Partha S Ghosh

Avoiding the Avoiding the DangersDangersof Linear Thinking?of Linear Thinking?

A Strategic PerspectiveA Strategic Perspective on on China & China & The World in the 21The World in the 21stst CenturyCentury

Partha@ParthaGhoshPartha@ParthaGhosh

May 5May 5thth 20072007

Partha S Ghosh

Pearl River DeltaHK,Macao,Shenzhen, GZ

Bohai Delta:Tianjin, Qingdao, Dalian

Yangtze River DeltaShanghai, ZheJiang,JiangSu

Pockets of metropolitanAreas in Western China

The Real Challenge

The Challenge: How to use the power centers for the development of new economic models

enabling distributed wealth Creation ?

Partha S Ghosh

How do you sense the “State of Health” of our Planet?

Increasing Significance of China

Partha S Ghosh

Global Population 650 Years = US today: 300M

Note : Each dot represents 1 million peopleBoston Analytics Research1. “Energy Consumption and Sources of Renewable Energy”, Amitabh Lath, (www.physics.rutgers.edu/~lath/Piscataway_2003.ppt)

Partha S Ghosh

Population Hundred Years ago : 1,600 Million

Note : Each dot represents 1 million peopleBoston Analytics Research1. “Energy Consumption and Sources of Renewable Energy”, Amitabh Lath, (www.physics.rutgers.edu/~lath/Piscataway_2003.ppt)

Partha S Ghosh

The Recent Past, 20 Years back 5,000 Million

Note : Each dot represents 1 million peopleBoston Analytics Research1. “Energy Consumption and Sources of Renewable Energy”, Amitabh Lath, (www.physics.rutgers.edu/~lath/Piscataway_2003.ppt)

Partha S Ghosh

And Near Future 2020: 8000 Million

Note : Each dot represents 1 million people Boston Analytics Research1. “Energy Consumption and Sources of Renewable Energy”, Amitabh Lath, (www.physics.rutgers.edu/~lath/Piscataway_2003.ppt)

Partha S Ghosh

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1980 1990 2003 2010 2020 2025 2050Boston Analytics Research1. Energy Information Administration (http://www.eia.doe.gov)

World Carbon Dioxide Emission in Million Metric Tons(1980 to 2050*)1

Mill

ion

Met

ric T

ons

Slow Pace of Dangerous Change : CO2 emission

65 Billion Tons by 2050

Year

Partha S Ghosh

-16,184

-8,415

-8,053

-804

-661

211

1,538

-20000 -15000 -10000 -5000 0 5000

Annual Change in Forest Area (000 ha per year) 1990 to 2005)1

Boston Analytics Research1. “Extent of forest resources”, (http://www.mongabay.com/deforestation.htm)

Annual loss of Forest land 16.2 Mn Hectares

Asia

Europe

Oceania & Australia

North & Central America

South AmericaAfrica

World

Partha S Ghosh

• Loss of vegetation

• Decrease in no. of species

• Increasing infestation

• Decrease of pollinators & seed dispersers

• Loss of human diversity

• Less CO2 taken in

• Burning Trees adds even more CO2

• Less photosynthesis takes place

• Increased risk of fire

• Soil Erosion

• Increase in Flash Floods

• Aquatic Habitat Degraded

• Flow of Water Changes

• Less Oxygen in the waterways

Dynamics of Deforestation and Ecology: Require Repurposing our Knowledge

DEFORESTATION1

ATMOSPHEREHYDROSPHERE

GEOSPHERE BIOSPHERE

Boston Analytics Research1. “The Choice: Doomsday or Arbor Day”, (http://www.umich.edu/~gs265/society/deforestation.htm)

Partha S Ghosh

The Essential Points:

1. Indeed Challenging & Interesting times ahead

Partha S Ghosh

Changing Ecology

Finite Resources

Increasing Sea Level

65 Billion Tons of CO2

Rising Temperature

Increasing Population

Powerful Forces at Work?

Equity

Deforestation

Partha S Ghosh

Changing Ecology

Finite Resources

Wall Street Expectations

Increasing Sea Level

65 Billion Tons of CO2

Rising Temperature

Increasing Population

Powerful Forces at Work: Clash of Perspectives?

Digitization requirements

Equity

Deforestation

CO2

Partha S Ghosh

0

20

40

60

80

100

120

140

0 5000 10000 15000 20000 25000 30000 35000 40000 45000GDP / Capita (US$)

Ene

rgy

Con

sum

ptio

n (‘0

00 K

WH

r / C

apita

)

Energy Consumption per Capita vs. GDP per Capita (2004)1

Boston Analytics Research1. Energy Information Administration - EIA (http://www.eia.doe.gov/)

Most of the world is still in the early stage of Economic development

Ukraine

Russia

US

Kazakhstan Czech Republic

Malaysia

TurkeyBrazil

RomaniaThailandChina Egypt PhilippinesIndonesia

India

Italy

FranceGermany

UKJapan

Canada

80% of Global Population

Partha S Ghosh

Overview of Energy Scenario

685565473391288Total230198173153139Other Asia

5143372820South Korea119108999179Japan142102745428China143114906522India

20252020201520102001Country

(In BCM)

Future Natural Gas requirement of Asia

Partha S Ghosh

The Essential Points:

1. Indeed Challenging & Interesting times ahead

2.Emerging Economics must make the difficult choice: Adapt or Advance?

Partha S Ghosh

R2 = 0.8631

0

20

40

60

80

100

120

140

0 5000 10000 15000 20000 25000 30000 35000 40000

Old Path or New Path: Time to Choose?

Plastic Consumption per capita in Selected Countries vs. GDP per capita (2003)1,2,3

Boston Analytics Research1. http://www.dailytimes.com.pk/default.asp?page=story_11-9-2003_pg5_122. Poland and its investment opportunity – BCG Report3. http://www.eia.doe.gov/

SingaporeGermany

Canada

JapanUS

Malaysia

ChinaIndia

Thailand

IndonesiaPoland

Hungary

Developing and Moderately Developed

Countries

Highly Developed Countries

GDP per capita (in US$)

Plas

tic C

onsu

mpt

ion

per c

apita

(in

kg)

Partha S Ghosh

Cleary we are at the End of a Long Era?Pr

oduc

tivity

of S

ocie

ty

Economic Development Curves

Industrial Revolution 1 (Steam Engine)

Industrial Revolution 2 (Internal Combustion

Engine)

Information Revolution

Low

High

Time

2005 ~2010

Mega Challenge = Managing a Mega Transition to avoid Mega disruption

Era of Extraction & Mono dimensional Value Creation

• “Unconstrained” Processing of Earth’s resources• New Relationship of Space & Time• Supply to Fuel Unidirectional Demand

Next Era Paradigm?

Role of Emerging Economies?

1350 20501900

1. Concentrated Economic Growth

2. Ecological disequilibrium

3. Complex Politics of Supply Chain

2005 ~2010

Partha S Ghosh

Holistic Approach?

Renewable and Clean Energy

SourceEnergy

Ecology Equity

Holistic Approach

Energy ,Food and Health for All

Sustainable Economic Developed

PROBLEMS ≈ OPPORTUNITIES

Partha S Ghosh

Scope of the Field?

Point Solution

Industry’s Future (?): Two Strategic Vectors

Perspective?Holistic/Integrative Solution

Conservation driven

Consumption driven

Future Business Models

Balance?

Bal

ance

of E

colo

gy

Balance of Economic Advance

Partha S Ghosh

Expanded Field?

Point Solution

Industry’s Future (?): Two Strategic Vectors

Perspective?Holistic Solution

Conservation

Consumption

Future of Business Models

Balance?

Today

Bal

ance

of E

colo

gy

Balance of Economic Advance

Systems Approach to Energy & Transportation Management

New Chemistry for the Car

Recycling of Waste

Agro based Chemical Industry

Carbon Free Energy System

Lighter Products

Process Intensification

Recycling

Improved functionalities

Partha S Ghosh

Stage 3: Market Driven

Stage 3: Market Driven

15001500 17001700 18001800 19001900

Stage 2: Resource DrivenStage 2: Resource Driven

oWealth CreationoBrand Creation

Raja Ram Mohan Ray

European Renaissance

Chaitanya MahapravuSocial Reforms

In search of Raw Materials•Cotton•Minerals

20002000→→

Historic Perspective is necessary: 2500 of Globalization

500 500 BCBC

Silk Road

Merchants of Venice

Stage 4: Skill, Scale, ScopeDriven

Stage 4: Skill, Scale, ScopeDriven

Stage 5:Digitization Stage 5:Digitization

Sources of Competitive Advantage

Colonization Decolonization

Empowerment Neo-Renaissance?

Stage 1: Venture-Trade DrivenStage 1: Venture-Trade Driven

Partha S Ghosh

The Essential Points:

1. Indeed Challenging & Interesting times ahead

2. Emerging Economics must make the difficult choice: Adapt or Advance?

3.China is an unique position to lead the Paradigm Shift?

Partha S Ghosh

China’s Unique Status?

World:Approaching Limits

US/EC victims of significant momentum & Aging

Negative trade balances

Concentration of Oil & Gas Wealth

China:New level of Confidence

Possibilities of early stage growth

Rapidly Increasing Financial Power

Relevance of Ancient Wisdom

Partha S Ghosh

R2 = 0.578

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0 5000 10000 15000 20000 25000 30000 35000 40000

Perc

enta

ge o

f Lab

or F

orce

in

Agr

icul

ture

GDP* per Capita ($)

JapanUSUK

CanadaGermanyFrance

Italy

MexicoMalaysia

BrazilSouth Africa

ChinaIndia

Indonesia

Pakistan

Nigeria

Bangladesh

Boston Analytics Research1. Energy Information Administration (http://www.eia.doe.gov)2. Food and Agriculture Organization of the United Nations (http://www.fao.org/)3. “World Bank list of economies, April 2006”, World Bank (http://www.worldbank.org)

Percentage of Labor Force in Agriculture Across Various Countries v/s GDP per Capita (2003)1,2,3

Note : * Real GDP with base year 2000

Countries with high GDP per capita and low % of labor force in agriculture: G7 Countries

Countries with low GDP per capita and high % of labor force in agriculture:

Upper-middle income countries and Lower-middle income countries (Brazil)

Opportunities to create new Economic Model

Mega Challenge = Managing a Mega Transition to avoid Mega disruption

Era of Extraction & Mono dimensional Value Creation

• “Unconstrained” Processing of Earth’s resources• New Relationship of Space & Time• Supply to Fuel Unidirectional Demand

Multi Multi –tier Strategic Initiatives

1350 20501900

1. Concentrated Economic Growth

2. Ecological disequilibrium

3. Complex Politics of Supply Chain

2005 ~2010

Partha S Ghosh

The Promise of Chemical Industry has to be applied in Multiple Scales

Scal

es o

f Eng

agem

ent

Holistic /Tera Scale Perspective

Microscopic Perspective

Three Scales of Knowledge Application

Large Scale Systems Dynamics Issues •Global Ecological Balance ?• Energy Balance ?• Social Structures ?

Raw materials

Cellular /Nano Level functionalities

Tera Scale

Current Scale

Micro Nano Scale

1. Efficiency 2. Conservation

3. Recycling

1

2

3

Partha S Ghosh

Upstream Downstream

Biotechnology

Information Technology

10011000101110

Process Industry Reconfiguration

New technologies could indeed trigger a New Era

Nano Technologies

Opto Technologies

Partha S Ghosh

Large Scale Engineering systems thinking is essential

The Virtual Power PlantAggregates the output of thousands of micropower technologies Peak shaving becomes power trading on the wholesale marketCoordination and control through a new communications infrastructure

Residential

Rooftop PVs

Fuel Cells

Reciprocating engines

Stirling Engines

BioEnergy

PV Array

CommercialMicroturbines Fuel Cells

IndustrialReciprocating enginesMicroturbines

Transmission andDistribution

Wind Farm

Fuel Cells

Partha S Ghosh

Basic Mechanisms of Solar Energy Conversion1

Boston Analytics Research1.”Global Energy Perspective”, Nathan S. Lewis, California Institute of Technology, Pasadena, CA

Solar Energy has the potential to address our growing energy needs in an environmentally-friendly way

LightFuel

Electricity

Photosynthesis

Fuels Electricity

Photovoltaic

H O

O H

2

22

sc M

e

sc

e

M

CO

Sugar

H O

O

2

2

2Semiconductor/Liquid

Junctions

Partha S Ghosh

Equipment Efficiency vs. Equipment (2004)1,2,3,4,5

Boston Analytics Research

Equipment efficiency?Eq

uipm

ent E

ffici

ency

Equipments

Thermodynamic Efficiency=100%

35% improvement

20% improvement

10% improvement

0%

20%

40%

60%

80%

100%

LightingDevices

IC Engines AirConditioners

Heaters Boilers

Partha S Ghosh

0100200300400500600700

2025 2025

15.2

Reduction in energy intensity could reduce world energy demand by 14% to 20% in 2025

World Energy Demand in Quadrillion Btu (2025)1 :If Energy Intensity is Reduced in Selected Regions

Projected Energy Demand

Reductionin India

Reductionin China

Reductionin WesternEurope

Reductionin US Projected

Energy Demand afterReductionAssumptions:

•Energy intensity is reduced by 35% for India and China•Energy intensity is reduced by 20% for Western Europe (WE) and US

10.3 38.2 26.5

Qua

drill

ion

Btu

554.8645.0

Partha S Ghosh

Macro Socio-economic

Macro Socio-economic

Multiple Perspectives is necessary “Synthesize Perspectives

to be Effective“Synthesize Perspectives

to be Effective

MarketMarket

Need to understand the "Big Picture“ to

deal with the “nuts & bolts”

perspectives

Need to understand the "Big Picture“ to

deal with the “nuts & bolts”

perspectives

Cultural & Environmental

Cultural & Environmental

Historic/Geo Political

Historic/Geo Political

TechnologicalTechnological

Partha S Ghosh

Last 5,000 Years… …..Future Possibilities..

Economics of Economics of Linear Linear MechanicsMechanics:: Extraction, Extraction, Exploitation & ExperimentationExploitation & Experimentation

Economics of Economics of Closed Closed Loop HarmonyLoop Harmony

Knowledge for Knowledge for Recovery/RecycleRecovery/Recycle

New Technologies

AgroAgro

Energyand PowerClean Clean

WaterWater

Bio MassBio Mass Solar , Wind Solar , Wind Fuel CellsFuel Cells

BroadbandBroadband Clean EnergyClean Energy

Partha S Ghosh

Five Point Agenda:1. Emphasis on original thinking to advance progress of

civilization as opposed to extension of Western Models

2. Develop Village centered Economic models with heavy use of Convergence, Bio Engineering and new Systems thinking

3. Use China’s success with Land and Manufacturing productivity to think of new avenues of Knowledge Productivity (Boston Analytics story)

4. Develop universal approach to Geo potential issues building on Ancient wisdoms – Holistic approach to problem solving

5. Renew education system to enable Next Renaissance