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Monday, March 19, 2012

Color GDP growth green


It is often said that the 21st century is the "century of the environment." This means two things: One is that the environmental problems of this planet, especially climate change and global warming, have become so serious that they are attracting more people's attention; and the other is that environmental constraints will serve to trigger technological innovations and economic development.

In other words, technological innovations to overcome environmental constraints will serve as a driving force for economic development in industrially advanced countries in this century.

Shortly after assuming office three years ago, U.S. President Barack Obama announced a set of new proposals that the news media dubbed "Green New Deal." Although this new program appears to have been toned down after Democrats lost badly in the 2010 midterm elections and the American economy plunged into stagnation, its aim still stands.

The Green New Deal is aimed at ending the economic slump through such means as utilization of renewable energy sources, promotion of environmentally friendly products for mitigating climate change, and energy-saving measures in buildings and residences.

Shortly after his inauguration, Obama declared that over the ensuing 10 years, he would invest $150 billion in public works to stop global warming and create 5 million new jobs.

His call for using measures to combat global warming as leverage to achieve economic growth concurs with my personal view that it is impossible to achieve economic growth without taking measures to counter global warming.

One of the catchphrases at the Asia Pacific Economic Cooperation forum in 2011 was "green growth." Obama had not forgotten the proposals he made three years earlier and was calling for green growth.

I have long thought that in general terms, attempts to overcome certain types of shortages or constraints serve as the source of technological innovation and that there is no economic growth if there is no technological innovation.

This is another way of saying that an economy grows in the process of popularizing durable consumer goods created by technological innovations.

What then are the constraints in the 21st century?

One is a insatiable desire for perennial youthfulness and long life and the other is environmental constraints. By reflecting this undercurrent, the government's Council for Science and Technology Policy has made "life innovation" and "green innovation" the two main pillars of future technological innovations.

In the 20 years between fiscal 1991 and fiscal 2010, the growth rate of the Japanese economy remained at virtually zero. If I were asked what the new growth strategy for the 2010s should be, I would answer that the promotion of eco-friendly products is the only way.

At present, between 3 and 4 percent of houses in Japan are equipped with solar power generating systems. If this ratio is boosted to about 30 percent, and if such systems are installed in large numbers on the roofs of buildings, condominiums, schools and hospitals, it is bound to contribute remarkably to the growth of the Japanese economy.

I strongly urge the government to take aggressive measures to promote eco-friendly products as part of its new growth strategy. A broader use of such products would accelerate mass production and lower the prices of products, which in turn would invite more new customers to buy them. A policy that produces a "positive cycle" like this is called for.

Steps to fight climate change are composed of "regulatory measures" and "economic measures." The former imposes prohibitions or obligations. The latter seeks to reduce carbon dioxide emissions through market mechanism by means of tax and other reforms.

It is incumbent upon Japan, which professes to pursue liberalism, to endeavor to push the spread of eco-friendly products and thus achieve economic growth and secure employment through a policy mix of minimizing regulatory measures and promoting economy-centered policies.

Ever since the 3/11 disasters struck the northeastern part of the country and caused the Fukushima nuclear crisis, Japan has, willy-nilly, been forced to reduce its reliance on nuclear power as a source of generation of electricity. Nuclear power generation, which is free of carbon dioxide emissions, had long been dubbed the ultimate means of combating climate change.

The basic energy plan adopted by the government in June 2010 called for raising the ratio of nuclear power to 41 percent of Japan's total electricity supply by 2019 and to 53 percent by 2030. This was thought to be a prerequisite for achieving the "Hatoyama initiative" of September 2009 — named after the then-Prime Minister Yukio Hatoyama — which envisaged reducing Japan's greenhouse gas emissions by 25 percent by the year 2020 from the levels registered in 1990.

At the moment, the nation is going through a major social experiment of finding out to what extent Japan can reduce its reliance on nuclear power generation. The question of how much electricity Japan can save must be divided into two segments: (1) how much the peak demand for power (kilowatts) can be reduced and (2) how much power consumption (kilowatt-hours) can be reduced.

Reducing peak demand is necessary to prevent a blackout, and reducing overall power consumption is necessary to decrease carbon dioxide emissions.

At 5 p.m., Feb. 20, Kansai Electric Power Co. stopped the operation of its 870,000-kw Takahama No. 3 reactor in Fukui Prefecture due to a regularly scheduled inspection. That put all of Kepco's 11 reactors out of operation. A weekly release by Kepco to the mass media forecast demand for electricity at between 84 and 91 percent of its total power generating capacity. Actual demand as of March 5 was about 80 percent.

Since most of the nation's nuclear power plants are out of operation due to the Fukushima nuclear fiasco and regular inspections, people and enterprises will save power, thus leading to reduction of carbon dioxide emissions. To mitigate climate change, we must make further efforts to use less electricity.

As the amount of electricity generated by nuclear power plants continues to decline, the government must mobilize every conceivable economic measure, including the imposition of environment taxes, the introduction of carbon emissions trading, and the reform of automobile taxes.

Make power companies purchase electricity generated by renewable energy sources at fixed prices, with special pricing at times of peak demand.

Takamitsu Sawa is the president of Shiga University, Japan.


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