Towards a green economy 1 Introduction

Manufactured products are a key component of human consumption, whether as finished or semi-finished goods. Manufacturing processes are a key stage in the life-cycle of material use, which begins with natural resource extraction and ends with final disposal. Basic industries such as cement, aluminum, chemical and steel supply the semi-finished, or intermediate goods, used to build houses, cars, and other appliances used in daily life. Other industrial sectors produce finished goods such as clothing, leather, fine chemicals, electrical and electronic products.

In Our Common Future (1987), the Brundtland

Commission foresaw industrial operations that are more efficient in resource use, generate less pollution and waste, are based on the use of renewable resources, and that minimise irreversible impacts on human health and the environment. This vision became the drive for concepts such as Cleaner Production promoted by UNEP and others since the 1980s. It remains a challenge for manufacturing industries world-wide, highlighting a need for more fundamental change in which the purpose of products and side-effects of manufacturing become a source of inspiration for re-design and beneficial output (Braungart and McDonough 2008).

In order to implement a strategy of sustainable use of natural resources based on integrated resource management and resource efficiency, policy interventions supplemented by voluntary initiatives are needed at each stage of the life-cycle of production and use. The balance between upstream and downstream interventions is up for policy debate. Upstream policy interventions, for example, at the stage of mineral extraction or forest harvesting, to minimise adverse environmental impacts or to charge users appropriately for depletion or appropriation of resource rents, would have the effect of raising input prices to manufacturing companies.

Policy interventions targeted at manufacturing companies with the aim of reducing pollution to air and water, safeguarding health from exposure to toxic chemicals, and emitting greenhouse gases can also have the effect of increasing the cost of using resource inputs. These, together with other measures, can be powerful drivers in encouraging manufacturing industries to become more efficient in their use of natural resources and

energy. Measures intended to improve the

performance of markets for secondary raw materials and to encourage recycling can help to improve the performance of manufacturing companies in reducing their use of virgin raw materials. These are all building

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blocks for moving us closer to the vision described in Our Common Future.

1.1 Structure of the chapter

The chapter starts with a brief sketch of global manufacturing and its importance to developing economies. It then explains the choices of manufacturing branches, which are the main focus of the chapter , the environmental pressures associated with them, recent trends in decoupling economic growth from those pressures and a definition of green manufacturing.

Section 2 describes the costs of failure to implement a strategy of greening manufacture. These relate to excessively rapid depletion of natural resources, which could adversely affect future economic growth, the negative externalities of industrial air pollution and the use of hazardous substances.

Section 3 outlines a number of strategic approaches to encourage green manufacturing that involve investment in innovation, cleaner energy technologies, resource efficiency and a transition to green jobs. This includes a supply-side strategy involving the redesign of processes and technologies employed in the major materials-intensive subsectors of the manufacturing sector, including closed- cycle manufacturing where feasible. It

also includes

a demand-side strategy to change the composition of demand, both from within industry and from end-users.

Section 4 argues that there are many opportunities for investments that can lower costs by using less material, energy and water. At the micro-level this can translate into an increase in profitability, if the rate of return on such investment is greater than that of an alternative investment. The section provides numerous examples of green investments highlighting, in particular, their impacts on energy savings and CO2

emissions reductions,

water savings and employment creation. However, the process of transition may be slowed by the problem of lock-in, owing to the capital-intensive nature of many manufacturing processes and long plant lives.

Section 5 presents the results of model-based quantitative analysis done for this study that shows how investing to improve resource efficiency in manufacturing can often be profitable to business and increase employment while reducing environmental pressure. At the macro- level it can mean greater Gross Domestic Product (GDP) and a higher level of environmental services.