This article was written for Tornado Insider, the European business magazine, for publication in its November 2002 edition.
On a recent visit to Telluride, in Colorado, I was terrified to see a huge black Humvee draw up at the gates of a kindergarten. At the time, American newspapers were full of stories about a gun-toting maniac who had attacked a school, so I flashed to the image of a re-run. My heart raced as out of the Humvee hopped … a blond-haired, seven-year-old girl. Fear turned to indignation: who the hell takes a 30 kilogram child to school in a 3.5 ton, eight feet wide vehicle that does eight miles to the gallon? The answer is: lots of people, in the US at least: civilian sales of the Humvee are booming. The lease price is an affordable $350 a month, and if you ask about fuel consumption on the Humvee website the charming answer comes back:” who cares!” And you wondered why the US government had to invade Iraq?
Carbon-based energy is to yuppies as cocaine is to crack heads. We don’t need it, but we are addicted to it. The carbon dioxide emissions of someone in the industrialised north average 8,467 kg per year. Experts state that, globally, our emissions of carbon dioxide must be reduced by at least 60%. On this basis Friends of the Earth propose a target of 1100 kg per person.
How might that happen? Any ‘jump’ to renewables will be the result of cultural, rather than technological, transformation. By this I do not mean ecological gloom mongering, which tends to be counter-productive. An over-supply of bad news leads to denial, not to change. During a recent visit to Hong Kong, the story broke about the discovery of an “Asian brown cloud”. A team of international climatologists, led by Professor Paul Grutzen, whose work on the ozone hole won him the 1995 Nobel science prize, said that they had identified a10 million square mile, three kilometre thick, fluctuating haze of man-made pollutants that was spreading across the whole Asian continent and blocking out up to 15% of the sunlight. The cloud was described as a “dynamic soup” of vehicle and industrial pollutants, carbon monoxide, and minute soot particles or fly ash from the regular burning of forests and wood used for cooking in millions of rural homes.
This horrendous story only made page two of the local press and disappeared after a couple of days.
The academics were y reluctant to attribute individual weather phenomena to the cloud, even though it is clear the Asian climate has been disrupted in the past decade with a series of unseasonable and erratic rains, severe droughts, and fierce storms in Bangladesh, India, Vietnam, Cambodia, China, and elsewhere. This year the monsoons in many parts of India and south east Asia have either not arrived or have been particularly severe.” The Asian cloud is man-made so it can be eliminated”, said Klaus Toepfer, head of the UN environment programme.” To do so needs better burning technologies and we need to have cleaner traffic, and sustainable energy”. But Hong Kong shrugged, and went on with its business.
Many of the technology ingredients for a post-carbon energy regime are already in place: photovoltaic fuel cells, solar power, geothermal, wave energy, hydrogen, and the like. But these saplings will only grow into viable trees when some kind of eco-shock – to match the oil-shock of the 1970s – sweeps aside extraction industry vested interests and the institutions that support them. I thought this year’s floods might do the trick, but from a US perspective, at least, it looks like George Bush’s dog will have to drown before change happens.
Looked at from Europe, changes in attitudes towards energy issues are more evident. In Germany’s general election, the remarkably strong showing of the Greens indicated that the environment had been a central concern. And this was not just a protest vote. The Greens first four years in government delivered a tax on fossil fuels, an agreement to phase out nuclear energy, a huge increase in wind power, and an enforceable commitment to a fall in carbon dioxide emissions. German commentators argued that a key factor in the Greens’ success was the summer’s extensive flooding in southern and eastern Germany.
The US boycott notwithstanding, ratification by EU countries of the Kyoto protocol on limiting green house gases, accompanied by ambitious government targets and tax incentives for renewable energy, are good news in the long run for sustainable energy ventures which otherwise still face a distorted market with strong subsidies for conventional energy.
In Germany, environmental goods and services are now a larger sector than the steel making which once epitomised the country’s industrial strength. The global market for environmental goods and services is estimated at $335 billion and is forecast to grow to $640 billion by 2010, according to the UK’s Department of Trade and Industry
Interviewed in The Guardian, Rolf Westenhagen, energy and private equity analyst with Sustainable Asset Management, described how he reviewed about 1,000 business plans in setting up Sam Private Equity Energy Fund (the Energy Fund), which focuses specifically on sustainable energy opportunities. “We noticed some particular characteristics of the European VC market. Compared to the US, where 50% of our deals still originate, there is a lot of technological know-how in European companies, but the business side is often less developed. Part of it may be that European companies face smaller home markets, so they anticipate slower growth rates than their US counterparts, but it is probably also a cultural issue. As a result, the average size of deals is smaller in Europe than in the US. On the other hand, the current regulatory environment, specifically for sustainable energy, is definitely more encouraging in most European countries than in the US.
Our physical state of affairs is easier to analyse than the psychological one. Whatever kind of economy we are in – old or new – almost everything we design and consume stimulates wasteful flows of matter and energy. We buy more hardware than ever – especially new devices, however pointless. We print more paper, especially now our personal computers and laser printers are networked. We package more goods, especially now they have to travel so far. And it’s not just the objects we buy that weigh us down. According to Paul Hawken, in Natural Capitalism, only six per cent of the vast material flows in the US economy actually end up in products. In most of the so-called advanced or developed economies, he writes, the overall ratio of waste to durable products is closer to a hundred to one. This waste is enabled, fuelled and accelerated by information technology. The promise was that digital communication would bring lightness and dematerialization. But as Paul Hawken discovered, the amount of wasted matter generated to make one laptop computer is close to four thousand times its weight on your lap. And that’s just the wasted stuff. George Gilder predicts in his book Telecosm that, by 2006, internet computing will use as much power as the entire US economy in 2001 – some three trillion kilowatt hours.
“What is happening is not by intention” says Hawken, “so we can put aside the theory that there are ‘bad’ people that we can get rid of to make everything OK.The fact is that the rate of loss is deeply embedded – a systemic problem inherent in assumptions that have only recently begun to be questioned”. In other words, it’s a design issue, not an ethics issue. We are using the earth’s resources faster than we replace them. Design can help reverse this trend by changing the processes behind products, as well as the resources used to make them and use them. In this sense sustainable design is a driver of innovation. In the UK and France, for example, many companies companies already do so. Many are acting defensively, to meet customer demands or in response to regulation. Others, such as Sweden, Germany and The Netherlands, are more proactive, aspiring first mover advantage’ in an inevitable trend. Design for sustainability has been integral to innovation in Swedish policy for 20 years now.
Incremental change can only be a warm-up, like the ride down the ramp of a ski jump, prior to a jump from one energy-using paradigm to another. Optimistic experts believe that innovation processes now emerging will deliver a twenty-fold improvement in our matter and energy performance by 2040. Dutch scientist Leo Janssen, for example, thinks in terms of multiple, interacting cycles of change: “better treatment of today’s stuff and energy usage can be achieved within a five year time frame. Cleaning and improving existing plant takes ten years. Replacing old plant with new, cleaner equipment is a 25-year process. Introducing completely new categories of product and service are a 30-40 year process. Re-building basic infrastructures, for reorganised infrastructure for example, mobility systems, takes 50-100 years”.
It took from the beginning of human history to the year 1900 to build a world economy that produced $600 billion in output. Today, the world economy grows by that amount every two years. Once implanted in culture and the economy, principles of sustainability can deliver rapid transformation – for example, `minimising the waste of matter and energy’ or `reducing the movement and distribution of goods’, or `using more people and less matter’. Once we shift from covering up symptoms, to the re-design of the systems that deliver us necessities, the possibilities are immense.
One of Europe’s leading experts on service design, Ezio Manzini says of the passage from today’s systems of production and consumption, to sustainable ones, that it will be “like changing the engines of an aircraft while it is still in flight. We need to move beyond the implementation of clean processes and technologies towards systems whose utilisation of natural resources is reduced to 10 percent of present levels. He says. “It may appear a difficult task”, understates Manzini, “but consider this: during two centuries of innovation until now, we reduced the role of labour in production by even larger proportions than those required now for matter and energy. We have done it before”.
There are four scenarios for the transition to energy and resource sustainability. Scenario one describes a step-by-step improvement of present products, the so-called “end-of-pipe” approach. A second scenario involves the radical redesign of products and services based on existing concepts. In scenario three, we develop alternative products and systems. And in scenario four, we re-design of all our agricultural and industrial systems to meet the goal of a fully sustainable society.
Re-designing whole business according to a service-and-flow model is a good example. In this system, manufacturers – and the designers and users they work with – stop thinking of themselves as being in the product business. They become, instead, deliverers of service. These services are enabled, or carried, by long-lasting, upgradeable, durable, things. In this book I call these material things, which are currently known as products, equipment. Mobile phone handsets are equipment; so is an Airbus 330. In design, we need to think of equipment is fetishized end-in-themselves. That said, equipment is nonetheless made of stuff, so it has to be designed to be to be materially light as well as light in the ways it is used.
Wall Street, never one to step too soon out of line, sees eco as a tech issue – but a promising one nonetheless. In an interview about ‘eco-tech’ with the Wall Street Journal in August 2001, equity strategist Mark Howdle was confident that “concern over environmental factors will generate a long-term trend among corporations to throw money into technology that could alleviate such problems as air pollution and energy waste, allowing companies to turn a profit from the exercise”. Howdle said he expected a critical mass to be reached that allows eco-tech “to blossom from an assortment of small business making windmills into a stand-alone sector” Such firms are less than 0.1 percent of European market capitalization right now but according to several analysts the sector has the potential to grow to as much as three to five percent of the European market over the next few years. “We are using the earth’s resources faster than we replace them” reported the UK Design Council in 2002; “design can help reverse this trend by changing the processes behind products, as well as the resources used to make them and use them. In this sense sustainable design is a driver of innovation”.
The global market for environmental goods and services is estimated at $335 billion and is forecast to grow to $640 billion by 2010, according to the UK’s Department of Trade and Industry. In Germany, environmental goods and services are now a larger sector than the steel making which once epitomised the country’s industrial strength. Design for sustainability has been integral to innovation in Swedish policy for 20 years now.
From end-of-pipe to whole-of-life
Many big companies, which think more naturally about processes, have gone further towards a whole systems approach. Their environmental management policies stress the importance of metrics – measures of success – so that green strategies can be justified to shareholders and investors.
At the whole systems level, environmental management encompasses the whole business framework, and thinks in terms of product lifecycles. It is no longer considered eccentric to promote basic principles of sustainability that would have sounded wacky in boardrooms a few years ago – for example, `minimising the waste of matter and energy’ or `reducing the movement and distribution of goods’, or `using more people and less matter’. In Natural Capitalism, Paul Hawken is blunt: we have to use less stuff, molecule; we have to use more people; we have to restore and improve, not just protect, the environment; and businesses have to make money. (> White House/Clinton story).
Our problems are invisible. Most of our collectively wasteful behaviours are hidden from view. As Jane Elder of the Sierra Clubs put it,” pollution never goes away, it just goes somewhere else”. Most of the loss and waste behind products we take for granted is hidden from view. Every product that enters our lives has what Paul Hawken calls a “hidden history” – an undocumented inventory of wasted or lost materials. Industry, says Hawken, “moves, mines, extracts, shovels, burns, wastes, pumps and disposes of billions of pounds of material in order to deliver the products we take for granted, but which are needed for roads and buildings and infrastructures”. Hawken goes on to list waste in the form of tailings, gangue, fly ash, slurry, sludge, slag, flue gases, construction debris, methane – and other wastes of the extractive and manufacturing processes. “The problem is not the limits of human nature”, says Hawken, “it is the limits of human perception, especially our perceptions of time and process. Copernicus took us out of the centre of the solar system; we now need to take ourselves our of the centre of the biosphere”.
Business is moving for self-interested reasons, which is fine. Delivering what consumers want is a powerful driver of innovation. Consumer demand for ‘green products’, services and infrastructures has grown strongly from the 1980s onwards. In his book Green Gold, business expert Curtis Moore describes these changes, as is the tip of an attitudinal iceberg. Moore found back in 1992 that nearly two out of three voters in Houston Texas, of all places, believe that “humanity is approaching the limit of the planet’s resources”. Respondents in numerous other polls since then say they are willing to pay more for environmentally sound products, but have difficulty finding them. Mintel, a market research company in the UK, found consumers willing to pay 13 per cent more for ‘green’ products.” The greenest of green consumers are also the richest”, according to Frances Cairncross of The Economist. Writing in her book Green Inc she quotes a ORI opinion poll that more than half of consumers earning over $18,000 a year are classified as “environmental activists”. Curtis Moore also quotes a Golin/Haris poll that 87 percent of respondents would boycott a company that is careless about the environment. Says Moore: “these results barely scratch the surface of a massive and compelling body of polling data that point to a commitment to environmental protection so deep and enduring that is it reconfigures global business”.
This article was written for Tornado Insider, the European business magazine, for publication in its November 2002 edition.