July 8, 2009

The Low Energy High Happiness Society ?

 

My brother pointed me to a TED talk recently in which Bill Clinton identifies Wal Mart as a beacon of hope for the low carbon economy. This was a bit of a shock to me. Wal Mart ? A Beacon of Hope ?  

Yes, Wal Mart is making its business energy efficient, switching to renewables and generally doing things we might expect a good retailer to do. But surely ANY company that produces, distributes or sells physical goods has one fundamental raison d’etre – it wants more people to buy more things more often.

There is no supermarket in the world asking us to buy less food, no auto maker encouraging us to keep our existing cars, no fashion brand helping us to hand down clothes from older children to younger. It is not just companies – the global economy judges prosperity by GDP, a measure of the volume of trade. Our prosperity and well-being seems to depend on making, distributing and selling more things !

This raises an interesting question. Is it possible to build a society in which we do not need to buy more things in order to be happy and prosperous ?

Supermarket

Imagine two villages:

1) In BuyerVille, people want the latest thing and typically discard their items after a year to buy new ones. These are not evil folk – they try to make things using less energy and they recycle all that waste !

2) In SharerVille, the elders of the family make clothes for younger members using natural resources that they do not need to buy. People keep their goods for as long as possible, replacing only when necessary. The closely knit community of SharerVille means that you might give away things you no longer need to others, and might borrow things instead of buying them for yourself.

Now, the people of SharerVille appear to be perfectly happy, perhaps more so because of the sense of community and the lack of desire to always have the latest thing. SharerVille consumes less energy, uses fewer resources, and has a high quality of life.

However, in the real world, the concept of SharerVille is loaded with problems:     

 

  • SharerVille has very little trading and so has a low GDP. It is classified as a poor country.
  • SharerVille has fewer jobs. In BuyerVille, by contrast, you can get a job as a factory worker, a retailer, a recycler, or an old goods collector. With all those salaries, people in BuyerVille have money to spend on a wider choice of food and better healthcare.
  • Countries that look like SharerVille in the real world typically come with a host of other challenges, such as high levels of infant mortality, government corruption, and poverty. These countries also seem to be on an inevitable path towards becoming more like BuyerVille !
  • Previous attempts to build an alternative to the consumer society (namely, Communism) failed because they ignored the tendencies of human nature.

In other words, we see few real world examples of a successful SharerVille.

Yet, if you look more closely you CAN see elements of SharerVille that work. Arguably, the citizens of Minnesota in middle America might consume less and be more happy than the hard driving high earning citizens of New York. The joint families of the deep South might be prosperous enough and less stressed than the fashion conscious movie types of Los Angeles. The citizens of Bhutan (famous for their ‘Gross National Happiness’) might have all they want, whereas I in London still do not have the iPhone 3G(S) !

The fundamental question: Is it possible to build an economic structure for SharerVille that can be rolled out globally? Can we build a world in which success does not depend on buying more things? Can the new model keep people busy with fulfilling things to do, drive innovation, work with human nature instead of against it, allow people the freedom to do what they want?

Today, we have not found this new system, and until we find the answer we must remain happy with Wal-Mart using less energy to make more things !

_____

LINKS:

TED Talks: Riveting talks by remarkable people, free to the world.

Bhutan and Gross national happiness

March 17, 2009

The Phoenix Economy – Birth of a New World

 

The economy is going through a prolonged slowdown of several years, longer and deeper than recent recessions.  This will cause us to question things that we see as unchangeable, to redefine and rebuild our models of capitalism and the role of government.

 

This is a world ripe for creative entrepreneurs, people who can perceive and ride gamechanging shifts in the ‘rules’, to deliver the ideas, products and services that we will need in the new world.  In this article I combine my own ideas with thoughts from the FT series on Rebuilding Capitalism, Stanford University’s conference “Leading Matters”, and a First Tuesday event on the “Green Technology Window of Opportunity”.

 

First, what’s happening.  Major global banks are capitalised with an average of just 2.7% of deposits, while asset values have fallen much more. This means that, technically, almost every major bank is insolvent.  Governments have provided deposit guarantees for savers, but do not have the money to back those up in practice. It is possible that a major bank may limit or ban withdrawals, leading to a run on other banks.  Government bonds are likely to fall as long term interest rates go up, and a major European government could default on its own bonds. Equity markets remain unstable.  The dark side of recession means protectionism, racism and civil unrest.  Gold could rise dramatically as the only safe haven.

 

Does this mean the end of capitalism?  Capitalism is a resilient dynamic force with its own heartbeat of rises and falls, perhaps the biggest rises and falls have a multi-decade lifecycle.  Capitalism will re-invent itself through creative destruction.  Now is the time to take bold steps to reconceptualise finance.  The United States under the Obama administration seems to have the expertise, the ambition and the confidence to take these bold steps.  For example, their environmental team is second to none in terms of scientific knowledge, political savvy and implementation skill.

 

The new economy with its new regulations and its new controlled markets will focus on wealth that is worth having, the triple bottom line (financial, social and environmental).  Companies will report on value added to a sustainable planet and its people.  Through carbon markets and CSR reporting, this is already beginning to happen. The government has a key role in setting up these markets, defining and adjusting their frameworks until they are stable enough for it to step out of their way. Consumers will want to see tranparently what happens to their money in the financial system, and will select what impacts their investments have on the world.  This is an opportunity for charities, for banks, for microfinance projects, for venture investors, for development agencies and for information providers.

 A new energy infrastructure is emerging, one that enables micropower projects to contribute to the national grid and earn money (witness Al Gore’s idea of the Electranet).  Your own investment in upgrading your home will be made based not on the absolute cost of the electricity you save or produce, but on whether that investment makes sense for you given the subsidies available, the feed-in tariff, the carbon market, the value you add to your home, and yes, on your values and the contribution you wish to make to your local environment.

 

Is this utopia?  Well, eight years ago you didn’t believe that Britain would ban smoking in pubs, did you? We overstimate change in the short term, but often underestimate the long term.  Besides, change isn’t just what the world does to us, it is the sum of the small things that we make happen. Enjoy THIS decade, or it will enjoy you !

 

 

January 16, 2009

Disappearing forests: the world’s biggest emitter

Do you think that driving your kids to school in a 4×4 is bad for the environment? Well, you should take a look at what’s happening in Indonesia ! That’s right, Indonesia is the world’s third largest emitter of greenhouse gases, after the US and China, and closely followed by Brazil.World’s biggest carbon emitters (including deforestation)

(1) UNITED STATES: 6 billion tonnes CO2 per year

(2) CHINA: 5 billion tonnes

(3) INDONESIA: 2.6 billion tonnes

(4) BRAZIL

What makes Indonesia and Brazil such big emitters? People are cutting down tropical forests in order to profit better from their land. Trees absorb carbon dioxide from the atmosphere throughout their growing life. When trees are logged and burned or left to decay, they release this carbon back into the atmosphere. Some trees also go up in smoke in annual forest fires.Deforestation causes more emissions than all forms of transport combined, in fact it now accounts for about 25% of global man made emissions.Deforestation occurs largely because it is not economical to keep the land forested – you can make more money by cutting down the trees and doing something else with the land. Usually, this means producing palm oil for biofuels, or some other form of farming.

forest.jpg

Conserving a rain forest isn’t just catchy and cool, it its the most efficient way to slow global warming, at $20 per tonne of carbon saved. In 2005 the UN launched an initiative called RED (reducing emissions from deforestation), acknowledged by conservation biologists as one of the most effective programmes for carbon reduction.The main ways to slow deforestation are:

                        Prevent forest fires

                        Stop mass clearing forests where land is unsuitable for agriculture.

                        Harvest the trees and turn them into long-lived products (such as furniture) so that they don’t decay or burn, with new trees being planted in their place.

                        Provide forest owners with carbon emission offsets for not logging their land.

 

The last of these is controversial. If I pay a landowner or farmer to do nothing with his land, is he taking the mickey or saving the world? Which projects are ‘additional’ ? If I had not paid the money, would the landowner have been pushed to chop down the trees, or were they going to stay there anyway?And what can we do sitting here in our comfortable homes?

                        Buy wood products made from sustainable forests. OK, ’sustainable’ is a buzzword. What it should mean is that the trees are replanted.

                        Support carbon neutral companies, provided that the carbon credits are certified by a highly respected firm. Yes, there are high quality as well as dodgy carbon credits.

                        Go do some voluntary work in the Amazon, or in Indonesia. Figure out for yourself how logging can really be prevented. For this one, I would recommend VSO.

                        Support forest protection programmes in small way and directly, through charitable sites such as http://www.globalgiving.co.uk/

    September 29, 2008

    Greenwash on the daily commute

    Just around the time that carbon emissions and global warming became a major public issue, last year, we started seeing a massive push by London’s free papers the Metro, the London Paper, London Lite and City A.M. to pump out as much newspaper into as many public hands as physically possible.  More staff were hired to push the papers out, esacalators were awash with paper, and every empty seat on the tube was, and still is, laden with a choice of several free papers.  There is something deeply incongruous about this. Even if these papers use 100% recycled paper, their creation requires it to be manufactured, printed, distributed via trucks, pushed out, collected, carted off by energy consuming trucks and reprocessed using more energy.  The paper companies get paid by advertisers for the number of papers that are pushed into the market, whether they are needed or not, so every effort must be made to push them out faster and more widely across our capital.  Energy consumption is an integral and growing component of free papers. 

    LondonLitter

    Imagine the frustration of these companies when they see people leave papers behind on the train so that others can read them. Re-use by multiple readers is one way that energy can be saved, but advertisers don’t buy it, and every time someone picks up a used paper this reduces their chances of pushing out a freshly minted one. A major new effort of free paper firms then, is to prevent people re-reading old papers. The way they’ve gone about this is clever as well as manipulative, and we should be ashamed if we fall for it.  Firstly, they have installed plastic recycling bins with acclaimed green credentials outside stations, so papers can be irretrievably placed inside and recycled, but NOT re-used.  Secondly they have embarked on an advertising campaign to persuade commuters that if they do not take the paper home to recycle it, the the READER is to blame for the melting of the polar ice cap, desertification and other environmental damage.  

     London paper recycling cartoon

    On the surface, these efforts appear green, but they are hypocritical and self-serving, aimed at appearing green while enabling more wasteful production.  There is something gentlemanly, erudite, and polite about leaving papers on the train for others to read, something that has existed in British culture long before free papers.  Imagine if, instead of recycling bins, the companies put re-use racks in stations so people could pick up a used paper.  Imagine if people were encouraged to leave papers on the tube for re-use, and if train companies were offered recycling services by the paper companies, instead of installing new bins on the streets.  It is true that advertisers would take some persuading to account for re-use.  It is easier to count shiny new papers but, if you believed in helping the environment, wouldn’t you lead this change in thinking?One day, free papers will be wirelessly sent to our devices for the daily commute, but until then it is up to each one of us to vigorously hold companies to account and point out that we know more about helping the environment than marketers would like to believe.  I encourage each of you to write or text the London Paper to tell them what you think of their ads. 

    October 29, 2007

    Guilt-free flying?

    These days we are all aware that air travel is bad for the environment, with the media exhorting us to stop flying, holiday locally and reduce business travel.

    Yet, flying around the world is exhilarating, liberating, and enabling. It opens the mind to different cultures and ways of thinking, stimulates business ideas and trade, provides opportunities in developing economies, and builds global understanding. Above all, it is fun. Throughout history, wherever social mores have tried to prevent people from doing something fulfilling and possible, they have usually failed.

    Surely the problem of ‘dirty flying’ is crying out for a technology solution, some way to travel far and fast without damaging the environment. This seminal challenge holds all the promise of a perfect market for breakthrough innovation. An airline industry stuck in well entrenched ways, engine technology that has remained much the same for decades, and a complex system of regulation that makes it tempting to break free from industry bounds. Certainly, it is a market with massive demand: consumers eager to travel but loaded with personal guilt, operators eager to shed the polluter label, and corporations ready to pay a premium for social responsibility.

    There are no ready made answers here, but I have gathered below some of the ideas currently bubbling under.

    Guilt-free flying

    It appears that steady improvements in efficiency are likely to be the answer, rather than step change. Some of the bolder ideas, including hydrogen fuel cells, flapping wings, or solar commercial aircraft, are more than a decade away, but improvements in propulsion and materials are already at hand.

    In addition, improvements in operational efficiency can have a dramatic impact – ideas such as taxiway starting grids, single European traffic control, continuous descent approach, and fixed ground electrical power are held up more by the complexities of international negotiation and politics than by technology.

    The industry has geared up its promises in the wake of criticism. Richard Branson recently committed to invest his profits from travel over the next ten years into biofuels, and is trialling starting grids with airports. IATA Director Giovanni Bisignani said in June that " Air transport must aim to become an industry that does not pollute—zero emissions".

    Perhaps what is needed now is an E-Prize (similar to the X-Prize for space flight). A multi-million Euro E-Prize could trigger a race to build the world’s most efficient and environmentally friendly commercial aircraft. Bon Voyage !

    May 10, 2007

    Getting the world to work together

    Jeffrey Sachs
    This year’s Reith lectures, delivered by Jeffrey Sachs (economist and advisor to world governments), were a paean to liberal multilateralism – the idea that, in an interconnected world, problems can be resolved only through cooperation and understanding. I recommend listening to them at the BBC Radio 4 website, and shall try to summarise them below:

    (1) Liberal Multilateralism

    “We live in an interconnected world with global shared problems. Fear begets fear, trust begets trust”.

    Sachs states that peace is process of international engagement and collaboration rather than belligerence and war. The world needs open-source leadership of the kind provided by global foundations on aids, Africa, climate change etc, rather than nation states looking after their own interests.

    (2) Addressing resource demand

    “Human activity has taken over vast parts of the natural cycles in ways that fundamentally threaten us in the years ahead”.

    There is a battle for resources in local areas that will have a global impact. We cannot continue to grow at the current rate of consumption.

    (3) Reducing poverty

    “Alleviating poverty in all parts of the world is key to our collective security. . The question is why rich countries with so much wealth are so irresponsibly and relentlessly neglectful when the amounts needed are so small and the consequences of inaction are so catastrophic for all”.

    Sachs argues that helping children to survive actually reduces population pressures. When there is low life expectancy at birth, people have more children. In fact, life expectancy at birth is the single best indicator of social organisation and wellbeing in a society.

    Many global governments are not meeting their commitments to provide 0.7% of GNP in international aid. Countries that do not look after their own poor are less likely to contribute globally. The lack of a domestic safety net for America’s poor creates a society of people fearful for their economic future in a world filled with threats – where each must fend for himself. By contrast, Northern Europe has high domestic security and support, high levels of social trust, and is meeting its GNP commitment to help the world’s poor.

    (4) Providing technology solutions

    “Technology is the fundament of economic development . . We have powerful technologies which can be mobilised and can make a remarkable difference at a remarkable rate.”

    Technical advances in one place are rapidly adopted across the world – we are reaching a state of global convergence in terms of available tools. Sachs advocates simple practical solutions on the ground such as anti malaria bed nets, anti-retrovirals, capital to seed higher food production, etc.

    Commitment to international development goals must be reinforced by informed governments using scientific knowledge on how to achieve them. Sachs also advocates “Open source” global cooperation – myriad ideas contributed within a framework of clearly agreed goals to help the world’s poor.