The Path to a Green Economy – Lessons From Germany

Written by Moritz Bühner   // February 12, 2012    4 Comments

GruenesDeutschland

What green economy deals with is the idea of running our businesses in a sustainable way. All of them. All of us. Running a business in a sustainable way means that, while doing business, you preserve the basis of your business. One business may be based on a talent, another one on an idea, a third one on luck. There are capital intense businesses, risky businesses and there is dad’s business. What they all have in common, every single one of them, is they all require a certain state of affairs to run. I don’t refer to the classic triangle of land, labor and capital here – I stretch the point to emphasize that without air there is no combustion engine, without fertile soil there is no food production, and without biodiversity there is no tourism industry.

By this wider definition, it all comes back to mother earth. Whatever we call it – Gaia, Patcha Mama, planet, Earth – our businesses are all based on having this planet in good shape. If the Earth is unbalanced, eventually our businesses will fail. A diminishing stock of natural capital, in the vocabulary of economics, eventually destroys our revenues. Extinction of species, paving over of soil, loading the atmosphere with pollutants beyond its capacity – we are facing an incredibly short-sighted destruction of our capital. Preserving this incalculable capital is the goal of the green economy. In a few simple words: green economy deals with making money without destroying the basis for making money.

Printing a Green Economy in Blue

It reaches as far back as 1989, when the term was first introduced into the political discussion. The heavily cited Blueprint for a Green Economy, having never lost its capacity to fascinate, defines five goals that the economy has to comply with:

  • constant reduction of emissions
  • 100% closed loop recycling
  • drastically diminished resource consumption by increasing energy and resource efficiency and by substituting fossil resources with renewables
  • use of 100% renewable energy in the long term
  • preservation of biodiversity and revitalization of negatively affected environments

Sounds good. But how do we get there? Let’s see how Germany, a country with a green image of world-wide renown, is trying to make a substantial shift towards a green economy. As an excellent starting point, I will introduce you to the “2011 Report on the Environmental Economy”. This document, published jointly by Germany’s Federal Environment Ministry and the Federal Environment Agency, contains some sophisticated data and some comprehensive statistics in its 200 pages. I show you the most interesting findings and the most important steps Germany will take in the next ten years. In English, there is only a press release available. But never mind that the full report is in German. I will review the findings for you in English.

How to Shift to a Green Economy

What a state can do, in order to encourage its population to participate, is to foster green innovations on all levels. This implies the promotion of green innovations not only in production, but also in research & development, in the market introduction phase, and through technology transfer to other countries. But the responsibility lies not only with the government. The realization of a green economy also requires that companies invest in the qualifications of their personnel. Banks should develop easier finance models for green investments. And, above all, an environmental policy framework is needed that allows all stakeholders to pull in the same direction.

Practical Indicators: How Green is the Economy?

One important indicator of an economy’s sustainability is energy productivity. Energy productivity measures the relation between gross productivity (GDP) and primary energy consumption. In a sense, how much money does a country earn and how much energy does it use to do so? Germany has the goal of doubling its energy productivity in 30 years, from 1990 to 2020. There is some work left since productivity increased by only 39% between 1990 and 2010. In the last 10 years, energy productivity has increased by only 1.1% – so in order to achieve the 2020 goal, it should rise by at least 3.7% annually.

Another important indicator is resource productivity, which deals with the relation between GDP and raw materials. All abiotic raw materials are included here – those imported from other countries as well as those extracted inside national borders. Germany’s sustainability goal foresees a doubling of resource productivity from 1994 to 2020. So far (’94 to ’09), it has increased by 47%. One way to increase raw material productivity is to increase the lifespan of products, and to facilitate reuse of their components once they become obsolete.

There is another indicator you have certainly thought of: total greenhouse gas emissions. Germany’s goal is to reduce them by 40% from 2011 to 2020. Other indicators are land conversion due to urbanization and transportation, which is measured in additional space taken per day, and air quality, measured in total emission of pollutants per year.

External Effects: Taking into Account the True Costs

It is argued by many economists that subsidies for renewable energy are too costly. In a serious discussion, however, we should include both the direct and the indirect costs of, for instance, power generation. The indirect costs are mostly long-term costs, e.g., when the health system has to pay for problems linked to the emission of pollutants. Not the polluter, but the general public will pay. This is referred to as an external cost. External costs, are costs generated by a business, but not paid for by that business. So when we compare the true cost of fossil fuels to that of renewable energy, a holistic approach is necessary, one that assigns the true costs of each power source. The following graphic gives you an impression of how cheap, or rather expensive, fossil energy is, compared to renewable energy.

However, the loss of biodiversity is not included in this calculation because it is hard to monetize. Hydro power, for instance, will generate more costs than the displayed 0.1 cent per KWh because the destruction of fluvial ecosystems and loss of habitat is linked to the installation of hydro power plants. On the other hand, this impact is trivial compared to the cost of fossil fuels. It is striking that coal power generates 8-9 cents of external cost per KWh! If this were to be included in energy bills, cheaper renewable energy, like wind power, would be fully competitive on the marketplace.

Benefits of Environmental Management Systems

What an Environmental Management System like ISO 14001 or EMAS can do for the environment is clear. However, it will also benefit your organization. While systematically reducing emissions, you also systematically reduce raw material and energy costs, improve your relationship with all your stakeholders, and lay the basis for a business beyond the oil era.

Life Cycle Cost Analysis for Public Sector Purchasing

In Germany, public procurement results in annual purchases of 260 billion euros. When calling for proposals, it is not the purchase cost, but the total life cycle cost that should be the deciding factor. All costs – for the purchase, for use and for disposal of a product – are included in its life cycle.

To conclude, we can see that there are infinite possibilities for moving toward a green economy. If you want to take a closer look at the report, you will find it here (in German).

Article image by Moritz Buehner, based on the image “nature” by wot nxt and tjuel‘s German flag, found on flickr.


About Moritz Bühner :

Job: Freelance blogger, attitude: green, reason: by conviction. Bachelor in Environmental and Bioresource Management at the University of Applied Life Sciences Vienna. Born in Hamburg, Germany, lived in Quebec (CAN), Vienna (AUT) and Pamplona (ESP). Why he blogs? "The possibility of going into detail with every link, satisfying the desire to learn. The direct feedback. The free global distribution. I just love the medium!"

Tags:

air quality

energy efficiency

Germany

green economy

green investment

renewable energy

resource productivity

sustainable development



4 COMMENTS

  1. By T. Müller, February 13, 2012

    Interesting figure on the true cost of power generation. I missed nuclear power, though. That issue is too sensitive, I guess, given that the German government has issued the report. Nuclear power would actually do quite well in terms of air pollution and global warming, but not so if it comes to health issues and risk considerations….

    Reply
    • By Moritz Buehner, February 17, 2012

      That issue is too sensitive, I guess

      Probably, yes. Another option would be that since the Fukushima events, nuclear energy is out of discussion in Germany, anyway. Concerning the climate related emissions of nuclear power, we should not forget to include the fossile fuels consumed in uranium mining and the methane emissions of all the concrete used for power plant construction.

      Reply
  2. By Florian, March 11, 2012

    Thanks for the info, good article. There are many hurdles Germany still has to take in order to realize the sustainable future it’s been envisaging for so long. The ongoing “Endergiewende” shows very well how difficult sustainability gets once it leaves the academic ivory tower and is put into practice. Nevertheless, every hurdle is worth the effort as not only will Germany benefit in terms of reputation, it will also be more competitive once energy things turn sour for others.

    Reply
  3. Pingback : The Path to a Green Economy – Lessons From Germany | EfficientCarbon

Leave a Reply

Your email address will not be published. Required fields are marked *

Similar posts

20-20-20 Objectives

2012

3 scopes

3D printing

academia

ACHEMA

acidification

agriculture

air quality

aluminum

Ankara

antarctic ozone hole

apocalypse

assessment

atmospheric carbon measurement

B2B

Bachelor program

background database

BASF

battery change station

best practice

bio capacity

bio-economy

biocapacity

biodiversity

biological gas treatment

biomass

blogs

BMBF

books

Brazil

BREEAM

building sector

building standards

business opportunity

carbon

carbon accouting

carbon assessment

carbon emissions

carbon footprint

carbon footprinting

carbon free city

carbon intensity

carbon leakage

carbon management

carbon neutral

carbon neutrality

carbon reduction

carbon relocation

carbon tax

carbon-neutral travel

cargo shipping

carton

central america

central asia

certification

CFC

change

chemical industry

China

circular economy

circular flow economy

city

climate change

climate control

climate impact

climate neutral

climate protection

club of rome

co2-equivalent

cogeneration

collaborative consumption

combined reporting

commercial sector

commons

comparative life cycle assessment

Competence Center

composite indicator

compost

composting

consistency

construction

construction industry

consumption

container ship

copenhagen

corporate carbon footprint

corporate culture

corporate material flow modeling

Corporate Social Responsibility

cost accounting

cost-effective measures

Country Attractiveness

cradle to cradle

creative destruction

Creative Sustainability

Critique of the Green Economy

cross-collaboration

CSR

CSR report

customer-driven sustainability

cycling

dairy

Dashboard of Sustainability

database

Davos

de-growth economy

decarbonization

dematerialization

denmark

design

developing countries

developing world

development cooperation

distributed manufacturing

divestment

domestic fuel consumption

domestic sector

double decoupling

e!Sankey

e-car

e-mobility

e-sankey

earth overshoot day

Earth Sciences

Earth summit

eCarUs

eco city

eco design

eco label

ecodesign

ecoinvent

ecologic footprint

ecological footprint

ecological resilience

ecological tax reform

economic indicators

ecosystem disturbance

ecovillage

education

efficiency

efficiency factory

efficiency investment

efficiency measures

efficient construction

Effizienzfabrik

EHS

eLCAr

electric car

emerging economies

emission gap

emission relocation

emissions

EMS

energiewende

energy

energy contracting

energy efficiency

Energy Efficiency Directive

energy efficiency in production

energy efficient production

Energy Intensity by Sector

energy management

energy performance

energy reduction

energy sources

energy transition

engineering excellence

Enhipro

enms

environment

Environment Ministry

environmental accounting

environmental awareness

environmental capital

Environmental Contracting

environmental control

environmental cost accounting

Environmental Engineering

Environmental Goods and Services Sector

Environmental Governance

environmental impact

environmental labeling

environmental management

environmental management system

environmental performance

environmental performance indicator

environmental policy

environmental product declaration

environmental product declarations

environmental profit and loss statement

environmental regulation

environmental standard

Environmental Sustainability Index

environmental technology verification

Environmentally Harmful Subsidy

Environmentally Weighed Material Consumption

EPD

EU

Europe

European Comission

european commission

European Green Cars Initiative

European Sustainable Development Strategy

eutrophication

EVALEAU

events

external effects

fashion

FIFA

fish

fishery

food footprint

food industry

food production

food sector

footprinting

forest ecosystems

forestry

fouling

FPC

free trade

freighter travel

full cost accounting

gate-to-gate

gate-to-gate approach

geopolymer cement

Germany

Ghana

GHG emissions

GHG mitigation

GHG reduction

GHG reduction goals

glass

Global Compact

global justice

global warming

governance

green building

green buildings

green business

green business models

green Christmas

green construction

green consumers

green economy

green growth

green investment

green jobs

green living

green new deal

green paradox

green production

greenhouse gas emissions

greenhouse gas inventory

greenhouse gas protocol

greenhouse gas reduction

greenhouse gases

greenwash

GRI

handprinting

Happy Life Years

harmonization

HDPE

Herman Daly

HFC

holistic approach

holistic sustainability

human development index

HVAC

IEA

IFEU

ifu hamburg

ILCD Handbook

impact assessment

impact category

incentive

Incentive-based pay

incineration

India

industrial ecology

industrial location choice

industrial production

industrial sector

information design

innovation

input output

input-output databases

input-output economics

InReff

insulation

Integrated Reporting

integrative approach

intellectual property

internalization of externalities

international standards

interplant collaboration

IPCC

ISO

ISO 14000

ISO 14001

ISO 14015

ISO 14025

ISO 14031

ISO 14040

ISO 14046

ISO 14051

ISO 14064

ISO 14067

ISO 50001

Jevon’s Paradox.

knowledge economy

Kuznets curve

Kyoto protocol

LCA

LCA recommendations

LCA software

LCM Berlin

lean manufacturing

LEED

life cycle

life cycle analysis

life cycle assessment

life cycle engineering

life cycle inventory

life cycle management

life cycle thinking

life style

lifecycle

limits to growth

LinkedIn

living planet report

Long-Term Pay

low carbon economy

low-carbon transport

low-energy house

management models

manufacturing industry

masdar city

master program

material consumption

material efficiency

material flow

material flow accounting

Material Flow Accounts

material flow analysis

material flow balance

material flow cost accounting

material flow cost analysis

Material Flow Management

material flow modeling

material flowcosts

material flows

material footprint

meat

mechanical-biological treatment

media

metal industry

methodology

Mexico

MFA

MFCA

milk

modeling

Montreal Protocol

municipal solid waste

nature conservation

Nepal

NIMBY

nitrate pollution

nuclear phase out

nutrients balance

nutrients cycle

OECD

OECD Environment Policy Committee

oligolopoly

Online Resource Efficiency Platform OREP

operational efficiency

organic agriculture

outsourcing

ozone layer recovery

packaging

PAS

passive house

patents

PET

philippines

phosphorus

photovoltaics

pilot program

pinch analysis

plastic industry

policy

policy instruments

politics

pollution haven hypothesis

post growth economy

post oil age

PR

process engineering

process heat

process improvement

process modeling

Process Optimization

process system engineering

product carbon footprint

product environmental footprint

product stewardship

production

production circle

production planning

production system

Production-based CO2 Productivity

productivity

PUMA

PVC

qatar

quality

quality journalism

quantified self

Rapid prototyping

rebound effect

recycling

refuse-derived fuel plant

remuneration

remuneration of environmental performance

renewable energy

renewable energy in manufacturing

renewable heat

renewable hydrogen

renewable methane

renewable process heat

renewable raw material

Renewable Resources

renewable thermal energy

resilience

resource conflicts

resource efficiency

Resource Efficiency Framework

resource flows

resource politics

resource productivity

resources

retailer

reuse

RFID

Rio+20 summit

rising material demand

risk management

Rolf Dobelli

sankey diagram

saving potentials

savings

scope 3

seafood

season's greetings

seattle

shopping rage

smart grid

smart meter

SMB

social cost accounting

social media

social metabolism

Social-Ecological Resilience

software

solar energy

solar heat

solar thermal energy

South Africa

South America

South Korea

soy milk

stakeholder management

standards

statistics

steady state economy

steel

stranded assets

strong sustainability

studies

sufficiency

supermarket chain

sustainability

sustainability control

sustainability indicators

sustainability innovation

sustainability management

sustainability performance

sustainability projects

sustainability reporting

Sustainability Science

sustainability strategy

sustainability triangle

sustainable agriculture

sustainable architecture

sustainable business

sustainable construction

sustainable development

sustainable housing

sustainable lifestyle

Sustainable Living

Sustainable Process Index

Sustainable Resource Management

sustainable transport

sydney

system analysis

tajikistan

Tesco

textile industry

textile refinement

Tobias Viere

total material consumption

trade

transparency

transport

transport emissions

transport sector

trends

triple bottom line principles

Turkey

Umberto

umberto for carbon footprint

umberto user workshop

Umweltbundesamt

university

upcycling

urban carbon emissions

VDMA

vernon curve

vertical cooperation

Vertragsnaturschutz

virtual water

waste air treatment

waste cycle

waste disposal

waste hierarchy

waste management

waste prevention

wastewater

wastewater treatment

water abstraction rate

Water Consumption by Sector

water extraction

water filter

water footprint

Water Management

water stress

web 2.0

Wellbeing Index

wind gas

wind power

wine

with both eyes open

working conditions

world cup

world statistics day

world vegan day

YET

zero carbon

zero carbon city

zero emission mobility

zero growth

zero growth economy