6 Enabling conditions for a green transformation in manufacturing
The manufacturing sector can make a significant contribution in greening national economies by producing goods that are more resource-efficient and have lower environmental impacts over their life-cycles. This applies, in particular, to the highly resource-intensive value chains such as metals and car manufacturing. But for the manufacturing industries to make this transition, they need to receive the appropriate policy and price signals. Under certain conditions it also needs institutional support from governments, in particular ensuring that supportive investments in physical infrastructure and education are sufficient to enable a transition that requires new systems and skills.
The past several decades have witnessed a major restructuring of the global economy, with the global manufacturing industry base shifting toward developing countries and emerging economies, and developed countries becoming ever more service- oriented. Globalization through increased cross- boundary trade and investment flows is driving this restructuring, along with technological and associated organizational changes. This transition process, driven by global factors of production and markets rather than local development factors, has resulted in significant capacity gaps in developing and transition economies in managing the structural transformation of their economy on a more sustainable basis. This situation is a handicap for small enterprises to adopt more resource- efficient technologies as they face growing demand to meet the new standards required to market their products through global supply chains.
With this background in mind, this section on enabling conditions focuses on actions that mainly governments can take to help induce the transition to green industrial production both through incremental and transformational changes. It is a transition that faces drivers such as resource scarcities and rising energy costs as well as barriers such as inefficient monopolies, outdated regulations that restrict new technological approaches and principle-agent conflicts. It is a transition in which, for example, power monopolies need to be challenged by government support for decentralised energy production and investment in smart grids that saves electricity transmission losses. It is also a transition in which governments need to consider the integrated resource efficiency perspective, avoiding technology policies (the example of Carbon Capture and
Storage) that focus on a single measure (such as carbon emissions) at the cost of increased fossil fuel extraction, lower resource-efficiency and lower economic growth.
Before reflecting on appropriate instruments for action, two key policy priorities for greening manufacturing are recommended and the promotion of closed cycle manufacturing and related life cycle approaches with supportive recovery and recycling infrastructure, and regulatory reform to enable factor efficiency improvements in energy use, for example through the introduction of co-generation and CHP technologies and the feed-in of decentralised power generated by use of renewables. The latter needs to be supported by investment in smart grids and approaches such as feed- in tariffs and time-of-day pricing (see Energy chapter).
6.1 Policy priorities
Closed-cycle manufacturing and life cycle approaches Efforts to promote resource efficiency at the product, production process and company level need to be complemented by resource-efficiency innovations at the industrial cluster and systems level. At the company level, this starts with approaches such as eco-design, life-cycle management and cleaner production. At the industry and systems level, this implies innovations such as the greening of supply chains and clustering of industries in a given economic zone to become a platform for resource efficiency through optimised resource flows between industries. The industrial parks of the future could be eco-parks to maximise industrial symbiosis and secure green jobs.
The move toward a closed-cycle manufacturing through remanufacturing and reprocessing of post-consumption products and materials that are currently thrown away as a waste, represents an important opportunity for the transition toward a green economy. Two broad categories of post-consumption waste that could be the focus in such a transition are e-waste and materials such as metals, glass, plastics and paper products. The latter category constitutes the most diverse group of industrial products, which are already a target of some degree of recycling, albeit in varying degree of organisation and with an informal character in many developing societies. The policy focus would thus be