The Role of Financial Institutions in Framing the Future Direction of the New Green

Economy

A. Karim AhmedNational Council for Science & the Environment

Washington, DC

TBLI Conference Asia 2010Tokyo, Japan

May 27 - 28, 2010

National Council for Science and the Environment Improving the Scientific Basis for Environmental Decisionmaking

.

MISSION:

Improving the scientific basis for environmental decisionmaking

VISION:

• A society where environmental decisions are based on an accurate understanding of the underlying science, its meaning, and its limitations

• Receive accurate, understandable science-based information

• Understand the risks, uncertainties, and consequences

• Support research, communication and use of science

• Recognize cultural values play an important part in decisionmaking

Five Strategic Areas:

1. Education and Careers

2. Science Solutions

3. Science Policy

4. Annual National Conference

5. Encyclopedia of Earth

National Council for Science and the Environment (NCSE)

Tenth Annual National Conference:

“The New Green Economy”

Washington, DC, January 20 – 22, 2010

Past NCSE Conferences & Chafee Lectures2000

2001

2003

2004

20052006

20072008/2009

NCSE’s Tenth Annual Conference, 2010

Highlighted Speakers

• Government:– Lisa Jackson - Administrator, US EPA– Leonard Peters - Secretary, Energy and Environment Cabinet, State of Kentucky– Representative Rush Holt -  Congressman, 12th District, New Jersey– Tim Jackson - Economics Commissioner, UK Sustainable Development Commission– Martha Kanter - Under Secretary, US Department of Education– William E. Spriggs - Assistant Secretary for Policy, US Department of Labor– Cecilia Rouse - Member, White House Council of Economic Advisors 

• Non-Government / Academic:– Charles Holliday - Chairman and former CEO, DuPont– Kyung Ah-Park - Vice President, Environmental Marketing Group, Goldman, Sachs– Jeff Seabright - Vice President, Environment & Water Resources, The Coca-Cola

Company– James Gustave Speth - Dean Emeritus, Yale School of Forestry and Environmental

Studies– Mindy Lubber - President, Ceres– Damon Silvers - Policy Director, AFL-CIO– Michael Crow - President, Arizona State University– Herman Daly - Professor, School of Public Policy, University of Maryland– Van Jones - Author of "Green Collar Economy“– Joseph Romm - Founder and Executive Director, Center for Energy and Climate Solutions– David Gergen - Senior Political Analyst, CNN, and Professor, Harvard's School of

Government– Jessy Tolkan - Executive Director, Energy Action Coalition

NCSE’s John H. Chafee Lecturer, 2010:James Gustave Speth

Dean Emeritus, Yale School of Forestry & Environmental Studies Former Administrator, UN Development Programme

“The environmental movement . . . has grown in strength and sophistication, and yet the environment continues to go downhill, fast. If we look at real world conditions and trends, we see that we are winning victories but losing the planet. . . We have instead allowed our only world to come to the brink of disaster. . . the old economy has given rise to a triple crisis, and they are tightly linked. . .”

Overall Message: We are in the midst of an unprecedented globally-linked

Economic, Social & Environmental Crisis of vast proportions

Lecture excerpt:

New Scientific Evidence for Global Warming since Publication of IPCC 2007 Report

- New satellite and ground-based data gathered since the IPCC report (AR4) was published in 2007 have indicated a more severe melting of the Arctic Ice Cap than any climate models had previously predicted.

- It is likely that in the next 10 to 15 years, the Arctic Ice Cap will be completely ice and snow free during the late summer months.

- New analysis of paleo-climate data, based on Antarctic ice-core data for the past 425,000 to 800,000 years, carried out by NASA’s senior climate scientist Dr James Hansen show that current prediction of climate change by the IPCC significantly underestimated the severity and extent of global warming.

Future Projection of Greenhouse Gas Emissions:Business-As-Usual versus Accelerated Mitigation

(World Bank, 2009)

“Green Investing 2010: Policy Mechanisms to Bridge the Financing Gap”

A Report of the World Economic Forum, January 2010

• WEF Report in 2009 highlighted the need to globally invest US $500 billion by 2020 in order to achieve peak carbon emissions of 2 degrees C. Current projections shows that we may not reach that goal…

Projected Annual Global Investment in “Clean Energy”

(World Economic Forum, 2010)

Green/Clean Technology & Private Investments:Bright picture in the short-term, yet a looming

long-term challenge…

• “Record Number of Clean Technology Venture Deals in 1Q 2010 Finds Cleantech Group and Deloitte” (Cleantech Group Press Release, March 31, 2010)– Globally, venture investments in 1Q’10 was up 29% from previous

quarter and 83% increase from same period last year– In the US, extended tax credits and federal grants spurred investment in

wind energy, solar pv and smart grids– US corporations increased funds in 1Q’10 (over 4Q’09) for clean

technology by 140%

• Long-term investment is an enormous challenge:– Current investment in clean technology R&D is falling behind attempts

to achieve carbon emission goal (< 2 degrees C)– Bottom Line: Global financial community – public and private – must

embark on investing in green/clean technology and energy efficiency practices on an extremely urgent, crisis-mode basis, equivalent to a full “Manhattan-like project”

“Clean Energy Revolution” in Developing CountriesRemarks of UN Secretary-General Ban Ki-moon

“We need a clean energy revolution -- in developing countries, where demand is rising rapidly, and in the developed world, in order to cut greenhouse gas emissions… we cannot achieve the [UN] Millennium Development Goals without providing access to affordable modern energy. Some 1.6 billion people lack access to electricity…Two to three billion people still rely on traditional energy sources such as firewood, peat or dung…

Access to energy needs to be expanded in the cleanest, most efficient way possible. Toward that end, the Advisory Group has called for a 40 per cent reduction in global energy intensity by 2030. We need to scale-up renewable energy and other green technologies...These are ambitious goals, but I think they are achievable. And they are necessary.”

On release of report of UN Advisory Group on Energy and Climate Change (April 28, 2010)

Sustainable Development & Green Technology

• How Do We Define It?

• How Do We Achieve It?

Let us first consider a Biological Cell…

Physicist’s view of a cell:Mathematician’s view of a cell:

Systems Engineer’s view of cells:Chemist’s view of a cell:Chemist’s view of a cell:

…Different Views of a Biological Cell

Molecular Biologist’s view of a cell:

Cellular Biologist’s view of a cell:

Ecosystem’s view of cellsEcosystem’s view of cellsand organisms:and organisms:

Economist’s view of a cell:

We are now back to square one…

…Current Neo-Classical Economic Theory

• Trying to fit the Economist’s empty square peg into an equally empty Physicist’s round hole:

• “The Economist Has

No Clothes”

Robert Nadeau, Scientific

American, April 2008

• The market system is a closed circular flow between production and consumption

• Natural resources exist in a domain that is separate and distinct from a closed market system

• The costs of damage to the natural environment by economic activities is an external cost (“externality”) • The natural resources of our globe are largely inexhaustible

• There are no biophysical limits to the growth of market systems.

Gross lack of knowledge of the biological & ecological sciences

=

Thus, it is assumed that…

Bio-geochemical Cycles and Human Habitats

Human – Nature Interactions

Ecological Economics

.

Economist Herman Daly2010 NCSE Lifetime Achievement Award

Elements of Ecological Economics:

• Economics is a sub-set of ecosystems • Inter-generational equity is paramount• Normative and ethics-based economics• Non-linearity of economic factors• Sustainable development is a necessity for global survival

Environment – Society – Economy:Inextricably Embedded Together,

Not Divided into Separate Domains

Capital: Natural, Social, Human

Ecological Footprint

Global Map of “Effective Consumption” (Ecological Deficit: global hectares per capita)

Ecological Footprint and Biocapacity

Global Distribution of Patents (Proportion of 312,000 patents granted in 2002)

1. Japan 9942. South Korea 7793. United States 2894. Sweden 2715. Germany 2356. France 2057. Luxembourg 2028. Netherlands 1899. Finland 18710.Switzerland 183

Top Ten Countries Granted Patents (per million people)

Ecological Footprint: Where Are We Headed?

NCSE’s Annual Conference, 2010Summary Recommendations

• National Sustainability Vision – Planning Programs and Governance Structures– Vision of sustainable future – articulated by top leaders of the country– Environmental ethics as a basis for economic development– Protecting life of future generations as part of national agenda– Long-term planning as a pre-requisite to sustainability– Develop economic subsidies and incentives, including new “green” jobs– Build cultural and aesthetic models of economic stewardship– Link population growth to consumption rates – “effective population” metrics

• Carbon Management Mechanisms– View carbon pricing as a “transfer” cost, not an economic cost– “Cap-and-dividend” – principle of public ownership of natural resources– 100% government auction of carbon allowances; no secondary markets

would be needed– Encourage public and private investments in low carbon technologies– Issue government-guaranteed “green bonds”, in partnership with private

sector companies and NGOs

NCSE’s Annual Conference, 2010Summary Recommendations (continued)

• Promoting Green Technologies and Sustainable Practices– Develop “systems approach” to economic development– “Cradle-to-cradle” analysis, bio-mimicry research and industrial ecology– Improve sustainability literacy, both in formal and informal education

• Payment for Ecosystem Services (PES)– Enacting a PES system for resource conservation (air, water, land, biota)– PES will require strong regulatory oversight – User-financed PES is more effective than government-financed approaches– Development of appropriate ecosystem metrics for PES

• Genuine Progress Indicators (GPI)– New economic indicators are needed to supplant current GDPs– Enact pilot projects at local and regional levels for development of GPIs– Professional societies and NGOs should establish a GPI network– An inter-governmental GPI committee should be established

Green Technology & Natural SystemsThe Big Picture

• Humility– Nature has been evolving for the past 3.5 billion years– Modern technological society is less than 300 years old– Therefore, we can learn a lot from observing natural systems– This is the basis for the new discipline of Bio-mimicry

• Efficiency– Nature is frugal, efficient and self-reliant – it does not waste energy

and material resources; it lives within its means– Modern technology should strive to be: (a) systems-based, (b)

optimal, not maximal, (c) renewable & sustainable, (d) symbiotic & conserving

• Harmony– Nature’s beauty reflects a dynamically optimal & harmonious system– Modern technology should embrace the concept of aesthetic beauty

in its overall design, development and operation

…Recalibrate and Optimize Material Flows in Energy Producing Systems

Harnessing Energy Efficiently by Emulating Nature

• Major Anthropocentric Sources of Energy – Materially Intensive and Non-Optimal (Current)– Biomass/Fossil Fuels: Firewood, Steam Boilers, Gas Turbines– Petroleum: Internal Combustion Engines– Stream Flow/Gravity: Hydroelectric Power– Fission: Nuclear Power

• Emerging “Green” Technological Sources of Energy – Less Materially Intensive, Sub-Optimal (Interim)– Solar: Passive, Photovoltaic, Concentrated Solar Power– Air/Ocean Flow: Wind & Tidal Power– Geothermal: Heat Pumps/District Heating– Biomass: Cellulosic Biofuels, Micro-Algae Harvesting

• Biotic Sources of Energy – Materially Efficient & Optimal (Long-Term)– New Solar: Biomimetic Photosynthesis– Potential Geothermal: Hydrothermal Microbes

…Emerging “Green” Technologies to Reduce Carbon Emissions to the Atmosphere (interim)

Carbon Capture and Sequestration

Concentrated Solar Power (CSP)

Plug-In Hybrids and Electric Cars

Cellulosic Biofuels

…Solar Power: Micro-Algae Harvesting (interim)A Promising Large Scale Green Technology Around the Corner

Closed micro-algae bioreactorsClosed micro-algae bioreactors

Different micro-algae speciesDifferent micro-algae species

Open pond micro-algae harvestingOpen pond micro-algae harvesting

Micro-algae uses Micro-algae uses photosynthesis photosynthesis and and carbon dioxide fixationcarbon dioxide fixation to produce a to produce a variety of variety of energy-rich oilsenergy-rich oils as feedstock as feedstock

…Solar Power: Nature’s Model Photosynthesis and What We Can Learn From it…

“Nature has designed one of the most exquisitely effective systems for harvesting light, with the steps happening too fast for energy to be wasted as heat. Current solar power systems, however, aren’t following Nature’s model.”

- Graham Fleming, Lawrence Berkeley National Laboratory

Photosynthetic Reactions in the Photosynthetic Reactions in the ChloroplastsChloroplasts:: Production of energy-Production of energy-bearing bearing ATPATP & & NADPHNADPH molecules across the molecules across the electron transport systemelectron transport system

• Energy TransferEnergy Transfer:: Solar Energy (Photons) Solar Energy (Photons) Activated Electrons ( Activated Electrons (e*e*)) • Light ReactionsLight Reactions:: Water + Activated Water + Activated Electrons (Electrons (e*e*) ) ATPATP + + NADPHNADPH + Oxygen + Oxygen

• Dark Reactions (Calvin Cycle):Dark Reactions (Calvin Cycle): Carbon Dioxide + Carbon Dioxide + ATPATP + + NADPHNADPH Sugar Sugar MoleculesMolecules

Solar EnergyHuman Scale Solar Power versus Natural Photosynthesis

Concentrated Solar Power Concentrated Solar Power (CSP)(CSP)

Photosynthesis in Plants & Photosynthesis in Plants & BacteriaBacteria

Photovoltaic Photovoltaic PanelsPanels

Optimal Dynamical Systems and Aesthetic BeautyUbiquitous Natural Wonder – Biodiversity on Land and Sea

Coral ReefsCoral Reefs

Amazon Rain ForestAmazon Rain Forest

Glass Wing ButterflyGlass Wing Butterfly

And for all this, nature is never spent; There lies the dearest freshness deep down things - Gerard Manley Hopkins

To Reduce Significant Differences Between Human-Based and Natural Systems

Steps Toward a Fundamental Transformation…

Natural

– Dynamics: Open, Non-Linear, Efficient and Optimal

– Design: Harmonious, Complex and Beautiful

– Chemical Reactions: Low Temperatures & Pressures

– Energy Flow: Renewable and Sustainable

– Material Resources: Symbiotic and Conserving

Human-Based

– Dynamics: Closed, Linear, Inefficient and Non-Optimal

– Design: Discordant, Simple and Crude

– Chemical Reactions: High Temperatures & Pressures

– Energy Flow: Non-renewable and Non-Sustainable

– Material Resources: Opportunistic and Non-Conserving

Bio-mimicryA New Scientific Discipline that Creatively Imitates Nature

Echolocation in dolphins – novel Echolocation in dolphins – novel methods for blind assistancemethods for blind assistance

Biowave energy – Biowave energy – mimicking mimicking movement of movement of underwater plantsunderwater plants

…Novel Use of Physical Chemistry & BiomimicryConcept of Van der Waal Forces in a Gecko’s Foot Designed into Carpet

Tiles

Tokay gecko (Tokay gecko (Gekko geckoGekko gecko) ) adhering to molecularly adhering to molecularly smooth hydrophobic GaAs smooth hydrophobic GaAs semiconductorsemiconductor

Office carpet tilesOffice carpet tiles

Johannes Dederick Johannes Dederick van der Waals, van der Waals, (Nobel Prize, 1910)(Nobel Prize, 1910)

…Through Green Chemistry & BiomimicryNew Scientific, Technological & Aesthetic Concepts

and their Applications for a Sustainable Future…

…Achieving the Beauty, Grace and Serenity of Nature

The harmonious integration of science, technology and the arts, remembering the everyday fauna and flora of the Earth

Art, Poetry and Culture: Our Common Heritage

Kinkaku-ji, KyotoKinkaku-ji, Kyoto

I do not know which to prefer,

The beauty of inflections Or the beauty of innuendoes, The blackbird whistling Or just after. - Wallace Stevens

- Matsuo Bashō