1. Philip Sutton Convener Greenleap Strategic Institute 29 October 2006 (Version 1.c) Creating a Green Growth Strategy Workshop notes Up-to-date notes can be found at: http://www.green-innovations.asn.au/green-growth/Green-growth.htm

2. Anchoring Green Growth Strategies on actually achieving sustainability, very fast

3. The real structure of the economy

4. Conversion of Nature’s economy to the Human economy

5. There is a rapid switch in the ratio of Indirect vs Direct Costs of developments as nature’s economy shrinks and the human economy grows

6. Once the human economy gets large enough (relative to the size of the earth) indirect costs escalate at a hyper-exponential rate, and both the natural environment and the human economy become unsustainable

7. Climate change case study

9. Petit, J. et al. (1999). "Climate and atmospheric history of the past 420,000 years from the Vostok ice core, Antarctica", Nature, Volume 399 Number 6735 Pp. 429- 436. 400,000 year record of CO2 and temperature

10. Flows of emissions of CO 2 from burning fossil-fuels have risen rapidly since 1950 Source: World Resources Institute, CAIT Gt CO2

11. Strong Global Warming Observed Hadley Centre for Climate Prediction and Research Based on Folland et al (2000) and Jones and Moberg (2003)

12. This depiction of linear trends in the Palmer Drought Severity Index from 1948 to 2002 shows drying (reds and pinks) across much of Canada, Europe, Asia, and Africa and moistening (green) across parts of the United States, Argentina, Scandinavia, and western Australia. (Illustration courtesy Aiguo Dai and the American Meteorological Society.) National Center for Atmospheric Research (NCAR) http://www.ucar.edu/news/releases/2005/drought_research.shtmlAmerican Meteorological Society Global soil moisture trends – 1948 - 2002

14. Global insurance losses 1970 – 2005 Source: Swiss Re sigma no1/2005 www.theclimategroup.org/assets/Bruce%20Thomas%20(06-04%20pm).ppt

16. Additional short term threats Increased frequency and more intense fires Increased storms severity (cyclones, hurricanes, tornados, hail storms) Bigger sea storm surges Higher temperatures / heat stress Increased soil loss / dust storms Water shortages Migration of pests and diseases Loss of soil carbon Food shortages

17. 2 ºC warming is thought to be a rough boundary between ‘dangerous’ and ‘catastrophic’ climate change

18. Global average surface equilibrium temperature change for various stabilization targets. Source: Azar, C., & Rodhe, H., 1997. Targets for Stabilization of Atmospheric CO2. Science 276, 1818-1819.. Dashed line a) refers to an estimate of the maximum natural variability of the global temperature over the past millennium, and dashed line b) shows the 2 o C temperature threshold.

20. Modelling the recent evolution of global drought and projections for the 21st century with the Hadley Centre climate model Eleanor J. Burke, Simon J. Brown and Nikolaos Christidis Hadley Centre for Climate Prediction and Research October 2006

22. Severe drought over 40% of land (agriculture unviable on 30%) Near total loss of the Amazon Between 20% - 60% loss of all species on Earth Accelerating sea level rise Loss of Himalayan ice sheet (and seasonal snow melt) Loss of the Arctic and Antarctic sea ice Melting of the permafrost

23. Crucial Prevention Aspect Avoiding Catastrophic Climate Change

24. Dangerous & catastrophic climate change We have already entered the realm of dangerous climate change It is thought that warming more than 2ºC over the pre-industrial level will lead to catastrophic climate change There is a 20-30% chance that we will trigger 2ºC warming with 400 ppm CO2 – an atmospheric level that will be reached in less than 10 years – unless massive cuts now.

25. “We need to treat climate change not as a long- term threat to our environment but as an immediate threat to our security and prosperity” “It is now becoming increasingly clear that it is what we do in the next 15 years that matters most.” John Ashton, the UK's climate change envoy, 8 September 2006

26. Enting, I., Wigley, T. and Heimann, M. (1994). Technical Paper No. 31: Future emissions and concentrations of carbon dioxide: Key ocean / atmosphere / land analyses. CSIRO Division of Atmospheric Research: Melbourne. One scenario for stabilising atmospheric CO2 at 350 ppmv.

27. There is too much CO2 in the air right now! We need to get to zero greenhouse gas emissions as fast as possible (within 10 years) We need to take excess CO2 out of the air as fast as possible – to bring the atmospheric level down to between 300- 280 ppm (precautionary principle)

28. End of climate change case study

29. A completely new development paradigm needed Green growth must be 100% decoupled from damage and it must enable the restoration of nature’s economy (our sector zero) to safe condition. Economic development must now be truly ecologically sustainable. This is not comfortable political rhetoric – it has huge implications for how to change and manage the economy – and for how politics is conducted.

30. Key is to 100% de-link economic growth from environmental impact / waste Economic growth Environmental impact/waste

31. Homeostatic management Safety zone or mode  Restoration Prevention  Dynamically creating/maintaining a state of sustainability o prevention (eg. Natural Step principles) o recovery/restoration

32. Key concepts We need to be clear about what we are trying to sustain and the scale and urgency of the task We have to apply double-practicality - get things done and do things that actually solve problems Sustainability requires having no major trade- offs We need to recognise that we are facing a global sustainability emergency.

33. Creating a Green Growth Strategy

34. Economic growth relates to the service flow (of the ‘whole product’), not to the physical platform (which makes it possible for dematerialisation to work)

35. Near term economic growth is compatible with a major once-off restoration of the environment if….. the total of all the physical platforms of all economic output can be changed in character and shrunk small enough physically to be compatible with the maintenance of everything that needs to be sustained, AND the real value of economic output does not collapse in the process of physical adjustment and can keep rising during the transformation period

36. Economic growth is compatible with perpetual prevention of damage to the environment and of wastage of resources……. if the total of all the physical platforms of all economic output remains small enough and of the right character physically to be compatible with the maintenance of everything that needs to be sustained, AND the total service flow from economic output can keep increasing within that constraint

37. This means that once basic human physical needs are met … all future economic growth is generated through net qualitative change, not physical expansion, AND compatible productivity boosting mechanisms are tapped

39. What is the character of the physical platform shrinkage and change? A Factor 20 or more dematerialisation (for developed countries), and then maintenance of a capped quantity of materials and energy for all purposes (Developing countries will also need to ‘dematerialise’ inefficient sectors and processes) The creation of a virtually closed-loop economy (everything recycled) Stabilisation of population (after gentle shrinkage??) Declining use of oil from now Effectively zero greenhouse gas emissions Full transition to renewable energy Sequestration of past greenhouse gas emissions to stay below or get below 400 ppm CO 2 fast and to trend towards 300 to 280 ppm over time Major restoration of habitat for threatened species Move to zero toxic emissions etc.

40. Stock enhanced while in use New capital Fixed (or declining) flow of renewable energy Fixed (or declining) stock of materials maintained in a closed- cycle (with minuscule top up from nature) Continually rising service flow - to benefit a stable population at a sustainable level Reuse & recycle The conditions under which a truly sustainable economy could have continuing economic growth

41. How can service flow be boosted in perpetuity? via improved qualities via more qualities that benefit the user and the environment/community achieving this depends on compatible sources of productivity growth and this depends on continuing innovation to overcome diminishing returns

42. Major sources of productivity growth that needn’t drive physical expansion and can co-exist with physical contraction: Lean production / closed-cycle production Increased knowledge & information intensity / intensified education Internet communications Fast, needs-based leapfrogging-innovation system driven by sustainability transition Whole-system design Green chemistry / nanotechnology / biotechnology (miniaturisation) Physical proximity (new model of urban form) Reduced scale & therefore opportunity to mass produce/speed up creation of production capacity & infrastructure Reduced environmental damage / reduced wastage Full employment Artificial intelligence

43. Old: Sources of productivity diminished by shift from physically growing economy Cheap physical resources and abundant supply (materials, energy, water, land) (But this source of productivity is being constrained anyway) Quick and easy single- purpose decision-making on most things (but leads often to poor/low wisdom decision-making) New: Sources of productivity boosted by shift to environmentally sustainable economy Speed and ease of proximity (in urban design) Increased skills in whole-system design opening up greater access to leapfrog innovation Necessarily ubiquitous application of lean thinking Necessarily ubiquitous application of smart technology and AI Low levels of health/environment damage More highly skilled workforce / community Reduced real expenditure on raw materials Drag on economy released due to low unemployment / underemployment

44. Can the necessary short-term physical shrinkage/change be achieved without collapsing economic growth? there is a big enough increase in investment, with temporary shrinkage of discretionary consumption, plus really effective redeployment of sunk capital (cf. WW2 US) Arguably yes, if there is sufficient innovation to keep boosting productivity, and there is enough time, so that normal investment levels can cover the restructuring, or for a short-duration transition,

45. Theory of natural capital In perpetuity: Natural capital as ‘infrastructure’ with service flow – ecosystem services and renewable resource flow Once-off: draw down / economic take off / payback: restoration/resequestration is the payback – those who benefit from the drawdown (through economic take-off) should pay for the restoration (eg. fossil energy use > CO 2 resequestration)

46. Theory of rationing, ecotaxation & related instruments Rationing, ecotaxes (& related economic instruments) are regulatory tools – they should be managed for regulatory effect – in innovative system revenue should fall if ecotaxes are effective The way revenue is recycled from auctioned rations, ecotaxes etc. is critical to maximising productivity and minimising inflation

47. How can we avoid rebound? Through macroeconomic management using: –rations –ecotaxes –tradable permits –regulation Rebound is a symptom of the failure of macroeconomic management. Rebound is also a symptom of 300+ year old institutional arrangements that cause resources to become systematically cheaper than labour intensive products (factor price problem).

49. Simplifying the task of dealing with multiple issues – at the level of industry/economy restructuring Pick the issues that have the biggest impact that can’t be ignored or that we can’t afford to ignore (eg. climate change, peak oil, water, food supply) Use these issues to work out the maximum scale & speed of action necessary – this calibrates the restructuring (calibration issues) Identify other important issues that ought to be taken really seriously – where’ if these issues are taken into account’ solutions to the other issues will need to be changed (eg. biodiversity) (solution-changing issues) Deal with all other issues at the level of detailed implementation of the restructuring program.

50. Divide action into a ‘crash program’ & a ‘long run innovation program’ If any of the calibration or solution changing issues require major changes to the economy within a 5-20 year period, they need to be managed through a formally recognised ‘crash program’ Any issues that will have (a) a big impact on the economy or (b) must be responded to, but can be tackled over an extended time period, should be part of a long run radical invention & innovation program.

51. Analyse using supply chains* rather than industry sectors & regional economies The economy is going to have to change so much, in so many detailed ways, that if we use industry sectors & regional economies as the basis for analysis and solution building, we will lock in old (bad) practice and vested interests Information about transformed industry sectors & regional economies should be created by aggregating data or ideas about the new supply chains. * Includes the “end of life chains” as well to make up a full lifecycle chain.

52. Old business-as-usual, new business- as-usual and the sustainability- achieving economy The old business-as-usual economy is based on physical expansion, resource throughput and only (sometimes scant) attention to local environmental problems The new business-as-usual is beginning to emerging in response to climate change and other environmental crises – it is using a new generation of technologies to make a big reduction in externalities – but it does not attempt to fully eliminate externalities – so it will face new crises down the track as the economy grows The sustainability-achieving green growth paradigm is based on systematically eliminating externalities – so that economic growth does not periodically recreate major crises.

53. Positive correlations In the developed world, generally the countries and provinces with the strongest environmental controls have the strongest economies. In the developed world, generally the countries and provinces with the strongest environmental controls have the leading exports of related technologies

54. Fastest industrial restructuring Korea: from agricultural nation to world competitive manufacturing economy in 20 years US: after Pearl Harbor: from world’s largest consumer economy to world’s largest war economy in 1 year (complete infrastructure change) (complete change to how infrastructure is used)

55. Questions for workshop (following)

56. Questions: Framing issues How much development do we need for social reasons? (The more economic development we want the stronger our environmental policies need to be to get 100% decoupling.) How big and how urgent does the environmental restructuring program need to be? How will the ‘crash program’ and the ‘long run innovation program’ run? How do we want to position our economies within the world economy? - in relation to (a) the old business- as-usual, (b) the new business-as-usual and (c) the new sustainability-achieving elements of the economy?

57. Questions: Backcasting strategy methodology Where are we now? (judged by success principles) Where do we want to be, when? (with the least loss along the way) (based on success principles) What do we have to do to get there, in time? For an effective start, what should we do now?

58. More questions for workshop session - 3 What would an appropriate green growth strategy be for your society? What are the supply chains that make up your economy? How well do the end purposes and the elements of the supply chains fit with an ideal sustainability-achieving economy? What changes need to be made to the supply chain profile of your economy if it is to be sustainability- achieving? How should your economy relate to the “old business-as- usual”, “new business-as-usual” and sustainability- achieving elements of current or new export markets?

59. Tools to help with the questions (following)

60. So, where do we want to be, when? we want to be in an environmentally sustainable state as soon as possible, with the least loss (to people and nature) along the way exactly what that means should be determined by careful assessment – the ideas in this paper are merely a crude illustration of such an assessment process the assessment process in this paper suggests that: –possibly we have an immediate issue to deal with the peaking of world oil supply – requiring major and continuing demand reductions to rebalance supply/demand –at the same time we need to make massively deep cuts in greenhouse emissions (down to zero?) and begin sequestration of past emissions –at the same time as these transitions are made, solutions to other pressing environmental, social and economic issues should be built in – so that timely solutions are not pre-empted and opportunities for ‘economies of renewal’ are not lost – this is comparable to the advantages that have accrued to economies rebuilding after the devastation of major wars Pulling all the issues together……

61. Major end-state integrated goals To create an environmentally sustainable economy very fast To be the global pioneer of the full “environmentally sustainable economy” paradigm To create economies based on the new quality-driven paradigm Having used the low wage strategy to kick start economic take-off, to end the dependence on this strategy for driving economic growth To spread the benefits of the new economy through the whole of society

62. What do we have to do to get there, in time? 1 Educate decision-makers and innovators in areas of society about the need for change, the possibilities for change and the methods/technologies for change Build institutional capability to drive fast structural change to achieve an environmentally sustainable economy Proactively seek the most environmentally demanding customers in the global economy Preferentially encourage the most creative environmentally minded investors to be active in the region Develop very strong sustainability R&D and innovation programs Make sure that all long-lived investments are compatible with an environmentally sustainable economy

63. What do we have to do to get there, in time? 2 Try to shorten the lifecycle of traditionally very long-lived infrastructure Lobby to establish international treaty obligations to mandate the adoption of production systems that are compatible with an environmentally-sustainable economy Build the most advanced environmentally sustainable urban systems Expand the domestic and regional economy – and build it on environmental sustainability principles Build a social movement to promote the rapid achievement of an environmentally-sustainable economy

64. For an effective start, what should we do now? create methods and scenarios for the fast achievement of an environmentally sustainable economy – use these for discussion (& then action) create a network of professionals to build skills and promote the idea, within mainstream society, of creating an environmentally sustainable economy Promote the “Race to Sustainability” program as a way of engaging societies http://www.green-innovations.asn.au/Race-to-Sustainability.htm Catalyse change

65. The principle of eco-efficiency (dematerialisation) Aim for Factor ‘x’ improvements in eco-efficiency Don’t lock into arbitrary Factor 4 or Factor 10 goals Calculate afresh See Dutch “Sustainable Technology Development” book

66. The principle of closed-cycle Power with renewable energy

67. Physical products and materials & energy should be managed to retain their entropic quality as long as possible: through combined processes such as: Strategies/initiatives for zero waste - 1 -Maintenance / containment -Repair -Reuse (whole systems) -Re-manufacture (component reuse plus) -Reprocessing / waste warehousing -Up-cycling

68. A new waste hierarchy for a zero waste society

69. Earth’s crust Biosphere (zone of life) Earth’s crust Biosphere (zone of life) Philip Sutton Green Innovations 19 May 2002 Version 2.e Producing the physical platform Delivering services via a physical platform Using services on a physical platform Meeting individual, social & environmental needs of the world’s human population; and meeting the needs of nature Reprocessing / resource stewardship / closed-cycle production Reverse processing / reverse mining (sequestration) The new sustainability- orientated economy Reverse processing / reverse harvesting All powered by renewable energy and mining from the biosphere Eco-efficiency / Dematerialisation (ratio of service value/materials) Product stewardship (attached to the dominant brand managers) Closed-cycle greenhouse- friendly biodiversity- friendly, renewable Processing Biological resource harvesting Mining from the earth's crust

70. Price (factor cost) Elasticity SignalsFinancial imperative Responsiveness building (technical, social, financial)

71. How can we drive the change? MacroeconomicsFactor price Investment flows Gross drivers Rebound control Mesoeconomics Industry level lifecycle management (supply chains) Industry policy Regional economics Infrastructure shaping Structural innovation level Strategic mobilisation Microeconomics Product level lifecycle management Innovation Organisational capability building Bottom up influence Mass mobilisation

72. Introducing broad-based ecotaxation

74. Opportunities for economic growth in a physically constrained world Zone of intermediation The living world (includes humans) Protected slower zone Fast changing or accelerating zoneProtected slower zone The social world Benefit Impact Carefully manage interface Improvement of service quality Expansion of coverage by service of the population

76. Year X Peak 1 Downswing 1 Trough 1 Upswing 1 Peak 2 Downswing 2 Trough 2 Start regulatory taxes Spread new paradigm Reach consensus on new paradigm Prepare initiatives Sell new paradigm products Cost saving, risk management & customer loyalty measures Early movers explore Cost saving, risk management & customer loyalty measures Early movers explore Lock in initiatives Start new investments Year X+1Year X+2Year X+3Year X+4Year X+5Year X+7Year X+9Year X+6Year X+8 Managing for sustainability-promotion through the business cycle

77. Modelling the green growth program To understand proposed or real economies that are intended to be ecologically sustainable it is essential to model both the money economy and also the physical economy (from the macro to the micro level The green growth / sustainable economy transformation will involve so many micro initiatives that need to be assessed for their aggregated macro effects that new modelling technology will be needed The only technique that can deal with this level of necessary detail and policy flexibility is agent based modelling. All players in society will need to be able to access ‘whole economy’ agent based simulations to test their initiatives to make sure that they add up to a sustainable outcome.

78. Making the Green Growth Strategy possible

79. 3 stages to make the strategy feasible Creating a mandate Developing the mandate Implementing the mandate

80. Motivations - ethical Caring for local people Caring for future generations Caring for people globally Caring for nature, locally and globally For example: 2400 years before current era, during the Warring States period, Chinese philosopher Mozi ( 墨子 ) argued that we need to act on universal, not partial love. Compassion for all life, human and non- human, is central to Jainism, a philosophy of even greater antiquity founded in India.

81. Motivations (pragmatic) - threat Food security, risk of widespread famine Economic viability Risk of global depression, armed conflict. We stand in relationship to climate change and its consequences where people stood, in 1900, in relation to WW1 (and its aftermath - the Depression, WW2 and the Cold War).

82. Motivations (pragmatic) - opportunity Chance for viable/sustainable development Opportunity to seize competitive advantage – leapfrog to success Chance to build a highly innovative and creative culture Opportunity to show leadership, wisdom and courage.

83. Strategies to promote the feasibility of the Green Growth Strategy - 1 Obtain a formal declaration of a State of Sustainability Emergency Develop a self-generating network of people to promote effective action Carry out widespread education & training Work with innovators and professionals across government, industry and general community Create &/or develop centres for innovation and strategy development – link globally Use “concurrent engineering” methods (multiple actions in parallel) to get faster development and implementation of strategies.

84. Strategies to promote the feasibility of the Green Growth Strategy - 2 Campaign to change the World Trade Organisation rules so that countries can discriminate against imports on the basis of their inferior methods of production Press the rich countries to establish a multilateral “new Marshall Plan” for large scale sustainability investment.

85. Questions for workshop (following)

86. Questions for workshop session What barriers do you see to a Green Growth Strategy being feasible in your society? How could a Green Growth Strategy be made feasible for your society? How can elites be engaged? How can the community at large be engaged? What combinations of motivations could be tapped for greatest effect? How can innovation and education processes be put into motion in your society? How can resources be mobilised to catalyse the needed transformation?

87. Thank you