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What does a "green economy" look like?

Source: Thomson Reuters Foundation - Thu, 28 Feb 2013 05:33 GMT
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By Laurie Goering

What does a “green economy” look like?

Few people - including most of the experts pushing for one - have painted a clear picture of what a green economy would include, which is one reason it has been so hard to build enthusiasm for a shift.

Yet it turns out that many parts of the world - including some surprising locales - are taking important and unexpected steps toward creating economies that use natural resources sustainably, create jobs, reduce inequalities in society and don’t lead to runaway climate change.

Could those steps begin to paint the much-needed vision of what’s possible?

Take Mexico and energy efficiency. The Latin American country’s gas power plants are now more efficient than Germany’s or Japan’s, thanks largely to policy changes that require such efficiency, according to research by the McKinsey Global Institute, which looks at the evolution of the global economy.

That’s not the whole answer, clearly, but it’s a start.

The city of Phnom Penh in Cambodia, meanwhile, has become a world leader in preventing water waste by reducing leaks from its municipal water supply lines. China now has higher use of energy efficient LED lighting than Europe. And Brazil has made huge strides in sustainable agricultural production by getting Embrapa, its state agricultural research organisation, to study agricultural innovations from around the world, adapt them to Brazilian conditions and then get the information out to farmers.

“There is no country dominating good practice,” noted Fraser Thomson, a senior fellow with the McKinsey Global Institute, at a conference on green growth at London’s Chatham House this week.

A 2011 report by the institute shows how crucial making a shift to a more sustainable economic model will be. By 2050, the number of middle-class consumers worldwide is expected to burgeon from 1.8 billion to 4.8 billion as China and India grow richer, creating immense new demand for limited supplies of food, clean water, timber, minerals and other resources.

THE 'CIRCULAR ECONOMY'

That is going to require what Karl Falkenberg, director-general for environment of the European Commission, calls a “circular economy” in which resources are carefully conserved and, once used, are recovered, recycled and used again. That might involve mining the gold and rare elements from electronic waste dumps, rather than from African soil, or incinerating municipal waste to produce electricity and heat for warming homes.

One of the easiest ways to reduce the use and waste of increasingly rare resources, McKinsey’s report suggests, is through greater energy efficiency - in particular steps like insulating homes so they require less energy to heat and cool. The institute calculates that the worldwide benefit of a global energy efficiency push would be close to a whopping three-quarters of a trillion dollars by 2050.

An added benefit? Insulating homes is labour intensive, and would create plenty of new jobs, as well as improving people’s lives and cutting their expenses, experts at the Chatham House conference said.

Similar clustered benefits could come through measures like cutting food waste, repairing municipal water leaks, increasing urban density, improving the yields on small farms, promoting electric and hybrid vehicles, reducing land degradation and improving irrigation techniques.

However, political will and good policy are critical to driving all of those shifts. Fossil fuel subsidies - especially for particularly polluting fuels like diesel - need to be phased out. Insurance schemes that cover the losses of farmers to extreme weather in rich parts of the world - thereby removing incentives to adjust to the changing conditions - should be changed to reward only those who adapt effectively and work to reduce their risks.

And, as the world races toward a population of 9 billion by 2050, effective birth control needs to be made available to families who want it, to help limit ever-growing demand for the planet’s limited resources.

THE NEEDED CHANGES

What changes are crucial to move toward a sustainable green economy? The experts at Chatham House put these at the top of the list:

  • Investing in energy efficiency in housing
  • Creating a financial transactions tax to curb speculation and push investment toward the “real” economy, including green efforts
  • Pricing water in relation to its scarcity, and putting a price on carbon emissions
  • Finding ways to prioritise long-term, rather than short-term, decision making, including through reducing requirements for quarterly reporting by companies
  • Turning the power of public procurement toward greener purchasing
  • Banning landfills to force reductions in waste and reusing any waste that is produced
  • Making birth control easily available to all who want it
  • Taxing resources more and labour less, to help reduce resource use and create jobs

“We need to do things differently,” Falkenberg, of the European Commission, said. “And this doing things differently has to start fairly rapidly.”

Laurie Goering is the editor of AlertNet Climate.

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