Western industrialism has achieved miracles, promoting unprecedented levels of prosperity and raising millions out of poverty in Europe, North America and, most recently, Japan. Industrial capitalism is now diffusing throughout the East, with China building the world’s largest industrial and manufacturing engine to run on fossil fuels, initially, like all industrial powers before it. But as it does so, China faces the inconvenient truth that the Western model will not scale. China finds itself confronting geopolitical problems in sourcing fossil fuels from abroad and pollution problems at home so severe that it has to find an alternative way, namely, a Chinese version of ecomodernization based on rapid urbanization, renewable energies replacing fossil fuels and a circular economy replacing linear resource throughput, all driven by the greening of finance. This is a feasible model that is likely to prove attractive to other industrializing countries, the diffusion of which will be driven by falling costs associated with learning curves in manufacturing. That China’s solution involves low-carbon emissions is heartening news for the world as it grapples with climate change. The process of global green growth now underway captures the notion of economics meeting ecology, or Ceres meeting Gaia.
About the Author
John A. Mathews is a management strategy scholar who has influenced global policies on the greening of industry.
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Global Green Shift
When Ceres Meets GAIA
By John A. Mathews
Wimbledon Publishing CompanyCopyright © 2017 John A. Mathews
All rights reserved.
We are now in the middle of a long process of transition in the nature of the image which man has of himself and his environment [...]. There was almost always somewhere beyond the known limits of human habitation [...] a frontier. That is, there was always someplace else to go when things got too difficult [...] The image of the frontier is probably one of the oldest images of mankind, and it is not surprising that we find it hard to get rid of. Gradually, however, man has been accustoming himself to the notion of the spherical earth and a closed sphere of human activity.
K. E. Boulding, The Economics of the Coming Spaceship Earth (1966)
Fifty years ago, Kenneth Boulding argued in his predictive essay on the economics of the coming Spaceship Earth that the world would eventually have to move to a more responsible mode of economic interaction with our planet – from a Cowboy economy (reckless, wasteful) to a self-contained 'Spaceship economy' (regenerative, contained). Now we are at last catching up with Boulding's vision, as the prospect of an economy centred on accessing renewable energy resources from the sun and the wind, and tapping regenerated resources from a circular flow, becomes a realistic option. We are living through a profound industrial transformation, a 'green shift' that is being driven by global demographic, economic and technological forces.
We do indeed live in a period of profound change, particularly in terms of energy and resources utilized. The upheavals in the patterns of energy production and consumption – with dramatic swings away from established systems of fossil fuel usage and linear resource throughput – are occurring so fast that it is difficult to keep up with them. Innovations like the Tesla electric vehicles now transforming the global automobile industry, new sources of electric power, new smart grids and new ways of producing food in urban settings (e.g., vertical farms) all appear so dramatic partly because they are, well, dramatic. But they also invite contrast with decades of stasis in the energy, electrical and transport worlds, that have long been held in a 'frozen' state by patterns of corporate power established earlier. Now it is all being shaken up. There is a green ferment in the air.
The difference in this case is that it is a ferment that is touching not just a handful of countries or a small fraction of the world's population, but it is instead mobilizing the great populous countries of China and India in a world-historic transformation. These two countries (more civilizations than nations) are now reclaiming their traditional place as leaders of the world economy in a profound transformation that may be characterized as the Great Convergence. This term itself is carefully chosen to depict a contrast with the Great Divergence that separated Europe, North America and then Japan – the (not strictly geographical) 'West' – from 'the Rest'.
The relevance to the story of 'greening' is immediate and profound. China started on its quest to join the advanced world three decades ago, with its famed 'opening up' that ushered in sustained economic growth fluctuating around ten per cent per year. This process has now brought Chinese firms to quasi-parity with advanced firms, and in the process lifted hundreds of millions of people out of poverty. India is following the same astonishing pathway with perhaps a lag of a decade or so. As with all previous industrial powers before them, China and India have been following the Western route of utilizing fossil fuels – above all, coal – as their primary source of power, as well as extensive supplies of resources as material inputs. But as they do so, they come across the inconvenient truth that this Western fossil-fuelled model will not scale to global dimensions. There is the issue of carbon emissions and global warming, of course. But the real barrier that China and India face is not so much climate change (a problem that they feel, rightly, they inherited from the West) as immediate pollution from the burning of fossil fuels with their particulate emissions, and the geopolitical entanglements that result from global sourcing of such fuels and resources. This globalization of resource extraction impinges on established patterns of trade and production and sparks trade wars, if not civil wars, revolutions and terrorism. These are the real 'limits to growth' faced by China and India.
The resolution of the problem can be found not in terms of manipulating global political and trade-based economic relations, nor in simplistic calls for a shift to 'zero growth' even before China, India and the other industrializingcountries have enjoyed their time in the sun. Rather, the resolution is to be found in a new pattern of economic growth that is coming to be termed 'green growth', where growth is complemented by changes in energy and resource flows that are more sustainable. Countries embark on a revolution in their energy system, displacing the established fossil fuel supplies and centralized electric power systems, and reduce their resource vulnerability by shifting from linear patterns of resource throughput to circular resource flows. The unanticipated aspect of this global green shift is that it is actually being led by China and (to some extent) by India. These are the countries where the problems are felt acutely and where the solutions present themselves most forcefully.
As the green shift involves new energy and resource and food production technologies, and new companies to drive their adoption, we see Chinese and Indian players emerging in newfound positions of leadership. These players are utilizing strategies of convergence (catch-up) that were perfected by East Asian countries like Korea and Taiwan in their catch-up with the West – initially, in a surge of fossil-fuelled industrialization. We also see Western companies striking out in new entrepreneurial ventures that break with the deadening hand of 100 years of stasis in the oil industry (the period of the 'seven sisters'), the coal industry with the prolonged dominance of firms like Peabody and the commodity giants. As they do so they are imposing Schumpeterian 'creative destruction' on the established order – and Chinese and Indian firms are only too willing to pick up the pieces and scale up the new, insurgent technologies to create new global businesses. These new firms are founded on wind power, solar power, and imminently, water regeneration, urban food production and other constituents of the worldwide green shift.
IT'S NOT ALL ABOUT CLIMATE CHANGE
The conventional argument on these matters of renewables and low-carbon energy and resource systems is that they are all about preventing – or mitigating – climate change. I present in this book a fresh alternative approach to the question of renewables. Yes, climate change is a large and important issue – but to focus on this question alone is to exclude other important aspects of renewables, such as their contribution to enhancing energy security and their cleaning up immediate particulate pollution problems. These are the aspects of renewables that are of most relevance to the emerging industrial giants like China and India.
The major trends I wish to focus on are those that decouple economies and economic processes from natural constraints. Now a qualification is in order atthe outset of this discussion. The whole rationale of greening is, ultimately, one that locates our industrial systems within their ecological setting rather than pretending that they lie 'outside' ecological processes and cycles. This is my main objection to the story as told by mainstream neoclassical economics – it makes no reference to natural cycles, and works only with abstractions like wealth and income without ever grounding them in real flows of energy and resources. By contrast, 'greening' initiatives like those involved in introducing green taxes that tie economic activities to their origins and degree of pollution – and penalize polluting behaviour – make sense because they make producers of goods (like manufactured products) and services (like intercontinental transport) take greater cognizance of their impact on the earth. And this impact is frequently negative, as we are now realizing – and getting worse as 'business as usual' industrialization proceeds.
So far, so good – this account does not differ from numerous treatments that view the climate changes resulting from our 'unthinking' carbon-based industrialization as the primary issue, and decarbonization (clean energy and dematerialization) as the necessary way forward. But in the way this is posed it frequently comes across as the West forcefully imposing its view of how industrial evolution needs to proceed. As Pascal Bruckner (2013a; 2013b) put it in well-argued texts, even as the West's influence is diminishing, its arrogance in dictating to others on the planet how they should adjust their processes to make them climate-friendly is rising in its insistence.
A quite different argument is presented in these pages. The argument is that China (and to some extent India) are already feeling the pressures of pollution and geopolitical tensions created by their wholesale replication of a Western industrialization strategy, and are now seeking a green alternative with serious intent, on a global industrial scale. The driver is not so much a concern to save the world from climate change. It is rather a very real concern that the industrialization process being mounted by emerging giants like Brazil, India and China will be stalled by increasing local pollution and by geopolitical complications, and that a green alternative represents the only option available that can guarantee energy and resource security. And the key to this security lies in a feature of renewables that is seldom highlighted, namely, the fact that the devices used in power systems based on renewable resources are in all cases products of manufacturing. If manufacturing is what produces the devices needed to generate power and drive a circular flow, then it can be performed – in principle – anywhere. This is why manufacturing is central to resolving the issues of energy and resource security, as discovered by countries like China and India.
Manufacturing the devices needed to produce power is a completely different process from drilling for oil in more and more hostile locations, shipping the oil across the world in giant tankers, and then building a vast infrastructure for the processing, distribution and sale of the oil-based products. Manufacturing wind turbines and solar cells is governed by quite different 'laws' and places a country that pursues this alternative green strategy on a quite different footing, free from concerns over 'energy security' (meaning access to fossil fuels at a reasonable price) and able to frame energy and resource strategy as a part of its manufacturing and industrial development strategy.
Manufacturing is a special process that creates increasing returns, by virtue of declining costs as markets expand and new niches for specialization are created. This is the process of intensive economic growth driven by circular and cumulative causation described so clearly by Allyn Young (1876–1929) in his account of how mass production industries work. We are now grappling with the same issues as industrializing countries like China and India build new green industries based on mass production and falling costs that promise to oust industrial products based on fossil fuels, resource extraction and open-air food production. If we apply this reasoning to the rise of new green industries, where China and now India are the countries taking a leading role, then we have a new and arresting twist to the story of our industrial evolution.
The story told here is one where China and India are able to enhance their energy and resource security – mitigating the domestic pollution created by their earlier coal-based industrialization strategies, and ensuring a reliable source for raw materials through the 'mining' of urban resource flows. This is not a shift dictated by any technological demand or geopolitical constraint – as has been the case for fast followers on the path of industrialization like Japan, then Korea and Taiwan in the fossil fuel era. In this story, the real driver is the shift to green growth, undertaken as a strategic and entrepreneurial initiative that turns out to have far-reaching implications. The driver is the strategic goal of enhancing energy and resource security – with decarbonization resulting as a fortunate side-effect. I propose in this book to leave climate change to one side and to focus instead on the strategic issues – the choices that are being made by the converging countries, and their material and energetic implications.
As my collaborator Hao Tan and I have argued in successive articles in Nature, there is a profound aspect to this shift and a reason why Chinese and Indian firms are emerging as leaders of the transition. It is manufacturing that lies at the core of the shift. What is being disrupted is not just a way of producing concentrated power, but a way of producing power via the extraction of fuels in a global system of drilling, mining, processing and transport. This system is now being disrupted by a new emergent global system based on the different principles of manufacturing. New power devices like wind turbines and solar cells can operate anywhere on the planet and produce power and store it any time.
The fact that some Western companies like Tesla are surging to world leadership in the new green era only serves to underline the point that they too are doing so by basing their strategies on manufacturing. They are the exceptions that prove the rule that the new, green era that is opening up is one that will be based on secure foundations of manufacturing. This green shift offers emerging countries an optimal way forward both in terms of industrialization through manufacturing (with all its labour enhancement and employment aspects) as well as clean and green energy that does not tie them up in geopolitical knots.
The fact that the green growth strategy is also one that delivers low-carbon emissions is a convenient side-effect that runs counter to the inertia displayed by Western oil, coal and gas and electric power and transport industries. We need to be clear about what is driving the disruptions in these industries. The driver is lower costs induced by expansion of markets as China and India enter world production and distribution systems for renewable power and circulation of resources.
This is the fascinating world of upheaval that I tackle in this book. Kenneth Boulding would no doubt have been fascinated as well – if a little disappointed that we had taken so long to heed his words.
GEOPOLITICAL AND ENVIRONMENTAL LIMITS TO FOSSIL FUELS
Fossil fuels conferred enormous benefits on the Western world as it industrialized over the past 200 years. The transition to a carbon-based economy liberated countries from age-old Malthusian constraints. For a select group of countries representing a small slice of the global population, burning fossil fuels enabled an era of explosive growth, ushering in dramatic improvements in productivity, income, wealth and standards of living.
Now the 'peripheral' countries that missed out on this initial industrial revolution are clamouring to have their time in the sun. For much of the past 20 years, China and India have led the charge in claiming the benefits of fossil fuels for the rest of the world, mainly through the use of coal. Recently, however, they have begun to moderate their approach. As their use of fossil fuels brushes up against geopolitical and environmental limits, they have been forced to invest seriously in alternatives. In doing so, they have put themselves at the vanguard of a planetary transition that in a few short decades could eliminate the use of fossil fuels altogether and transform the global industrial system.
In the United States and Europe, the benefits of renewable energy are predominantly seen as environmental. Energy from the wind and sun can indeed offset the need to burn fossil fuels, helping to mitigate climate change.In China and India, however, renewable energy is viewed as serving multiple purposes. The relatively rapid transition away from fossil fuels that is under way in both countries is driven not so much by concerns about climate change as by the economic benefits renewable energy sources are perceived as conveying.
Indeed, while the economic benefits of renewables can be attractive to advanced economies such as Germany or Japan (both of which are starting to move away from fossil fuels), the advantages for emerging industrial giants are overwhelming. For India and China, an economic trajectory based on fossil fuels could spell catastrophe, as efforts to secure enough for their immense populations ratchet up geopolitical tensions. By contrast, an economy based on renewables and the circulation of resources would promote domestic manufacturing and improve local environmental quality by, for example, reducing urban smog, as well as enhancing resource and energy security. The greening economy would offer supplies of energy and resources that would renew themselves, at costs that diminish because of the manufacturing learning curves involved.
Excerpted from Global Green Shift by John A. Mathews. Copyright © 2017 John A. Mathews. Excerpted by permission of Wimbledon Publishing Company.
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Table of Contents
List of Figures; Foreword by Dr Shi Zhengrong; Preface; List of Acronyms; Part I: Dynamics of the Green Transition; 1. Introduction; 2. Evolutionary Dynamics of Our Industrial Civilization; 3. Ecomodernization –with ‘Chinese Characteristics’; 4. Sociotechnical Transitions: A Sixth Wave; 5. No Wonder China and India Are Pursuing Green Growth Strategies So Vigorously; 6. Finance Now Playing a Central Role in the Green Shift; 7. Can the China Model Be Utilized by Other Industrializing Countries?; 8. Green Growth Development Strategies, Local Content Requirements and World Trade; 9. Farewell Fossil Fuels; Part II: Sixth Wave Eco- Innovations; 10. Global Population Peaking […] and Urbanizing; 11. Energy That Is Clean, Cheap, Abundant – and Safe; 12. Reframing Renewables as Enhancing Energy Security; 13. The Myths of ‘Renewistan’; 14. Recirculation and Regeneration of Resources (Circular Economy); 15. Food and Fresh Water Production; 16. Energy, Water, Food for Cities: Deploying a Positive Triple Nexus; 17. Eco- Cities of the Future; 18. When Ceres Meets Gaia; Bibliography; Index.
What People are Saying About This
‘John Mathews is one of the foremost political economists examining, perhaps, the central question of our time, whether, we, as a species, can devise responses to global climate change. In this book, he argues that new green technologies are already available to allow us to begin manufacturing energy and thus overcome our addiction to fossil fuels – and he argues that it is China that is leading the way in the transition.’ –Martin Kenney, Professor, Community and Regional Development, University of California, USA
‘Asian countries are removing limits to their economic growth, using intelligence and manufacturing skills to let renewable energy replace polluting energy from finite sources. Clearly describing this revolution, Mathews helps readers in the other parts of the world understand how competitiveness for the future is now being created.’ –Tomas Kåberger, Professor, Energy Area of Advance, Chalmers University of Technology, Sweden
‘In this sweeping global analysis of environmental challenges, Mathews weds Schumpeterian and renewable energy insights to draw the bold conclusion that China and India have embarked on a course to lead the world toward sustainable solutions. The book documents China’s ecomodernization strategy, placing it in the vanguard of clean and renewable power.’ –Mark Selden, Professor Emeritus of Sociology, State University of New York at Binghamton, USA, and editor, The Asia-Pacific Journal