Philip Sutton Convener Greenleap Strategic Institute 29 October 2006 (Version 1.c)

1. Philip SuttonConvenerGreenleap Strategic Institute29 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. AnchoringGreen 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 escalateat a hyper-exponential rate, and both the natural environment and the human economybecome unsustainable

7. Climate change case study

9. 400,000 year record of CO2 and temperature 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.

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

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

12. Global soil moisture trends – 1948 - 2002 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.shtml

14. Global insurance losses1970 – 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. Science276, 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 2oC 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 AspectAvoiding 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 andprosperity” “It is now becomingincreasingly clear that it is what we do in the next 15 years that matters most.”John Ashton, the UK's climatechange envoy, 8 September 2006

26. One scenario for stabilising atmospheric CO2 at 350 ppmv. 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.

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

31. Prevention Safety zone or mode Restoration     Homeostatic management • Dynamically creating/maintaining a state of sustainability • prevention (eg. Natural Step principles) • 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 CO2 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. The conditions under which a truly sustainable economy could have continuing economic growth Continually rising service flow - to benefit a stable population at a sustainable level Fixed (or declining) stock of materials maintained in a closed-cycle (with minuscule top up from nature) Stock enhanced while in use New capital Reuse & recycle Fixed (or declining) flow of renewable energy

41. How can service flow be boosted in perpetuity? • via improvedqualities • via morequalities 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. 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 Major sources of productivity growth that needn’t drive physical expansion and can co-exist with physical contraction:

43. Old: Sources of productivity diminished by shift from physically growing economy New: Sources of productivity boosted by shift to environmentally sustainable 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) • 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? • 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, • there is a big enough increase in investment, with temporary shrinkage of discretionary consumption, plus really effective redeployment of sunk capital (cf. WW2 US)

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 > CO2 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.