How to secure that innovations in business help transform society
When I went on record over a decade ago that the only way to transform business is to sack all the MBAs, it created a seldom seen flood of reactions. For the first time I even had to read a series of hate mails. While I know all too well that I did not come to this world to please everyone, it is seldom that my blunt statements hit such a raw nerve. I should have known better. After all the MBA diploma has become the passport to fast track careers in large corporations. It is one of the money making diplomas on offer around the world, both for the students who graduate and the school that offers the diploma for which aspiring career people pay thousands in cash to get all the promises related to this paper chase.
It is time to be honest and transparent: I also thought that an MBA was the best ticket towards a future in business and management. Little did I know in 1980 when I applied with INSEAD Fontainebleau for entry, and for the record, my application was first refused since I had a lousy GMAT (General Management Aptitude Test). It was already clear from day one that I did not fit the prevailing management culture where standardized multiple choice exams determine your qualifications. However, I had my way of persuading the admissions committee. Before I graduated - on the Deanʼs List - it was clear that I would consider this academic degree as one of the major obstacles to move business towards higher levels of competitiveness, to move society towards better health and happiness, and to put nature back on its evolutionary path. What went wrong? I never considered that the MBA contributed to my career path.
An MBA is nothing less than a certificate of brainwash. This is another bold statement, perhaps even more offending than the earlier one. But let us be honest, what do the MBAs learn? We learn to make abstraction of all reality in the world, pursue corporate strategies from technology, to organizational behavior, to product design and marketing in one common language all around the world: cash flow. And while many will argue that the teachings I received in the early eighties is quite different from the modern day MBA courses, reality before me demonstrates that the Master of Business Administration is solely focused on business. While there are some reflections on the fringes about corporate social responsibility and environmental management, finance remains at the core, and the driving force behind the logic of this academic training is the philosophy of the core business principles to pursue ever larger economies of scale in an endless chase to achieve ever lower marginal costs, leveraging assets through mergers and acquisitions in order to compete in a globalized business reality. After 50 years of graduating MBAs, there are armies of individuals executing the same logic. It will be hard to stop them - after all I consider them brainwashed.
The notion that we should compete globally with standardized products on volume and price has lead to the unacceptable effect that whatever is damaging to the environment and is of low quality, while depleting natural resources is cheap; and that whatever is good for you and the environment, while generating jobs is expensive. The good with quality is relegated to niche markets, while the cheap and branded is advancing in this global market. While the concept of core business made sense after the devastation of the second world war, in order to rebuild infrastructure and society around the world, we have to realize that this model is not well adapted to respond to the basic needs of 10 billion people on earth. It is not even capable of guaranteeing the minimum of quality of life for 8 billion. After the arrival of another 2 billion, this business model where cash flow is king will only stress out the system.
The globalized economy, driven by highly standardized products where there is a permanent quest to cut costs requires a great discipline in management philosophy, culture and approach. Hence the need to put the operations into a common and highly predictable mould, i.e. the MBA. Since the markets are by definition within this business philosophy global, the rules of the competitive game are global, then you need to solidify the whole framework by reliable global players. This is only possible when there is a blueprint of training. The fact that Europeans have high unemployment, suffers from dying communities and the whole industrialized world consumes too much of everything requires an overhaul. I have called for a conversion of the Master of Business Administration into the Master of Brilliant Adaptations. We have to shift from Administration to Adaptation since it has become increasingly clear to me that the tools that have been installed through the logic of the MBA prevents managers to adapt to the new realities. All the tools, including remuneration is geared towards maintaining a strict financial bottom line. In brief: the MBA is resistant to any redefinition of the business model and the rules of their game.
Business environments have embraced the culture of certification, independent market studies, rating agencies, audits and consultants approval. There are hundreds of certifications that litter the minds of corporate executives, confirming that they conform. While the business of certification is itself run by MBAs, it has become one of the blocking agents in change. After all, once you have your ISO 14,000, it is confirmed that your business operates within the pre-established minima of environmental management. The fact that you know the waste you produce, as the certificate proclaims, hardly makes the industry sustainable. At best it gives the key players in the supply chain management the comfort that a common minimum has been achieved. Any deviation is discouraged, since these certifications block any dramatic innovation, and certainly render a change in business model impossible. While the world of voluntary certifications certainly has turned quality and environmental management a little bit more transparent, it has not made brilliant adaptations likely.
Today just about any shift, change or innovation will be subjected to an audit, worse a committee decision that will make certain it never really happens. An innovation will be subject to a rigid review internally, and if it were to have a pervasive impact into the business operations, then a third party review will impose itself. Technology audits have become the rule of the game, with a third party who confirms the expectations by establishing clear deliverables, so that these can be trustworthy enough to change the business plans (including the discounted cash flow analysis). It is hardly expected that a bold adaptation will receive a smooth approval. The risks involved with change, especially the unsettling of the tightly organized supply chain management will hardly get a chance. There is a remarkable preference for trimming and nibbling around the fringes, and a stubborn resistance to bold shifts.
The armies of consultants that accompany corporations have not by surprise emerged from the audit function that has become another feature of the globalized economy. Everything gets audited, and even the law or the by-laws of stock exchanges require broad audits of everything imaginable. When a factory is considered for closure, then the auditors will establish the closure costs, a great unknown. It is no surprise that companies prefer not to mothball an uncompetitive plant, and fast track embrace a breakthrough innovation, since the provisions that will have to be decided by the board are imposed by the auditors. And that were not enough, the insurance companies will also have their way of questioning any changes since they only work with standard agreements from where no deviations can be permitted. Once a process has been set in motion, certified and operating it turns into autopilot. Any attempt to implement a brilliant adaptation will find that the logic of innovation is all too often equated with the logic of the status quo.
Of course, if some breakthrough were imminent, then there are still the lawyers who will have to check, and double-check if the proposed changes are not causing additional risks. In a business environment where the MBAs are all applying the same straight jacket of analysis, and where the multiple whammies of certification, audits, insurance rules and legal reviews make society not just risk averse, any change from the median will be considered too dangerous for management. In order to overcome the impressively shy attitude of management, the human resource director will suggest to take the team to an experience in the forest, to increase their capacity to take risks and improve the willingness to navigate into the unknown. While these experiences in the wild are unique opportunities for development, business will have to increasingly adopt the philosophy “rather ask for forgiveness than permission” instead of sticking to the prevailing logic “better be safe than sorry.”
This does require that management eliminates the shackles from all staff. However, while people on the shop floor and those interfacing with clients have an innate desire to adapt through dialogue with colleagues and customers, the traditionally moulded MBA will require everyone to stay in step, since the overall whip, sweetened by bonus based on performance of the quarterly data will continue to search for ways to further improve profit margins by cutting costs, and engage in financial operations to improve cash flow in order to justify further mergers and acquisitions which are solely valued on the expected savings in money and people, and the capacity to pay back the loans taken to finance the next leap in the globalized economy. Of course, all certified with every point ticket off by the legal advisory team.
It is against this background that the design of new business models must evolve rapidly from the core business philosophy, to one that generates multiple benefits, measured both in financial terms (as the MBA can do well), but most importantly also in terms of the strengthening of the commons and the building up of social capital. How could a business ever obtain a license to operate if it were not strengthening the commons like the provision of free drinking water, the building of top soil, the purification of the air, the resilience of biodiversity. This is not about protecting the environment, and reducing water consumption, this is about revolutionizing business by ensuring that the capital and operational expenses decrease, while the value increases, and the externalities benefit society, instead of the dumping of the negative on society.This is not about paying fair wages to the workers, and providing cheap products at low cost. This is about building social capital that can be measured in improved purchasing power, thanks to making the most healthy, durable and desirable products that the market has ever known, thus revolutionizing the production and consumption model where clients do not simply consume.
The Blue Economy permits us to design these innovative business models. The reason why this represents such a shift is not because the pervasive innovations in technology, rather because of the logic that emanates from the philosophy that underpins the way strategies emerge and corporations shape their relationships through the capacity to respond to the basic needs of all with what is locally available.
Its a problem that people do bad - worse is that people refuse to do good
The world needs positive action. We cannot be satisfied by stopping negative attitudes and asking those who do harm to do less harm. A thief who is stealing less is still a thief. However we have this strange situation that a company that pollutes less gets environmental awards. It is still polluting! How is it possible that we developed this double moral, celebrating what is clearly insufficient? If you know you pollute, and you are aware of the collateral damage you cause, how can one solely engage in programs to do less bad. It is unethical and should not be condoned, and certainly does not merit awards which have proliferated around the world justifying this mediocre shift towards sustainability. The jump from doing less bad to committing to do more good requires a shift in business philosophy where external costs cannot be tolerated anymore and the building up of social capital is as important as competing on the market. And while traditional managers will denigrate this concept as unrealistic, one sometimes must demonstrate that the present crisis is real and caused by an economic system that is not capable of responding to the basic needs of all, let alone control its aberrations.
It is difficult to write - but timely to admit that several large global environmental organizations are often as conservative as multinational enterprises. Therefore it is no surprise that they find each other next to each other - and not anymore opposite to each other debating subjects that seems to make little difference on the ground to the people that matter, especially the bottom of the pyramid. How come institutions like the International Conservation of Nature (IUCN) and WWF can only set targets for protecting nature while 40 years of action on the ground can present a few anecdotes as successes, while the world statistics of conservation are dramatic: loss of species like never before and loss of ecosystems of unparalleled magnitudes.
If the chief executive of an enterprise misses all targets while having had a tremendous groundswell of consumer interest and support in his products, would we not all agree that time has arrived to fundamentally shift the strategy, instead of accusing others for failure to live up to the expectations, and complain of having insufficient funds to get the job done? Or is the excuse for failing that the politicians who were not cooperative, or even corrupt? It is time that environmental organization shift their strategy and bluntly state that protection has been attempted for 40 years and we have clearly fallen short of most of the even modest objectives. Let us therefore be ambitious and aim to put nature back on its evolutionary path, drastically reducing the time and the money spent on analyzing the problem, calling for an urgent call to this creative force of millions who are committed to design a new way forward.
Labor unions are unfortunately loosing members by the millions and as such find themselves face to face with an erosion of their legitimacy. Whereas strikes are increasingly wild strikes supported by non-unionized members, an increasing amount of union representatives are only aiming to preserve what has been acquired. Just like conservationists who want to preserve, and end up losing; union representative wish to preserve the acquired rights of workers, and end up losing; and, corporate executives want to maintain their market loose market share. It suffice here to mention that bankers who wanted to continue making huge bonuses by making money on other peopleʼs money without risking much of their own, also ended up loosing taking the savings of rich and poor with them. Protecting is a first step in the right direction, only preserving is no guarantee you move forward in a more promising direction.
Over the past years we have seen courageous whistleblowers who exposed corporate greed and political corruption as well as the lack of respect for human rights. These people often risked their careers, and even their lives in order to show the excesses of a system and rightfully so have obtained legal protection thanks to a broad societal support. We should continue to encourage those who have the guts to come forward and secure that corruption and deceit are rooted out. Apart from the few high profile cases, there are thousands of small whistleblower scale cases which have never been exposed but to some friends and colleagues. Abuse goes far and unnoticed for too long I recently had to expose a Berlin-based team that was offering money for scholarships under the pretext of supporting further education and specialization, only asking worldwide exclusive exploitation rights to the new know-how acquired by the students. Imagine for a mere €6,000 lifelong modern day slavery was expected. We cannot tolerate this and should not only prevent this from happening again, we should expose it in order to avoid other people falling into the same trap - definitely with the same people.
However, while the unveiling of bad practice is well known, I believe time has come to support a new type of whistleblower: the person who exposes those who refuse to do good. From an ethical point of view - doing bad is bad, but refusing to do good is also bad! It is a well established fact that if you are witness to an accident, and refuse to attend to the people in need, you are possibly condemned by court, and if you leave the scene without rendering assistance, the penalty could include jail time. Now we need to take this logic to modern enterprise, environmental organizations and even to labor unions and ask ourselves: are these organizations aware of the tremendous opportunities before them (and us).
It is true that most organizations, especially in the industrialized world, spend huge resources in both time and money on analyzing the problems. We have armies of people who have committed to understand every angle of the issue, and know how to argue the case. It is no surprise that in this culture we have more lawyers than we need to be happy. To my great regret, we have too few people trained to observe a situation and quickly evolve from the description of the problems to the identification of a portfolio of opportunities. These urgently required new insights will give us ideas, which are certainly quickly discarded by experts of fantasy; it will provide access to prototypes, which are always ridiculed as non-functional in the real world; it will even give us pilot cases that are ignored as too small to have an impact on the problems we need to address. However, once you have cases that have outgrown the growing pains that accompany any innovation, then what can the response of the nay-sayers be?
When back in 1992, Prof. Shuting Chang studied for the first time the farming of tropical mushrooms on coffee waste, it was nothing more than an idea. When Carmenza Jaramillo (Colombia) documented over seven years the application of the science, complemented by the pioneering work of Ivanka Milenkovic (Serbia), then pilot projects emerged both on coffee farms as well as in the inner-cities like San Francisco, Seoul, Mexico and Amsterdam. Now there are thousands of people working in the conversion of coffee waste into food, and the conversion of post-industrial and consumer waste into material for odor-controlling polymers for textile and carpets. Then one wonders how long can the makers of instant coffee - who burn millions of tons of pure coffee waste - pretend that this is not an option for them, the community in which they operate and the world which requires fundamental shifts towards a better future. While some may argue that they did not know - once they know - how long are they negating the opportunity to make their company more competitive and their community sustainable while generating jobs and cash flow.
A preliminary calculation indicates that the worldʼs largest maker of instant coffee is discarding an estimated three million tons of coffee waste, which could be converted to three million tons of tropical mushrooms, dramatically increasing the availability of healthy food on the world market at very competitive costs since the substrate has been sterilized in the process and the space needed is minimal. How long can the company maintain that since it is not in the mushroom business it prefers to incinerate the waste and only recover some energy from it? Is it not time that we get positive whistleblowers and say that the refusal to create the opportunity to turn waste into possibly 100,000 jobs at this one company, and to introduce healthy food at lower prices to consumers in a world where half of the world is turning obese due to an economic system where whatever is bad for you is cheap and therefore preferred, especially by the poor.
Now I would like a team of positive whistleblowers take this case to the top 10 instant coffee producers and ask: “How much longer before you want to do good - and make more money?” Unlike the negative whistleblowers, these positive whistleblowers are not preventing companies from making money in the wrong way. These positive whistleblowers empower corporations to make more money, generate better cash flow, and contribute to a positive shift in society towards more and healthy products. This helps to create an economy where the good is cheap and whatever supports the environment to embark on its evolutionary path is possible.
The regeneration of the forest, as demonstrated by Paolo Lugari in Las Gaviotas (Colombia) shows beyond any doubt that the errors of the past can be converted into productive centers of today, while regenerating a native forest and pursuing a clear strategy to respond to the basic needs of all, including the need for fuel and mobility in an isolated zone. This project is now self-sufficient and generates social capital. When we presented the opportunity to expand this to 100,000 hectares the proposal was discarded by the Government. The introduction of soy and corn monocultures with special seeds (read GMO) and a satellite controlled planting and harvesting received the green light from the government, not even generating a 100 jobs on 65,000 HA of land. How can one prefer the short term exploitation by a private group which needs security guards to prevent invasions, to the creation of community that requires no importation from the outside. Is the wish to speculate with land, the drive to export soy to satisfy animal needs elsewhere, and impose genetically modified crops that are chemically controlled the best option for the people? Or should we expose that there is an opportunity to replicate a development inspired by the nearly three decades of hands on experience on the remaining five million hectares, before these will also succumb to the appetite of speculators? There are hundreds of cases that permit us to turn “less bad” into “more good” without falling in the trap of “refusing to do good”.
The key will be to rely on these positive whistleblowers who expose the great opportunities we can quickly identify provided we shift our mindset from the negative to an unconditional positive, scanning for the opportunities while screening for the best options without getting diverted by the audits of the doubters and the demand for more proof of concept than the best one you can offer: go, visit and see for yourself. After all that is the most disarming response of the positive whistleblowers, and one that works even with the staunchest opponents to change. So positive whistleblowers stand up and unite.
© 2012, Gunter Pauli - publish and reprint only with permission
A framework to guide innovation that guarantees social capital and sustainability
Engineering has evolved into a logic where without further and certainly no deeper thought chemistry is used to transform materials, genetics determine new forms of food, mechanical pumps are planned in production, and air conditioning systems have become indispensable to operate a house or an office. The introduction of automated computer designs for everything from a simple home to the planning of complex petrochemical refineries uses existing and known solutions off-the-shelf often without any deeper thought. As a result we engrain a portfolio of standard solutions into the design of just about everything. Legal obligations and risk reduction requirements -with the best of original intentions- combined with our computer tools block the introduction of innovations which are only admitted after major expense and dramatic improvement has been demonstrated, often at high cost. The result is that engineering has lost its deeper meaning and innovations are limited to changes on the fringes. Industry finds itself in a straightjacket incapable of pursuing fundamental shifts.
While business students will occasionally get exposed to social responsibility and the green economy, engineering students are hardly challenged in their approach to design. Students and professors seldom have any notion of the underpinning philosophy that should guide their logic of using materials from complex plastic molecules to energy. This is not a call to expose engineering students to Socrates or Schumpeter. However, we are in need to go beyond the simple drive towards ever higher levels of efficiency measured in simple parameters as time and energy. Engineers are taught that “The slower the process, the more retention, the more space”, thus costing more and encumbering competitiveness. The faster the process, the more energy and the less space that is required, the more competitive the process. My own experience in the making of liquid detergents convinced me that the traditional forms of blending ingredients in water would have been revolutionized if a fundamental philosophy would have determined the direction of innovation. Unfortunately, in those days I lacked the insights I enjoy now.
When I observed that a 10,000 liter vat with a screw at the bottom requires 45 to 60 minutes of mixing, the best my research team could imagine was a new screw, one that did not move around in circles, but one that creates slow movements of an eight. Substituting fast screw revolutions with slow turns into an eight could save about 30 percent energy while the retention time remained unchanged. The engineers described it as a revolution inspired by the anthroposophic philosophy proposed by Rudolph Steiner. I was happy to innovate. It took me over a decade to realize that Viktor Schauberger, an Austrian forester had imagined a completely different mixing system that did not require any screw or blender. The vortex emerged as a remarkable gravity- based naturally swirling movement permitting to blend all ingredients in a matter of minutes, instead of hours solely relying on the law of gravity as a driving force. The ecological factory, with dozens of ten thousand liter vats could now have been reduced to one vat, and one only. The savings in space and energy are now not measured in percentages, rather in multiples.
After reviewing over two thousand innovations in the framework of the writing of my Report to the Club of Rome entitled “The Blue Economy”, it occurred that the reason why many of the “obvious” innovations could never find their way into industry is because the underpinning philosophy of engineering is focusing on known efficiency with known machinery. In this context, the best we can expect is a marginal improvement like saving energy, but never a paradigm shift that goes beyond the obvious. Engineers are not expected to rock the boat, and change the fundamentals. Engineers are expected to build on the established fundamentals. Time has come to rock the boat and the best way forward were to expose students in all classes of engineering to some fundamental principles which one day could emerge as a new philosophy of engineering. That could warrant a fresh look at innovation, steering society towards health, sustainability with the capacity to respond to the basic needs of all.
All is Connected
The first line in this philosophy should be that “all is connected” based on the extraordinary insights of Arne Naess, the Norwegian founder and inspiration of deep ecology. While even many of my green friends have hardly ever heard his name, Professor Naess who was recognized by the Royal Swedish Academy of Sciences with a life time achievement award, argued very effectively for a rigorous understanding of how everything is connected. If we pursue a singular goal, a simple objective like energy savings or speeding up processes, then we are bound to cause unintended consequences, like the excessive use of harsh chemicals. Deep ecology unravels the links amongst everything we know and see. While this increases the level of complexity in a world fascinated with simplicity, it allows the design to resolve issues that could never be tackled in an isolated fashion.
The Law of Physics
When we realize that “all is connected”, then we will have the freedom of mind to observe that the laws of physics should be applied before we attempt to revert to chemistry and genetics. It is amazing how often designs of production or construction systems go against the laws of physics. Pumping cold air up as is done with air conditioning systems, or pumping water down as is done in mining, simply does not make any sense, and yet these are the standard. How come we could ever permit this level of “ignorance” in engineering? Or, should I ask who taught such stupidity and tolerated its widespread replication?
The laws of physics have no exceptions. Hot air always rises, and water is more dense than air, therefore generates more pressure when moving. This puts hydropower at the top of renewable energy, since it generates potentially 832 times more energy than wind ever could. Then physics also teaches us that for any force in one direction, there are forces in the opposite direction. That helps us understand why the apple can get up in the tree, before subjecting itself to the law of gravity. While we teach all these core facts of life one by one in high school, engineers seem to have forgotten the basics once they graduate from university. The mere fact that we pumps water in straight pipes, with elbows that move the direction of the flow in 90 degrees angles leads to a generally accepted use of pumps that consume up to ten percent of all energy requirements of production facilities. The introduction of energy efficient pumps, or for that sake even solar pumps, does not change the fact that a smart gravity based process could eliminate pumps all together.
Substitute Something with Nothing
When I observe the theory of evolution, and realize how ecosystems evolved over millions of years, then there is one principle that inspires me most, and one that should guide our engineering design: “substitute something with nothing”. While the majority of engineers are frightened by the idea, and therefore ridicule the concept since it eliminates the core building blocks that are part of the automated designs, it is a sign of the master when one succeeds in turning production and operations simpler by eliminating what is not needed. I have often argued for keeping it simple, but here it is kept so simple that what was considered key is now superfluous. Many of the eliminations are possible only because we rely on the laws of physics. The fact that we can cleanse water with a vortex, driven by gravity, or that we can have color, without color pigments, or that we can eliminate bacteria without chlorine, or control fire, without fire retardants helps us imagine cheaper, healthier, more sustainable solutions that are also very competitive. In order to embark on such fundamental shifts - substituting something with nothing - does require the capacity to think out of the box and embrace solutions that are not off-the-shelf. These solutions are not even on the shelf!
Work with What you Have
When Anders Nyquist exposed me to the possibility of refreshing the air in a school in the North of Sweden every thirty minutes all year around without the need for additional energy, it occurred to me that architects and construction engineers have no exposure to this philosophical approach. We have to respond to the basic needs with “what we have”. The engineers in modern society operate on the premise that we can get whatever we want even when it is not immediately or locally available. Now the laws of physics unveil tremendous predictable forces that are available all the time and everywhere. And, if we adhere to the principle that we use what is locally available, then we can strengthen the concept that we should substitute something with nothing.
The consumption of batteries is an obvious point in case. The desire to have a permanent source of power for our miniaturized mobile electronics leads to the production of 40 billion batteries annually which unfortunately spur the need of mining in the four corners of the world. This leads to the indiscriminate dispersement of minute amounts of metals in our environment. The introduction of green batteries which last longer and use less toxic metals will not change the predicament: we still deplete the earthʼs crust, we continue to consume non-renewable energy to make it, and we force our living environment to accept our incapacity to recover the precious materials. While these metals can never be destroyed, the uncontrolled waste flows into our habitat, even with green batteries.
Keep it Simple
What we need is mobile electronics without batteries, applying the core principle that we have to substitute something with nothing. Now cell phones, iPads, and gameboys could all function based on physical and locally available forces like temperature and pH differentials, pressure, also created by our voice, radio frequencies, and dozens more that can be converted into the low voltage that is required. If the electronic and electric engineers focus on circuits that require ever lower energy, by shifting to materials that have less resistance, then we see emerge before our eyes a world of efficiency and mobility without ever having to rely on the toxicity of metals nor the exploitation of more greenfield mines. This implies that the laws of physics permit us to evolve from the elimination of something with nothing to the clear practice that we have to keep it simple and we use what we have. Of course, those who have been trained as engineers, this may even sound heretic, and that is the reason why we have to revert to the need to agree on a philosophy of engineering, instead of the simple pursuit of productivity measured by one parameter only.
The leads to the next baseline in the new philosophy: the pursuit of multiple benefits. Engineers are trained in the Cartesian logic of cause and effect. If you increase pressure and temperature, then you speed up the chemical reaction splitting long molecules into shorter ones. And, if that does not do the trick, increase the acidity. The toolbox of engineers has become oversimplified and does not permit the discovery of multiples opportunities. When we gain the insight that synergies are easily generated once a complex approach is pursued, then the “cause and effect” toolbox will emerge as too limited, not permitting the full exploitation of all potential. Therefore, the cause-effect logic fundamentally affects the productivity and the competitiveness of the overall operations. I am not against any of the past engineering exploits, I am in favor of doing much better.
If more water is needed, engineers may revert to water treatment and design a closed loop water use. An ore processing facility located adjacent to a mine potentially stresses out the water reserves of the whole region. Engineers would quickly embark on an expensive design of a water treatment plant that would reduce consumption of fresh water. However, a quick review of the ecosystem could reveal a broad presence of exotic species that deplete the water table, irrespective of the mineʼs presence. The replacement of the non-native eucalyptus and pine trees with a diverse portfolio of native vegetation not only increases the water retention, it also contributes to the replenishing of the top soil, the provision of construction material for housing, posts for farming, and fibers for paper production. Instead of increasing the investment and operational expenses, this approach reduces costs, while offering local solutions to local issues, including the strengthening of the commons (top soil generation) which offers a major plus to the influence zone. This approach position the company as a truly social and ecological enterprise that improves its competitiveness.
Strengthen the Commons
This highlights a key component of the Philosophy of Engineering: the engineering design will also contribute to the commons. If we aim to respond to the basic needs of all, then we must strengthen the commons: the ecosystem services on which life, especially our human livelihood depends. This includes clean water, fresh air, top soil, conversion of waste into nutrients, and an ever evolving biodiversity which provides resilience to change. While the costly management of each of these critical components of life lead to the exploration of private public partnerships especially for water and waste management, this has converted the commons into a commodity. While there may be a market logic to impose a scarcity framework for all the commons, this approach has decreased the purchasing power of the bottom of the pyramid. This created a poverty trap from which they cannot escape. This means that the only sustainable phenomenon of the dominating engineering principles today is poverty itself?
Therefore we have to engineer innovative business models in such a way that the commons can be guaranteed, free of charge as originally intended, through the systemʼs design. Paolo Lugari at Las Gaviotas designs the regeneration of the forest, with results in a major increase in asset value, thanks to the generation of drinking water which is supplied for free to the local population. The management of solid municipal waste through its blend with the slurry of waste water treatment plants provides clean water while generating revenues through the production of biogas. This is sufficient to pay for the water treatment, even providing room for a profit. Whereas the dominant business model is based on taxing citizens for public water and waste management services, the new model generates revenues in excess of costs, eliminating the need for taxation, and therefore implying the reinstatement of the commons.
Health is the Overriding Priority
While the commons, and their wide availability to the most vulnerable in society is key, we need to ensure that whatever we do improves the healthy living conditions. This is more important than preserving our environment. Actually when we guard our health as the true objective that united all races and classes, then we share this common goal to enhance life on Earth. This goes beyond the control of bacteria and the use of antibiotics, which are not in tune of the philosophy of engineering outlined above. This means that we will undertake all we can to have quality air to breathe and rich water to drink. We ensure that our food is modulating our immune system, enriched with trace minerals, and that radiation of all types is brought to quasi nil. Metals are not dispersed, and plastics do not have the minute softeners and UV control agents. If we agree that health is the overriding priority, and even our mental health is considered a priority, then many solutions that may have appeared interesting, are now discarded from our portfolio of options.
If and when the new production and consumption system provides for the commons, made possible thanks to the multiple benefits, created thanks to the rigorous application of the laws of physics, going with the flows, then we can eliminate numerous superfluous components of the mechanical and chemical world. This cuts costs, renders the operations less vulnerable, thus more profitable while at the same time creating more value. The overriding principle is that we will enhance life, not in years but in quality. This Philosophy should be taught to students from economics to engineering. It provides a fresh look at how a market economy can turn social and sustainable, while generating jobs and improving competitiveness, finally lifting a major portion of the worldʼs population out of poverty, not by chasing ever higher wages, but rather by improving their quality of life, including an improvement of their purchasing power.
© 2012, Gunter Pauli - reprint only with permission
If you are against growth think again - if you are in favor of growth think again as well
The Reports to the Club of Rome in the early seventies described the facts beyond any doubt: unbridled growth pursuing ever more gross domestic product will soon hit a brick wall. It is not a matter IF, rather it is a matter WHEN. Exhaustion of natural resources, starting with the commons like water, air and top soil, will lead to a collapse in productivity, rendering societies incapable of responding to the basic needs of all. The concept of the carbon footprint described in clear terms that we are already in need of more than one Earth in order to satisfy human needs. We have clearly gone beyond limits. On the basis of this set of data, we need to stop growth.
On the other hand, there is massive poverty and billions need access to the most basic products and services to lead a humane life. It is impossible to refuse the right to respond to the need for water, food, housing, energy, and health. The drive to supply the basics to the bottom of the pyramid has been considered as an impulse to the old growth model. So the question is: are you in favor of growth, and further deplete the Earth faster? Or are you against growth and negate a few billion fellow earthlings the right to life? It is clear that the issue is not - either / or - we need to change the framework of thinking in order to satisfy both.
In previous articles I argued in favor of the multiplier effect, and the faster circulation of money as appropriate strategies to grow the economy without inflationary pressures. In this blog I expand on the power of innovation to increase purchasing power. In the end what consumers are interested in is purchasing power, not simply a salary. If there are urgent calls for increasing the miner wages in South Africa, the income of electronics industry workers in China, or the airline staff in Germany is that people just cannot make ends meet. Then, the only prevailing logic it to increase wages. However, more income for employees represents higher costs to the company, and in the globalized economy model, this equates to a reduction of competitiveness, profitability and ultimately share value on the stock exchanges. This clear sequence has lead to the absurd logic that whenever companies announce a massive lay-off or closure of operations, that this companyʼs stock price will reach historic highs. There can be nothing more devoid of human logic.
In the 20th century, the social movement set up cooperatives permitting its members to embark on joint purchases, thus reducing cost and improving purchasing power. This cooperative movement still has a strong base in Sweden, Netherlands, Germany, Austria and Switzerland. It expanded from basic needs to insurance, banking, and lately also to green energy purchases. Time has come to revisit this logic of corporatism and and salary negotiations to some more fundamental shifts that will finally achieve the objectives we all want.
For example. If we succeed in bringing a solar system to market that offers power, heat and chill, then we are harnessing the real force of the sun. Instead of having three separate capital investments, we now could combine it all in one. The photovoltaic (PV) cell functions on both sides, regular solar on top and concentrated solar on the bottom; the heat generated by the reflection in the mirror chamber produces hot water, and tubes in the solar cells cool the water to six degrees since the black PV radiates out all heat at night and secures a continuous daily supply of cold water. Since hot water rises, and cold water drops, a hot water tank is always ready for use on the roof top, while the fresh water keeps a container of two cubic meters cool all year in the cellar of the building. On top of that, the casing of the “power, heat and chill system” is made from heat resistant recycled plastics, offering a great market for waste that otherwise gets - at best - shipped off to China to be converted into garden posts.
In Europe up to 30 percent of the electricity and gas is used to heat water. This cost is eliminated in the above described model. The acquisition of a refrigerator is considered key to health and safety, however these cooling devises are equipped with energy guzzling compressors and cost cash to buy and to operate. That is also eliminated. Then, the electricity consumption for daily use is reduced to the PV generated power, which is more efficient than the grid offering access to power at approximately 4.0 cents per kWh. Thus, design of the Solarus triple power panels not only offers a dramatic reduction in energy costs, it eliminates the need for capital expenditure. This releases purchase power for families across the board through the introduction of innovations that really respond to basic needs. And let us not forget, that additional jobs are created by converting waste plastics into a substitute for aluminum represent the entry into the job market that is much needed. This positively affects as much the bottom of the pyramid, more jobs means more income, and then more purchase power for all.
While the salesman of refrigerators is likely to loose customers, and the electricity supplier is not required to plan for an expansion of power generation, society now has additional funds available to make critical acquisitions and expenditures. We need to shift our production and consumption patters towards one that is capable of responding to the basic needs with what we have, so that our carbon footprint remains in line with the regenerative capacity of the Earth. This does not imply a reduction of consumption, on the contrary this model permits an increase of consumption without suffering from the rebound effect, whereby we observe that a lower cost of energy generates more demand so that the absolute effect even is worse than before the improvement.
The well known examples of maggots and mushrooms demonstrate that we are in a position to ensure more food and better health care at lower cost, and since this cascading effect trickles through the system, we observe a decrease of poverty, and an increase in consumer satisfaction, without this explosive overall growth that has dogged our sustainability models for the past decades. In my book “The Blue Economy” I indicated that we have to design with the flow. Each time we must generate value from existing matter, nutrients or energy flows, we must generate good use at every interval. The process to simplify everything so that whatever is not needed is designed out provides further improvements. In the end, we succeed in making so much more with what is available, and we can respond to more critical demands without having to increase salaries. Of late I have been challenged that my examples are always related to food. So let us take a case that has no relation to nutrition at all.
The mining industry in South Africa asked my opinion on the present dilemma of social unrest. The doubling of salaries as requested by unions would be detrimental to the survival of the mining industry. On the other hand, the amount of available cash to the people working in mining should double in order for them to lead a meaningful life. We cannot and should not negate their necessity either. So, if the mine owners and the workers now solely haggle over the percentage of the increase in salary then both will loose. If on the other hand both embark on a bold development strategy using all the assets opportunities of the mine sites both closed and operational, I am convinced that first of total employment could double from the present 500,000 to one million workers in South Africa alone. And second, perhaps more important, specific innovations that target responding to the basic needs for food, water, housing and health using the existing cash flows of the mining operations will make everything cheaper than thus increasing funds for spending without requiring a rise in individual salaries.
Now the doubling of employment in and around the mine sites does not mean a strategy to double output from the mines, or to carry a larger personnel count on the payroll than is needed to exploit the business. It means that we have to convert existing costs into revenues, provisions into investments, undervalued and hidden assets into value adding proposals. My first analysis of the mines unveil multiple opportunities beyond what is obvious for a mine, but self-evident for anyone who knows how to connect the available resources. Let us look at a concrete example of a new mine in Latin America.
Mining concessions reserve thousands of square kilometers of land as their influence zone. A mine requires water. How can a mine not secure that its operations will never interrupt the present supply of water, nor jeopardize future generationsʼ access to this source of life? Mining indiscriminately requires to undertake a surgery in the earthʼs crust. The restoration should include reforestation. Imagine with me the following scheme: 1,000 square kilometers of mining concession is used to regenerate a bamboo forests that once stood. Bamboo regenerates hydrological cycles, creates new creeks and rivers, plus regenerates topsoil at a rate of 50 centimeters over thirty to fifty years, the typical life of a mine.
Three years after planting bamboo (Guadua angustifolia), the first poles can be harvested. The 25 meter long bamboos offer 6 meters of structural building material, perfectly suited for social housing. The Guayaquil (Ecuador) experience of prefabricated bamboo houses demonstrates that 42 houses can be produced every day at a cost of $950. Now, the remaining 19 meters of the pole can be used to produce fluff, ideal for the production of paper, especially for applications like toilet paper which today requires genetically modified eucalyptus or pine, or recycled paper shipped from around the world.
A mine would typically have to reserve major provisions in its balance sheet to cover the cost of restoring land after extraction of ores. A paper and pulp company would normally have to invest long term in the plantation of forests, a major immobilization of cash to secure supply independent of market price fluctuations. A social housing company cannot afford to buy land, and has left-overs from construction. The production of charcoal from the waste construction material is one option for most of the structural components, offering an additional revenue from the same bamboo. This already offers already a fourth benefit. Now it is most important not to loose out of sight the fact that once bamboo is harvested, it will sprout again annually for the next seventy years.
The outcome is clear: mining is restorative by design, generating more water than there was before, social housing can be offered at an even more competitive cost, and the replacement of a water guzzling eucalyptus with a fibre producing ten times more fluff on land that one does not have to purchase, but rather help restore, and assist in the creation of a model for social housing holds a completely different logic. This mindset underpins a fresh competitive approach to mining, housing, and paper products. The bottom line is that it represents a major cost reduction for consumers, an improvement of their purchase power. This also represents a better use of cash flow and capital investments of corporations. Thus, while the industry gets more competitive, more jobs are generated, thus rendering more income to the people to get out of the poverty trap, while at the same the time cost price for key items is cheaper and the commons like water can now be guaranteed long(er) term instead of falling into the trap of privatization.
Today salary increases are the subject of delicate negotiations between unions and employers. At times of economic downturn as we face now, at best the unions will succeed in getting additional pay in line with the additional inflation rate. This means that there is a fictional salary increase, since there is no additional purchasing power, one only keeps up with inflation.
That is why the economic model of The Blue Economy is more than an bundle of innovative technologies, a proposal of new business models, it is a fresh way of transforming society in cooperation with government, academia, large corporations, small and medium sized companies, NGOs and civil society at large in order to respond to the basic needs of all. It is a chance to eradicate poverty through increasing purchasing power, while securing more entries into the labor market. It is this double effect of more jobs by going beyond the core business model, and higher purchasing power for the basic needs that allows the economy to turn socially just and ecologically sustainable without depleting its resources and forcing the poor to remain poor.
© 2012, Gunter Pauli - reprint only with permission
When I wrote for the first time on the need to embrace the principle of Zero Waste and Zero Emissions, it was a surprise to me that the article was initially published in 1991 in Korea where the President of the Kyung Hee University in Seoul took notice and secured its wider distribution. To distance myself from the notion that we have to reduce our impact was a bold statement. We have to do better. The suggestion that preserving and protecting what we have is a necessary first concern, but not enough to steer our societies towards sustainability sounded for many too far fetched. Twenty years ago I declared that we need more than the desire to reduce our negative impact. So I suggested the design of a production and consumption system where the bad like waste and emissions is converted into inputs for another process generating value. The concept of the biorefinery was born. This has now been solidly established by concepts such as the circular economy. Now we need to make the next bold steps, eliminating what is not needed (like batteries, pumps and so much more) and undertake 1,000 small steps in the right direction all at once.
The human race has to become more ambitious. Instead of seeking one minor improvement after another, celebrating tiny changes we must realize that we have the capacity to generate a broad and positive impact without ever leaving ugly traces behind. We have to be clear, it is not enough to reduce our footprint. We cannot leave a footprint behind! Steeling less is still steeling; polluting less is still polluting. Humanity should be part of the ecosystem and join this evolutionary path where we can redress the errors of the past by making multiple positive contributions and eliminate our chronic dependencies on the unnecessary. Since this approach is beyond the standard today, time has come to qualify this with some examples in which I have been involved over the years.
When the small green detergent maker on which board I served was at the point of collapsing, I accepted my duties as a board member to first become the interim CEO, then part owner and chair to convert this embryonic pioneer into a global statement on how sustainable enterprises could compete starting with the construction of perhaps the first ecological factory in the world. The building, which stands tall two decades later has a life expectancy of at least five years more, and only cost $2.5 million to construct.
Within months after its inauguration, the green factory with the green roof mobilized a multiple of its investment in advertising value through extensive media attention and thus created a unique emotional bond with millions of customers who remain loyal to the brand to date. The most coveted relation between producer and consumer - loyalty and repeat sales was established as a sign of appreciation from clients for the pioneering actions we undertook. It was more than a green factory, it was a new way of doing business.
The process and the message of constructing the factory was more important than the actual building itself. It helped change the state of mind of a significant segment of the market, offering people a chance to look beyond the obvious. A team had spent years imagining the green factory, but never gathered sufficient momentum to secure the funding and never had the drive to implement. Nine months after I took the leadership of the company, the Environment Commissioner of the European Union Carlo Ripa di Meana, and the environment guru Lester Brown, founder of the WorldWatch Institute planted the first flower seeds on the roof - instead of cutting a ribbon. Planting flowers, not cutting ribbons was the symbolic language for a factory that had its own wetlands to treat its waste water. It was an exercise of empowerment, permitting everyone to be their best and to go with the flow - even if it felt like a roller coaster of dozens of small, pragmatic initiatives.
The green roof turned brown within months, unaware of the fact that we inadvertently relied on a monoculture of grasses to provide a green cover. While we were debating what to do next, the birds and the bees did the job. Before we could finish our dialogue with the experts, biodiversity was invited to take over the football field some 10 meters above the production floor and turned the symbol of the green factory into a diverse and lively cover that regulated the temperature inside. We had provided the living conditions, and once nature took over, the looks turned back to green. In addition, already 20 years ago we experimented with biofuels for mobility. We encouraged carpooling by offering parking space closest to the entrance for those who come to work in the most fuel efficient car, and promoted the use of bicycles as a means of transport. Our staff in the factory received Patagonia long johns and undershirts. This move surprised Yvon Chouinard, owner of the outdoor clothing company who never thought that energy conscious companies would opt for his quality wear. Dressing up workers as if they were going to scale the highest mountains permitted us to save on heating inside the factory. All our findings were published, open source and created a media buzz at a time when fax machines were the only innovative communication tool around.
The chosen direction - sustainability - is a good but is embarrassingly insufficient to steer our societies towards the future if we only take one step at the time. We need to undertake many steps in parallel. That is what Paolo Lugari did in Las Gaviotas1. He was never content with the sole production and installation of water solar heaters. His team was not satisfied with the mere planting of trees. It is the attitude that you need to deploy multiple initiatives - each with multiple benefits that creates a platform for real change. Twenty five years later Gaviotas demonstrates that it can tick off results attaining basic needs in terms of water, food, housing, energy, jobs and health, while at the same time regenerate biodiversity. Better: Gaviotas not only meets the Millennium Development Goals, it also meets the tough financial criteria in terms of return on investment and cash flow in a part of the world where government services excel through their absence.
My approach to Bhutan has been comparable. A country that is opening itself to a globalized society faces hard choices when it wishes to preserve its culture and tradition like the farming of buckwheat in remote villages or the use of soap nuts as the basis for hygiene. Whereas the Royal Government of Bhutan has clearly opted to grow its capacity to respond to the basic needs of all in an effort to improve the happiness index, reality is that the country has been swamped with cheap imported goods that offer its citizens a temporary pleasure of the “new” at low (perceived) costs, but completely drains its cash resources from the local economy. A widespread shift towards the cheap and the easy fundamentally alters the direction of development, away from sustainability, depriving the local economy of the financial resources to keep it liquid. Unfortunately, few realize the cascading of these negative effects when comparing prices on a supermarket shelf.
Now, if we only argue to substitute cheap imported GMO rice with subsidized buckwheat that has fallen out of favor with the locals since advertising has convinced them that white rice is “in”, and brown buckwheat is “old” then the country will never succeed in its quest to maintain its tradition and culture, while developing the economy and ensuring happiness for all. The smart development of buckwheat for the future includes a myriad of initiatives with buzz words like beer, malt extract, animal feed, wild yeast harvesting, overseas licensing with a royalty fee that generates more than the original cost of farming, plus a local brew( 2). Only a clustered approach could succeed in making a dent. Implementing a dozen of those, puts a sustainable Bhutan squarely into the globalized world. Other recent initiatives like the one for the Province of Limburg (Belgium) equally highlights how it is possible to embark on a portfolio of innovative business models, and as Herman Reynders, the Governor of the Province states, this causes everyone to change their way of thinking. We need more than new technologies, we need a new way of thinking: shift from doing less bad, to doing more good.
When we observe the potential of the island of El Hierro today and compare the reality with the impressions a decade ago when few considered that there would be a future for this island without water, dependent on subsidies for diesel fuel to keep the grid humming, then we realize how few thought this would ever be viable. Now, even the Spanish Minister for Industry, Energy and Tourism takes notice realizing that the island does not even need subsidies anymore, a welcome message in a cash strapped society that is struggling to keep its head above the water with a staggering unemployment rate in excess of twenty percent. The same cluster approach mentioned for Gaviotas, Bhutan and Limburg demonstrates like the initiatives in El Hierro that it is possible to develop of portfolio of initiatives that deliver results. In this case the offer includes competitive electricity that provides more water, strengthening the productivity of local farming, which now goes organic, and more value for the economy with a cheese factory and a slaughterhouse, and a ready market to buy all excess output. This strategic portfolio approach not only reduces the carbon footprint and ultimately eliminates the footprint, it generates jobs and offers a future in the periphery of Europe. Now, it is the periphery - a small island located closer to the coast of Africa than the Spanish Peninsula that shows the center how many actions can be undertaken on the ground - with patience and tangible results.
The Blue Economy (3) I propose solely embraces projects that have by design multiple benefits, and when we then embark on dozens of these initiatives in parallel in well defined regions we can realize the change we can implement. Honestly, I see no other way. The key to success is to design positive interactions, to envision synergies, and to facilitate progress by multiples of ten to one hundred and it does start with a wide portfolio of initiatives. We are often blinded by the notion that one small initiative can hardly have a global impact. Let me be clear, we do not need to see the global impact, we first need to see multiple local impacts. Successes at the local level, not one small one, but dozens connected ones all in parallel will turn the global conditions around.
What my original work at the green factory has in common with Las Gaviotas, Bhutan, Limburg, El Hierro and the other initiatives I have had the privilege of being involved with is that everyone choose a clear direction, and teams embark on a portfolio of initiatives. No one expects a quick fix, no one wants to embark on one trial only. We know from experience that pilots and tests lack commitment and therefore fail in producing the breakthroughs that are needed. We need the science that offers certainty and entrepreneurs who are prepared to embrace the risks. And, as we weave more examples together, solutions bring the message home, and touch peopleʼs heart, as well as their wallet. Then we can start beyond a remote village or a distant island.
Therefore we need to change that overly careful management style of taking one step at the time and expose people to all the opportunities right before us at the local level, and leave the global debate for what it is: frustrating and without concrete results. Then, we will realize that reducing our footprint is a good idea, but it is not good enough. Better, then we realize that we are capable of doing so much more, so much better, and that is what inspires me to pursue the work I do, and should inspire you.
(1) The case of Las Gaviotas can be seen in the video that I produced and is available on YouTube
(2) This is is described in detail in Case 98 which you can download from http://www.zeri.org
Recycling was a great idea, cascading matter even better, the best is to KISS
When the elementary school teacher wondered how a tree recycles its leaves, common knowledge hit smack into the face: a tree never even attempts to reattach the leaves that dropped in the fall to its branches in the spring. While this seems to be self-evident, it sheds new light on the logic applied by societies to recycle. We have imagined and imposed closed loops that turn glass bottles into bottles, and newspapers into paper.
And while we learn the lesson that glass should perhaps become glass foam, through a chemical reaction with carbon dioxide, and paper may rather become an insulation material extending the life of cellulose, we start to understand as a community that merely recycling comes at a high cost, and that there are better options. In addition, we fail to see that while recycling is a great step towards a circular economy, the mere recovery of a waste stream often perpetuates the very non-sustainable behavior of modern society that is putting such stress on our limited resources - even when we recycle. We need to design a society that meets the needs of all by generating more value while consuming considerably less stuff. That is the reason why I call for KISS as a design principle.
Since the Club of Rome shook the establishment and presented a clear logic with the publication of the 1972 Report entitled “Limits to Growth”, we need to increase material efficiency in order to render our societies sustainable. Industry has embarked on the reduce, reuse and recycle concept. While we applaud all the efforts in that direction including the popular notions like the circular economy, cradle to cradle, increasing material efficiency by Factor 4,5 and 10, we must realize that recycling renders our consumption and production pattern inflexible as we continue to rely on and thus promote the use of totally unsustainable resources. This means that we continue to consume too much stuff. The mere reduction of materials and their recycling is great but not good enough. The rebound effect makes us consume more as efficiency increases and the continued population explosion is expected to add an extra 2 billion people implies that we continue to stress out our limited resources. That is why we need to go way beyond the mere 3R, and embrace the principle to substitute something with nothing. Only then can we respond to the basic needs of all.
While this expression “substitute something with nothing” seems unrealistic it is urgent that we embrace simplicity as a core principle in our endeavor to steer society towards sustainability, and eliminate many of the standard components, products and processes that we consider part and parcel of modern life. Take the example of the battery. While the industry delivers 40 billion batteries a year, most of which end up as uncontrolled waste, the large majority of mobile and electronic devises never needed a battery in the first place. The convenience of a power source like batteries spurs mining, smelting requiring high energy consumption and a wasteful consumption of precious resources. This battery approach to the storage of electricity neglects the potential to exploit a mere difference in temperature, pressure, or pH and the conversion of pressure from noise to generate sufficient power to operate 95 percent of all mobile electronic devices. There is no need for a green battery, we simply need no battery.
We should embark on a broad initiative to finetune and introduce technologies that eradicate the need for batteries - as simple as that. This should be one of the global initiatives in the interest of cost, health and the Earth. When exceptions apply, we should eliminate all one way batteries by law and solely operate with power accumulators that can perform the job at least 2,000 times. Or, use water that can be recharged indefinitely as a power source through the accumulation of heat. This design principle can be applied to hundreds of products and we should review a few to clarify how easy it is to have the same quality of life, without all the stuff that chokes ecosystems, risks our health, relies on too much mining and energy and was not needed in the first place!
The challenge we are facing is a dependency on material cycles which are superfluous. While recycling should be a part of life, as a part of our desire to create a culture around products of service we continue to consume excessively. I repeat: many recycling programs perpetuate totally unsustainable products and services. So instead of promoting recycling and the cradle to cradle logic, which were great strides forward at their time of conception, we need to go way beyond and eliminate. We can obtain clean drinking water without filters, pumps, membranes or chemicals, simply using the vortex, the swirling movement that rivers have applied thanks to gravity to remove unwanted particles.
Take the emerging practice of burning solid municipal waste under the pretext to generate power. While we know that incineration produces little energy at high cost, the capital investments lock in the pattern of turning waste smaller and more toxic preventing for the next 20-25 years the opportunity to practice urban mining, recovering the precious components. This “burning” locks in a destructive process. Even the more sophisticated versions of pyrolysis and plasma reinforce the closed loop approach for unsustainable elements, which will continue to be over-exploited since the worldʼs population continues to grow and ascend to the middle classes.
The broadening practice of burning waste from agriculture ranging from the bagasse of the sugar cane and the black liquor of paper production destroys the opportunity to generate more while eliminating the unneeded. Bagasse should never be incinerated since it provides the core ingredients for mushroom farming, generating ten times more protein than sugar could ever have imagined. Why would one not facilitate a ten fold increase in nutrition knowing that millions of tons of the raw material are available nearly for free? Even the promise of generating energy should not divert our attention to secure more quality food at lower cost. The same logic applies to the processing of pulp and paper. While black liquor has been traditionally viewed as an energy source, due to its high lignin content, it should never have been considered as a fuel in the first place.
Black liquor provides a rich source of biochemicals which could be converted into a feedstock of fine and renewable chemicals including the raw material for cathodes, a core element in the battery which is traditionally produced out of metals, but could now be manufactured out of bio-based materials. The same logic could be applied to antennas, screaming at us at high energy cost and metal intensity competing for waves to reach our phone, computer or internet connection. If the new Superformula by Johan Gielis were widely applied, then we could reduce the stuff related to this standard equipment by factor one hundred since transponders, relays and WiFi senders and receivers will not be needed anymore.
Custom designed and powerful antennas can be produced out of recycled plastics, mining the tremendous excess of thermo-stable petroleum derivates that now pollute the air (due to indiscriminate incineration) and the seas (through accumulation in huge plastic islands that need 500 to 1,000 years to degrade). We can substitute metal antennas, while dramatically cutting back the energy consumption of antennas that is hardly ever debated. Do we realize that each cellphone antenna unit that dots the skies especially along freeways consumes electricity as if it were a Hummer car?
The conversion of our local electricity networks from 110 or 220 Volt Alternate Current (AC) to 12 V Direct Current (DC) while relying on at least seven different sources of renewable energy forms abundant and available in the immediate neighborhood of consumption, cuts dramatically back on copper wires perhaps with factor one hundred, while simplifying all electric and electronic equipment. About 80 percent of energy efficient systems used at home or at the office, operate with electronic devices and controls requiring less than 12V. All electricity needs can be met without the need for converters and inverters, it even reduces the need for pylons and transfer station that dot our urban and peri-urban environment exposing us to poorly understood radiation risks. This would eliminate the charger business. It is another case of substituting something ... with nothing.
If we substitute cotton, the standard natural fiber dressing the world, which consumes an estimated quarter of the worldʼs agro-chemicals and irrigation water with nettle fibers and alginates from algae blooms, then we not only free up land for food production, the nearly 100 million tons of cotton could become more than 100 million tons of protein for human consumption. At the same time we eliminate the chemicals and put water to a better use. The nettles can be farmed on degraded land, clean up the soil from contaminants, and the algae absorb CO2 cleansing our air. This substitutes large scale farming of cotton with small scale industrial units for nettles and alginates processing that are competitive provided we take all the benefits and externalities into account and not simply compare a ton for a ton. We substitute water for irrigation with “no water” since nettles are stronger when stressed in their growth, and algae convert abundant seawater into a base for farming, instead of consuming precious drinking water. This approach not only frees up essentials, it takes the negatives out of the equation.
It is well known that we do not have enough steel, cement and concrete to meet all the housing needs. The 200 million homes required over the next decade in the tropical belt will only be met with poverty and violence if the cement, brick and mortar approach dominates. Since 100 square meters of land reserved to farm bamboo provides sufficient space to “grow” a house every year (after an initial 3 years) for 75 years we can once again add up what is not needed in modern construction industry: no energy, no water, no metals, no additives. Even the preservation of the bamboo can be achieved by converting the non-structural parts into charcoal and the gases are impregnated eliminating the chemicals that are otherwise needed to extend the life of the house by protecting it from insects and fungi. And while we plant thousands of hectares with bamboo forests, we secure that the hydrological cycles provide local drinking water. A 2,000 hectare bamboo forest secures - as is done in Guayaquil (Ecuador) 42 prefabricated homes a day at a cost of less than one thousand dollars. The house can be signed up for in the morning and delivered in the afternoon at a cost of $17 a month. Who said housing is expensive? Who argued that we should reduce our carbon footprint? We can even have a negative carbon footprint by providing social housing low cost.
The infamous PET bottles with PP caps are a disgrace in our modern societies, defying the intelligence of the human race. How can one use a water container with ingredients that do not degrade for hundreds of years, and then invent incineration as the solution to rid ourselves of the excesses of plastics? It seems to have slipped out of our reality checks that unlike plastics, glass cannot be destroyed, only transformed. Whereas plastics can be produced and burned once, that is it. Now if we convert the end-of-life glass into glass foam while consuming CO2, then we eliminate the need for fire retardants, considered indispensable in society. This necessary evil does not have to pursue its search for “less toxic” ingredients. We can simply eliminate the need by choosing materials that will not burn!
The Blue Economy cases that I have been monitoring, supporting, implementing and learning from provide me the proof of concept. Substituting something with nothing is an important guideline to simplify our society that is over-consuming, accumulating stuff that has no exit, while releasing resources that are abundant without stressing the Earth beyond the carrying capacity. Time has come to keep it simple - may I say - stupid!
tʼs time to go beyond the great proposals that guided us 20 years ago.
I remember standing in the grand hall reserved for the heads of state at the Rio Conference in 1992. It was magical to be one of the few who were adorned with the special badge that permitted entry into the sanctum that gathered more heads of state than ever before. Other special guests were Jane Fonda and Ted Turner. We all signed this huge board with declarations of admiration of, commitment to and love for our Mother Earth. Why did I deserve to be there? What made me a darling at this conference? The invitation arranged by the Minister of Foreign Affairs of Colombia was based on the enthusiasm of the international community with an entrepreneur who was taking market share from multinational corporations like Procter & Gamble, Unilever and Henkel with biodegradable soaps, without advertising. We could all celebrate a new business model.
Biodegradability was rightfully considered as one of the key breakthroughs in steering business towards sustainability. I had claimed that my soaps - made from fatty acids derived from palm oil - degrade 3,000 times faster than the standard petroleum-based cleaning products. The response from the industry was fierce: this is a lie. And, after an independent consultant verified my statement, it indeed turned out to be a lie - he concluded that my soaps were “only” 1,000 times faster dissolved into nothing. I suggested that Iʼd be condemned by the courts for misleading the public. Obviously no one took me to court. However, it revealed an amazing reality: the world did not know in 1992 that biodegradation is measured on a logarithmic scale, one that moves from 1 to 10 to 100 to 1000.
It was remarkable that key parameters like biodegradation depend on complex measurements that remain poorly understood. And yet, even when people slowly started to grasp the importance of biodegradation, then we realized that this was not enough to take us towards sustainability. Indeed, it would take another 16 months after the Rio Summit before I would be face to face with the destruction of the rainforest in Indonesia where I realized that a rising demand for these ecological products that clean up the rivers in Europe, and which decrease the risk of allergies are causing a massive annihilation of the habitat of the orang utan. It was a shock and I fell into a depression.
Over the next months I tried and failed to communicate with the key actors in the green movement about this plight that my attempt to clean up the rivers in Europe lead to a disaster in Asia, only to be met by disbelief. It was as if I was destroying their green dream that social and ecological entrepreneurs like Anita Roddick (The Body Shop) and Ben Cohen (Ben&Jerryʼs) and I could indeed change the economy from the grassroots up. I must admit - I failed. Worse, I must admit that I was not in a position to correct my business model.
When you do not know the unintended consequences of your actions you developed with the best of intentions, you are ignorant and perhaps forgiven. However when you know the consequences of your products, processes and business model then you knowingly cause collateral damage which cannot be condoned by society. And if society tolerates this damage, it displays a double moral. Indeed, a thief who steals less will always be considered a thief, whereas a company that reduces pollution by 80 percent is heralded as an environmental success. That cannot be! Whereas I could not image an immediate solution, it did motivate me to look beyond my level of consciousness and frantically started searching for all the connections that at least would avoid the damages. Soon and thanks to a generous team of researchers linked through the United Nations University in Tokyo (Japan) this exploration evolved from avoidance of the bad to the design of multiple and positive effects. I imagined business that does good.
This is how the Zero Emissions Research and Initiatives (ZERI) transformed its philosophy into action, known as The Blue Economy. It is therefore painful to read that the RIO+20 conference continues to live in the world of twenty years ago and has not yet grown into the new context where youth unemployment (one third worldwide under 26) turned chronic, basic needs are still not met since we continue to change details on the fringes without taking a fresh look at reality and accept that the green economy as worked out today is too little, too late, and too expensive. It is disheartening to observe that more time and platform is reserved to representatives of multinational corporations and hardly any for the entrepreneurs who make the difference on the ground.
Then, the RIO+20 Conference continues to plea for the transfer of billions to introduce business models that are based on Cleantech without ever changing the supply chain management, the core business based on core competence paradigm. Yes indeed, reducing pollution was the obvious logic two decades ago, now time has come to eliminate the concept of waste and pollution all together. Can we be that brave for once? We cannot do less bad - we need to do more good! We cannot only give money and technology we believe are best from our industrialized point of view, we need to jointly explore the marvelous opportunities embedded in culture, tradition, biodiversity, using what is abundant, renewable and locally available. Remember after peak oil we are witnessing peak globalization.
An economic model that is based on Breton Woods world financial structures, Chicago University macro-economics and Harvard Business management principles will argue that this discovery of this type of opportunities will not enable us to tackle the urgent crises that humanity is facing, starting with excessive government debt and the need to alleviate poverty through growth. Here is why we differ.
After decades of global negotiations we are not steering our societies towards sustainability, on the contrary, we keep on discovering surprises like the plastic islands in the Pacific Ocean and the acidification of our air and waters beyond repair while the CO2 continues to rise unabated. Therefore it is time to consider changes on the ground, initiatives in the communities, breakthroughs beyond the rule of the existing game and when the innovative business models are implemented, move forward on a broader scale. It is not about economies of scale, it is about clustering these opportunities that shift our material use, build social capital, accrue assets (not debt) and create a learning environment where we can all strive to do better - perhaps forever.
If humanity is prepared to embark on this evolutionary path, then societies can be transformed. Or do we really believe that politicians assisted by an army of lawyers will ever succeed in hammering out the global agreements that turn spaceship Earth towards a worthy livelihood? I must admit - I believed it but as time evolves I perhaps have become a little wiser.
For months we are been bombarded with news reports about the crisis of the Euro. In the end we even believe that the Euro is in trouble. We should be very clear: the Euro is not in crisis. Excessive government spending is the culprit of the crisis, whatever currency is used. Outrageous government spending destabilizes the world economy. It does not matter if it is referred to in Euro or Drachma, Pesetas, or Deutschmarks. Let us be clear: European Governments spent money beyond their means. Unfortunately, the Old Continent is not the only one that reserved the right to mortgage the next two generations of citizens’ tax earnings.
While the excessive spending of governments cannot be condoned, time has come to propose a more solid assessment of “sovereign debt”, or the debt owned by the government. The risk of a loan is directly related to the capacity to repay that same loan. While expenses are one side of the problem, revenues represent the other side. The capacity of governments to pay debt, next to cutting expenses, depends on the capacity to generate revenue. There are some short term opportunities like selling assets and privatizing operations, however the key to long term success of balancing budgets depends equally on the capacity to secure tax revenue.
If we wish to assess the capacity to secure tax income, it is important to study first and foremost the accumulated debt of citizens and corporations as a percentage of annual gross domestic product. If the government is overspending, and the citizens are maintaining a solid savings ratio, while the corporations are not leveraging their balance sheet and investing in future activities as is the case with Germany, then there is no reason to worry (too much). If on the other hand consumer credit is at its limits, estimated at 100 percent of annual income, and if companies have leveraged their balance sheet to the extreme, maintaining a debt/equity ration in excess of three for debt and one for equity, then it is obvious that the government has little flexibility but to cut down spending dramatically, cause excessive pains to all members of society and generate social unrest.
I would like to suggest that instead of panicking over the pericles of the Greeks, we should worry over the American triple debt: the federal government plus the states have more than 150 percent of GDP in debt with the State of California hovering on the brink of bankruptcy. As a percentage of GDP, the US federal and state debt is equal to the Greek one. The real crisis of America (and not Greece) is in the huge accumulated debt of the individual Americans. The private citizens have assembled more debt than their total annual income. Greek individuals have but a fraction of the private debt as a percentage of their revenues and have maintained savings rates in excess of debt accumulation, a rather healthy indicator.
Perhaps the worst debt situation is the state of affairs with Corporate America which has leveraged its assets and mortgaged its cash flow carrying a massive debt. The debt has grown to such proportions with the largest corporations and banks, that these are now deemed too large to fail. Hence, business benefits from a safety net provided by the Government, or better said by future earning of its citizens who will be taxed to pay for the irresponsible decisions made by business and financial policies imposed by shareholders. Whereas a debt equity ratio of 3 to 1 is the norm, many companies have evolved to a ratio of 5 to 1. A 10 to 1 debt/equity ratio is no exception and even tolerated provided that there is cash flow to cover the interest payments. A company like Lehmann Brothers did not even have 3 percent coverage, meaning that its debt equalled 30 and its assets just one! However what is worse, is that publicly held companies that have a healthy one to one ratio will be pressed by shareholders strapped for cash, to either acquire additional assets (complemented with additional debt) or increase dividend pay, draining the money out of the company.
This dramatic triple level of debt (state, corporate and citizen) means that there is hardly any propensity to increases taxes in an effort to reduce government debt. This explains the allergy of Americans towards any additional levies. Everyone is so busy trying to pay off interest on debt that there is no room for additional levies. Whatever can be creamed off is already committed to the financial institutions. Under these circumstances, interest rates are comparable to taxes, the only difference is that these are paid to banks, which are guaranteed their operations through bail-out schemes with government. If citizens and corporations do not pay the interest anymore, then the banks will fold, and the government has to pay the difference - with tax payers’ money. So we are back to square one.
If we assess the European private and business debt (with the exception of the UK), we see a much healthier situation. While we all agree that taxing citizens when the economy slows down is not wise, continuing to bail out the financial institutions, and thus committing tax revenues for approximately two generations to non-productive investments which are not contributing to alleviating social stress in society. The Belgian Government finally reached an agreement on its budget deficit, cutting some €12 billion, but at the same time, it provided €90 billion guarantees to a defunct bank Dexia, compromising the future capacity of its citizens social security. After all the debt accumulated at this magnitude can only paid back by forcing future generations to cough up the cash. The great difference is that in Europe, there is a propensity to impose more taxes, since the capacity to generate income by private individuals and corporations remains strong due to their lack of massive debt. In America, none of that is available. The surprise came when Sweden surpassed America as the highest per capita investor in venture capital stimulating innovation. A country with the most generous social security scheme in Europe shatters the presumption of uninformed protagonists in America that social security in Europe is at the heart of the problem.
So who should we really worry about: the Euro zone, the Greek economy or the Americans? We should worry about them all. However, the latest report on poverty in the USA confirmed that already 24 percent of the population lives below the magic poverty line, and the number of poor Americans has been growing for decades. The American dream does not exist anymore for one quarter of its population. The American dream is the privilege of the one percent that enjoys the wealth of Wall Street. Everyone else is struggling to make ends meet, abate obesity and make end-of-month debt payments. Do you believe that children can imagine a future under these conditions?
Common practice in conflict resolution involves a third party, disconnected from the harsh realities of decades of aggression, to mediate in establishing an agenda that brings sworn enemies around the same table to discuss a common way forward. The agenda includes agreed subjects of conversation, and time to listen to the pain inflicted on each other. There is a great logic in this approach. Few, but convincing examples show how this approach can bring an end to long lasting conflicts, including the one in Northern Ireland and Namibia. However, as the recent statistics on conflicts indicate, we seem to add more aggressions than resolutions. Especially our record on fighting extremism seems to suffer from our incapacity to reconciliate. Politicians eager to impress an unimpressed electorate have a clear preference for the recourse to weapons. The key problem is that we fail to understand that aggression today is the seed of counter aggression in years or decades to come. Thus the question is how we can bring opposing parties together - who have paid for their survival, livelihood and dreams with pain and blood. My experience tells me: do not bring them together at all - but get action on the ground without any further delay.
Families who suffered acts of expropriation, expulsion, oppression, humiliation, extended periods of hunger and exploitation, indiscriminate incarceration with innocent children and mothers killed in collateral damage condoned by society on both sides have a hard time imagining ever sitting around the same table with the aggressor. And if they ever do, no one will trust the other, whatever the status of the mediator, whatever the financial and political prowess she or he brings along to entice the parties to talk about a possible agreement. Whenever there are two opposing parties who have two opposing dreams, it is indispensable to elevate the nightmare of one - which is the dream of the other - into a broader context while focusing on the simple basics of water, food, shelter, and health. If you have a problem, bring another one to the table that needs a resolution, and if there are three situations in need of out of the box breakthroughs, even better.
The strategy of bringing the core problems to an outsider for resolution, independent of a physical meeting with the arch enemies, could move societies in conflict towards a peaceful solution. Quick, creative and pragmatic solutions to immediate problems can be embraced by all. After all, a dream is more than a declaration of independence. A dream consists of the capacity to respond to basic needs, especially when it comes to water, food, housing, and jobs. Therefore, the conflict resolution that focuses on getting quick results to priority needs should be the first step in a long healing process. As soon as the hungry are fed, the unemployed youth has jobs, and shelter is provided, then self-confidence builds up. How else can be expect to find any agreement on the bigger picture.
As long as conflict resolution first relies on an agreement on the agendas as a pre-condition to meet, we are facing hostile responses and tedious negotiations with little chance of success. And while patience has always been preached in any resolution process, what we should need is impatience in getting key issues resolved immediately. People who have been neglected and mistreated for generations cannot be requested to take time. We know all too well that the buoyancy of the young generation that has seen its parents suffer beyond reason requires fast, clean and clear results on the ground and now. We have to celebrate that impatience, and work with this tremendous energy as a pre-condition to success.
While this blog on Conflict Resolution is detailed in a separate article with a few concrete cases, and a detailed methodology the bottom line is simple: imagine pathways forward where everyone realizes their dreams, step by step - here and now. And since words can never convince anyone that the only way to realize once’s dream is that the other achieves a dream, deeds though do convince. The attainment of the best for one is actually the precondition for the opposing party to also achieve the best. And when two parties are on a pathway to reach all of their goals, then these ancient enemies empower others who have not been part of the inter-generational conflict to also achieve their best. This creates conditions propitious for a long lasting peace.
Whereas I do not claim that this is the only way to achieve a peaceful society, experience teaches me that it is a novel form of getting things done on the ground, build up the confidence that peace at home and in our minds can be achieved, while spreading the enthusiasm that more can be done - even with the enemy. And when the opponents know that only in the end - when a few dreams have been achieved - there is a need to meet the enemy- that broader peace process can be put on track faster than we believe. We all know that the absence of war is not peace. What we should now realize it that conflict will always be part of reality. However, when a conflict emerges we should embrace it as an opportunity for societies to reach a higher level of common purpose in life, first and foremost within one’s own culture, religion and language.
Sustainability has been defined as “The capacity to respond to the basic needs of all with what we have”. If we apply this logic to energy, then we are forced to rethink our present model. Indeed, ever since the concept of a centralized production and distribution of electricity emerged over a century ago, potential local power sources have seldom been taken into account. If we neglect this portfolio of energies that can be accessed where we are and with what we have then we will continue pay high cost both in terms of price and pollution. If on the other hand we switch our mindset and integrate multiple local power and heat sources, then our energy balance could evolve from scarcity to abundance, at lower cost, increased flexibility, while we can finally cut back on contamination. The surprise effect may even be the lowering of local taxes.
Green energy has always been associated with increased costs. Somehow the system of generation and distribution of power convinced consumer and government alike that whatever is good for health and the environment requires a premium. How often are we not requested to perform a cost benefit analysis that amounted to business as usual? The classical management adagio of “core business and core competence” lead to the imposition of the economies of scale, based on few energy sources aimed to reduce the cost per kilowatt hour (kWhr) for the producer. The energy mix today is driven by the capacity to respond to base load and peak demand at predictable rates with guaranteed margins, passing the additional cost on to the client. This resulted in the adoption of nuclear, coal, fuel and natural gas as the core sources. Renewables were typically dismissed since - as the argument goes - the sun only shines 5 hours per day, and wind is unreliable. Then renewables need back-up and storage. This increases the cost borne by the customer or requires subsidies from (bankrupt) governments which in the end are also paid by citizens through higher taxes.
Time has come to reassess this logic. There are two guiding principles of The Blue Economy that determine the identification of a new energy mix beyond green power. First, use what you have. Second, search for multiple benefits. To succeed in this endeavor requires a change of the rules of the game. It has been widely overlooked that our grid today distributes power at 240 V in alternate current (AC). Nearly all renewable energy is generated in direct current (DC). The integration of DC into the grid requires additional capital. If we were to create local 12V DC grids, then many well known but little used renewables would immediately become economically viable without major investments.
The AC enigma made us neglect the potential of all renewables. Photovoltaic cells are only used on one side, even though these could generate more power when sun light is exposed on both sides, especially when concentrated solar is applied to the bottom. If this power were fed straight into a 12V DC local network, then it would outcompete the power supplied by the grid. Unfortunately, electric engineers have been groomed in the AC logic, and off-the-grid homes or communities have been equated with investments in back-up batteries, increasing the cost to the consumer beyond reason. Only the very green and wealthy could afford this option.
Anyone committed to renewable energy produces predominantly power in DC, then converts it to AC supplying the grid (sometimes with feed-in tariffs), only to reconvert it back to DC at the point of consumption. Do we realize the inefficiency and the cost of this? The electronic engineers, driven by energy efficiency have chosen DC as the standard. Over 80 percent of home and office appliances driven by micro-electronics operate in DC, which combines processing capacity with mobility and miniaturization. Suffice to check the number of chargers, which actually are AC/DC converters that are scattered through our homes to realize the inefficiencies that we tacitly tolerate.
Time has come to rethink the decision on the AC standard that has been made over a century ago. The creation of local DC-grids linked to local power sources that can easily supply power in DC represents a new competitive model with high efficiency reducing energy requirements up to 60 percent without compromising on performance or comfort. A local DC grid also influences health and safety. It reduces the risk of fire and electrocution, cuts wiring, metals and maintenance. The switch to local portfolio of DC power is only a first step, additional adjustments are required including a smarter exploitation of available sources. The first and foremost set of opportunities are embedded in a better management of water.
Home owners and office users will quickly agree: water is key. It always has come as a surprise how little effort building designers make to use the laws of physics to improve the quality of life in general and energy efficiency in particular. A fresh look at water could change that. For example, a thermosyphon functions all year, with hot water rising predictably to the top. Today, residential and office buildings rely on pumps - with increased cost and energy consumption. If on the other hand solar energy, or even just luminescence were used to generate electricity and to heat water, exploiting both sides of photovoltaic panels as provided by the Swedish innovation company Solarus AB, then four to six units are sufficient to provide electricity, hot water and cooling to a family home in Scandinavia. Multifunctional technologies provide multiple benefits, reducing the cost per kWhr.
Whereas the thermosyphon gets water to top of the building, the downward flow of water - predictable with precision of 6 liters per minute - could generate power while adding extra benefits. For example, the flow could power the production of ozone to purify water on site from dissolved oxygen in the water, and could destroy elemental chlorine at the same time. If the water were stored in tanks at 80 or even 90 degrees, then water can be delivered at 38-40 degrees, providing additional DC power through a solid state heat exchange exploiting the 40-50 degrees differential. This power source used to be considered negligible, since the amount of power that could ultimately be fed into the AC grid is trivial.
We can continue the logic of “use what you have to gain multiple benefits” to waste water, and solid waste management. Any building or block in a city hands over its waste to a service provider against a fixed cost per cubic meter or ton. Insights into the biochemical reactions of the slurry from black water and organic solid waste permitted to generate four times more methane gas than previously considered viable. These waste streams, guaranteed as long as people are present, now provides a stable and cheap source of methane. If one combines this smart chemistry provided by Scandinavian Biogas with the vortex technology of AgroPlas from the UK, one has on demand access to local hydrogen to power fuel cells, with solid carbon powder of commercial value as the sole residue. While this will be readily dismissed by the experts in the field since it sounds to good to be true, it is already reality. Better it is competitive, thus it will change the rules of the game.
The biggest challenge we face is that too few building designers and energy experts have been trained to think along these lines. In addition, the few who have this capacity lack access to off-the-shelf tools and equipment to implement this. The few opportunities and options described plus dozen others presented on <www.blueeconomy.de> are therefore understandably dismissed as unviable, futuristic or at least too costly. Time has come to navigate from fantasy to a vision based on science so that these opportunities can soon become mainstream. This requires leadership from a few, and a preparedness to leave our comfort zones. Then we can embrace the shared need to steer business and society towards sustainability - with what we have.
The Japanese government decided two weeks ago to undertake the biggest ever investment in solar with a plan for 100GW to be installed by 2015. This is in four years more than four times what Germany installed in 25 years! This policy decision is backed up by huge capital outlays provided by the government and a string of private investments including high profile commitments from Masayoshi Son, the founder of Softbank and one of the leading shareholders of Yahoo. This political decision combined with a strong business support from a select group of entrepreneurs will be the greatest boost in modern history to renewable energy.
At the same time, several major American solar companies filed for protection and shut down assembly lines adding to the doom and gloom in the US. The much heralded solar power industry that was part of a greening of the economy and the greening of jobs is clearly suffering. In a press release, Solyndra - the latest to fold after Veeco a month earlier - which had received over one billion dollars in venture capital funding and over half a billion dollar in government guarantees, stated that it could not compete with bigger overseas rivals. The company claims that cuts to generous solar subsidies in the number two market of the world, Italy stalled development of solar projects and led to a global glut of solar panels sparking a 25 percent drop in prices.
Experts go on to claim that "Chinese firms that have received billions of dollars in low-cost loans from state banks and have access to a well developed domestic supply chain for solar manufacturing" are root causes of the trouble for the US solar industry. However, one and a half billion dollars in VC funding and government guarantees is quite a generous outlay of cash. The real reason why Solyndra and Veeco had to fold is the choice of technology and the lack of a competitive business model. The copper indium gallium selenide (CIGS) belongs to the thin film solar cells, competing with Cadmium Telluride (more toxic) and amorphous silicon. And yes in that narrowly defined game amongst three, CIGS is the best.
Moreover, the claim to success was spurred by a perceived shortage in Silicon which would drive up the prices, only to replace one material (Si) in limited supply with another few (In, Ga, Se) in short and uncertain supply, very difficult to handle, requiring lots of energy. Three years later, Silicon is cheaper, so that first promise did not hold up. When it comes to the Chinese, they only are 10-20 percent cheaper, thus efficiency and technology should be able to make up the difference, or? The bottom line is - it did not live up to the expectations.
The CIGS technology was the wrong bet. Instead of looking for variations to the same theme, it is time to change the rules of the game. The substitution of one material with another simply will not do the trick. Thin film technologies are too expensive, have too many manufacturing problems to resolve and cannot compete against simple and yet fundamental innovations like Solarus AB (Sweden) which bundles PV, concentrated solar using both sides of the silicon wafers (what a simple but profound invention), generate heat from the cooling, while providing combined heat and power (CHP). This three in one approach is three times more efficient in output than the most efficient stand-alone PV - wafer, silicon, CIGS, thin film whatever, at a fraction of its cost. With less than one percent of the funding of Solyndra, Solarus competes with nuclear in kWh and has a decentralized manufacturing philosophy, using many recycled materials that can be locally sourced.
The game is not technology alone, it is about an innovative and competitive business model. So it is not right to blush the Chinese, blame betting on the wrong horse of technology and sticking to an outdated business model that solely focuses on one core competence, and nothing else. Perhaps too much money could have been another core problem. After all any entrepreneur flush with cash is not an ideal change agent. Entrepreneurs often succeed without money and experience charting innovative pathways to the future with what they have.
As water scarcity increases, the push for recycling water gets a boost. While there is a certain logic in recovering water, the problem is that pharmaceuticals have made their way into our drinking system worldwide. While we do not yet understand the precise effects on human health, animal studies suggest that we are heading towards a new crisis. After intake and metabolism, drugs, antibiotics, and synthetic hormones for birth control end up into our surface and drinking water. Worse, many of the compounds are so persistent that 1,000's of tons flow annually into the sea, then accumulate in the fish we eat. When it comes antibiotics, we dispersing a multiple, since more than 50 percent of the world's consumption is not for making people healthy, but to grow cows fat faster. We thought it were only the heavy metals the fish absorb that should us worry.
Drugs are known to cause reproductive, mutagenic, and teratogenic effects in water life. Prozac residue causes male mussels to spawn; anti-hypertension drugs impact the reproduction of crayfish and crabs. The infiltration of antibiotics and anti-bacterials increases the resistance of bacteria. This has serious implications for treating infections in the future. Anti-tumor drugs used in chemotherapy are known to cause mutagenic and teratogenic effects. There is increasing evidence of endocrine disruption in wildlife even when only exposed to trace levels of synthetic hormones. Painkillers, like Ibuprofen and even nicotine are not removed during the drinking water process. We thought we finally handled the adverse effects of second-hand smoking by prohibiting smoking in public places. Now it seems that we are all smoking anyway - through our drinking water!
The conventional water treatment plants are incapable of removing pharmaceuticals. Studies demonstrated that coagulation, sedimentation and filtration eliminates only 10-12 percent of the active ingredients. This accumulates in sludge, which is often recycled as a soil additives, exposing our food chain once more to unwanted ingredients which can continue to cause havoc for years to come. Activated carbon filtration and ozone treatment can remove up to 75 percent removal. However, this still exposes the population to the remaining 25 percent. As water continues to be recycled - and re- recycled entering into closed loops, and consumption of both prescription and over-the- counter drugs increases, society and the ecosystems on which our life depends are overly exposed to a broad cocktail of pharmaceuticals. It would not be a surprise that whole sections of the population start suffering from mood swings and shifting sex behavior.
Officials in Philadelphia discovered 56 pharmaceuticals in treated drinking water. Nearly 20 million residents of Southern California are exposed to anti-epileptic and anti-anxiety drugs. San Francisco's drinking water contains a synthetic hard to break down sex hormone. Unfortunately, bottled water is filtered drinking water in a wasteful plastic container, and most water bottlers do not test for pharmaceuticals either. Even our home filtration systems only reduce - but cannot eliminate drugs. Your only salvation is your own well from your own watershed. This is available to very few indeed.
It is time to revisit health care and the search for effective medicine. Undoubtedly, in the wake of these legitimate concerns, traditional and natural medicine becomes more relevant than ever. The vision of the Bhutanese constitution to guarantee traditional medicine to all citizens now sounds like a visionary decision. As we are spreading medicine indiscriminately throughout the environment and society, it is urgent to provide new shelf-life guidelines to the pharmaceutical industry. Just like it took decades to realize that plastics do not disintegrate and build up of massive junk islands in the Pacific Ocean, pharmacological products do not degrade and thus accumulate in water bodies - with one major difference - those mood swing chemicals and chemotherapy residues are invisible to the human eye. It is hard to make the gross impact visible.
The typical response from the concerned economic interests is that there is no scientific proof that humans are affected. The problem is that when the full proof is delivered, then it is too late and remedy will be impossible. Actually, it is not the effect of one pharmaceutical product, it is the cocktail that does irreparable damage. Therefore it seems that three parallel initiatives are needed. First all medicine needs to include a trigger that secures the disintegration of the complex formulations after intake. Instead of only discovering new drugs and invent new delivery methods, research must identify triggers to disassemble these man-made molecules the moment they leave the human body. Second, water treatment must be equipped to measure the presence of pharmaceuticals in waste water. It is not possible that every city is now obliged to install a reverse osmosis facility that effectively removes 95 percent. Such an end-of-tube solution dramatically increases in costs that should never have to be borne by the tax payer.
Perhaps we should finally focus on tackling the root causes that lead to this massive consumption of pills. Time has come to search for a happier and less stressful life. Whereas the first two solutions can be decided by any responsible government, the third one is a decision we have to make, before it is too late.
Durante décadas la economía mundial se ha sometido a la ola de la globalización. La fuerza incansable de construir economías de escala más altas, de producir a costos marginales siempre más bajos, forzaba las industrias a estandarizarse, cortando gastos pasando la producción a terceros (Outsourcing) e imponiendo una disciplina feroz de compras y suministro mediante Gestión de Cadena de Suministro, limitando el número de proveedores a unos grandes, eliminando todo exceso de ejecutivos, forzando fusiones y adquisiciones, sacando capa por capa todos los excedentes para ofrecer a los inversionistas mejores rendimientos y mejores precios a los consumidores, reforzando el poder de compra que les permitiera formar parte de la clase media. Ese proceso de la globalización suponía un impacto gota a gota (trickle down) a una sociedad que nos conduciría al final a la aspiración de riqueza.
Observando la realidad de la economía globalizada, me parece que el único fenómeno sostenible de la globalización es la pobreza. Aunque uno podría reclamar que la economía creció y el mercado se expandió, la realidad dura es que nunca como hoy en la historia tanta gente en números absolutos vivió en la miseria absoluta. Muchos opinan que se necesita el control de la explosión de la población como uno de los factores centrales para llevar una distribución equitativa de la riqueza y lograr el desarrollo social para todos en la tierra. No considero viable reducir la capacidad de responder a todas las necesidades de todos al manejo del factor “ Control de la población”. Se necesita más, y el cambio más crítico y el menor debatido es la necesidad de cambiar el modelo de negocio.
Nuestro sistema económico está motivado por la eficiencia, sin considerar suficiencia. Nuestro mundo de negocios está inspirado por la ambición, no por la necesidad. Los riesgos -causados por especulaciones con el pretexto de generar liquidez en el mercado financiero o por la energía nuclear, propuesta como fuente energética básica y barata- son sin excepción asumidos por los ciudadanos para el rescate financiero y las garantías del estado, cuando los beneficios son acumulados por pocos. La brecha entre los más ricos y los más pobres nunca ha sido tan enorme.
La Economía Azul propone que respondamos a las necesidades básicas con lo que tenemos. Ha llegado la hora de que paremos de consumir más que la capacidad regenerativa de nuestra tierra. Y aún más, tenemos que adoptar innovaciones y técnicas diseñando cascadas de nutrientes, materias y energía tal como lo hacen los ecosistemas, que nos permitan salir de la trampa de la escasez y podamos acceder al mundo de la suficiencia para todos los seres vivos, no solamente los seres humanos.
Amory Lovins y sus colegas expertos en política energética del Rocky Mountain Institute han comprobado que la humanidad llegó al pico de producción y consumo de petróleo en el 2007. Eso implica que llegamos al máximo nivel de extracción de combustibles fósiles de la tierra y que de ahora adelante tenemos que aprender a vivir con reservas en disminución. La reducción del consumo y la búsqueda de fuentes renovables se impone. Ahora que llegamos al punto de no retorno y el acceso al petróleo ilimitado se terminó, el empuje para globalizar más tiene que confrontarse a la misma realidad. Llegamos al pico de la globalización! Eso implica que las empresas que han sufrido una transformación brutal como actores globales, tienen que prepararse a una recesión en sus dinámicas fundamentales de crecimiento. Los ganadores de esta nueva realidad son las pequeñas y medianas empresas, inspiradas por millones de emprendedores que están dispuestos a responder a las necesidades básicas de todos con aquello que está localmente disponible.
Este cambio permite el diseño de un mundo de negocios competitivo donde el libre comercio y la libre inversión internacional no sean los elementos claves para el éxito económico. El nuevo modelo de negocios ofrecerá oportunidades al emprendedor local capaz de crear coaliciones -agrupaciones de actividades sociales y económicas- con múltiples ingresos y beneficios que rebasa la camisa de fuerza y mantra del negocio central y la competencia básica como precondiciones de un mundo estandarizado y globalizado determinado por el concepto abstracto del flujo de caja descontado.
Un alejamiento del modelo del Harvard Business School obliga a la gestión de la empresa a enfocarse en un solo producto o proceso simultáneo, asegurará que los Davids derrotarán a los Goliats. David lo logrará no porque tenga un acceso privilegiado al mercado mundial de capital, trabajo, energía o minerales; lo conseguirá en primer lugar porque la lucha en pos de la globalización ha dejado los Goliats con tantas debilidades, que son hoy en día muy vulnerables. A diferencia de la lista del Fortune 500, pocos emprendedores aspirar a reemplazar los gigantes; ellos se satisfacen con el 2-3 por ciento del mercado local que podrán mordisquear de la torta de mercado de sus formidables oponentes.
El nuevo paradigma facilitará la llegada de sistemas descentralizados de producción y consumo que son hoy en día técnicamente viables, compitiendo en todos los sectores de la economía, incluyendo la minería, la agricultura, la agricultura forestal, la siderurgia, la generación de energía, pulpa y papel y muchos campos más. El portafolio de 100 innovaciones descritas en La Economía Azul y sus éxitos emergentes en las cuatro esquinas del mundo, no es un casos aislado, pero parte de una nueva tendencia que resumo como "El Fin de la Globalización".
Aunque la penetración completa del nuevo modelo de negocios en nuestro tejido social y económico podría requerir un par de décadas más, ya está conformando su fortaleza competitiva, impulsado por las necesidades y los recursos locales. Eso formará una nueva sociedad que generará empleo, donde lo mejor para salud y el medio ambiente sea más barato y donde se acumule el capital social simplemente siendo más productivo y más competitivo. Después de todo, eso es lo que esperamos del Homo Economicus: hacer mucho más con mucho menos.
Governments are bankrupt. The financial management of the state's household has not only derailed, bailing out banks, subsidizing uncompetitive industries, and generous hand-outs are risking to enslave the citizens of industrialized nations into excessive taxation for decades to come. We seem to forget that the trillion dollar spending sprees of the past years associated with massive national budget shortfalls all have to be paid back by the citizens.
It is the addiction to subsidies that drains economies, diverts resources from productive and social objectives, while it distorts our view of competitiveness. While energy is critical, we have clearly have lost touch with reality. If and when energy is widely subsidized, from nuclear to coal, fossil fuels and renewables, then we are not making it cheaper, we only delaying payment! What appears as a discount is only a temporary reprieve. And, payback time will include interest, and interest on interest. How come? Because our governments spend more, much more than they can reasonably earn as income.
The culture of subsidy has evolved from a temporary measure to a permanent addiction. Coal in Germany has been subsidized since 1965, and this drain on the state budget only ends in 2018 - 53 years later. The political measure to soften the social impact of the demise of coal mines turned into a permanent revenue stream for the corporate world with the associated cost passed on to the tax payer. Is this the route solar and other renewable energies should take? Let us be transparent: solar and wind energies need subsidies since these are not competitive. The forced return of 8 percent on investments for 20 years -the norm in Germany- generated a huge demand for silicon wafer panels, but it did not build up a creative and innovative solar industry which mainly imports its components and panels from China.
Imagine the latest solar systems that offer both electricity and heat, that concentrate light onto a wafer more than three times, using both sides of the panel, cutting wiring to 25 percent. Only 8 units produce enough ambient heating, cooling, hot water, purified water, and electricity for a household of five in Sweden, at a cost of approximately 1.5 cent per kW/hr. At this rate, solar needs no subsidy. The faster these innovations are adopted by the market the quicker all energy subsidies will become obsolete, releasing money to support the good - like meaningful labor and absolute resource efficiency, pensions and the social sector, or funding the exit from an overly risky nuclear energy.
The trilogy of disasters in Japan: earthquake, tsunami and nuclear power demonstrates the total failure of technology. The fury of nature, caused by moving tectonic plates annihilated every single defense that the most prepared nation in the world had established. Japan is facing black-outs and eats radiated food. The worst imaginable did not only happen, it could very well happen again, especially if many dismiss the failure of nuclear power and declare their pursuit of disaster in an unknown future.
Japanese society, stoic and heroic is rediscovering the human capacity to respond to the basic needs with what we have. Deprived of drinking water, heating, cellphones, internet, cars, roads and even their homes the Japanese show the world how even the worst can bring us to discover the best in the simplest. A roof, a candle light, a blanket, reflections on the past, reconciling pain with hope that the future will be better - together, trusting each other even those we did not know before.
On the other side of the world, the Bahrain Government enlisted the Saudi forces to quench an uprising of the majority of the population with casualties unaccounted for. Ivory Coast, a nation that elected an opposition leader to the presidency, faces a defiant outgoing president, unwilling to give up his post. He even ordered to shoot at unarmed women demonstrating on the street killing several. The West stays put with threats limited to words, and Bahrain does not even face a boycott of any sort. The word is that the American President is out to mend relations with the Saudi King.
At the same time, the West deploys its war planes in Libya without even knowing who the opposition really represents and what it stands for. The West shows its fury over a leader who all policy makers have embraced in recent years, and who was next to South Africa the only one to voluntarily dismantle his nuclear weapons plan. While the West turns a blind eye to Bahrain and Ivory Coast, it picks fights that clearly serve self-interest and not the wishes of the majority of the local population. If the pretext is the protection of the local people, why is there no protection in Bahrain or Ivory Coast - and so many nations where torture and oppression is the standard.
How will our children judge the double moral our politicians display? I hope our children will remember how Japanese society overcomes the worst predicament it faces since the second world war, and urges our policy makers to behave with dignity on high moral grounds on every occasion, not only the ones that serve their ego, power bases or constituencies.
The aim of this blog is to present a fresh look at realities around us. Whereas I do not pretend to present the truth nor a definite position, I do wish to push the reader to think beyond the obvious. After all, time has come to dramatically improve the plight of millions, and that requires more than the predictable. Sometimes it forces us into spheres of discomfort.