Green Tech, or how the market is probably going to do more to help the environment than the State

It’s time, I think, to make a confession.

I am a capitalist. An economic liberal. And I have a passing interest in sustainability and environmentalism. I am supposed to believe, from the prophets of self-righteous indignation like Naomi Klien, that these are irreconcilable enemies. That the capital is the enemy of the environment and of conservation.

Try as I might, I cannot agree. I might explain why.

On the surface, if you have a rudimentary understanding of capitalism it will make abundant sense. Trouble is, most people who are arguing about the politics of climate change don’t understand it, so I’m going to need to explain it a bit. (And honestly, if you’re new to economics and capitalism, I’d highly recommend Freakonomics for a fairly fun insight into how economic modelling appears everywhere and can explain, well, a lot.)

Capitalism, by its nature, creates and thrives of competition. Competition between producers of goods or services for consumers. Competition produces two positive effects for consumers, effects that socialism can simply never replicate. The first is to push prices down as efficiencies are pursued and adopted. The second is to drive innovation.  The good or service that is proverbial light years ahead of its competition attracts buyers, and whilst that can push the price in the seller’s favour it creates an incentive for competitors to produce similar goods, but better and cheaper. If you look at a fairly ubiquitous gadget – the smartphone – you will absolute see this in practice. Apple takes the concept of the smart phone, which was a business-only device most famously in the form of a Blackberry, and figures out that if you strip it back and make it a bit easier and more fun to use, more people would buy it. The parts and novelty allow you to command a premium price and Apple integrated it’s highly popular iPod device into the phone. Internet, social media, telephony and music, all on one device? Where do I sign up?

Apple revolutionised the concept through innovation, and created healthy competition from the likes of Sony, Samsung, HTC et al. Faster, better, cheaper models come out often and for the first time in years the Samsung Galaxy S3 was able to steal the iPhone’s crown as the top seller. Furthermore, Apple’s dominant share of the market has removed the incentive to innovate form them, which is why so many iterations of the iPhone come out with minor advancements. An Appleista will defend this as an instance of it being hard to improve on perfection, but that’s horse shit.

OK, so by now you might conceded that the theory of capitalism is well served by the smart phone example, but you’re still pretty firmly convinced that the market is actually the number one destructive force in this field. Certainly, participants in the market are contributing to the continual worsening of our planet’s ecosystem and I’m not sure I need to name the sectors and culprits. We know who they are.

But I don’t see that pointing to them as encompassing the whole marketplace is actually a useful exercise. Like any society, the market is not a homogenous blob (so, unlike Gina Rein… or Clive Pal… no, mustn’t) and so if we don’t generalise in one case, we shouldn’t generalise in the other.

You just have to know where to look to see that a new class of entrepreneurs and venture capitalists are busily investigating, investing in, and lobbying on behalf of an emerging sector of greentech startups. Any major new industry takes a long time to get established, due to a variety of factors – the rules of the game aren’t yet written and you have to take time to eke those out. Circa 1996, when I was given my mother’s chunky Eriksson GH337 to take to parties to call for a lift home, that nobody else had mobile phones and it was seen as an extravagance. Even just 5 years later this had radically shifted.

You only need to look at a site like Green Tech Media (http://www.greentechmedia.com/) to see just how much is going on. Now, a lot of work needs to be done in this field but it’s where the innovation is coming from. Changes to regulations, improvements of essential technologies (solar energy is hampered by both the wasted, uncollected energy and by poor battery technology), and widening public awareness will continue to drive growth. A company in California, Fulcrum BioEnergy (http://fulcrum-bioenergy.com/) have developed a technique to produce biofuel from municipal waste, which has substantial benefits for the environment (beyond the obvious fossil fuel concerns, land waste is a significant source of methane which, although quicker to break down than carbon, is more reflective and contributes more in the short term to global warming). Stories like this aren’t hard to find, and they’re growing.

I am going to completely crystal ball this moment and claim that, in the next 5-10 years, a substantial green tech sector of the economy will exist, compete, and flourish. The “greenness” of a product (measured in efficiency, [low] waste output, and cheapness) will be a measurably metric for consumers. And we can stem some of the tide of damage we’ve inflicted.

I could be wrong, too…

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