Turning The Tide - A New Vision Of Eco-Nomics

Sustainability challenges have economic consequences. This is true in every sector and in every country, and for most people it is too scary to even contemplate. These economic consequences range from equity and burden sharing around climate or biodiversity to the fear of jobs lost from moving from a fossil-fuel to a green-tech economy.

The protection of the tropical rainforests as a global common asset is a good example. Who has the right to use the resources the rainforests provide and how? Who "pays" for the environmental damage caused, now and in the future? We can expect this discussion to become more heated as the field of vision expands to include who should pay for the effects of climate change, and who should be paid? Who should make the most sacrifices - the rich or the poor?
Fear Prevents Development Of New Sources Of Economic Growth
Some countries are clearly afraid of the economic consequences of making climate change decisions that are good for the planet. The US is clearly afraid to let go of its fossil-fuel-based economy, all the more so now that BP has supposedly found a "giant" oil field in the Gulf of Mexico and Iran found an even larger field. Why stop doing business as usual when it is so profitable for the country to continue the way it is?

Pointedly, according to the 16 September edition of E&E; Daily, Senator Reid from Nevada indicated that "the global warming legislation could be tossed to the sidelines because of a packed legislative agenda that includes equally bruising battles over health care and Wall Street reform." The article continued: "Several Senate aides warned that any slowdown in the Capitol Hill climate debate could hinder progress as diplomats try to hammer out the details on a successor to the 1997 Kyoto Protocol."

Clash Of Continental Economies
Even more scary than contemplating the economics of sustainability is the fact that, according to the UK's The Guardian, "Europe has clashed with the US Obama administration over climate change in a potentially damaging split that comes ahead of crucial political negotiations on a new global deal to regulate greenhouse gas emissions."

"The dispute between the US and Europe is over the way national carbon reduction targets would be counted. Europe has been pushing to retain structures and systems set up under the Kyoto protocol, the existing global treaty on climate change. US negotiators have told European counterparts that the Obama administration intends to sweep away almost all of the Kyoto architecture and replace it with a system of its own design," the 15 September article continues.

China Emboldened
And while the US is dragging its feet, the Chinese, although at pains to rein in their own growing energy demands, are taking the steps to turn their economy green. While the changes will not happen over night, the move in this direction will set China up to be a leader in the green revolution, leaving the US in the dust of its oil fields.

Corporations Follow Customers
Some US companies understand this and have joined the march towards a greener world, even in the absence of government support and regulation. A September 2009 article in Time magazine has this to say about the company: "GE views its sustainability effort as a moneymaker. 'Green is green,' says senior vice president Beth Comstock. Launched in 2005, GE's 'ecomagination' unit focuses on the energy-efficient technology that reaped $17 billion in revenue last year, up 21% from 2007. It's not easy for a company long known for dumping chemicals to change course. But, says Comstock, ecomagination 'has put us on the right side of our customers.'"

For GE, $17 billion in revenue is certainly not small change. However, that pales in comparison to the estimates coming out of China - the country could foresee up to $1 trillion in revenue from green tech alone. And this has much to do with the country's 11th five year plan, which foresees the country cutting energy use by a fifth over the next five years even while the economy continues to grow. This means, for example, a tax on disposable chopsticks in order to safeguard the 1.3 million cubic meters of Chinese timber lost to chopstick production every year, and a 12% increase in tax on large-engine cars.

Countries are going to have to find ways to meet demand amid the restrictions, and that is what China is doing.

The failure of the US government to jump in and tackle the climate challenge through green-tech solutions will leave American companies, and indeed the American economy, on the sidelines. Says a 10 September article in the Wall Street Journal:

"China, the world's fastest-growing resources consumer, and the U.S., the biggest, together generate 40% of global emissions and use a third of the energy. Support by leaders of these countries for corporate clean-technology efforts, at forums such as a major climate conference planned for December in Copenhagen, is therefore considered crucial. Today, without government support, many wind, water, solar and other clean technologies don't yet make financial sense."

Government Backing Drives Large-Scale, Accelerated Green Growth
When projects do get government backing, they can be on a grand scale. This week, China's government gave preliminary approval for an Arizona-based company, First Solar Inc., to develop a colossal system of panels over the coming decade to produce 2 gigawatts, or 2 billion watts, of electricity in the desert of Inner Mongolia. Yet questions remain as to just how big the project is, such as how many billion dollars it may cost, how funding will be arranged and how its power output will be priced."

But one thing is not questioned: the economic benefits of that technology, even if developed by an American company, will remain largely in China.