Factor Five

Can sustainable development be achieved by increasing resource productivity? ERNST VON WEIZSÄCKER argues that is not only desirable but eminently doable.

Factor 5 graph 1

Source: Global Footprint Network and WWF – Living Planet Report 2006.

Ocean fish stocks are declining due to overfishing. Global warming has become a reality and could soon become a nightmare. Human-induced biodiversity losses make this century resemble the catastrophic events 65 million years ago which saw the end of the age of the dinosaurs. For the sake of human prosperity, we can no longer ignore the threats to the global environment. But what can we do to curb the destruction? How big is the challenge? Some recent publications can answer this question.

The Stern Review: The Economics of Climate Change showed that instead of ‘business-as-usual’ scenarios, we should reduce carbon dioxide emissions by some 80% by the middle of the century. Even this ambitious reduction has been challenged as too modest because it will not prevent some additional global warming – in the range from 1 to 3.8°C on average – meaning some considerably higher temperature increases locally. Nonetheless it serves as a useful benchmark. An 80% reduction means a factor of five in reducing the carbon intensity of production and consumption.

The same order of magnitude applies to the reduction of ‘ecological footprints’. Figure 1 shows the size of per capita footprints for different countries, plotted against the Human Development Index (HDI). The carrying capacity of the earth can be assumed to be sufficient to accommodate seven billion people, each with a footprint of a bit less than two hectares. A decent living standard means an HDI rating above 0.8. The “sustainable development quadrant” would then be defined as “a footprint below two hectares and an HDI rating above 0.8” (as seen in the lower right corner of Figure 1). Looking at the geometry of the graph, the message is clear: we should be aiming at a five-fold shrinking of the footprints (with no shrinking of the HDI rating) of the rich countries, and a five-fold increase in the HDI rating (without increasing the footprints) of the developing countries. That, roughly speaking, would render both types of countries “sustainable”.
So much for the challenge, but is it at all possible to increase carbon efficiency or the efficiency of land use by anything like a factor of five?
Good news: it can be done

Here comes the big surprise. It can be done. In a book, titled Factor Five, I have collaborated with the Australian team, The Natural Edge Project, under Karlson “Charlie” Hargroves, to present examples showing the availability of a factor of five in efficiency improvements for entire sectors of the economy. Even such unwieldy sectors as cement and steel seem to be susceptible to dramatic improvements in resource productivity. The story gets even more persuasive if inter-sectoral synergies are considered. For example, a building constructed with recycled steel and geopolymer cement, and designed to use one fifth of the energy ordinarily required for daily operation, can be 20 times more efficient than a conventional building.

Factor Five is the sequel to Factor Four, a book that presented 50 examples of technologies and logistics saving 75% or more energy, water, or minerals, without losing the quality of service or well-being. Factor Five has a stronger focus on whole sectors of the economy, notably, buildings, heavy industry, transport, and agriculture. Most, if not all, of the improvements are available to rich and poor countries alike.

To be sure, nothing is really new in Factor Five. Low energy farming has been around for 5,000 years, by necessity, and will have to be combined with modern techniques helping to feed a planet of seven billion people. Replacing Portland cement with geopolymer cement – thereby making an 80% energy saving –  repeats the experience of the ancient Romans, who 2,000 years ago built their aqueducts using cement-like binders very similar to modern geopolymers. Recycling metals, and thus saving a lot of energy, has been going on since the Bronze Age, and is enjoying a revival with “city mining” – the extraction of valuable metals from landfills or from the tailings of old mines. On the other hand, there are of course also some exciting high-tech advances already in progress; for example, with lightweight yet robust automobiles, in the field of micro-electronics, and with selected applications of bio- and nanotechnology that help optimize processes, systems, and specific technologies.

Waves of innovation (Factor 5)A global green technology cycle
We discuss these questions at a time of a major global job crisis following the financial disasters of the second half of 2008. During a time of recession, people often speak about, and hope for, the ‘next upswing’. Usually they are thinking about the short kind of business cycles. But there are also long-term cycles, every 30–50 years, which can be attributed to major technological innovations. Although the idea of long-term cycles is not fully accepted in mainstream economic literature, the historical observations are quite striking. Figure 2 shows in a simplified manner how technologies unfolded over several decades spurring economic growth, and then faded, giving way, after a while, to a new set of technologies and a new growth cycle. The best-known early scholar to describe such long-term cycles was the great Russian economist Nikolai D. Kondratiev (1892–1938) who published his findings in 1925.

After Kondratiev was killed in 1938 during one of Stalin’s purges, the famous Austrian, and later American, economist Joseph Schumpeter suggested honouring Kondratiev by naming the long cycles after him. It was also Schumpeter who associated the long-term growth cycles with major technological innovations.

All five growth cycles so far were accompanied by a massive rise in energy and resource consumption. If we take the above-mentioned ecological and climatic crisis seriously, we cannot conceive of another such growth cycle. The Factor Five message could signal a new Kondratiev Cycle, initiated by a new wave of exciting technologies, but this time with technologies reducing, instead of enhancing, resource consumption and environmental degradation. The co-authors of Factor Four, Amory and Hunter Lovins, together with Paul Hawken, had a similar idea as early as 1998, in their pivotal book, Natural Capitalism.

When, in late 2008 and early 2009, many countries went ahead with stimulus packages worth hundreds of billions of dollars, some put the main emphasis on greening their economies. South Korea, China, and the USA were the three champions in this regard. Still, the total amount of the packages and of its “green” component was very small in proportion to the world economy. It cannot be expected that the “green” stimulus money alone will trigger such a big thing as a new, world-wide growth cycle. That will have to come from the private sector – in close cooperation with the guiding forces of the state and international organizations.

But what can make private investors move in the direction of a green growth cycle? I suggest three components should come together:

  • The existence and availability of attractive technologies, well-known ones and novel ones, that promise to produce the kind of wealth a world of seven billion people is longing for, while drastically reducing specific energy and resource consumption;
  • The realization that the conventional kind of expansion both of infrastructure and of consumption will only store up ever greater troubles and eventually strong opposition from the losers of climate and other environmental deterioration;
  • The willingness of states to work on the frame conditions so that investing into the new and green technologies will be more profitable than conventional expansion.

In other words, there has to be a broad consensus that the greening of industry, of agriculture, of transport and tourism, and of the service sectors, is both doable and desirable. It is often a clear sense of direction that makes the investor community move.

Some greening of technologies and the economy is actually already underway. Increased oil and other commodity prices since the turn of the century have alerted many countries and firms to the need for the development of low resource production and consumption. Thomas Friedman, always one of the early birds in new developments, wrote another bestseller in 2008, Hot, Flat and Crowded. In the US edition, the subtitle runs, ‘Why we need a Green Revolution – and how it can renew America’. This is an appeal to his homeland to overcome its complacency, epitomized by an “American way of life” that just does not care about energy, land, water, and other resource, consumption. What holds for the United States, should be even more relevant for countries like China and India, less richly-endowed with natural resources, but with much higher economic growth rates and much larger populations.

Changing the economic framework
Complacency in the USA has a lot to do with a history of cheap availability of land and of most other natural resources. There was no need – or so it seemed – for increasing energy or resource productivity. However, the price hikes on the world markets, after 2000, came as a wake-up call for many US Americans. Millions had built new homes far away from their jobs, and with borrowed money. When oil prices skyrocketed in 2007-08, many had to relocate into mobile homes, close to their jobs, because they could no longer afford the daily commute. Their houses lost value, the mortgage banks began to falter, and the entire financial system imploded. Taxpayers had to bail out some of the biggest financial institutions. By contrast, countries used to paying high rates of petrol tax were much less vulnerable because they were also accustomed to energy efficiency.

This experience should teach us something about suitable economic frameworks that are conducive to the launch of the new technological revolution. What I find attractive is a trajectory of gradually increasing energy and raw materials prices, preferably in parallel with measured increases in resource efficiency, so that no social hardship should be expected. The price increase can come from a revenue neutral ecological tax reform reducing indirect labour costs (or reducing deadly public deficits). If investors know that resource prices will move upwards from now on, for a very long time, they will throw a lot of money into efficiency solutions, thus accelerating the process leading to the Sixth Kondratiev Cycle.

If such thoughts gain momentum, I foresee a new international race for a place among the pack pioneering the new growth cycle.

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