The next industrial revolution

NEW YORK – A new global deal to tackle climate change will not only be good for business, it is crucial to achieve sustainable growth for the global economy. As we approach the global climate talks in Copenhagen this December, much debate has focused on the supposed conflicting interests of big business and the climate. This argument is based on the idea that business does not like change, and in particular does not like change brought about by government policy or regulation. This is a grave misconception, and also underestimates the gravity of the choices we face as business people and citizens. But business thrives on change. Today’s large companies were once only a few people who saw an opportunity arise, new demand that would grow, a change that made something new possible. Many opportunities were created by new technologies, from the internal combustion engine to the micro-chip. Some of these were driven by demand, food production for example, and many of the most revolutionary were supported by well-designed government policy, such as the construction of railways and the rapid development of mobile telephony. When these three forces align, economic change accelerates and so does economic growth and wealth creation. A major shift in the economy requires all three. The agricultural revolution, the industrial revolution, the technology revolution, all provided enormous opportunity and government played a key role in each, by reacting quickly to put the policy structures in place to support those changes. The low-carbon revolution is next. New businesses are already emerging all over the world, focused on low-carbon solutions to energy generation and use, from light bulbs to transport, but they are still at the pioneering stage. To create some certainty and achieve the scale of investment necessary to make a major change in our economic direction, it must be clear to business that political leaders, from developed and developing countries alike, are committed to this course. Inaction or delay would be disastrous for the climate, but it would also be disastrous economically. With a clear commitment to the low-carbon industrial revolution, businesses around the world, large or small, can compete with confidence, invest with certainty, and drive the scale and innovation necessary to make the changes we need to make. The result will be job creation, investment opportunities and a new direction for industry. The effort requires significant investment, not least in infrastructure development in both the developed and developing world. Fundamentally, this is changing the way we invest and changing the direction of the economy, so that we can grow sustainably on the low-carbon path. For example, in the US, energy efficiency measures alone can save over a trillion dollars, while driving job creation and growth in the short-term, aiding the economic recovery and providing the economic stimulus required to accelerate investment in low-carbon energy generation and use. Specifically, a global agreement at Copenhagen can deliver three things for business: 1. A clear commitment to emission reduction targets in the developed and developing world to drive technology investment and energy efficiency measures. 2. A clear commitment to the global pricing of carbon that allows businesses to invest with confidence and at the scale required. 3. A deal that supports, through a mixture of both public and private financing, the infrastructure required to shift to a low-carbon economy. With these three straightforward principles at its core, a global deal signed in Copenhagen can fire the starting pistol for the new industrial revolution, the low-carbon revolution, creating significant growth, job creation and economic development throughout the world. At this time of financial turmoil, a global deal in Copenhagen needs to bring world leaders together in a strong, clear message to business: follow the low carbon path, we will support you all the way. ars G. Josefsson, president and CEO of Vattenfall, Europe’s fifth largest generator of electricity, is a member of the UN Secretary-General’s Advisory Group on Energy and Climate; Jamshyd N. Godrej is chairman of Godrej & Boyce Mfg. Co. Ltd, one of India’s largest engineering and consumer products companies, and a former president of the Confederation of Indian Industry; Peter A. Darbee is Chairman of the Board, Chief Executive Officer and President of PG&E Corporation; Steve Holliday is Chief Executive of National Grid, which owns the high-voltage electricity transmission network in England and Wales and operates the system across Great Britain. Copyright: Project Syndicate, 2009.www.project-syndicate.org

Opinions

The next industrial revolution