one’s voice.
Thankfully, those days of blatant arrogance are over, and that it has once again become almost mainstream to address the environment’s very real problems. A range of different factors brought about this worldwide sea-change in public opinion. The billions of people in their “sinking boats” are no longer silent, the international community is beginning to address their situation through the Millennium Development Goals (MDG), thus tacitly acknowledging that markets on their own will not do the trick. And while the busting eight years ago of the dot com bubble was a wake-up call to some, the broader public did not hear the signals until America’s sub-prime mortgage crisis of Summer 2007 began to spread around the world. A number of celebrated financial investment gurus, along with their institutions, were then unmasked as irresponsible speculators who had fittered away the money of credulous clients.
In the political arena, the military and ideological answer to the 9/11 attacks on New York and Washington was America’s “War on Terror”, which then quickly developed into a nightmare for all concerned. The arrogant US unilateralism of the Pentagon when led by Donald Rumsfeld and Paul Wolfowitz eventually lost the support of the George W. Bush’s White House, not to speak of the US Congress at the mid-term elections.
The environment is now back at centre-stage, after a quarter century of denial among the political and business elite in the US. The weight of evidence from the Intergovernmental Panel on Climate Change, and the devastating levels of pollution in the industrial centres of the high growth countries, like China, have at last shifted opinion behind tough new controls. The EU has taken the political lead in addressing global warming, setting up the European Trading System (ETS) for carbon dioxide emissions. Both the Republican and Democratic candidates for the US presidency have given clear commitments to mitigating global warming, and China too has become very serious about tackling pollution, climate change and energy efficiency. Renewable energy sources now constitute a dynamic growth sector, and the Convention on Biological Diversity (CBD) is enjoying increasing visibility in the signatory states which means nearly all countries around the world except the US.
It would be fair to say, then, that the last ten years have seen a tidal change in the way international public opinion sees the world’s problems. Overcoming the arrogant optimism of the 1990, has been difficult, but of vital importance.
Yet it still doesn’t add up to an agenda of saving the planet. That’s why the answer to whether we are any closer has to be an emphatic no.
Global warming has deteriorated markedly over the last 10 years. New figures and extrapolations from experts such as NASA’s James Hanson seem to show that stabilising atmospheric carbon dioxide at 450 ppm will be far from enough, and that instead we should be aiming at 350 ppm, which is still well above the pre-industrial levels of 280 ppm.
Biodiversity losses have accelerated, most notably in the tropics. The depletion of fisheries and fish stocks has continued, and in some cases has accelerated. China’s growing appetite for mineral and energy resources in Africa and elsewhere is cause for concern, and India, Brazil, South Africa, Angola and others are all aiming to fuel their high growth rates with accelerating resource extraction, and there is no end of this trend in sight. All around the world, national governments seem to work on the assumption that they have a right to the same prosperity as the US, and after so many years of brainwashing about the American way of life it’s an assumption that is hard to deny. Yet six billion, and eventually 10bn people living an American life style is quit simply an impossibility. We would need four or five Earths to accommodate their ecological footprints, says the Global Footprints Network.
In terms of climate change and the overall ecological situation, the picture is not better but a good deal grimmer. So how in policy terms can we deal with this odd combination of the yes and no answers? I would submit that we need to break out of the vicious circle of seeking wealth through material growth alone. We can, if we adopt the right policy mix, decouple wealth creation from energy and material consumption just as we decoupled wealth creation from the total number of hours of human labour. That was the great achievement of the industrial revolution, and labour productivity has risen at least twentyfold in the course of mankind’s last 150 years of industrialisation. Put another way, from one hour of human labour we have learned to extract 20 times more wealth. The time has now come for us to do the same for energy and materials. We can and must learn to extract four times, 10 times, and eventually 20 times as much wealth from one barrel of oil or from one ton of bauxite. Technologically speaking, this should be no more difficult than the rise in labour productivity. Resource productivity should become the core of our next industrial revolution.
In years past, labour productivity rose in parallel with wages. Rising wages were justified by rising labour productivity, and rising labour costs stimulated ever greater increases in labour productivity. Energy prices have on the other hand seen a secular decline (in constant dollars) over the last 200 years. The latest energy price hikes have not even brought us back to the price levels of some 30 years ago. The tragic reality is that political zeal has led governments to keep energy prices as low as possible, thus frustrating most attempts to increase energy productivity. Energy price elasticity is very much a long-term rather than a short-term affair, yet infrastructure investments that are crucial to the creation of an energy efficient society take a lot of time.
What our societies ought now to learn is how to create a long-term trajectory of energy prices that slowly, steadily and predictably rise in parallel with our energy productivity. This would, by definition not cause hardship to most people, but would give a clear signal to investors and infrastructure planners that energy efficiency and productivity are going to become ever more necessary and profitable. On that basis, energy productivity would be bound to become more profitable and sexier than even renewable energies.
If, starting perhaps with the EU, our societies were to embrace this new policy agenda for technological progress, so that future historians might recognise the 10 year period up to 2008 as the decade that kicked-off a new technological revolution, then perhaps the history book may one day say that this was a time that brought us closer to saving the planet.