Can Asian Green Industry Drive the Economic Recovery?

International Conference on Green Industry in Asia: “Managing the Transition to Resource-

efficient and Low-carbon industries”

Ludovico AlcortaDirector, Research and Statistics Branch

United Nations Industrial Development Organization

Manila, 9-11 September 2009

Historical and Technological Trajectories

(Jänicke and Jacob, 2009)

Green and Greening

• Green Industry• Non-hydrocarbons: renewables, ethanol, biofuels• Recycling• Industry-related environmental services• Equipment and capital goods

• Emerging (?): CHP, CCS, geo-engineering• Mature: pumps, boilers, motors (?)

• Greening• Products

• Final: fuel efficient vehicles, light bulbs• Intermediate: fuel cells, new materials (?)

• Processes• Adoption, adaptation and systems• Organizational modifications

The conditions for success

• Profitability, risk and realities• The greening of demand• From comparative to competitive

advantage• The direction of innovation• Ensuring dynamism

Profitability, risk and realities• Is green investment profitable?• Low and high hanging fruit

• Technological complexity• Hidden costs, e.g. lost output• Scale

• Market failures, barriers and obstacles• Availability of information• Financial calculations and availability• Organizational structure and culture• Technological knowledge and risk• Energy and material supply

90.0

100.0

110.0

120.0

130.0

140.0

150.0

160.0

170.019

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Excl. energyused bytransformersIncl TS

MVA

Manufacturing Decoupling

Corporate: Iron & Steel Sector Case Studies

Country Firm Name Initiative Investment

Annual Savings/Year

Payback Period

Bangladesh

Abul Khair Steel

Products

Insulated pipelines and repairing

leaks

US$ 1,667

US$ 6,000 3.5 months

China Shijiazhuang Iron & Steel

Revised procedure to turn roof deck fan off in winter when

it is not needed

0 US$ 160,000

Immediate

India Visakhapatnam Steel

Limited the field current to 25

percent during the non-rolling hours

0 US$ 37,023

Immediate

Indonesia

PT. Krakatau Steel

Installed a Control System to control the burners automatically in Ladle Drying and

Preheating process

US$ 8,333

US$ 72,306

Less than 2months

Philippines

Steel Asia Insulated the inside of furnace wall

US$ 180 US$ 2,410 0.9 months

Corporate: Paper and Pulp Sector Case Studies

Country Firm Name Initiative Investment

Annual Savings/Year

Payback Period

Bangladesh

TK Chemical Complex

The number of blow-downs was reduced to two per day

0 US$ 800 Immediate

China Anhui Tiandu Paper

The company installed heat recovery equipment on every digester and reused this heat to produce hot water

US$ 36364 US$ 49,697 9 months

Sri Lanka National Paper

Company

Leak tests showed that about 54% of compressed air escaped through leaks in 2003, and this had increased to 70% when tests were repeated in 2004

US$ 100 US$ 620 2 months

Indonesia PT. Pindo Deli Pulp & Paper

The Team observed and found many steam leaks, steam traps leaks and a lot of un-insulated or poorly lagged steam piping that caused large quantities of unaccounted steam losses

US $ 200,00

0

US $ 366,192

6 months

The Greening of Demand

• Growing consumer environmental consciousness, even militancy

• Increasing demands for additional product information• Growth of public and private certification and standards• Trickle-down processes through value chains• Environmental branding is key to the acceptability of

certain products• Yet, the financial crisis has:

• Increased the level of unemployment and reduced disposable income• Increased the role of price level as the main determinant of purchase

• Arguably, “enlightened” green consumers are still not a majority of the world-wide population

From comparative to competitive advantage

• Pricing natural resources• Asia’s comparative advantage: “cheap labour”• Trade-offs between greening and labour

utilisation?• Adding value through:

• Design• Product attributes• Sophistication• Material and energy efficiency

• Paradigmatic shift in nature of competition at the level of the firm

The direction of innovation

• The supply of eco-friendly products• The capital vintage problem• Economic recovery stimulus packages

expenditure in greening? • New R&D expenditure in eco-

innovation?• Share of innovation accounted by eco

friendly products?

Ensuring dynamism• Green industries• Greening industries• Structural shifts and reallocation of resources• Where are the investments?• Policy imperatives:

• Dealing with resources at their opportunity costs• International coordination of and vision for industrial

restructuring• International cooperation in transferring technology• At national levels incentives need shifting towards more

sustainable patterns of production and consumption without affecting local perceptions of wellbeing

Back to Jobs

By way of conclusions

• So, can Asian Green Industries Drive the Economic Recovery? Possibly, provided• Barriers are removed• Consumers are informed• Corporate strategies are shifted• Creativity ensues• Resources are reallocated

• Much as it was in earlier industrial revolutions it is at the point of production where changes need to be ‘concretised’.