Transforming Industrial Civilization

It has become a daunting task to maintain industrial civilization that humankind has ever developed since the Industrial Revolution. Although the Club of Rome alarmed the world with the publication of The Limits to Growth in 1971, the situation has gone even more serious since then.

Global economy has achieved a high growth since 2000　at the average annual rate of 3.5&, thanks to the advancement of globalization and information technologies. East Asian countries, especially China and India, have shown remarkable industrial growth, which resulted in rapid increase in the demand of raw materials including oil, coal, iron ore and nonferrous metals in early 2008. Despite recent lower prices due to the simultaneous global recession, the demand of resources will tend to tighten in the long run.

Meanwhile, global warming has become a real threat to the world in the mid 1980s. Extreme weather events such as droughts, hot waves, floods, torrential rains and forest fires have taken place more frequently all across the world. Outrageous logging in tropical forests; extended slash-and-burn agriculture; degraded land; and spreading desertification have all accelerated the pace of environmental destruction. It is hard to say that international response has successfully attained sufficient results, even though the Kyoto Protocol was agreed to regulate greenhouse emissions mainly in developed nations in 1997, following the adoption of the United Nations Framework Convention on Climate Change at the UN Conference on Environment and Development in Rio de Janeiro in 1992.

Humans have ever developed technologies and a range of industries in order to protect themselves from natural threats and pursue benefits for their living. Above all, the Industrial Revolution in the late 18^th century and the energy revolution in the 20^th century contributed to remarkable progress in industrial techniques and technologies.

Thus, man-made industrial system was established to maximize ”economies of scale• depending on mass production, mass consumption and mass disposal. It was based on the assumption that the earth was endowed with inexhaustible natural resources and that its natural cycle would last forever.

However, you might have to say that the foregoing assumption is on the verge of collapse, given the latest energy outlook that projects tightening supply and demand over a long period and aggravated global environment represented by extreme weather. Expanded human activities have brought the earth beyond the limit of its capacity of natural resources and circulatory functions.

If so, the industrial system for which we must seek from now should allow us to produce more with less energy, consume effectively and achieve a fully recyclable stream. It must be a neo-industrial civilization that will deliver higher intellectual productivity with added values, based on low energy intensity and low carbon infrastructure.

International post-2012 framework talks are underway to address global climate change. The European Commission advocates retaining of a cap-and-trade system, namely, the European Emission Trading Scheme that was put into practical application first in the world, while promoting wider adoption of the scheme outside the EU region. They seem to postulate that market functionality will enable to cut emissions at the lowest possible cost through mandatory emission trading.

A new framework should involve big emitters including China and the US.　Then one pertinent question is whether or not reasonable and acceptable caps can be established for such major emitters. A multiple of criteria such as per-capita GDP ratio or per-capita GHG emission benchmark have been proposed and discussed so far, although none of them could lead to a consensus.

As seen from the case of the Kyoto Protocol, it is inevitable to settle whatever negotiation by a political compromise after all. Then it might lead to a denial of the market function, because allocated emission rights determined under the influence of political power can directly lead to uneven economic interests through the emission trading.

Also, it is possible that actual reduction efforts are intentionally delayed at both national and corporate levels in order for them to register more advantageous emission histories. Although the concept of auctioning emission caps is supported by some, it is impractical on the part of countries and may be cumbersome on the part of corporations. Growing burdens on corporations will be likely to induce capital flight even.

In my opinion, such an approach to ignore market functions should not be adopted. Undoubtedly, the market functionality can never be perfect. That is why occasional corrections are required. However, even in such cases, we must respect the market as much as we can, while exploring a better mechanism to facilitate industrial efforts. We should direct our efforts toward a path toward ensuring both optimal distribution of resources by way of market functions and conservation of global environment.

Recently, there is a call for a Green New Deal as a way to beat the worldwide simultaneous recession, and I am one of those proponents. In introducing it, I think we need to focus on: establishing a framework in which users are willing to opt for low-carbon goods and services at the market; green paradigm shift of industrial technologies; business orientation to help achieve less resource-intensive, low-carbon infrastructure; development of intellectual industries to place less burden on resources and environment.