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Delhi Sustainable Development Summit 2002
Ensuring sustainable livelihoods:

challenges for governments, corporates, and civil society at Rio+10
8 - 11 February 2002, New Delhi

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DSDS 2002: Keynote address 4, 10 February 2002

Eco-economy: building an economy for the earth
Lester R Brown
President, Earth Policy Institute, USA


We read about the deteriorating relationship between the global economy and the earth’s ecosystem in daily news stories on shrinking forests, expanding deserts, collapsing fisheries, falling water tables, rising carbon dioxide levels, rising temperatures, melting glaciers, rising sea level, and more destructive storms. Our existing economy is destroying its natural support systems. It cannot take us where we want to go. The challenge is to restructure the economy—to build an eco-economy—so that economic progress can continue.

We can see glimpses of the eco-economy emerging in the wind farms of northern Germany, the solar rooftops of Japan, the reforested mountains of South Korea, and the steel recycling mills of the United States.

Today, wind turbines are replacing coal mines in Europe. Already, Denmark, which has banned the construction of coal-fired power plants, gets 15 percent of its electricity from wind. For Schleswig-Holstein, the northernmost state in Germany, the figure is 19 percent. In Spain, the northern industrial province of Navarra gets 22 percent of its electricity from wind.

In the United States, North Dakota, Kansas, and Texas have enough harnessable wind energy to satisfy national electricity needs. Densely populated Europe has enough off-shore wind energy to meet all its electricity needs. China can double its current electricity generation from wind alone. Wind is a vast energy resource, one that cannot be depleted.

Advances in technology have lowered the cost of generating electricity from wind from 38˘ per kilowatt-hour in the early 1980s to under 4˘ at prime wind sites today—a figure that is competitive with oil, gas, and coal. The low-cost electricity that comes from wind turbines can be used directly or to electrolyze water to produce hydrogen. Hydrogen provides a way of both storing and transporting wind energy. It is also the fuel of choice for the fuel cell engines that every major automobile manufacturer is now working on.

With a modest U.S. 1.7˘ per kilowatt-hour wind-production tax credit, new wind farms have come on-line in the last few years in Minnesota, Iowa, Kansas, Colorado, Wyoming, Oregon, and Washington. We are now looking at a future where farmers and ranchers in the United States, who own most of the wind rights, could one day be supplying not only much of the country’s electricity, but also much of the hydrogen—the fuel for the national fleet of automobiles. We now have the technologies needed to stabilize climate and to declare our independence from Middle Eastern oil.

In addition to new energy industries, recycling industries will replace mining industries. The United States last year produced 58 percent of its steel from recycled scrap. Steel recycling is concentrated in small, electric arc minimills that are widely distributed around the country, feeding on the local supply of scrap.

Germany leads the world in paper recycling, with 72 percent of its paper coming from recycled stock. If the entire world were to achieve the German level of recycling, it would reduce the wood used for paper making by nearly one third.

Today major corporations are committed to comprehensive recycling, to closing the loop in the materials economy. Others are starting to phase out their use of fossil fuels. STMicroelectronics in Italy and Interface, a leading manufacturer of industrial carpet in the United States, are both striving for zero carbon emissions. Shell Hydrogen and DaimlerChrysler are working with Iceland to make it the world's first hydrogen-powered economy.

People appear hungry for a vision, for a sense of how we can reverse the environmental deterioration of the earth. More and more people want to get involved, to do something.

While we need to make personal changes, involving everything from using bicycles more and cars less to recycling our daily newspapers, that will not be enough. We have to change the economic system. And that requires restructuring the tax system: reducing income taxes and increasing taxes on environmentally destructive activities, such as carbon emissions, the generation of toxic wastes, and material going to landfills. We have to work to restructure taxes to get prices to include the ecological costs.

Řystein Dahle, former vice president of Exxon for Norway and the North Sea, summed it up brilliantly when he said, "Socialism collapsed because it did not allow prices to reflect the economic costs. Capitalism may collapse because it does not allow prices to reflect the ecological costs." Our challenge is to restructure the tax system so that market prices tell the ecological truth.

Can we move fast enough? We know that social change takes time. In Eastern Europe, it was fully four decades from the imposition of socialism until its demise. Thirty-four years passed between the first U.S. Surgeon General’s report on smoking and health and the landmark agreement between the tobacco industry and state governments to reimburse state governments $251 billion for smoking-related health care expenditures. Thirty-eight years have passed since biologist Rachel Carson published Silent Spring, the wakeup call that gave rise to the modern environmental movement.

Sometimes societies move quickly, especially when the magnitude of the threat is understood and the nature of the response is obvious, such as the U.S. response to the attack on Pearl Harbor. Within one year, the U.S. economy had largely been restructured. In less than four years, the war was over.

There is no middle path. Do we join together to build an economy that is sustainable? Or do we stay with our environmentally unsustainable economy until it declines? It is not a goal that can be compromised. One way or another, the choice will be made by our generation. But it will affect life on earth for all generations to come.