August 12, 2009

The Clean Industrial Revolution

I have just finished reading the brilliant new book by Ben McNeil, called "The Clean Industrial Revolution." Ben is a climate scientist and economist at the University of New South Wales in Australia. As the subtitle suggests, his book is about how to grow prosperity in a greenhouse age.

Which was quite timely, considering cabinet announced on Monday their plans for a revised Emissions Trading Scheme. I was always a wee bit hesitant to wade into the whole carbon tax/emissions trading scheme debate because I had not made my mind up fully on the topic. After reading Ben's book and talking to my learned economist friend, goonix, I believe that it is essential for NZ to begin either a tax or trading scheme.

I think a lot of the debate centred around the question of how much is it going to cost our economy now, vs. how much will it cost to fall in line and adapt later? We are only 0.1% of the worlds emissions after all, so why spend all this money, lets just wait and see what the world does and adapt later.

Well, one of the key points I took out of Ben's book is that creating a 'carbon price' will be a massive incentive for innovative change. When (not if) the world moves to a low carbon future, any country that is researching, commercialising and exporting these new clean technologies will be in a great economic position. Surely it would be harder to do this if we chose to wait and adapt, giving the rest of the world a head start. (Note: Masdar City, in the UAE, which I have blogged about here).

Sure, some industries in NZ will be harder hit than others initially, (ie. the polluters, farmers and their farting animals) however, do we want to end up dependent on a costly carbon rich lifestyle? It would be like suffering the same fate as those countries that resisted imposing high taxes on oil. Japan and the EU set high taxes, and their vehicle industries were given incentive to develop more efficient engines, which they did (up to 30% more efficient in fact). The US, on the other hand chose to keep the price of petrol near the market value, and as a result are heavily dependent on oil. There was no incentive for GM to innovate, and as a result GM have given their market share up to Toyota, and pretty much gone bust. The same will happen with anyone still intensively using carbon.

The book is focused largely on an Australian context, however the whole way through reading it, I felt that I could have easily substituted "New Zealand" every time I read "Australia". Apart from the huge solar resource Australia have of course, we have a lot in common. Perhaps we are even in a better position than Australia, as we have a lot of hydro, more wind generated power, are less dependent on coal fired power stations, and already have less emissions per capita. Creating a highly innovative CleanTech economy will create new, high tech jobs that won't be able to be outsourced to China. It's about being at the forefront of change, and I believe we have the goods here in NZ to make it a reality.

You can preview the book here.


  1. 'Creating a highly innovative CleanTech economy will create new, high tech jobs that won't be able to be outsourced to China.'

    This statement is on point. Nice one Aaron.

  2. Nicely written Azza. You've shone some good long-term light on the 'emissions trading' debate. I, like many other Kiwis, am worried about the initial economic cost of such a trading scheme (why economically hamstring ourselves while other countries do nothing to mitigate their emissions and prosper accordingly??). However, as you point out, the long term benefits appear to be incentive enough. I'm still not convinced...but am beginning to accept some views of the pro-trading camp.


  3. Here's a piece on Scientific American about GM's new electric car, the Volt. Took a near bankruptcy to lead to this!

  4. I got forwarded your blog from a friend and I forwarded it onto my dairy farming Dad as we have discussed this topic a lot. He had this to say:

    Some good thinking. Minor error in farting animals, its burping (methane) animals that are a problem. I still have a worry about lumping agriculture - which is basically recycling carbon, even though methane takes a while to break down and is a greenhouse gas - with carbon releasing coal & oil using industries that can only be considered cyclers if we talk in terms of millions of years.
    But the basic premise of embracing change & looking for opportunity is right & ultimately a winner. I think the 3rd generation biofuels offer the most exciting possibilities.

  5. Thanks for the comments everyone. It is a complex issue indeed. I understand the concerns about agriculture, and as I understand it CO2 absorbed by pasture is not included in the Kyoto Protocol, however negotiations are underway to include it in the future. Despite this ruminant animals are still considered net emitters, there are nitrous oxide emissions due to fertilizer, and methane is a much, much more potent greenhouse gas than CO2 (see:

    Ultimately I think there will be a price on carbon and we will need to penalise or (depending on how you look at it) give incentive to emitters. Agriculture is NZ’s biggest emitter unfortunately, and hopefully this will lead to better use of fertilisers, forestry and the introduction of new innovations etc to mitigate this. These can then be sold to the world to increase the value of NZ’s exports.

  6. I think agriculture knows it has to become more sustainable. But the argument stands that we are a primary produce based country, who do import most of our technology ie cars etc... Moving towards cleaner farming systems is a high priority, it can be seen through the 2009 Feildays theme My Land Our environment and the Clean Green Farmer theme for some farmer day coming up. While I agree in concept with making money from a knowledge economy. I also saw the affect a small increase in dairy prices sold on the Fonterra online platform had on the New Zealand dollar a few weeks ago. I think the issue between balancing the economic consequences, while shifting (as fast as possible) to a sustainable 'carbon zero lifestyle, while continuing to raise food production to feed a growing world population. Will take science and argiculture working closely together - but I can't see an easy solution - esp when you are as vulnerable as New Zealand - and one commodity from one animal can directly effect our dollar.
    I would not like to be a world leader at the moment.



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