Towards a green economy

4 Investment and resource efficiency

Making the investment decision to pursue green manufacturing opportunities requires careful consideration of real net benefits and longer term consequences of decisions made today. This includes consideration of research, development and design options that enable users and consumers to move away from the throwaway consumption paradigm. Some technology innovations hold potential for drastic gains in resource efficiency, while others – such as carbon capture and storage (CCS) – may bring more costs than benefits. The cases of energy and water resources display the importance of having appropriate regulations and pricing in place. The area of human resources and employment highlights the importance of carefully considering direct and indirect impacts, as well as the role of taxes, price elasticity and rebound effects.

4.1 Investing in material and energy efficiency

To create a greener economy, many believe that fundamental changes are needed – changes which some have referred to as a social-technological transition (Geels 2002). The magnitude of the challenges is underscored by the fact that current unsustainable systems (socio- technical regimes) are locked-in by a multitude of demand- and supply-side-related factors. Yet, if the concept of closed-cycle manufacturing could be extended to mass-market products such as cars, washing machines, refrigerators and air-conditioners, the potential benefits to society would be significant. Firstly, by extending the

average life-span of manufactured goods, the

need for extracting virgin materials is correspondingly reduced. In the second place, repair, reconditioning, and remanufacturing are fairly labour-intensive activities, requiring relatively little capital investment.

Thus,

governments of developing countries have an interest in promoting imports of used goods that are capable of being remanufactured, not only in reducing global GHG emissions and resource consumption, but also in maintaining domestic employment and availability of modestly-priced goods for domestic consumption.

Most cleaner technology innovations will struggle to attract venture capital under current conditions, even in industrialised countries. Venture capital firms are looking for investment opportunities that offer high margins and require low capital expenditures and

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low-cost testing of their market potential. Changing this situation to encourage innovation, especially in transitional and developing countries, depends on the enabling conditions (section 5). Those innovations that have attracted venture capital interest in recent years are mostly related to the Internet or renewable energy. While investment in core clean energy (including energy efficiency) decreased in 2009, owing to the global economic downturn, there was a record investment in wind power (UNEP SEFI 2010).

The field of electronics recycling is another promising area for research and development. Currently, there is some recycling of television sets to recover lead and glass, but e-recyclers mostly try to recover silver and gold, without recovering other scarce metals. New processes exist for recovering liquid crystal, indium metal and glass (LCD) from discarded flat-panel TV screens (Black 2008). These LCD panels constitute an increasing share of electronic waste, and the recovery process may be profitable enough to justify significant investment in a more structured approach to the electronic waste recovery problem as a whole.

Design initiatives in these areas are clearly within the scope and in the interests of manufacturers, because they contribute to competitiveness and cut costs. However there is another type of design innovation that is more directly relevant to overall resource efficiency, while being less profitable to manufacturers per se. This involves design changes to permit easier reconditioning, re-manufacturing and (finally) recycling of scarce metals. For example, it is important to facilitate the separation of electrical and electronic components from structural components of appliances and vehicles. This is important both to recycle rare metals (silver, gold, platinum, indium, etc.) that are increasingly being used in electronic products, and to reduce the extent to which these same metals (especially copper) become unwanted contaminants of secondary (recycled) aluminum and steel. Clearly, there is a huge opening for design-for- reparability, re-manufacturability and recyclability, i.e. for closed-loop manufacturing. In the case of used cars, open international markets currently provide incentives for material leakages that could be turned into business opportunities by using closed-loop systems.

A 2010 report from the Greco Initiative Regional Activity Centre for Cleaner Production (Greco Initiative)