ECO-FRIENDLY ECONOMIES

 

The world is now in the grip of what has been described as a once-in-a-century economic crisis. Clearly, the priority should be to pull the global economy out of the slump. If so, can we really afford to spend huge sums now on efforts to prevent a rise in the Earth's temperature that will take decades to happen?

As if dismissing such voices of doubt, U.S. President-elect Barack Obama has proposed a totally unconventional approach to dealing with the economic downturn.


Changes under Obama


Obama says he will tackle both the environmental and economic crises at the same time by nurturing industries and businesses that support efforts to curb global warming instead of spending heavily on traditional public works projects to build roads and dams.

He has promised to invest $150 billion (about 15 trillion yen) over 10 years in a wide range of clean energy initiatives to expand green demand at home and thereby create 5 million new jobs.

Obama is talking about promoting the increased use of renewable energy sources, such as solar and wind power, advancing the next generation of bio-fuels produced from nonfood crops, and promoting plug-in hybrid cars--gas-electric cars with batteries that can be recharged externally from ordinary power outlets at home.

An expansion of such green investments to other industrial areas will provide an even bigger boost to economic growth.

Obama's prescription for curing the ailing economy has been dubbed a "Green New Deal." The term reflects the hope that huge investment in green programs will end the current economic crisis, just as the series of public investment programs, known as the New Deal of then U.S. President Franklin D. Roosevelt, revitalized the U.S. economy during the Great Depression in the 1930s.

Obama's economic strategy represents a complete reversal of the economic policy of President George W. Bush, who has turned his back on various efforts to stop harmful climate change, contending they would hinder U.S. economic growth.

Such a radical policy change by the nation that spews out more carbon dioxide into the air than any other country on this planet would be a boon to international negotiations for a new framework on cutting greenhouse gas emissions. The framework will replace the current one under the Kyoto Protocol in 2013 after the 1997 treaty's commitment period ends in 2012.

The Group of Eight major economic powers have proposed to share with the rest of the world the goal of achieving at least a 50-percent reduction in global greenhouse gas emissions by 2050.

In its report released in June, U.S. consulting company McKinsey & Co. said achieving the ambitious reduction goal without sacrificing healthy economic growth requires a tenfold increase in carbon productivity over today.

Carbon productivity refers to the amount of gross domestic product produced per ton of CO2-equivalents emitted into the atmosphere. To accomplish the G-8's emission reduction target without lowering the standard of living, it is necessary for the world to make a dramatic shift to renewable energy and at the same time drastically increase efficiency in the use of fossil fuels.


Higher carbon productivity


It is time for all countries of the world, not just the United States, to undertake their own versions of the Green New Deal.

First, major advanced nations should adopt a combination of policies that push their respective societies toward a low-carbon structure while keeping their economies on a path of growth. Then, they should urge and help fast-growing emerging economies like China and India and developing countries to follow their lead.

In fact, the world economy is already beginning to move toward a cleaner future.

Global investment in renewable energy projects grew from $10 billion in 1998 to $66 billion in 2007, according to a report published in September by the United Nations Environment Program and other organizations.

Total green investment is expected to exceed $340 billion in 2020 and reach $630 billion in 2030. The report says "changing patterns of employment and investment resulting from efforts to reduce climate change and its effects are already generating new jobs in many sectors and economies."

The renewable energy sector alone has created 2.3 million new jobs across the world in recent years. In Germany, where photovoltaic generation is rapidly gaining popularity, the clean energy industry already employs as many as 260,000 people.

If the United States under the new Obama administration accelerates this trend, a low-carbon industrial structure will become the global standard before long. The days will soon arrive when companies across the world pour greater energy into developing green technologies under a new eco-conscious business environment in fierce competition to offer products and services with higher carbon productivity.


Supporting a low-carbon society


Last month in Japan, the government started inviting companies to take part in the nation's trial carbon credit trading system. The system is designed to push the nation toward a low-carbon society by making companies pay for increases in their CO2 emissions while enabling them to profit from cuts in such emissions.

However, the effectiveness of the new voluntary program has been called into question because it lacks enforcing power due to a political compromise with the business community, which opposes the idea of mandatory caps on emissions, claiming such a program would impede corporate activity. But companies and industries should take a step forward and adjust to the coming age of competition over carbon productivity, even though it requires much courage to do so amid deteriorating economic conditions.

Leading industrialized countries with mature economies are all struggling to find a new engine for growth. The inevitable transition to a post-carbon society will offer many valuable business opportunities rather than hamper economic growth.

Japan boasts top-notch environmental and energy technologies. A number of undertakings to bring about changes for a greener future are under way in this country. What is missing from the picture is an effective system to support such efforts.

Domestic automakers, for instance, are now bringing to the market such clean-running cars as electric vehicles and fuel-cell cars using hydrogen as fuel. But promoting these next-generation vehicles requires development of new infrastructure, such as recharging facilities and hydrogen stations.

Some local communities are tackling the environmental challenge on their own. In August, construction of a biomass-fuel power plant began in Higashi-Agatsuma, Gunma Prefecture. The project, financed by Tokyo Gas Co. and Orix Corp., will produce electricity by burning wood chips made by crunching up tree branches and wood waste.

Unlike electricity generating stations that burn oil or coal, biomass plants are regarded as carbon-neutral facilities that don't produce additional CO2.

The plant in Higashi-Agatsuma will generate 13,600 kilowatts of electricity when completed, enough to meet the demand of 23,000 households. Wood chips used at the plant will be supplied by 20 companies in and around the prefecture. Although it is small in scale, the new project will create jobs and help revitalize the local economy. Policy support should be given to such local initiatives across the nation.

The nation can maintain healthy economic growth while sharply reducing its CO2 emissions, according to the National Institute for Environmental Studies and other research institutions.

The earlier the necessary change is made, the more likely it is that investment, even if it is small, will produce big benefits. The government should lead the way by accelerating the change.


Publicado en The Asahi Shimbun. Miercoles 26 de noviembre del 2008.