What is the Clean Economy? A GLOBE-Net Editorial

GLOBE-Net, August 27, 2012 – The ‘clean economy’ has become something of a catch all phrase being used in a variety of contexts to describe the desired end state of a transition to a lower carbon future. Like the often overused phrase ‘green economy’ it carries many meanings, not all of which are grounded in reality.

The GLOBE Group has been engaged in some groundbreaking research on the clean economy and it would seem appropriate to share some of the insights gained from our work.

It is important to note at the outset that the ‘clean economy’ is not something separate from our everyday economy. In truth, we live in only one economy.  Making that economy ‘cleaner’ represents a shift toward less carbon intensive solutions and longer-term sustainability planning and programming.

It is not dissimilar from the how companies in the private sector are continually improving their operating efficiencies to reduce wastes and to conserve energy, thereby enhancing their bottom lines.

[stextbox id=”custom” float=”true” width=”200″ bcolor=”add3d5″ bgcolor=”add3d5″ image=”null”]The transition toward a cleaner economy is about creating and retaining wealth and jobs, reducing the carbon footprint of societies, restoring the natural environmental balance of critical ecosystems, and implementing improvements in energy and industrial efficiency, all of which contribute to enhanced economic competitiveness. [/stextbox]

And while the payoff for a corporation is improved profitability and shareholder benefit, the payoff of a cleaner economy is measured in terms of creating better jobs and promoting more public and private sector investment.

The second key point to note is that while clean and renewable energy sources and technologies figure largely in the substance of a cleaner economy, the opportunities for job creation and investment promotion range far wider and find expression in all areas of public policy and corporate governance.

In broad terms, the transition toward a cleaner economy is about creating and retaining wealth and jobs, reducing the carbon footprint of societies, restoring the natural environmental balance of critical ecosystems, and implementing improvements in energy and industrial efficiency, all of which contribute to enhanced economic competitiveness.

These words may sound like platitudes, but in truth the transition toward a cleaner economy is a demanding and in some respects risky proposition requiring courage and determination in terms of public policy and programming, and leadership from the corporate sector.

Is the Clean Economy Important?

Absolutely! The Brookings Institution summed it up nicely in a recent report: “the clean economy matters because its emergence responds to critical global and national environmental, security, and economic trends and associated challenges, most notably the growing demand for global environmental sustainability, the sharpening need for resource security, and the aspiration everywhere toward economic transformation.”

As illustrated in GLOBE’s research summarized in the West Coast Clean Economy Report published by the Pacific Coast Collaborative in March of this year, the transition toward a cleaner economy throughout the West Coast region (California, Oregon, Washington, and British Columbia)could result in over one million net new full-time equivalent jobs between 2010 and 2020.

Gross domestic product (GDP) contributions of up to US $142.7 billion and increased investments of between US $147-$192 billion are also possible during this period.

Five market opportunity areas or ‘sectors’ that hold the highest potential in terms of new investment and job growth were identified in the March 2012 West Coast Clean Economy report.  These sectors are:

• Clean Energy Supply and Storage;
• Clean Transportation;
• Green Buildings and Energy Efficiency;
• Environmental Protection and Resource Sustainability; and
• Knowledge and Support.

These five key sectors exist at the ‘core’ of a cleaner economy and supply the products, technologies, and services that are helping to accelerate the transition to a lower-carbon future.

Accelerating the Transition to a Cleaner Economy

What are the key factors driving the transition toward a cleaner economy? Our research has identified the following basic requirements:

1. Clear and stable policy frameworks-Having clear and stable policy frameworks that encourage private sector investment and which foster competitive market-based platforms for cleaner goods and services are crucial to the creation of more jobs and to the wide-spread deployment of innovative technologies.
2. Support for market-based mechanisms- While government financial support and related incentives are important for reducing technology risk and accelerating market adoption during the transition phase, market-based mechanisms must be allowed to work their way into the functioning of a cleaner economy. Market-based mechanisms are able to work faster than public policy in order to accelerate economic growth.
3. Establishing partnerships and increasing collaboration- Collaboration between governments and also between companies can help identify and exploit synergies to grow the cleaner elements of the economy. Promoting shared use of resources can accelerate the transition process.
4. Sustainable business models- Sustainable business models are not about re-inventing the wheel, but rather about developing strategies that allow them to realize existing and emerging opportunities. Business models should be a reflection of current and anticipated market demand. While incentives are useful in the short-term, good products and sound business models will endure the test of time.
5. Focus on increasing productivity- Increasing productivity is critical to achieving the opportunities of a cleaner economy. This will require a combination of investment and technology innovation, as well as training for skilled workforce development. Investing more in skills-based learning will be critical for boosting productivity levels.
6. Facilitating knowledge transfer-The skill sets required in individual sectors are increasingly becoming integrated. As a result, more cross-training and systems-based approaches to problem solving are required. Promoting knowledge transfer is critical to cleaning the entire economy. Demonstration projects are also important, not only as a means for proving new technologies and solutions to potential buyers, but also as tools for education and skill development.

Presently the GLOBE Group will be publishing new research on three key market opportunity sectors in British Columbia – specifically in the areas of clean energy supply and storage, clean transportation, and green buildings and energy efficiency.

This new research offers some very practical guidance for leaders in business and government. Suffice it to say, we believe the transition process described above represents the single most important global necessity and opportunity on the medium-term horizon.

John D. Wiebe

President and CEO