The pace of transition to an environmentally sustainable economy
Watch lawyers and experts react to Supreme Court decision EPA v. West Virginia, USA, I am appalled by their dismay that the EPA will no longer be able to implement quick and radical changes in the nation’s energy system. I have a little news for these experts, the EPA will never be able to decarbonize the economy fast enough. It’s always a slow and gradual process.at Lisa Friedman’s New York Times In last week’s article on EPA’s new approach to greenhouse regulation, she reported:
“… Many observers say the federal government’s piecemeal approach is still taking shape and could make it more difficult to achieve its goals. Power plants that burn fossil fuels are among the largest contributors to carbon dioxide in the atmosphere, which is rapidly warming the planet. The Supreme Court’s 6-3 decision concluded that the EPA lacks broad authority to transition the nation’s electricity system from fossil fuels…does not take away the EPA’s power to regulate greenhouse gas emissions, but it only allows for narrower policies to regulate how individual Power plant operation… That means the government’s backup strategy is unlikely to spur a rapid transition to clean energy Unless the government takes aggressive action quickly, experts say.“(emphasize)
There will be no “rapid metamorphosis”. Pearl Harbor and the threat of Nazi Germany in World War II rapidly modernized and transformed the U.S. economy, which, even with Roosevelt’s political skills, remained a peril. The complexity of our energy systems and our deep dependence on energy means that this transition will never be quick and complete. This lack of realism is based on a weak understanding of the pace of social, cultural, organizational, technological and economic change. While the pace of change is not rapid, the transition to environmental sustainability will occur, and a gradual process of change is already underway.
Economic and technological change has been going on since the dawn of civilization, but its pace has accelerated over the past two centuries. Still, the pace is gradual and often invisible as it progresses. America’s transition from a manufacturing economy to a services economy was invisible to many as it progressed. A sustainable, renewable resource-based economy is possible and necessary. It will take a process that will take decades to complete.
The careful, minimal use of physical materials that limit waste will make the production process more efficient and less expensive. We saw this in post-war Japan, where total quality management reduced manufacturing waste and improved product quality. In the 1950s and 1960s, “Made in Japan” meant low-quality products. By the 1980s, Japanese automobiles and electronics were already known for their high quality and value. As technology continues to evolve, energy efficiency and renewable energy will beat other forms of energy in terms of price, convenience and efficiency. If we maintain a regulatory structure that penalizes companies that release poisons into the environment, efforts to reduce environmental liability risks will also lead to cleaner production processes. Cities are being transformed for sustainability, with sewage and other infrastructure designed to reduce our impact on the environment.
Modern economic and social life no longer depends on physical strength, but on the brain. This means that there may be an increased focus on growing our economy while reducing damage to the planet. Mineral mining and material manufacturing companies such as fossil fuel and steel companies are far less economically powerful than companies such as Google, Amazon and Microsoft. Ultimately, this economic force will translate into political force, some of which will work to ensure free trade, immigration, and environmental protection—all policies that benefit these companies and their employees. The fossil fuel industry is interested in burning oil. Amazon and Walmart need energy, but there’s no reason to prefer fossil fuels to renewables. Based on all the solar panels on Walmart roofs, I suspect they’ve discovered the cost advantage of solar.
The transition to an economy based on renewable resources has at least six major phases, some of which will begin before others are completed. First, the theoretical or conceptual design of the transition must be fully articulated and understood. This phase is now underway. It is increasingly understood that we cannot continue to have a linear economy where every material we consume produces waste that is ultimately thrown away. The concept of a circular economy is becoming more widely known and understood.
The second stage is to attract capital for the green economy. The now-proposed SEC climate disclosure rule will be opposed by some conservatives, but should prevail because the SEC’s job is to ensure corporate transparency for investors, who are increasingly asking about environmental risks. Some NGOs have developed sustainability indicators, but this is too important for governance to be left to the private sector. Governments must ensure that these metrics are developed and carefully scrutinized as they are applied. We have seen developments in the field of sustainable investing. This year, more than 90% of the S&P 500 companies released environmental and social governance reports, and the scale of green investment continued to grow. These are all clear signs that this phase is in progress. By the mid-2030s, I suspect this will become a mature element of the world of capital finance.
The third stage is to develop public capital for green infrastructure. Biden’s $1.2 trillion infrastructure bill for 2021 includes more than $300 billion in public green investment — the largest single investment in environmental infrastructure in U.S. history. Both California and New York have issued green bonds to fund public green infrastructure investments. This phase will take decades to build momentum. From the Reagan era to the Tea Party to the Trump administration, far-right anti-tax and anti-investment ideology has been gaining momentum. These days, we can’t even raise the money needed to repair a collapsing bridge, so green investments need to be combined as much as possible with user fees to pay down debt. New York City’s third water tunnel is an example of green infrastructure funded by water user fees. Infrastructure that directly generates revenue will be easier to build.
The fourth stage is the development of technology to support an economy that grows without destroying the planet. This requires government-funded basic research as well as tax credits for corporate R&D. We need to develop many technologies: Our current forms of waste recycling are seriously inadequate. Sorting household waste is a great educational activity, but nothing more. It is inefficient and often ineffective. We need to apply artificial intelligence and robotics to waste sorting and mining. Garbage must be the main source of resources in the future. We need to convert food waste into fertilizer and mine waste for plastics, metals and various forms of material resources. We also need to use nanotechnology to improve and shrink solar cells, increasing battery capacity while reducing the toxicity of renewable energy technologies. We need windows and laptop-sized batteries for solar receivers that are low cost and save solar and wind energy during periods of no wind and sun. Current solar and battery technologies outperform fossil fuels in price but not in performance. Prices need to be lower and solar cells need to work better before fossil fuels can be driven off the market. But all of these technologies are coming.
This phase is underway and we are already seeing breakthroughs in new electric vehicle technology. A breakthrough in battery technology. Other improvements are incremental.Think cell phones and laptops in the early 2000sstone century and compare them to what we have today. This is a slow but steady process of improvement.
The fifth stage is to develop organizational capabilities to take advantage of new technologies and seamlessly integrate the behaviors required to produce goods and services, while minimizing environmental impact. This is going well. Companies like Land-o-Lakes save money by deploying agricultural practices that use as little water and chemicals as possible. Drones and satellites, as well as robotics and artificial intelligence, are reducing costs and reducing the environmental impact of agriculture. Many organisations are building capacity to minimise their carbon and environmental impact.
Finally, the sixth phase is to bring in the organizational capacity, infrastructure and funding needed to ensure widespread implementation, including retrofitting older facilities and built environment elements. It will be a gradual transition that will take at least 25 years to complete – although elements of the old economy will persist for many years.
Environmentalists and experts have often questioned the “seriousness” of policymakers’ pledges to take action on climate change. They look for big dramatic gestures and symbols to show “commitment.” I understand the urge, but we need less drama and more low-key, determined effort. The good news is that environmental sustainability is a phase of economic development that is already underway. The bad news is that it will take a long time to get there, and we’ll see more damage along the way. If we are to really speed up the process and reduce long-term, irreversible damage to the planet, we need to focus less on symbols and more on action.
