How it can save our planet. By Keith Mcilroy Copyright 2011 Keith Mcilroy Smashwords Edition http://thejollygreencapitalist.blogspot.com mailto:keith@keithmcilroy.com This free ebook has been designed to help you get the message out that we need to change our economic model to one that is truly sustainable. It is available free from every ebook retailer. Although this is a free book, it remains the copyrighted property of the author, and may not be reproduced, copied or distributed for commercial or non-commercial purposes. If you enjoyed this book, please encourage your friends to download their own copy at Smashwords.com, where they can also discover other works by this author. Thank you for your support. *********************************************  “We CAN live a life of limitless economic growth on a planet of limited resources” In the last 12 years the global economy has doubled to US $70 Trillion. During that same time oil is close to peaking, fresh water demand has ballooned, waste mountains have piled up and greenhouse gases have driven changes to our climate. If we continue at that growth rate the global economy will be US $700 Trillion per annum by 2050 and over US $11,000 Trillion by the end of this century. Can we have a global economy 160 times bigger than today? • The pessimists' view is that we cannot. We will consume and pollute ourselves to a life of meagre subsistence - "Living in caves and eating moss". • The optimists' view is that new forms of energy and new technologies will enable us to continue to grow for ever without limit. "Technology will solve the problem". The reality is, of course, somewhere between the two. That 'somewhere' I call ‘GreenCapitalism’. 'Capitalism' because that really is the only economic game in town. 'Green' because that is the only long term future for us. This book will help you understand why, when and how GreenCapitalism will impact on you. It will explain the good and the bad of our current economic model, what impact future economic growth will have on our planet and what we need to put in place for our economy to become truly sustainable. The focus of this book is the Australian economy. I have chosen the Australian economy because Australia is going to find the transition to a sustainable economy more difficult than most other economies. It is highly dependent upon fossil fuels for its energy usage, giving individual Australians the biggest carbon footprint of any developed country. Australia is the world’s quarry for so many of those natural resources that are going to become scarce over the rest of this century. Australia also has a lot to lose from the destruction of our environment, from the rugged wilderness of Tasmania’s native forests to the beauty of the Great Barrier Reef This ebook explains how (relatively!) easy it would be for Australia to transition to a truly sustainable economy. If Australia can do it, every other country can do it as well. *********************************************  "there is no need for there to be a 'loser' between economic growth and environmental protection" I have spent most of my professional life identifying the need for change in organisations then helping those organisations to make those changes. From turning around insolvent companies and integrating corporate acquisitions through to culture change programs on factory floors and in sales teams. Like most people deeply involved in business, my focus was on this quarter's profit, this month's sales, this week's cash flow. I paid scant regard to what was happening in the rest of the world, especially anything vaguely environmental. This started to change when my family flew into Manchester airport in 2000 to join me in the UK. It was raining. Hardly surprising for Manchester. Over the next few months it continued to rain and there was more and more discussion on climate change. At the time I dismissed this, along with 'peak oil' and 'global warming', as fear mongering from people who should get a 'proper job'. Then in April 2001, it was announced that the previous 12 months had been the wettest in the UK since records began. And records began in the 17 th Century. That caused me to wonder a wee bit. But only for a bit as I soon went back to my insular business world and stayed there, even when we returned to Australia to find ourselves in the middle of the 'hundred year drought'. Then, in 2003 The Business Council of Australia invited me to join their working group that was preparing a range of scenarios for Australia in 20 years time. 'Aspire Australia 2025' was put together over 12 months by running workshops with seventy of the leading thinkers in Australia. We looked at every aspect of life in Australia. It’s competitiveness, strategic defence, values and norms, it’s governance and it’s sustainability. That experience triggered the start of my journey. A journey that was initially focussed on climate change, for the more that I researched the arguments for and against, the more I came to the conclusion that this was a 'clear and present threat' to our quality of life. It also quickly became clear that, until the business community took the risk seriously, then we would always struggle to make the changes needed to reduce our greenhouse gas emissions. And here was where the nub of the problem was. Business had great difficulty seeing how they could both, reduce their dependence on fossil fuels and also maintain the economic growth that is so fundamental to their business success. In the same way that business saw the 20 th Century as a battle between labour and capital, many now saw the 21 st Century as being a battle between economic growth and environmental protection. Yet, there was no real 'loser' in the battle between labour and capital, so there is no need for there to be a 'loser' between economic growth and environmental protection. Hence my promotion of GreenCapitalism. I write, I speak and I present on how we can have our cake and eat it too. For those promoters of environmental protection who are cynical of capitalism, I would ask you to remember that capitalism has dragged millions of people around the world out of the miserable existence so well documented by Charles Dickens and that capitalism, properly motivated, can achieve rapid change in society. For the promoters of economic growth who see environmentalists as a threat to our prosperity, I would ask you recognise we live on a planet of finite resources with a delicate ecosystem. The sooner we modify our business practices to use renewable resources without unnecessarily damaging our ecosystem, the more confident we can be that our prosperity can continue for our kids and grandkids. *********************************************  “It is innovation that improves our quality of life, not economic growth per se” We have an economy for the simple reason that we do not have any choice. Where there is trade there is an economy. Economic activity by itself keeps people busy but does not achieve that much. What makes a real difference to our quality of life are the inventions and innovations that economic activity encourages. Think back to the first Neanderthal that took a sharpened stone, jammed it into a forked stick and invented the axe. That bit of innovation was an amazing step forward for them. It would have made their life a lot easier. That first axe design would have been very popular and we could imagine that, within a few years, everyone had an axe. People would have been kept very busy making those axes but no matter how many axes they made, their quality of life would not have improved much beyond that - until someone came up with a better axe. . The same applies today. The innovation of the pre paid postage stamp made communicating easier and improved our quality of life. For the next century and a half many millions of stamps were printed, licked, stuck on envelopes and posted. Many people were kept busy but, once it was in regular use, there was little improvement to our ability to communicate until the electric telegraph arrived, followed by the telex machine, fax and then email. So it is innovation that improves our quality of life. What economic activity does though is promote competition. The better axe and the fax machine came about because of competition. The more economic activity there is, the more competition there is and that then promotes the inventions and innovations to make our life easier. That is the basic argument in support of globalisation. Globalisation is simply the relaxing of trade and currency barriers between countries. That maximises competition which helps to improve the quality of life for everyone. *********************************************   “GDP makes no distinction between good or bad economic activity” GDP, or Gross Domestic Product, is the most common figure that is used to measure an economy. GDP is simply the sum total of all trades for a particular period. The GDP for the whole world for 2009 was seventy trillion US dollars. That is a 70 with 12 noughts behind it. It is made up of • Private consumption - eg groceries, fuel, cars, gambling, cigarettes, drugs • Government expenditure - health, education, traffic accidents, natural disasters • Private and government investment - houses, factories, roads, power stations, mines As you can see, it includes ‘good’ economic activity – housing, health, education – and ‘not so good’ economic activity – traffic accidents, drugs, natural disasters. For that reason it is not a particularly good indicator of the quality of our life but it does give us a fair assessment of the ‘quantity of life’. It also does not include any area of activity that does not have a dollar value attached to it. So, the activity carried out by volunteers is not included. All those people delivering meals on wheels, helping on clean up Australia day, fighting bush fires, are excluded. Because GDP includes activities that worsen our quality of life (drugs, traffic accidents, wars, natural disasters) and excludes many activities that improve our quality of life, many people have been critical of it, but, whether we like it or not, we are stuck with GDP for the time being as the main indicator of our prosperity. The figure of US$70 Trillion that I quoted before comes from the International Monetary Fund. There are many organisations that calculate GDP at country, regional and global levels. All of them use slightly different criteria and arrive at slightly different figures to one another. It does not really matter which we look at as long as we remain consistent and use the same one every time. What you do need to understand though is that, when calculating the figure for the world as a whole, there are two adjustments made to the raw data provided by each country. The first is an adjustment for inflation. It is important to understand that GDP has nothing to do with increases in the Consumer Price Index or any other measure of inflation. GDP is calculated having taken out any element of inflation.   The way that they account for inflation is a little confusing though. Rather then reduce the current period’s figure for the inflation for that period, they actually go back to all the previous GDP numbers and increase them by the inflation amount.   !"#$%&'()( *&+,*-&.*-/0.*+&-,1!*  23  '()(2 45'((6  !"#$724&8!"#$(& 452&  2 The second adjustment they make is to account for distortions in exchange rates. All global GDP figures are quoted in US dollars, but the exchange rate between each individual country and the US dollar is often distorted. To allow for this they make a further adjustment called Purchasing Power Parity, or PPP. This is rather like the ‘shopping basket’ price comparison between supermarkets. They take a selection of items that make up GDP and compare their prices between countries to identify distortions in exchange rates. &+9  2&302&:  30 !"# 2  2 In summary, looking at global GDP numbers can be confusing but as long as you use data from the same source and using the same criteria then it can give you a very good idea of global economic growth. For your information, the GDP numbers that I use are those prepared by the International Monetary Fund, adjusted for Purchasing Power Parity. Those are the two adjustments that are made when producing global GDP numbers. For an individual country, their GDP is also adjusted for their imports and exports. The value of products imported is deducted from the country’s GDP and the value of exports is added to that number. For example, the price you pay for a plasma TV at the local store will be included in GDP but the import cost of that TV will be deducted. That way we arrive at a true figure for Gross Domestic Product. You will also see Gross National Product (GNP) figures being mentioned. This is GDP plus the income of residents of that country working overseas, less the income earned by foreigners in that country. For countries such as Australia there is little difference but for many developing countries it can be quite significant as they often have many residents working overseas and remitting money back to the country. So GDP gives us an idea of how much economic activity there is in a country or in the world, but, as we said in the previous chapter, economic activity by itself does not really achieve much. What we need is ingenuity. So how is that measured? In economists jargon, ingenuity and innovation is referred to as ‘productivity’. Much as we hear politicians and the media going on about economic growth every day, it is rare that you hear much talk about productivity. That is mainly because improving productivity is very difficult to do and so politicians try to stay clear of it. We will talk more about that in the next chapter. But it is measured. The measure that is often used to compare the productivity of different countries is the simplest of all economic calculations. It is total GDP of a country divided by its population, otherwise known as GDP per Capita or GDP per person. Because GDP and GDP per person have a number of question marks about their effectiveness in assessing the quality of life for the citizens of a country, the United Nations have come up with an alternate measure called the Human Development Index, which, of course, has been reduced to the acronym HDI. The HDI index is calculated by taking the GDP per person (productivity) of a country together with life expectancy at birth and literacy levels. This is an extract comparing GDP per capita with the HDI ranking for some of the richest and poorest countries from 2008. The HDI is also a rough and ready calculation on ‘quality of life’ as compared to our ‘standard of living’. Economists are slowly developing different criteria for assessing a country’s performance on other than financial returns. However, in a world driven by capitalism, it will be a long time before GDP is superseded as the main criteria for economic and therefore political success. ********************************************* ! " “Without population growth and natural resources, Australia’s economy would be stagnant” There are four principle ways to grow an economy. The first way is to simply increase population. The more people in a country, the more economic activity there will be, therefore, GDP will increase. These are Australia’s GDP and Population figures for the last 5 years: As you can see, although Australia achieved regular growth in it’s economy, most of that growth has come courtesy of population increase through immigration. Without those immigrants, Australia’s growth would have been much lower. That is why most governments love immigration, despite the political protestations over asylum seekers. It is the best way to avoid recession as Australia did (just!) following the global financial crisis of 2008. The second way to grow an economy is to use up its natural resources. Every time Australia digs a new mine or discovers a new gas field, their economy will grow. They can also cause the economy to grow by introducing charges where there were no charges before. E.g. if the local council decide to charge people to use Bondi Beach, that will increase GDP. The third way is increased investment. If Warren Buffet decides to invest $3 billion into Australia by, say, building a new hotel, that will increase our GDP. Similarly if Australians stop saving money (or paying off their mortgage which is effectively the same) and instead, treat themselves to a holiday on the Gold Coast or buy a new car, that will increase their GDP. The fourth way of increasing GDP is improving productivity. This takes us back to the need for ingenuity and innovation to improve our quality of life. This is the most important and the most difficult for a government to manage. That is why they don’t like talking about it very much. The broadest measure of productivity is GDP per person. These are the figures for Australia for the last 10 years: However these are very broad numbers and are influenced by demographics (ratio of the working population to non working population) average weekly hours worked, how much we sell off our natural resources, etc. The Australian Bureau of Statistics uses a more tightly focussed calculation - ‘Multi factor productivity’. As they say on their website:- The most comprehensive Australian measure of productivity available is multifactor productivity. It gauges the efficiency with which inputs are transformed into outputs. In the short term, this reflects the impact of an array of factors, such as the utilisation of available labour and capital, economies of scale, and resource reallocation. In the long-term, it represents improvements in ways of doing things (technical progress), which is the ultimate source of economic growth and higher living standards. And these are the figures for Australian industry for the ten years to June 2009: Not a very good set of numbers! In summary, Australia’s economy has grown over the last decade primarily through increased immigration and the global demand for the resources that they dig out of the ground. So much for being a ‘smart country’! Incidentally, the reason that productivity is seen as being so hard for politicians is that it needs long term investment in education, industry policy and infrastructure. And we all know how politicians have no time these days for long term policies. They would rather rely on more immigration and encouraging the plundering of the planet. Now we have an understanding of an economy, let us now see how economic activity impacts on our environment. ********************************************* #" “The global economy has doubled over the last 12 years. Is it surprising that the planet is warming up, the oil is drying up and the waste is piling up?” For this chapter I have to thank Barney Foran (ex CSIRO Sustainable Ecosystems), Manfred Lenzen and Christopher Dey (Sydney University). for the work they did for the Australian Commonwealth Scientific and Research Organisation (CSIRO). In 2005 Barney and his team produced “Balancing Act: A triple-bottom-line analysis of the Australian economy” It examined over 130 industry sectors and looked at their impacts on 10 social, environmental, and financial indicators. It determined that every $1 of Australian GDP: • Produces 38c of Gross Operating Surplus • Generates 16c of export revenue • Requires 19c of import value • Requires 1 min, 45 secs of employment • Pays 34c income to employees • Produces 21c of government revenue • Produces 1.02kg of greenhouse gases • Requires 41.32 litres of fresh water • Disturbs 3.21 square meters of land and • Uses 7.65 megajoules of primary energy (that is the equivalent of 2 kilowatt hours of electricity or half a litre of crude oil) This excellent report (all 700 pages of it!) demonstrates the connection between economic activity and our society at large. In particular, it demonstrates the clear link between economic activity and our environment. Looking at the industry segments individually we see that: • Forestry and Brown Coal are the biggest producers of greenhouse gases. Forestry producing 97 kgs of greenhouse gases for every $1 of production and brown coal (brown coal is poorer quality than black coal) producing 27 kgs per dollar. The forestry figure is primary driven by the destruction of Australia’s native forests. • Although the average dollars worth of Australian production requires 41 litres of fresh water, sugar cane requires 1,246 litres, cotton 1,613 and rice requires 8407 litres! • The greatest disturbers of Australia’s land are, not surprisingly, livestock with beef cattle at 187 square meters and sheep (including wool) at 144 sq meters. • Energy hungry industries include Alumina and Aluminium at 61 and 45 megajoules per dollar, respectively and electricity supply at 40 megajoules. But what of the world? Sadly, Barney has not been given the resources to complete this analysis for the planet, so we have to look at other data. First of all, let’s see what global economic growth has been over the last few years. This is a graph showing global GDP for the last 12 years. Courtesy of the International Monetary Fund in October 2010. This is calculated in US dollars adjusted for Purchasing Power Parity which, I hope, you remember from previous chapters. $%&'&&&()*+$,, ( )(((( '(((( 7(((( ;(((( 4(((( %(((( $(((( <(((( )66$ )66< )666 '((( '(() '((' '((7 '((; '((4 '((% '(($ '((< '((6 - ./0% Over that time the global economy has doubled in size – and remember, this has nothing to do with inflation, this is a true doubling of economic activity in just 12 years. If that growth had been evenly distributed throughout the different industry segments, it would mean that, world wide: • The number of cars on the road doubled • Loaves of bread made doubled • Cigarettes sold doubled • Expenditure on children’s education doubled • Plasma TVs sold, doubled • Bicycles doubled • Car accidents and natural disasters doubled • etc So what has been the impact of all that increased activity on our planet? What has been the impact on our greenhouse gases? What has been the impact on our fresh water supplies? What has been the [...]... change our economic model to one that is truly sustainable It is available free from every ebook retailer including Smashwords, Apple, Kindle, Kobo, Sony, etc Please promote it Promote it to your family Promote it to your friends Promote it to all your work colleagues Promote it to your boss Promote it to your customers Promote it to your suppliers Promote it to your staff Promote it to your local politicians... your local politicians Promote it to your neighbours In particular, promote it to every climate sceptic you know and every one who is desperately clinging to the status quo, hoping we can just go on living as we are for ever Tag it on Facebook Review it Tweet it Blog it Share it Quote it Cheers Keith Mcilroy http://thejollygreencapitalist.blogspot.com mailto:keith@keithmcilroy.com ... and we want it now We can all help by talking more and more about the economic unsustainability of our current model It will also help if they can see a way that we can implement this change A government really only has two ways of implementing change They can introduce laws to force us to do something or stop us doing something else or they can change the taxation system to change our behaviour The first... decade arguing over what to do about it For the sake of our kids and grand kids and for the sake of business certainty and future competitiveness in the coming GreenCapitalist world we need to act now So the message I ask everyone to send to our politicians around the globe is… (Just Focus and Do It, or Just F*****g Do It – dependant upon the sensitivities of your audience!) ##############################################... get it up and running Once it is established though, running costs will be minimal Look at the running costs of using fossil fuels for our energy We have to extract the oil, gas and coal from the planet, ship it around the globe, process it, burn it then work out what to do with all the waste and pollution Compare this to the running costs for renewable energy There is very little apart from a bit of... continues to the end of the century our global economy would be US$11,490 Trillion – over 160 times larger than it is today Clearly an economy that demands 160 times the annual resources we use today and pumping 160 times our waste and pollution onto our planet cannot happen The whole ecology of the planet will collapse well before then as will the global economy itself So how do we stop this happening?... GreenCapitalism - J.F.D.I “Runaway Climate Change could lead to a planet that is simply uninhabitable.” The purpose of the previous chapters has been to explain why and how we need to change our economic model from one of dig up, ship out, ship back and throw away to one that is focussed on renewable and recycled resources In the last couple of chapters, I have then tried to show you when and how it. .. beer cans Even the plastic bottles and bags produced from oil are still around, filling up waste dumps around the world And everything can be recycled Plastic, steel, timber, clothing Everything is recyclable, all it takes is energy, sometimes lots of it And energy is our biggest hurdle to overcome to enable us to continue to live a life of limitless economic growth on our planet of limited resources... then pipe it to a suitable site for it to be buried Apart from the cost of all the piping and infrastructure, it will also take vast amounts of energy to make it happen It has been estimated that, for every 4 power stations that are converted to CCS we would have to build a fifth one just to provide all the additional power You can understand why the coal industry likes the idea so much – they can sell... that renewable energy to give us round the clock power We can now transmit electricity thousands of kilometers with minimal losses and we have sophisticated computer systems that can control complex power grids, switching power from where ever it is available to where ever it is required We can also store power locally Solar thermal power plants can store heat to release energy at night Battery technology . How it can save our planet. By Keith Mcilroy Copyright 2011 Keith Mcilroy Smashwords Edition http://thejollygreencapitalist.blogspot.com mailto:keith@keithmcilroy.com This. recognise we live on a planet of finite resources with a delicate ecosystem. The sooner we modify our business practices to use renewable resources without unnecessarily damaging our ecosystem, the. why, when and how GreenCapitalism will impact on you. It will explain the good and the bad of our current economic model, what impact future economic growth will have on our planet and what