The Natural Edge Project The Natural Advantage of Nations Whole System Design Factor 5 Cents and Sustainability Higher Education and Sustainable Development




"We also (demonstrated) that some elements of the efficiency revolution are profitable now at the company level. But we emphasized that the state can do much to expand dramatically the range of profitability for both producers and consumers."
Factor Four: Doubling Wealth and Halving Resource Usage





Introduction to Sustainable Development for Engineering and Built Environment Professionals

 


Unit 1 - A New Perspective


Lecture 3: Sustainability as a Driver for Innovation

         

We submit that there is now a critical mass of enabling eco-innovations making integrated approaches to sustainable development economically viable. As reported in Small is Profitable,[1] voted as one of the three best books by the Economist magazine for 2002, ‘These developments form not simply a list of separate items, but a web of developments that all reinforce each other. Their effect is thus both individually important and collectively profound.’

Hargroves and Smith, The Natural Advantage of Nations, 2005[2]

 

Educational Aim
 

To present theory regarding the next ‘wave of innovation’ and the emerging critical mass of enabling technologies that will achieve business competitiveness, improved economic growth and a more sustainable world. To explain that the transition to a sustainable economy, if focused on improving resource productivity through innovation, may actually lead to higher economic growth than business-as-usual. At the same time, it may also reduce environmental pressures and enhance employment. To also show that the rapid uptake of this next wave of innovation in sustainable development (to ensure development occurs within ecological limits) will depend significantly on the action of engineers. Hence it is vital that engineers are literate and trained in all these new methods to help society achieve sustainable development in the near future.

Required Reading

Hargroves, K. and Smith, M.H. (2005) The Natural Advantage of Nations: Business Opportunities, Innovation and Governance in the 21st Century, Earthscan, London:

  1. Chapter 1: 'A critical mass of enabling technologies' , (4 pages), pp 16-22.

  2. Chapter 6: 'What will be the Major Driver of Innovation in the 21st Century?' (2 pages), pp 83-85.

  3. Chapter 13: 'Natural Systems of Innovation' (2 pages), pp 244-245.

Learning Points

* 1. ‘Innovation’ is a term used to describe the introduction of a new idea, product, service, or practice which is intended to be useful; to satisfy a perceived market need. An essential element for innovation is its application in a commercially successful way.

* 2. Recent developments and studies in economics place innovation and better technical design at the heart of sustained economic growth over long periods. Increasingly business leaders, policy makers, politicians, and academics, are asking, ‘what will give rise to the new areas of innovation?

 

* 3. There is significant evidence that the next waves of innovation will be driven by the need to achieve sustainable development. In the 21st century the major driver for innovation will be the need to improve productivity while lightening humankind’s environmental load on the planet. As Natural Capitalism highlights, ‘the next industrial revolution’ will be driven by the emerging need for simultaneous productivity improvement (doing more with less) while significantly reducing the impacts on the environment.[3]

 

* 4. Nations and companies that work together to address sustainable development can position themselves to be at the forefront of the next waves of innovation. Such technologies include efficient appliances and resource saving fittings, renewable energy providers such as solar, wind, ocean-current and biomass and a suite of green technologies that are efficient, non-toxic, low or no waste, and are reusable and recyclable.

 

* 5. Not only do we now have solutions to many problems, we are also gaining insight as to which solutions are the most cost-effective and profitable. We now possess both the technological innovations and design know-how to tackle many environmental problems cost effectively and, in some areas, very profitably.

 

* 6. Unlike other waves of innovation this wave is urgently needed to prevent further pollution, climate change, species loss, and ecosystem decline. This portfolio of courses seeks to show that whether this next wave of innovation in sustainable development occurs rapidly enough will depend significantly on the choices, actions and leadership of engineers. Hence it is vital that engineers are not just literate and trained in how to achieve sustainable development but also have the confidence to show real leadership on this issue.

* 7. In the past, major breakthroughs in innovation have occurred when there has been a critical mass of enabling technologies that complement each other, providing more efficient ways to meet people’s needs. For example:

  1. Laptop computers – computers needed to become 80-90 percent more efficient than the original models to enable the system to run on batteries.[4]

  2. Hybrid-electric vehicles (such as the Toyota Prius[5] and Honda Insight[6]) – combine highly efficient electric motors, long-lasting batteries, light car body and fuel switching technology, and are now making a successful entry into the market.

  3. Distributed generation – the combination of a number of technologies (such as new fuels, solar cells, wind and current turbines, biofuels) coupled with energy efficiency and demand side management will ensure that ‘these developments form not simply a list of separate items but a web of developments that all reinforce each other. Together, they will not only continue the trend toward increasingly distributed energy resources [large numbers of smaller energy generation plants such as wind, solar, biogas], but also can greatly accelerate the shift to distributed utilities.[7]

Brief Background Information
 

The following information provides a brief overview of the related background material, from Chapter 1 of The Natural Advantage of Nations.

Waves of Innovation
As described in detail in The Natural Advantage of Nations, nations and firms are increasingly aware of the importance of being ahead of the next so-called ‘waves’ of innovation, both for prosperity and maintaining economic growth (see Figure 3.1). Many nations and firms have missed these multi-billion dollar opportunities in the past because they imagined the future to be an extension of the present. Australia was the third country in the world, after the US and the UK, to develop an electronically programmable computer (CSIRAC, in 1949). CSIRAC's co-inventor, Dr Trevor Pearcey, went on to build a highly advanced transistorised computer, CIRRUS, at the University of Adelaide, in 1963. Both projects lapsed from lack of private and government support, and Australia lost a clear opportunity to join the world leaders in the ICT wave of innovation. There is increasing awareness that no country or major company can afford to miss the next waves of innovation. Many people are asking what exactly will be the next wave?

In order for a wave of innovation to occur there needs to be a significant array of relatively new and emerging technologies and a recognised genuine need in the market that is leading to a market expansion. As Natural Capitalism discussed, the first industrial revolution began with the steam engine and new machines to increase the labour productivity of cotton spinning and the production of steel. This was followed by further industrial shifts within engineering that evolved out of advances in the understanding of, for instance, electro-magnetism.

A focus on the mass production of the automobile and electrification of cities ensued, a wave that lasted until the 1940s. The rise of semiconductors and electronics provided just some of the enabling technologies that helped create new business opportunities throughout the 1950s and 1960s. In the case of the Information and Communications Technology (ICT) wave of innovation, it is easy to identify the technologies that were driving the growth of capacity in the industry. Innovations in computer processing power, network bandwidth and data storage have all helped achieve the predictions of Gordon Moore in the 1970s that ‘computing power will continue to double every 18 months, while costs hold constant’. This last wave of industrial activity was largely based on semiconductors, fibre optics, networks and software.


Figure 3.1: Waves of Innovation.

Source: Hargroves, K. and Smith, M.H. (2005)[9]

Many of the applications in the previous ICT wave of innovation were based on the idea of reducing transaction costs.[10] In the book, Unleashing the Killer App, Downes and Mui[11] suggest that the market for the many internet applications was in the reduction of transaction costs. For instance, e-mail is a cheap and fast means of communication, finding information in general is now much faster and cheaper online, with internet booking, purchasing and banking significantly reducing the costs of customer transactions.

The ICT revolution is just one in a series of long waves of industrial innovation first noted in the 1940s by Joseph Schumpeter, an Austrian-born economist. In his work, Schumpeter tracked the rise and flow of economies with respect to technology. If the last wave of innovation, ICT, was driven by market needs such as reducing transaction costs, we believe there is significant evidence that the next waves of innovation will be driven by the need to simultaneously improve resource productivity while lightening our environmental load on the planet.


Leo Jansen, Chairman of Dutch Inter-ministerial, Sustainable Technology Development Programme stated in 2000,[12]

In setting a time-horizon of 50 years – two generations into the future… it was found that ten- to twenty-fold eco-efficiency improvements will be needed to achieve meaningful reductions in environmental stress. It was also found that the benefits of incremental technological development could not provide such improvements.


In order for a wave of innovation to occur there needs to be a significant array of relatively new and emerging technologies and a recognised genuine need in the market that is leading to a market expansion. There is now a critical mass of enabling eco-innovations making integrated approaches to sustainable development economically viable. This plus increased regulation through for instance the ratification of the Kyoto Protocol, the formation of the EU Emissions Trading Scheme, and the EU Directives on waste and hazardous substances, suggest that the next wave of innovation will be in sustainable development. As reported in Small is Profitable, voted as one of the three best books by the Economist magazine for 2002, ‘These developments form not simply a list of separate items, but a web of developments that all reinforce each other. Their effect is thus both individually important and collectively profound.

Figure 3.2. Critical Mass of Innovations meeting real market needs creates new Waves of Innovation.
Source: Hargroves, K. and Smith, M.H. (2005)[13])


This course and the textbook show that a range of institutional and regulatory barriers together with short term pressures on governments, business and communities has led to many resource productivity gains being unrealised. This genuinely has created a significant source of potential productivity improvements for companies, governments and society if they are willing to address the barriers to more resource productive approaches being taken up in the marketplace.

This course will also show that we now possess both the technological innovations and design know-how to tackle many environmental problems cost effectively and, in some areas, very profitably. Specifically, this involves everything from green buildings, hybrid cars, wind power, resource processing, transport systems, metals/plastic recycling and other enabling technologies. However, still more innovations are emerging from the fields of materials science, ranging from re-examining old systems with Whole System Design (WSD) approaches, to green chemistry using biomimicry principles based on nature, which is part of the nanotech wave of innovation. All of these will help achieve sustainable development. The examples that will be featured throughout this short course provide proof, and add weight to, what many have already sensed. Namely, that the problems are serious but there are exciting pioneering efforts and solutions being developed around the world through many industry sectors.[14] Not only do we now have solutions to many problems, but we are also gaining insight as to which solutions are the most cost-effective and profitable. Hence, nations and companies that work together to address sustainable development can position themselves to be at the forefront of the next waves of innovation.

Finally, as we pointed out in the ‘Setting the Scene’ notes at the start of this Unit, The Natural Advantage of Nations argues that such a new wave of innovation will significantly assist economic growth in line with the recent work of Professor Paul Romer. Stanford University Professor of Economics, Paul Romer, is seen as one of the founders of the field of ’New Growth Economics’, and writes,
[15]

We now know that the classical economic suggestion that we can grow rich by accumulating more and more pieces of physical capital is simply wrong… Economic growth occurs whenever people take resources and rearrange them in ways that are more valuable. A useful metaphor for production in an economy comes from the kitchen. To create valuable products, we mix inexpensive ingredients together according to a recipe. The cooking one can do is only limited by the supply of ingredients, and most cooking in the economy produces undesirable side effects. If economic growth could be achieved only by doing more and more of the same kind of cooking, we would run out of raw materials and suffer from unacceptable levels of pollution and nuisance. Human history teaches us however that economic growth springs from better recipes, not just from more cooking. New recipes generally produce fewer unpleasant side effects and generate more economic value per unit of raw material. Every generation has perceived the limits to growth that finite resources and undesirable side effects would pose if no new recipes or ideas were discovered. And every generation has underestimated the potential for finding new recipes and ideas. We constantly fail to grasp how many ideas remain to be discovered.


Optional Reading


- Brownell, B. (ed) (2006) Transmaterial: A catalogue of materials, products and processes that are redefining our physical environment, Princeton Architectural Press, NY. Available online at www.transstudio.com. Accessed 7 June 2006.


- Downes, L. and Mui, C. (1998) Unleashing the Killer App, Harvard Business School Press, New York.


- Hawken, P., Lovins, A.B. and Lovins, H. (1999) Natural Capitalism, Creating the Next Industrial Revolution, Earthscan, London, Chapter 1: The Next Industrial Revolution. Downloadable from http://www.natcap.org/images/other/NCchapter1.pdf. Accessed 3 January 2007.


- Lovins, A.B., Datta, E.K., Feiler, T., Rabago, K.R., Swisher, J.N., Lehmann, A. and Wicker, K. (2002) Small is Profitable: the hidden economic benefits of making electrical resources the right size, Rocky Mountain Institute, Snowmass, Colorado.


- von Weizsacker, E., Lovins, A. and Lovins, L. H. (1997) Factor 4: Doubling Wealth – Halving Resource Use, Earthscan, London, Introduction: More for Less.


- Weaver, P., Jansen, L., van Grootveld, G., van Spiegel, E. and Vergragt, P. (2000) Sustainable Technology Development, Greenleaf Publishing, Sheffield, UK.

 

Recommended Websites

- Natural Capitalism


- Rocky Mountains Institute


- WorldWatch Institute Organisation


- Natural Capitalism Inc



[1] Lovins, A.B. et al (2002) Small is Profitable: the hidden economic benefits of making electrical resources the right size, Rocky Mountain Institute, Snowmass, Colorado. (Back)

[2] Hargroves, K. and Smith, M.H. (2005) The Natural Advantage of Nations: Business Opportunities, Innovation and Governance in the 21 st Century, Earthscan, London, Chapter 1: Natural Advantage of Nations, pp 17-18. (Back)

[3] For a further summary see Hargroves, K. and Smith, M.H. (2005) The Natural Advantage of Nations, Earthscan, London, Chapter 1: Natural Advantage of Nations, p 17. (Back)

[4] Australian Greenhouse Office (n.d.) Greenhouse Challenge Plus Fact Sheet #3. Available at www.greenhouse.gov.au/challenge/publications/factsheets/fs3.html. Accessed 7 June 2006. (Back)

[5] Toyota Prius (n.d.) Toyota Australia: Prius Homepage. Available at www.prius.toyota.com.au. Accessed 7 June 2006. (Back)

[6] Honda (n.d.) Honda Homepage. Available at www.honda.com. Accessed 7 June 2006. (Back)

[7] Lovins, A.B. et al (2002) Small is Profitable: the hidden economic benefits of making electrical resources the right size, Rocky Mountain Institute, Snowmass, Colorado. Available at www.smallisprofitable.org. Accessed 7 June 2006. (Back)

[8] Hawkins, P., Lovins, A.B. and Lovins, L.H. (1999 ) Natural Capitalism: creating the next industrial revolution, Earthscan, London. (Back)

[9] Hargroves, K. and Smith, M.H. (2005) The Natural Advantage of Nations: Business Opportunities, Innovation and Governance in the 21st Century, Earthscan, London, Chapter 1: Natural Advantage of Nations, p 17. (Back)

[10] Transaction costs are the costs of undertaking transactions between purchaser and seller, supplier and distributor. (Back)

[11] Downes, L. and Mui, C. (1998) Unleashing the Killer App , Harvard Business School Press, Boston. (Back)

[12] Weaver, P. et al. (2000) Sustainable Technology Development , Greenleaf Publishing, Sheffield, UK, Foreword, p 7. (Back)

[13] Hargroves, K. and Smith, M.H. (2005) The Natural Advantage of Nations: Business Opportunities, Innovation and Governance in the 21 st Century, Earthscan, London, Chapter 1: Natural Advantage of Nations, p 19. (Back)

[14] United Nations Environment Program (2002) Industry as a partner for sustainable development - 10 years after Rio : the UNEP assessment , UNEP. This UNEP report documents sector-specific progress in implementing Agenda 21, building on the 22 industry-driven sector reports of the 'Industry as a Partner for Sustainable Development' series. (Back)

[15] Romer, P. (1994) 'From Beyond Classical and Keynesian Macroeconomic Policy', Policy Options, July-August. (Back)

The Natural Edge Project Engineering Sustainable Solutions
Program is supported by the Australian National Commission
for UNESCO through the International Relations Grants
Program of the Department of Foreign Affairs and Trade.

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