New Bottom Line Volume 6.23 – Compromise or Breakthrough? Kyoto, Climate Change and Factor Four Efficiencies

December 1, 1997

The final runup to the Kyoto conference on global climate change seems burdened with familiar positional warfare that seems inevitably inadequate to the unpleasant challenge of facing the facts. (See NBL 5.15, Weather or not: Risk and the physics of climate change)

The folks who do “ecological footprint analysis” estimate that we would need the area and resources of three planets like this one to sustain earth’s current standards of living…this at a time when only 20% of the world’s population “consumes” some 80% of the world’s resources. You don’t have to be very good at math to understand the challenge of a billion people moving into the ranks of the global middle class during the next century or sooner. It’s not a question of whether people should live better lives; they should, and hopefully they will. It’s a question of how we sustain rising standards of living without hauling half a dozen planets in tow behind us for spare parts.

The irony is that there are still powerful forces whose thinking is locked away in decades old misconceptions masquerading as “facts.” Case in point: Canada’s Imperial Oil <http://www.esso.ca/mainindex.html>; recently issued a special supplement to employees titled “Climate Change” (October 1997), “devoted to helping employees and annuitants understand the climate-change debate [associated with the Kyoto conference] and the recommendations Imperial is making to Canada’s policymakers.” In it Don Smith, Imperial’s director of environment and safety, insists that the need for economic growth cannot be decoupled from an increase of energy consumption. He calls it a “virtually unbreakable link,” and concludes that “limiting carbon emissions in the next decade inevitably means slowing economic growth.”

Each point of view has its validity of course, seen from its own experience and self-interest. Those whose wealth derives from fossil fuel tend, with a few notable exceptions, to oppose any attenuation of its central role in the global economy. Advanced economies look with concern at the rapidly growing energy appetite and corresponding carbon exhaust of the emerging economies–projected to exceed OECD carbon output by mid-century–and expect those emerging economies to shoulder their share of international restraint. Developing countries want to see the lion’s share of restraint come from the advanced economies, who both generate the lion’s share of greenhouse gases and in any case have benefited most from decades of unrestrained combustion of fossil fuels.

My attention turns though (no surprise to regular readers of NBL) to the innovators who are more interested in innovation than accounting, in leadership than compromise. Case in point: Factor Four: Doubling Wealth, Halving Resource Use by Ernst von Weizacker (of the Wuppertal Institute for Climate, Environment and Energy <http://www.wupperinst.org/WI/homee/> ;) and Amory B Lovins and L Hunter Lovins (of the Rocky Mountain Institute <http://www.rmi.org>;).

“The purpose of this book is practical change,” the authors note, and go on to chronicle 50 examples of quadrupling resource productivity — 20 each for energy and material productivity, and 10 for transportation productivity. This is not a pie-in-the-sky futurist report. Most of the examples noted — energy efficient homes, office buildings, kitchen appliances, lighting, farming systems, and motors — exist today as widely available, off-the-shelf, competitively priced technologies. Others are well-reasoned technical arguments of possibility, poised for implementation. A few years ago, for example, Lovins’ “hypercar” concept was just a well reasoned design exercise; this year Toyota is first on the market with a hybrid powered vehicle, with other manufacturers in the pipeline behind them.

Yet the Factor Four metaphor, as outlandish as it may seem to some, has been surpassed. A “Factor Ten Club” of business executives and scientists (mostly in Europe) is researching and promoting 90% reductions in resource use. What’s reasonable then? Simply this: whatever you can manage to accomplish and profitably implement.

True, the pressure for change is eased by low apparent energy prices in North America and some developing countries. (I say “apparent” because the price at the pump doesn’t reflect real costs of either military protection of resource supply lines or social subsidy of health and environmental costs.) In addition, many companies still dismiss energy and resource costs as a relatively insignificant factor of production. But other firms recognize that realizable reductions in energy expenditures and other environmental costs can yield noticeable (and largely risk-free) improvements to the bottom line.

The point of all this is that there is a logic looming here, understood by a small but growing number of business executives but perhaps still relatively few policymakers: it makes no business sense to spend money on resources that are not absolutely necessary to produce the desired results. Companies — and nations — that are smart enough to consistently generate more value from less stuff will gain a financial and competitive advantage over those stuck in the philosophical comfort of allegedly “unbreakable links” that ignore the laws of physics.

# # # NOTE: You can now order Factor Four online — along with other interesting books on business and environment — directly from the Natural Logic/Amazon.com Bookstore.

(c) 1997 Gil Friend. All rights reserved.

New Bottom Line is published periodically by Natural Logic, offering decision support software and strategic consulting that help companies and communities prosper by embedding the laws of nature at the heart of enterprise.

Gil Friend, systems ecologist and business strategist, is President and CEO of Natural Logic, Inc.

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