Ernst Ulrich von Weizsäcker

The successor to “Factor Four” (first published in 1997) has been published by Earthscan in December.

Factor Five
Transforming the Global Economy through 80% Improvements in Resource Productivity
By Ernst von Weizsäcker, Karlson ‘Charlie’ Hargroves, Michael H. Smith, Cheryl Desha and Peter Stasinopoulos

Picking up where Factor Four left off, this new book examines the past 15 years of innovation in industry, technical innovation and policy. It shows how and where factor four gains have been made and how we can achieve greater factor five or 80%+ improvements in resource and energy productivity and how to roll them out on a global scale to retool our economic system, massively boost wealth for billions of people around the world and help solve the climate change crises. Continue reading

The International Panel for Sustainable Resource Management (short: Resource Panel), set up by the United Nations Environment Programme, is focusing on biofuels, metals, decoupling, and prioritization. Continue reading

I am back home in Germany. After three wonderful and successful years as Dean of the Donald Bren School of Environmental Science and Management at the University of California, Santa Barbara, I returned to my home country and settled down in Emmendingen near my old Alma Mater, the University of Freiburg. My new address is Continue reading

Energy demand is rising in China and world-wide at high speed. Oil and gas are getting scarce and expensive. Coal is available but causes big environmental problems locally and globally (global warming). Renewable sources of energy enjoy strong growth rates but will for a long time to come remain a limited option, chiefly for reasons of space and cost. Nuclear energy in relevant amounts will be facing serious problems of uranium scarcity (uranium prices rose much faster than oil prices in recent years), not to speak about the troubles with radioactive wastes, and the nuclear cycle’s vulnerability to terrorism and wars. Continue reading

Festschrift at the occasion of the 80th birthday of Professor Mircea Maliţa, “Coping with Complexity at the Beginning of a New Century” Continue reading

Bertelsmann-Stiftung: Transatlantic Thinkers Part 2

The transatlantic relationship is not over, as has sometimes been suggested in recent years – but it has changed. There is still consensus in Europe and the US that the urgent global challenges confronting us today can only be met in a joint effort. The goal is to identify specific fields for strategic cooperation and formulate effective and coherent policy options towards them. The Bertelsmann Stiftung aims to help in this process. As part of its long-standing project work on “Europe’s Global Responsibilities”, it has made a major effort to foster transatlantic ties. One of the measures taken is the annual “Brussels Forum”, an initiative launched jointly with the main organizer German Marshall Fund, Daimler-Chrysler, Monitor, Fortis and the Belgian government) the annual “Brussels Forum” which aims to bring together the best and the brightest from the spheres of politics, industry, and ideas on both sides of the Atlantic. In the run-up to this major event in late April 2007, we would like to outline the main opportunities for a common transatlantic agenda.

Our new paper series “Transatlantic Thinkers” provides a fresh perspective on these opportunities, touching upon topics such as energy security, climate change, civil liberties in an age of terror, trade relations and many others. These short papers are “mind-challenging” in the best possible sense – sharp, precise and provocative. Often, we will form “Transatlantic Doubles”, pairing up prominent voices from both sides of the Atlantic to collaborate on one issue.

In this issue of our series, Peter Goldmark (director of the Climate and Air program for Environmental Defense, a Washington-based NGO, former President of the Rockefeller Foundation and chairman and CEO of the “International Herald Tribune”) and Ernst Ulrich von Weizsäcker (dean of the Donald Bren School of Enviorenmalt Science and Managament at the University of California, Santa Barbara, former member of the German parliament and president of the Wuppertal Institute for Climate, Environment and Energy) have teamed up to tackle one of the most pressing transatlantic issues – the debate on climate change on both sides of the Atlantic. They analyze the measures taken so far in Europe and the US and deliver pointed recommendations how to react to the “Decarbonization Challenge”.

”The Decarbonization Challenge – US and European Perspectives.“

Peter Goldmark and Ernst von Weizsäcker *

Introduction

This piece was written by a European and an American both deeply engaged in efforts to moderate global warming, and each of whom has lived in both Europe and the United States. We give a perspective on the present situation regarding climate change in Europe; a parallel perspective on the situation in the U.S.; and then close with a series of recommendations and policy opportunities that should be on the agenda of the transatlantic partnership, but which reflect the reality that Europe is the leading geopolitical unit today in defining and mobilizing global progress toward a regime of carbon limits that holds out the possibility of avoiding the most catastrophic consequences of global warming.

I: Grim facts on climate change

It has become clear to climate scientists that the carbon emission targets set by the Kyoto Protocol were not nearly ambitious enough to “prevent dangerous anthropogenic interference with the climate system”, as stated in Article 2 of the UN Framework Convention on Climate Change (FCCC). The Arctic Climate Impact Assessment (2004) was perhaps the most powerful wake-up call of the past few years.

It showed a picture of Greenland’s fresh water cover in summers 1992 and 2002 with the area of the latter being easily four times larger than the former and being nearly half the size of Greenland itself. Mighty vertical water currents tunnel down into the ice and appear to be lubricating the rocks on which the ice masses are sitting, thus accelerating the rate at which they move towards the sea beyond that which had been previously estimated.

This Assessment and other facts served as the scientific basis for the November, 2006 Review on the economic consequences of addressing or failing to act on climate change published by Sir Nicholas Stern, former chief economist of the World Bank. This report had been commissioned by British Prime Minister Tony Blair and Chancellor of the Exchequer Gordon Brown.

The Review suggests that early action to reduce greenhouse gas emissions would be much cheaper than originally assumed, and that delaying action will risk horrendous damage that could amount to as much as 20 percent of world GDP.

Climatologists tend to converge around the conclusion that global warming of an average of 2°C above pre-industrial levels should be seen as the threshold beyond which the anthropogenic interference with the climate system would become “dangerous”, to quote Article 2 of the FCCC.

All this information was available at the FCCC’s 12th Conference of the Parties in Nairobi in November, 2006. One had hoped that a post-Kyoto architecture could be negotiated but nothing of the kind happened. Nairobi was basically a bureaucratic gathering with no visible political initiative, although some progress was made on policies aimed at discouraging deforestation and laying the groundwork to bring emissions from deforestation under the post-Kyoto framework.

The EU had nothing to contribute to the coming debate on post Kyoto.

II: The EU’s bumpy learning phase

Nevertheless, the EU considers itself in the vanguard of climate policy. It was instrumental in launching the FCCC, which was adopted in Rio de Janeiro. Five years later, at the third Conference of the Parties of FCCC in Kyoto, the EU was one of the major players and ultimately the decisive one, in urging adoption of the Kyoto Protocol.

And finally, it was the EU which adopted the first international regime of carbon trading, through its Emissions Trading Scheme, ETS (Directive 2003/87/EC).

The first phase of the ETS, from 2005 to 2007, intended as the “learning phase”, ends this year. Some lessons can certainly be drawn from this learning phase. The EU had seen economic growth and growth in carbon emissions since Kyoto’s adoption, leading to demand for higher volumes of carbon allowances than appeared available in 2003. Therefore despite the political decision, taken under heavy influence from the major emitters, to allocate the allowances free of charge, allowances had a positive price from the start.

Fig. 2 shows the development of the price per ton of CO₂ emissions. The market price underwent a conspicuous collapse in May, 2006, due to the leaking of research data that major emitters were sitting on large quantities of unused allowances. At the time of the initial allocation they had claimed many more allowances than they actually needed.

What was more irritating than permit hoarding, not least to end-use consumers, was that some power utilities, notably in Germany, raised electricity prices in proportion to the market value of the allowances that they had obtained free of charge in the first place.

The power utilities argued that for every marginal kilowatt-hour generated above earlier production levels, additional costs would accrue in proportion to the permit prices. This led to calculations of horrendous marginal consumer prices above 1.000 Euros per ton of CO₂ emitted (Schlemmermeier and Schwintowski, 2006).

Ironically, most of the major emitters flourished tremendously after the introduction of the ETS, although the causes of this prosperity are complex. Electric utilities benefited from acquiring an oligopoly position a few years after market liberalization, while non-ferrous metals producers benefited from rising commodity prices.

Another irritating effect came in in recent months. Under the Kyoto Clean Development Mechanism (CDM), emitters were allowed to trade some of their obligations outside Europe. Their favourite place were China and India, discovering that reducing Chlorofluorocarbons (CFC’s) was valued very high on the scale of greenhouse gas emissions because their Global Warming Potential (GWP) is several thousands times higher per kilogram than that of CO₂.

To meet the phase out date of 2010 under the Montreal Protocol, developing countries are quite willing to reduce their production and stocks for good money from Europe. As the reduction of such substances is much cheaper per unit of GWP than CO₂ emissions reduction this trade is profitable both for the developing countries and the EU firms in need of reducing greenhouse gas emissions. This bargain is the main reason for the continued fall of prices for carbon emissions permits, as seen in fig 2. The bargain is nevertheless irritating because it weakens the incentive to reduce coal, oil and gas intensity in Europe, while China and India swiftly substitute phased out CFS’s with HCFC’s, notably with HCFC-22, the production of which results in emissions of trifluoromethane (HFC23), as an unwanted by-product that is a super greenhouse gas with a GWP 11,700 times more than CO₂.

The general impression in the European public is that not all went well with the “learning period” of the ETS. It will be politically difficult to repeat the free allocation of emission permits next time, and more voices are already being heard suggesting an auction of the allowances for the next phase.

The second phase of the ETS runs from 2008 to 2012, coterminous with the Kyoto Protocol. The EU intends to deliver the commitments assumed in the Kyoto Protocol.

Although it seems uncertain whether the ultimate target of an eight percent emissions reduction from levels in 1990 will be reached, the EU has performed far better in curbing greenhouse gas emissions than nearly all other Kyoto signatories. EU performance has also outpaced the US and Australia who have not ratified Kyoto and have had drastic increases in greenhouse gas emissions since 1997.

Post-Kyoto initiatives of the EU

It is clear now that Kyoto was just the first step toward a robust, global regime of carbon limits.

Everybody seems to agree that the post-Kyoto regime will have to be a lot more ambitious than Kyoto itself.

Greenhouse gas emissions will have to be reduced to at least 50% of expected business-as-usual levels if greenhouse gas concentrations are to be stabilised at a level low enough to keep global warming within roughly 2°C. Recent work (Vattenfall & McKinsey) suggests that stabilizing the climate at 450 ppm CO₂ by 2030 is doable and affordable if we start very soon. This goal is roughly compatible with holding the warming increase to 2O°C.

Many believe that eventually we will have to get beyond that goal and reduce emissions to 80% below today’s level.

What can be done on the European side to reach this goal? Essentially three strategies are available and have to be combined:

• Increasing energy efficiency;
• Increasing the use of fossil-free energy; and
• Reducing the amount of carbon dioxide being released into the atmosphere.

The EU has been fairly cautious on energy efficiency.

The energy efficiency directive, 2006/32/EC (16 May 2006), requires member states to draw up national action plans to achieve 1% yearly energy savings in the retail, supply and distribution of electricity, natural gas, urban heating, and other energy products including transport fuels. The 1% target, however, is only indicative. The national action plans will need approval from the Commission and will be reviewed every three years, but there are no sanctions whatsoever. The process will be spread over nine years, starting in January 2008, although the first national efficiency action plans are due for submission on 30 June, 2007. The European Parliament had demanded binding targets but member states killed that proposal during a Council meeting in 2005.

On renewable energies, the EU is more progressive.

Its 1997 White Paper contained a commitment to double renewable energy supplies to 12% by 2010 from 6% in 1998. The EU seems to be nearly on track to reach this goal, not least because of the pioneering roles of Denmark, Austria and Germany and the adoption in Spain of the German model of feed-in tariffs for electricity from renewables that is piped into the power grid.

In January, 2007, the Commission published “An Energy Policy for Europe” (COM (2007) 1 final). Its most specific change against earlier policies is the proposal for a binding target for biofuels to reach 10% of vehicles fuel by 2020, twice as much as proposed in earlier documents. This ambitious goal seems like an attempt also to join the USA in reducing dependence on imported oil. However, it immediately met with fierce opposition by ecological and North-South NGO’s hinting at big dangers resulting from diverting land from food and from the last remaining nature reserves.

The big contribution towards an ambitious climate policy seems to be intended to come from a new initiative to aggressively promote and spread “Clean Coal Technologies”.

Important steps were the increase of plant efficiency, chiefly by combined- cycle coal and gas technologies, some CHP (combined heat and power) and, according to a new EU Communication, a massive drive towards CO₂ capture and storage (CCS) in coal-based power generation. Bringing CCS to commercial viability in coal-fired power generation would pave the way to possible applications in combustion processes using other fossil fuels, notably gas. The new name of this game is “Sustainable Fossil Fuels” in power generation.

CO₂ capture and storage is perhaps the strongest incentive for speeding up the introduction of the Integrated Gasification Combined Cycle (IGCC) because that technology involves the automated separation of CO₂ as well as of sulfur and also allows the “syngas” from the gasification process to be used as feedstock for the hydrogen economy. However, all this comes at a cost, and many utilities, chiefly in non- Kyoto states such as the US, say that present market conditions leave IGCC non-competitive with conventional coal burning power plants.

Nevertheless, in light of the reality that coal is going to be burned one way or the other in China, India, other developing countries, and the U.S., and in the absence of an aggressive strategy on efficiency and renewables, CCS and IGCC may turn out to be lifelines for Europe and the world in curbing the release into the atmosphere of carbon dioxide.

Efficiency is more promising

It would be a lot more attractive, however, to have a well- orchestrated strategy to increase energy productivity.

On a macroeconomic scale, it is generally possible to extract at least four times, and in many sectors ten times, as much added value from one unit of energy than is presently achieved, be that unit kilowatt-hours, barrels of oil or gigajoules (Weizsäcker et al, 1997, Lovins et al 2005). The process may take 40 years but that is also the typical life-span of power plants. In addition, we are facing a new wave of decisions on the next generation of power supplies in Europe. Building too many dinosaurs now will make it virtually impossible for the next generation of politicians to shut them down or convert them without huge economic disruption.

The German grand coalition government has made energy efficiency its top priority and is trying during the twin Presidencies of the EU and G8 to popularize the concept.

III: The US and Climate Change

After years of dragging their feet, 2006 – 2007 will be seen as the years when Americans finally made up their mind that global warming was a serious crisis that required action.

American science helped to identify and highlight this issue in the 1980’s and 1990’s, and American NGO’s formulated the basic cap-andtrade policy model that underlies Kyoto and the ETS. American political timidity in the 1990’s and then outright obstructionism under the second President Bush slowed global progress on this issue. Fortunately, Europe took the lead – and did so relatively vigorously, sensibly, and with a careful eye to keeping the door open for the U.S. to rejoin the international process when it could.

That day is now near, and it will become a lot nearer when the US Congress enacts its own national cap-and-trade system.

There is a good chance that this will happen during this Congressional session, which means in the 18 months before the next Presidential campaign begins to paralyze the rest of the political process; and there is a good likelihood that if the law that is enacted is centrist and solid, President Bush will not veto it.

What has happened in the US to make this possibility imminent? Several things at once:

• The science became stronger, more visible, and more urgent.
• Business leaders, particularly the multinationals, came to understand that action on global warming was an imperative and began to remove the silent veto they exercise in American politics. General Electric, Wal-Mart, DuPont and others reflected a broad, silent change in mainstream American business attitudes toward global warming when they came out in favour of a mandatory national carbon cap.
• Thoughtful Americans noted that almost all of its allies with the quixotic exception of Australia, whose stance on this issue was quaint but not politically significant, were marching in the opposite direction.
• Many conservative evangelical Christian leaders decided that action on global warming was not only congruent with, but required by, their doctrinal beliefs.
• Former Vice-President Al Gore’s powerful movie, An Inconvenient Truth, ratcheted up the sense of urgency among those American opinion leaders already concerned about global warming. Intensity and urgency were the critical elements that had been missing in the American political discourse on global warming.
• The Democrats taking control of Congress by a thin margin now forces all stakeholders to reconsider their assessment of what may or may not be possible in the new Congress. That reassessment is by no means complete.

IV: The Impact on the Transatlantic Relationship

There are two pre-eminent reasons why climate change is both a critical and a formative issue for the most important geopolitical relationship in the world – that between Europe and the U.S.

The first reason climate change is a critical issue in the transatlantic partnership is because attitudes toward global warming specifically and environmental issues generally have their roots in fundamental values, life-styles, consumer habits and political outlooks.

It is one thing to share a broad consensus on democratic values and the market system, modulated to different degrees by state regulation or intervention; we grumble about each others’ political institutions and economic policies, but we do not differ fundamentally. But it is quite another thing for the European end of the transatlantic partnership to feel that environmental concerns are a bedrock and enduring priority for its own governments and a standard by which to judge the American government; and for Americans to feel vaguely that environmental issues constitute only one of many desirable agendas that need to be taken into account, and that on “green issues” the Europeans are “over the edge”. This rift becomes more serious as both ends of the partnership begin to understand that the “the environment” is really about “the economy, stupid.”

The second reason climate change is a critical and formative issue in the transatlantic relationship is because ultimately global warming requires that the Western industrial pattern, now imitated or imposed in virtually every part of the globe, undergo a carefully managed, full-scale, and relatively rapid transition to a low-carbon economy.

The process of decarbonizing our energy generation, our goods production, and our transportation systems on this planet is a task that is both daunting and imperative. It is one that will remain high, perhaps paramount, on our agenda and our children’s agenda for as long as they and we are alive.

What America must do is reasonably clear.

The US must pass a national carbon cap, with no “escape hatches” or other vitiating gimmicks.

It must then join Europe’s preliminary and fragile dialogue with China and the other giant economies of the South to build a bridge over which the US, China, Brazil, India and others can walk to join the young international regime of carbon limits.

In addition to these basic steps the US should, in concert with Europe, work on a plan of “carrots and sticks” in the trade area that will encourage other countries to join an eventual global carbon-reduction regime.

Such a plan should be linked to the evolving world trade system — for example, after a certain date requiring countries that have not taken a cap and joined the global carbon-reduction regime to accompany exports with certified carbon allowances to offset the CO₂ emissions involved in their manufacture. Measures of this type will in any case be necessary for domestic political purposes in the US and Europe if they are to support a serious global regime with the ambitious measures necessary to avoid the worst consequences of global warming.

These steps are simple to describe but not easy politically for the US to adopt. Following this course will, however, allow the US to participate constructively in the formation of a successor to the Kyoto Protocol, and will also serve to align once more the stances of the two partners in the transatlantic partnership in regard to climate change.

We suggest that Europe, as the transatlantic partner that in fact presently leads this process, should consider even bolder steps.

What might an American who has lived in and admires Europe advise Europe to do in this context? The following ideas will strike some European observers (though surely not the European co-author of this piece!) as unnecessarily bold. The opposite is true; if anything, they are not bold enough.

• Europe should continue to advance and improve the European Trading System. This is the world’s only full-fledged carbon capand- trade system. If it is weakened rather than strengthened; if it does not develop strong and impartial enforcement mechanisms; if it becomes a political horse-trading where favoured industries can get cushiony allowances; or on the other hand if it pushes too far too fast and causes unnecessary job loss and economic dislocation – any of these “ifs” could slow down or imperil the development of a wider post-Kyoto global carbon-limits regime. The ETS must grow in rigor and solidity. It need not set quantitatively more ambitious CO₂ reduction targets at this time. Both business and the public must be able to look at the ETS and say: “Yes, it is working, it is getting stronger, and we can live with it. This is the path of the future.”
• Europe should expand and intensify its dialogue with China. In the end only China’s self-interest will draw it into a global agreement. But the forces in China that want to do that need the exposure, the experience, and the analytic information necessary to make their political case domestically. An early objective should be discussion between the EU and China about an EU-supported financing scheme to make China’s next 100 coal plants “carbon-neutral”, with continuation of the scheme beyond 2012 conditional upon China joining the international system of carbon-restraints (which of course it will influence in large measure). Tony Blair, to his credit, started this process. Germany will now have to play a lead role in continuing and expanding it.
• The EU should take the bold and innovative step of inviting selected sub-national American political jurisdictions to join the ETS on a limited basis. That would include the state of California; the New England states that have limited CO₂ emissions from utilities; a forthcoming initiative of five Western US states to establish a regional carbon cap; and a growing number of other states or regional groupings that are now considering carbon limitations of various kinds. The participation should be limited in the amount of trading allowed so that it does not distort the European system, and the talks preparing this will necessarily be difficult because of the thorny American legal issues it will raise. But moving in this direction is important for creation of an international system, and its effect on American politics will be positive. The worst thing would be for Europeans to conclude that in order to “keep America in the game” they must move more slowly. On the contrary, the only thing that will “get America in the game” is to keep the pace of movement steady and serious.


Marginal abatement cost in the different demand scenarios (assuming opportunities are adressed in order of increasing cost)

• While one of the greatest virtues of cap-and-trade systems is that it treats all emissions as equal and drives economic actors to “hunt” vigorously for the lowest-cost, most efficient ways of reducing carbon, the world-wide stampede to build dirty coal plants is so large, and promises to lock in such a high level of carbon emissions, that special attention is required. The present EU discussion on when and how to seek carbon-neutral fossil fuel energy generation is the single most important debate on this issue, and if Europeans can drive it to a bold and successful conclusion, this will have enormous impact on both the U.S. and China. Recent work in many quarters, including a notable study on the costs of global abatement by Vattenfall and McKinsey, concludes that “dirty coal” can be tamed in terms of global warming if we move firmly and soon. Only Europe is now capable of defining and implementing that vital new direction.

V: The Transatlantic Partnership to Combat Climate Change

We divide our list of policy choices and opportunities that now lie before the transatlantic partnership in the area of climate change into three categories.

The first category consists of directions and adjustments that will help make it attractive for those countries now outside the system of Kyoto carbon reductions to participate in such a system. We call this category “carbon diplomacy”.

The second category, “slow and steady”, contains policies that contribute to climate stabilization, and which must be pursued steadily so that the costs of low-carbon systems come down and new technologies are refined, but in such a way that the they do not drive a country’s or region’s marginal cost of energy generation or goods production far outside the relevant global marginal cost curves. These policies, however, both help lay the ground for, and contain the potential for rapid acceleration within, a successor global carbon-limit regime once that is put into place.

The third and final category we call “win/win”: they are policies that both contribute to climate stabilization and increase the global economic competitiveness of whichever countries adopt them.

Generally, the faster these options are adopted and pursued, the greater the gain, both in greenhouse gas emission reductions and in economic performance. At the present time, Europe and Japan are broadly best positioned to pursue them.

a) “Carbon Diplomacy”

• Modify the ETS to provide quantity-limited “docking stations” so that sub-national jurisdictions such as American, Brazilian, Indian or Australian states and Chinese provinces that “take a cap” could trade a limited amount of allowances on the European carbon market.
• Europe should get on board wholeheartedly with the global effort to develop a system of “Compensated Reductions” under which the rainforest nations can receive credits in the international trading system if they arrest deforestation. (Deforestation accounts for roughly 20% of global greenhouse gas emissions.)
• Europe should expand its dialogue with China on climate and energy security to include:
  • Exploration of a “low-carbon zone” that would provide advantageous financing and low-barrier IP arrangements for the globe’s largest consumer market and its largest provider of goods.
  • Exploration of ways in which Europe could provide financing to cover the marginal debt service costs of making China’s next generation of coal plants carbon-neutral as long as China joins and remains part of a global system of carbon caps.

b) “Slow and steady” options:

• Set energy portfolio standards that require more renewables.
• Make Carbon Capture and Sequestration safe and affordable, and thereby break the back of the coal problem. Europe is presently in a strong position to extend its technological and IP lead in this area. The present internal debate in Europe over whether to require carbon neutrality for all fossil fuel plants by 2020 is one of the most important and exciting discussions currently ongoing in the climate arena, and its outcome will have enormous impact around the world.
• Set more demanding but reasonable carbon reduction targets within the framework of the ETS, but this time with the long time horizons necessary to affect capital investment decisions.

c) Win/win options:

• Sharply accelerating the drive for energy efficiency. Europe is in a position to ramp up its efficiency targets now. The U.S. cannot do so easily on an economic basis without either a national carbon cap or financial incentives that encourage utilities to “sell” efficiency to their customers [2], or both, in place.
• Begin to shift agricultural subsidies from payments for surplus or non-production to payments for carbon sequestration. Agricultural sequestration will be necessary as a “bridging” device over the next quarter century for offsetting carbon emissions from traditional sources until they can be replaced with low-carbon sources. The US and Europe between them pay their farmers several hundred billion dollars per year in counter-productive subsidies for various forms of economically useless behaviour or inactivity. It will be far easier to redirect these politically sensitive subsidy systems than to dismantle them. China, India, the US, Europe, Canada, Brazil and others will all, before we are done, be supporting “carbon farmers” of one sort or another. Designing the terms, institutions and enforcement systems of such a system needs to begin now. Either Europe or the U.S. could take the lead, or they could launch the first “study” phase together as an adjunct to the Doha Round now underway. (As this article goes to press, Europe and the US are working feverishly to find ways to “save” the Doha Round.)
• Begin to set efficiency standards for vehicles and aircraft which sharply increase mileage efficiency, achieve significant net carbon emission reductions, and sharply decrease reliance on imported fuel. (It is possible to have vehicles that will get as much as 500 miles per gallon of imported hydrocarbons). It will be possible with a single set of aggressive transportation policies to modernize the automotive sector, trigger development of a new generation of aircraft that are more efficient and emit less greenhouse gases, and provide increased income for the agricultural sector through national production of low-carbon fuels. Almost all of the world’s major auto companies are multinational, and it makes most sense if Europe, the U.S. and Japan start down this path together. However, any one of the three could begin alone.

Conclusion

In the trade-off between the aggressiveness of the steps required, and the time remaining in which to take them, it is clearly in the interest of humanity to start early and carefully, rather than late and drastically. Europe has grasped this; as of this writing the US is just beginning to awaken to that fact.

Every previous experiment with market-based systems suggests that once we adopt the system and unleash human ingenuity, commercial inertia, financial greed and naked ambition in the service of avoiding climate meltdown, it will happen faster, more easily, and more cheaply than even the shrewdest economists and pundits predict.

However, a difficult and fateful conversation with the large and growing economies of the South remains in front of us.

The one issue on which the US and Europe have no time to lose, then, is to get themselves facing in the same direction and working together once again on this vital issue.

Only in this manner will they be strong enough to insist wisely but firmly upon a set of incentives and constraints likely to make it in the self-interest of the developing countries to join a carbon-reduction framework that will, at last, be truly global. Let us remember that unlike past problems, the brutal reality that underlies the threat of global warming is that either we all succeed in avoiding the worst, or none of us will.

References

• Arctic Climate Impact Assessment (ACIA). 2005. Cambridge University Press.
• IPCC. Fourth Assessment Report (Summary), Feb 2007. www.ipcc.ch
• Lovins, Amory, Kyle Datta, Odd-Even Bustnes, Jonathan Kooney, Nathan Glasgow. 2005. Winning the Oil Endgame. 2007 edition by Rocky Mountain Institute, Snowmass Colorado.
• McKinsey and Vattenfall. 2006
• Schlemmermeier, Ben and Hans-Peter Schwintowski. 2006. Das deutsche Handelssystem für Emissionszertifikate: Rechtswidrig?, Zeitschr. f. neues Energierecht 10/3, p 195-199.
• Stern, Nicholas. 2007. The Stern Review on the Economics of Climate Change. London. Download: www.sternreview.org.uk.
• Weizsäcker, Ernst Ulrich von, Amory Lovins and Hunter Lovins. 1997. Factor Four. Doubling Wealth, Halving Resource Use. London: Earthscan.

[*] Peter Goldmark directs the Climate and Air program for Environmental Defense, a Washingtonbased NGO. Most recently the chairman and CEO of the International Herald Tribune, Goldmark has served as executive director of the Port Authority of New York and NJ and as budget director for the State of New York. He was president of the Rockefeller Foundation and encouraged their involvement in environmental issues, particularly energy.

Ernst Ulrich von Weizsäcker is dean of the Donald Bren School of Environmental Science and Management at the University of California, Santa Barbara. A professor of interdisciplinary biology who was the founding president of the University of Kassel in Germany, Weizsäcker has served two terms as a member of the German Parliament. He also acted as director of the United Nations Centre for Science and Technology for Development and president of the Wuppertal Institute for Climate, Environment, and Energy.

[2] In the U.S., “decoupling” means rewarding utilities for efficiency rather than for volume, i.e. “decoupling” utility profits from the volume of energy sold. Only California has “decoupled”; this step is responsible for the astonishing fact that California has experienced no increase in per capita energy usage for thirty years.

Dinner Speech, May 11, 2006
Bren School Corporate Partners Summit

Tomorrow, we shall discuss the science, management and economics of catastrophes. After Katrina, this is one of the hot debates in this country and the world. I seem to observe some kind of a new mindset setting in and do hope that the Bren School and the business community with which we are cooperating will be part of that shift of the mindset, with a view of reducing the risks of disasters and of arriving at a safe and prosperous world.

I thought to offer you some reflections this evening about the changes of the ecological mindset over the last half century and perhaps about its future.

Catastrophes have nearly always played a central role in creating a new mindset with regard to the environment. But in some cases it was slow disasters rather than sudden events like Katrina. Perhaps the most important chain of disastrous developments in this country surfaced during the 1960s. It was in 1962 that Rachel Carson in her “Silent Spring” described the widespread poisoning of the environment with toxic pesticides, killing millions of birds or their eggs and driving the bald eagle close to extinction. That gave an outcry of anger in the country about the chemical industry. Soon later you had that unbelievable burning water on the Cuyahoga river in Ohio. All of a sudden, then, it became politically correct also to complain about the air quality in LA or in Pittsburgh.

In Japan, it was chiefly mercury and cadmium pollution that killed fish and fishermen, (the Minamata and Itai-Itai diseases) and the terrible air quality in the two big agglomerations forcing traffic policemen to wear face masks all day. In Germany, the biggest trigger of environmental consciousness was the dieback of forests, and in Italy it was the Seveso disaster releasing tons of dioxin and killing people in the neighbourhood of the factory.

In response, all these countries developed regulation to control dangers and pollution. Pollution control became the core the ecological mindset in the 1970s and 80s. In the US, you had the Clean Air Act, the Clean Water Act. And California always went a step ahead e.g. with its clean cars regulation.

But then, with the political paradigm shift during the 1980s away from state intervention and pro free markets, the environmental movement suffered severe setbacks. Too much had it relied on state intervention and strict regulation.

One of the reasons why the movement got weaker was actually the good news that air and water quality had conspicuously improved over the years in all the rich countries. This made it possible to say in some quarters that environmentalists had overdrawn their cause and had become a real nuisance.

Moreover, the business community and the state could argue that the remarkable 20 or 30 years success story of pollution control was achieved by investing a lot of money in pollution control. The evidence was striking that countries could afford pollution control only if they had become rich in the first place. And turning directly to the activists you could remind them that on the market place organic food was more expensive than conventional produce. So if activists were opposing economic growth or further exploitation of natural resources, you had a convenient ecological argument against them.

The idea of “become rich first and take care of pollution control later” was an integral part of the ecological mindset of those years. And it served as a wonderful excuse for poor countries not to do too much for their environment. Thus the pollution control paradigm was extremely convenient for everybody.

But I am afraid that the days of this current paradigm and mindset may be over. Some very uncomfortable facts and forecasts are creeping in, most notably in the context of climate change. Uncomfortable because it turns out that it is chiefly the rich who cause the largest environmental impact. They have much higher carbon dioxide emissions than the poor. And they have an enormous need for land outside their own countries. Japan, Germany and to a lesser extent the US are exporting some of their environmental problems to poorer countries by importing timber, meat and fruits from those countries.

Of course, you see politicians trying hard to maintain the old, convenient paradigm. The ideal way of doing this is by singling out costly measures of climate protection, such as carbon sequestration, or costly measures of nature protection such as buying land with a view of idling it. Such costly measures allow us conveniently to pursue a “business as usual” strategy.

Let me submit that this strategy, as convenient as it may look at first glance, doesn’t really solve the problem. Chiefly because it encourages all six and a half billion people on earth to believe they can begin to cooperate only after having reached our levels of economic strength. By then it will be too late for a million species and for serious climate mitigation measures.

Fortunately, there is another way out. We can decouple economic well-being from carbon dioxide emissions and from excessive land use more or less the way we decoupled wealth from toxic pollutants. The new operation of decoupling will take longer than 30 years but it may actually become a thoroughly profitable operation.

What we would need, at the core, is a new technological revolution. This time, the characteristic of technological progress will in all likelihood be the dramatic increase of resource productivity. Prof. Umesh Mishra and Steve DenBaars, next door in the Engineering building, work on solid state power switching for hybrid cars, leading, so it seems to hybrid cars doing 100mpg. (This, I submit, would make the use of biofuels responsible, while biofuels for a hundred million gas guzzlers would be an ecological nightmare to me!) And Prof. Shuji Nakamura works on solid state lighting consuming just one tenth of the electricity of the outgoing generation of light bulbs. The same factor of ten seems attainable for buildings. The Bren School building is perhaps four times better than comparable office buildings.

This technological paradigm shift is already taking place in East Asia. There they have less energy and mineral resources of their own, and less space. So they are strategically heading for a doubling, if not quadrupling of their resource efficiency. I suggest that the US economy will be well advised to catch up with the Asians because world markets are becoming ever more sensitive in this respect as resource prices keep growing.

Let me close by explaining to you why I am putting so much emphasis on the technological solution side. It has been an experience all along both in medicine and in environmental policy that the readiness to recognize a disaster or a problem was greatly facilitated by the availability of remedies. The discovery of penicillin resistant bacteria was made in the early 1950s but became widely publicized and accepted only during the 1960s after other antibiotics had become readily available. At that time, the pharmaceutical industry, understandably, was the main driving force in publicizing the penicillin resistance problems! Similarly, the ozone depletion was known since the early 1970s but ozone diplomacy got successful only after Dupont had come up with elegant CFC substitutes. I suggest that in America and elsewhere the readiness to take strong measures on climate and biodiversity protection will grow more or less in proportion with the availability of the respective technologies.

That is a much nicer scenario, isn’t it, than waiting for natural catastrophes or business collapses resulting from dinosaur technologies until we wake up to the real challenges of our days.

An internationally recognized environmental scientist and statesman has been appointed dean of the Donald Bren School of Environmental Science and Management at the University of California, Santa Barbara. Continue reading

Keynote address given at the China Development Forum 2005
“China: Building a Resource-Efficient Society”
Beijing, 25 June, 2005

Prof. Ernst Ulrich von Weizsäcker, MP,
Chairman , Bundestag Environment Committee
Founding President, Wuppertal Institute

Dear Professor Lu Mai, dear Professor Liu Shinjin, ladies and gentlemen,
It is an unusual honour for me to be invited to this keynote address, which I have put it under the title of Resource Productivity.

Fig 1

This title contrasts with the preoccupation with labour productivity during the last 200 years of technological progress. Labour productivity has been the melody of the first Industrial Revolution. It increased twentyfold or more during those 200 years. This has been the basis of prosperity and it is the main theme of China’s stunning economic progress.

During those same 200 years, the world has also seen a systematic decrease of prices of natural resources.

Fig 2

This invited mankind to a wasteful use of those resources. Small wonder, then, that resource productivity was stagnant or even decreasing during much of this time.

Let me submit to you that we cannot continue on this road. It may be wise, chiefly for the industrialized countries to slow down the further increase of labour productivity while forcing the increase of resource productivity.

Forcing resource productivity has become an imperative also for the developing countries that cannot afford a wasteful use scarce resources. Obviously, this consideration was at the roots of planning this conference. The new trend in technological development, namely a strong emphasis on resource productivity, may be triggered by the recent increase of resource prices:

Fig 3

For China in particular, the rising commodity prices were a signal of warning. But then, you have additional reasons to become more resource efficient. It would allow you to simultaneously reduce one major health problem, namely pollution-caused mortality in your industrial agglomerations:

Fig 4

Clearly, air pollution should also be addressed directly by appropriate pollution control measures. These have an additional cost, which however, is far exceeded by the economic benefits for China, according to Stefan Hirschberg et al (2003) of the Swiss Paul Scherrer Institute:

Fig 5

China is going through the standard development with regard to pollution: Countries start poor and clean. Then they industrialize and get rich and dirty. And then they rich enough so that they can afford pollution control and end up rich and clean:

Fig 6

It has been the traditional view of the developing countries that they are too poor to pay for pollution control. As Indira Gandhi said it in 1972 at the first UN Conference on the Human Environment in Stockholm: “Poverty is the biggest polluter”

Fig 7

Indira Gandhi’s slogan went down well not only with the political leaders of developing countries to whom it was a nice excuse for not acting on pollution control, but also for industry in the North that could conveniently say that they needed good profits for the sake of the environment.

The trouble is that today’s biggest environmental problems, biodiversity losses and climate change, are chiefly caused by the rich.

Fig 8

Regarding biodiversity, the biggest problem is habitat losses due to increased land use for agriculture, settlements, mining, energy and transport. You can estimate the acreage that is needed per person for a sustainable supply of all the daily goods and services. This is then the “ecological footprint” according to William Rees and Mathis Wackernagel, caricatured in the next picture:

Fig 9

The ecological footprints of average Chinese people are roughly one hectare. We in Western Europe have footprints four times as large, and in the US and Canada, footprints are even eight times that size. If all 6.3 billion people had US type lifestyles, we would need three to four planets Earth to accommodate all their footprints. This is obviously unsustainable.

The other big problem is global warming. Global temperatures have been rising and falling over the last 160.000 years in close correspondence with CO2 concentrations.

Fig 10
Based on the physics behind this correlation, the Intergovernmental Panel on Climate Change (IPCC) has projected temperatures to rise dramatically during our century:

Fig 11

The consequences could be alarming for water, food security and for biodiversity. You would also have to count with more devastating typhoons and, most dangerous perhaps, with a rising sea water table, indicated by the green line in the next picture.

Fig 12

The difference between high and low water tables is more than 100 metres, which means that coast lines will heavily vary. The next picture shows it for Italy. 20.000 years ago, during the last Ice Age, the Sea was lower and Italy was larger than today. But two million years ago there were no polar ice caps (and also the geological situation was different in the Mediterranean Basin) so that Italy was much smaller:

Fig 13

At present, we see a dramatic change of temperatures in the Arctic region, as has been discussed in the Arctic Climate Impact Assessment (2004). The summer freshwater coverage of Greenland has increased more than fourfold in ten years:

Fig 14

We are unable to predict the consequences of this development. But we know from historical records that ice masses can collapse or glide into the oceans in a very short period of time. This has been the case with the ice shield once covering Labrador and the Hudson Bay, which disintegrated during a few decades, perhaps even a few weeks some 7800 years ago, letting the sea water table rise by some 7 metres:

Fig 15

Imagine what such a mega-event would mean for China’s or Japan’s coastal areas, or for the Netherlands or Egypt or Florida!

What do we have to do to prevent such disasters from happening? It is plausible that at least we should try to stabilize CO2 concentrations. This, however, will require us to reduce annual CO2-emissions by 60-80 percent, according to the IPCC. Let us optimistically assume that 50 percent will do. But under the present trends, we shall get exactly the opposite. We are heading for a doubling of CO2-emissions:

Fig 16

China, India and other countries are drastically expanding their industrial outputs, their motorized transportation and their energy consuming housing and agriculture. So we shall see China and India to have emissions similar to those of the US:

Fig 17

Fig 18

The world energy pie shows that worldwide we have still an overwhelming dominance of fossil fuels.

Fig 19

In Europe, we have begun systematically to work on the reduction of CO2-emissions. The trading began in December, 2004. Initially, the prices paid per ton of CO2-emissions were at around 8 Euros. Meanwhile, prices have roughly doubled.

Fig 20

One component of our combating greenhouse gas emissions has been the increase of renewable sources of energy. In Germany, we have been quite successful in this:

Fig 21

We were very glad to see a large Chinese delegation at the Renewables 2004 conference in Bonn last year, and many said that China was about to copy the German system and is now planning another such conference this November. However, for all their merits, the renewables will not suffice to solve the problem. The energy pie is simply too large and must be reduced if we want to fight global warming and also avoid a dangerous dependence on nuclear power.

The key to the answer will be a Second Industrial Revolution focussing on the strategic increase of resource productivity. This has been the vision in the book “Factor Four. Doubling Wealth, Halving Resource Use”, which was also translated into Chinese:

Fig 22

It has been known for a long time that lower energy intensity is a sign of modernity:

Fig 23

We therefore see the Factor Four story as a true continuation of technological modernization and progress.
Let me now open a window for you to look into the new universe of eco-efficient technologies. The pictures will mostly compare existing technologies on the left hand side with new technologies on the right hand side that are some four times, or even ten or a hundred times more resource efficient than the old ones.

Fig 24

Let me start with my co-author’s Amory Lovins’ favourite idea, the “hypercar”, which allegedly does 150 miles a gallon, or needs only 1,5 litres per 100 kilometres.

Fig 25

Some remain a bit sceptical about its success but according to Amory, some 2 billion dollars have already been invested in the concept.

Fig 26

The next is Amory Lovins’ institute and home, the Rocky Mountain Institute, high up in the Rocky Mountains, which during much of the year is largely energy-self-sufficient and is easily a factor of ten better regarding energy than typical mountain.

Fig 27

The concept has been transferred ten years ago to ordinary apartment houses in Germany and elsewhere, as “passive houses” making use of solar heat and of heat exchange ventilation.

Fig 28

In my political constituency, Stuttgart, or rather in nearby Fellbach, we have a true zero-external-energy house. It has become a tourist attraction. And part of the excess energy it produces is channelled into a super-efficient car.

You all know the efficient light bulbs that need only a quarter of the electricity used in old incandescent bulbs. China has become the largest manufacturer worldwide of the efficiency bulbs. However, as most of you know, this is not yet the end of the road. Light diodes are coming up that are yet another factor of two or three better than the efficiency bulbs shown on the picture.

Fig 29

This is a small cooling chamber to replace the refrigerator that stands freely in the kitchen. Two weeks ago, I met with a Japanese gentleman who told me that even freely standing refrigerators have now been developed that are seven times more energy efficient that the old ones. The new development was probably triggered by the “Top runner programme” of Japan.

Fig 30

Fig 31

If you replace the old-fashioned filing cabinet technology by CD ROM’s you save more than a factor of ten and you have easier access to your data.

Fig 32

Water scarcity is one of the biggest problems of China. You may therefore be interested in a technology used in Germany that has reduced water consumption twelve fold in paper manufacturing, chiefly by systematically recycling and cleaning waste water.

Fig 33

My friend Professor Ryoichi Yamamoto of Tokyo once sent me the above picture showing a thin rod of steel that has the strength and capacities of otherwise ten times more resource consuming steel.

Fig 34

Video conferences are, of course, something like a factor of one hundred more energy efficient than the otherwise necessary business travel. I admit that video does not easily substitute for a business meeting on the Bahamas.

Fig 35

This is the story of modern, energy intensive agriculture. Winter tomato grown in greenhouses in Holland tend to need a hundred times more energy than they afterwards contain! With intensive cattle farming, the ratio is hardly better. Organic farming, on the other hand, is roughly by a factor of four more energy efficient.

Fig 36

This is the well-known strawberry yoghurt saga established by Stephanie Böge at the Wuppertal Institute. Lorries criss-cross Europe and drive some 8000 kilometres for the manufacturing of strawberry yoghurt. Obviously you could do at least ten times better.
So much perhaps to encourage you to think further about the upcoming technological revolution. Let me close by making a few remarks about methods to arrive there.
China is one of the countries that has established efficiency standards for cars. To meet the 2008 standards, many European and American car manufacturers have still to do considerable homework, while Toyota is well prepared.

Fig 37 [*]

In the business world we seem to see a slight competitive advantage of eco-efficient companies listed in the Dow Jones Sustainability Index over the average listed in the Dow Jones Group Index.

Fig 38

And if you compare different countries using the World Economic Forum’s Competitiveness Index you see a positive correlation with the Sustainable Development Index of countries.

Fig 39

So we seem to be on a good way. However, this is all too slow to reach the necessary factor of four. Let me in closing say a few words about instruments. I am impressed with what I heard in China about the determination with which you are creating incentives for more resource efficient technologies. Moreover, Douglas Ogden this morning mentioned the possibility of tax refunds for companies that achieve ambitious standards, and James Sweeney spoke about appropriate pricing.

Japan has gone a considerable step further with her “top runner programme” that makes the most energy efficient appliance or vehicle the top runner or standard and announces shame on those companies in a few years that still sell outdated, less efficient items. Ultimately they even have to pay a fine.

Germany and other countries have adopted an ecological tax reform to reduce the fiscal load on human labour while making natural resources more expensive.
And at the G 8 Summit that takes place in a few days, we hope countries agree on a geographical extension of climate policy beyond “Kyoto”. We hope that also China, India, Brazil etc will be invited under fair term to join international climate policy.

For this, the North has to understand that the present “grandfathering” approach is unfair to the developing countries and has to be replaced step by step by a system based on per capita allowances, – which would be good for China and India.

Mr. Chairman, ladies and gentlemen, I feel that the race is on worldwide among countries and among companies to take the lead in the Second Industrial Revolution that is driven by the second melody of progress, the melody of a revolutionary increase of resource productivity.

Thank you for your patience and attention!

References

• Hirschberg, Stefan, et al. 2003
• Rees, William and Mathis Wackernagel
• Von Weizsäcker, Ernst Ulrich, Amory Lovins and Hunter Lovins. 1997. Factor Four. Doubling Wealth, Halving Resource Use. A Report to the Club of Rome. London: Earthscan. Also available in Chinese and ten other languages.

[*] After the lecture, I was approached by a reresentative of General Motors who said that GM had also met the standards with cars exported to China.

Interview for the Bosch Environmental Forum

The subtitle of the report of the World Commission for the Social Dimension of Globalization, which you were involved in, is “Creating opportunities for all”. It also mentions the role of companies and of the UN Global Compact, which Bosch also joined in 2004. What opportunities and initiatives should companies be taking here?

v.W.: Companies should recognize and apply the ILO’s core labour standards also within the supply chain. Companies may wish to establish assessments of climate or environmental impacts and draw their customers’ attention to them. Global Compact companies may also get involved in efforts to achieve an international i.e. competition-neutral) control of CO2 emissions and of the resource consumption. Global Compact companies could instruct their own pension funds to focus on ethical or ecological investments.

When the Kyoto protocol comes into force in February, this will mean greater climate protection. Your view is that the country that manages to disengage its economic development most efficiently from its CO2 emissions will have significant competitive advantages. How can this advantage be achieved, and with what innovations?

v.W.: Japan has developed a “top runner” programme that defines an efficiency standard for energy consuming vehicles and appliances. Products failing to meet that standard will be phased out in the long run. The EU should consider joining this programme. Climate targets should be developed and agreed for the period after 2012. They should help stabilizing temperatures at a level not exceeding two degrees Celsius above pre-industrial levels. For this, CO2 concentrations should rather not exceed 500 ppm.

In renewable energies, the German export industry is one of the world market leaders. China has announced that it will be generating 12 percent of its electricity supply from renewable energies by 2020. This ambition is underlined by its organization of a global conference on renewable energy in 2005, as a follow up to the “renewables 2004” conference in Bonn. Does that mean that German companies, with their know-how, can look forward to a good future in China as far as renewable energy is concerned?

v.W.: Germany seems to have established itself as China’s preferred partner for renewable energies. This could mean major market opportunities for German companies.

At the beginning of this year you are publishing a new report to the Club of Rome. In the report, you deal with the “limits to privatization,” and conclude that the balance between public and private sector that more or less existed up to 1990 has been lost, and that the economy is now leaning more toward the private sector.

What do you feel are the consequences of this, and where do you see the limits to privatization?

v.W.: I co-edited the book “Limits to Privatization – How to Avoid Too Much of a Good Thing” with professors Oran Young (Univ. of California) and Matthias Finger (Lausanne, Switzerland). It features some 50 examples of privatization, both successes and failures, in every relevant sector. The book observes an increasing imbalance between the public and private sectors, - to the detriment of the public sector. The private sector must be aware that there are many “public goods” that markets will never produce or maintain. Among them are primary education, the legal system, certain infrastructures, long term environmental protection, and a minimum of social justice.

Governance and Corporate Social Responsibility stand for two approaches that are intended to contribute to a new balance between government, business, and civil society. What hopes do you personally place in the voluntary assumption of responsibility by companies, and where do you feel is the most urgent need for change in management structures?

v.W.: There is a need for globally valid rules for business. There should be no incentive for companies to disregard minimum standards of human or ecological decency.Voluntary rules of Corporate Social Responsibility (CSR) are helpful but not sufficient. Governance and CSR are mutually complementary. CSR pioneers may enjoy first mover advantages as ambitious international rules are gradually emerging and are gaining broader recognition.