Spaces of Finance

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Spaces of Finance InnovationLecture
8Technology the EnvironmentThursday March
6, 2008
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Topics for Discussion
Part 1 Introduction positioning technology in
the environment / economy interfacePart 2
Exploring the creation and commercial development
of clean technologies
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Silent Spring (1962)
Rachel Carsons book drew attention to the
dangers of industrial chemicals, e.g. leading to
the removal of DDT (a synthetic pesticide)
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The Environmental Turn
Since the 1980s, there has been a greater
willingness by scholars to think critically about
the environmental, ecological and material
aspects of economic growthCollapse of
disciplinary boundariese.g. emergence of an
environmental economic geography in the 1990s -
looking at flows of energy, resources, materials
and waste within globalized companies and supply
chains
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Corporate Social Responsibility
Drive to study the environment has been sparked
by concerns about climate change, human health
and resource usePressure for companies to
monitor and improve their social and
environmental performanceCSR as a form of
corporate self-regulation and voluntary compliance
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Upgrading Supply Chains
In the current climate of CSR, companies are
reshaping the technological foundations of their
global supply chains a search for innovative
solutions to more efficiently produce and
distribute goodsChallenges of transforming
globalized networks of contractors and
sub-contractors combined with risks of
accountability, review and unforeseen publicity
(e.g. leaks onto the Internet)
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Environmental Innovation
Where does the impetus for transformation come
from? government-designed regulations
corporate incentives to make a profitOngoing
debate about whether government regulation
encourages or stifles environmental innovation
within the private sector
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Government Regulation
Porter and Van der Linde (1995) argued that
properly designed environmental standards can
trigger innovation within companies, that then
deliver cost savings sufficient to offset the
costs of compliance raising awareness of
efficiency issues creating certainty around
specific changes levelling the playing field,
encouraging all to adapt regulation needed to
mandate short-term transitions
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Limits to Regulation
Regulations often impose a net cost on companies
which will vehemently fight mandatory standards
(e.g. US car manufacturers resisting emissions
legislation)Challenges of geographic
regulation entry of banned substances through
complex goods relocation of facilities to
weaker regulatory regimes
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Regulatory Capture
Risk of regulatory capture - companies taking
advantage of a law or regulation to support their
own commercial interests (environmental
protection as an incidental outcome)e.g. -
profiting from environmental restrictionse.g. -
exploiting regulations as an anti-competitive tool
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Logging Regulations
Logging companies in the US supported regulations
designed to limit tree felling and protect the
endangered Northern Spotted Owl the regulations
reduced the scale of logging in public forests,
thereby raising timber prices in the market
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Costs of Pollution Control
The costs of pollution controls may be advanced
by larger firms, which can afford the costs of
compliance, as a tool to disadvantage or burden
smaller competitors
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Commercial Incentives
Environmental innovation can also be driven by
the prospect of saving money and boosting
profitThe transition to a lower carbon economy
can shave costs, and enhance the value of a
brandSmall, incremental changes can yield
significant cost savings across a global supply
chain e.g. every 1 reduction in aluminium used
in drinks cans saves manufacturers over 20
million each year
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Business as Usual?
Environmental innovations tend to be incremental
and superficial, without any substantive
restructuring of the underlying operations and
technological structureArgument that business
is essentially continuing as usuale.g. debates
about the carbon economy, and perils of bio-fuels
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The Carbon Economy
Companies buying carbon credits to offset their
environmental footprintCritique unclear
that there is actually a net benefit shuffling
cash between companies moral branding, rather
than environmental protection lack of
regulation and auditing fallacies of some
carbon credit schemes (e.g. paying companies not
to fell their forests replacing primary
rainforests with tree plantations)
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The Perils of Bio-Fuels
Technological and commercial innovation is
lurching in the direction of bio-fuels without a
full understanding of their environmental impact
e.g. corn-based ethanol consumes huge amounts of
energy in its production, as well as large
supplies of water from local aquifers (up to 2
million gallons per day for some production
facilities)
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Industry v Environment
Since the industrial revolution, the basic
operating principles of industry have been in
opposition with the environment nature as a
force to be tamed and civilized nature as a
constraint on economic growthIs this degree of
opposition even necessary?
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Problems with Industrial Design
A fundamental design flaw in modern human
civilization cradle to grave (not cradle to
cradle) linear, one-way (not recursive,
regenerative) built in obsolescence (not
planned re-use) activity equals prosperity (not
sustainability)
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Salvation through Recycling?
Prevalence of short-term strategies to make the
modern industrial system more sustainable
e.g. recycling is an aspirin, alleviating a
rather large collective hangover -
over-consumption
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The Fallacy of Eco-Efficiency
Important to question the general goal of
eco-efficiency for a system that is largely
environmentally destructiveEco-efficiency is
an outwardly admirable, even noble concept, but
it is not a strategy for success over the
long-term because it does not reach deep enough.
It works within the same system that caused the
problem in the first place, merely slowing it
down with moral proscriptions and punitive
measures. It presents little more than an
illusion of change. Relying on eco-efficiency to
save the environment will in fact achieve the
opposite - it will let industry finish off
everything, quietly, persistently and completely
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Towards a New Design
An urgent need for modern industry to radically
overhaul its operating and technological
structure to find greater symbiosis with the
environment bio-mimicry clean technology
renewable energyincorporating the evolved
designs of nature into industrial systems and
processes
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Learning from Nature
Bio-mimicry is a fundamentally different
philosophy not about extracting from nature,
dominating or improving nature - it is about
learning and adapting based upon 3.8 billion
years of research and development in natures
laboratorye.g. - solar cells inspired by
leavese.g. - computer technology that signals
like cells
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Environment / Economy
The environment / economy interface is an
increasingly important area of debate and
research what changes can we make to
radically improve the sustainability of
commerce? in what areas does nature hold the
answers to questions of commercial
sustainability? can new design provide
sufficient savings in resource use and energy
consumption?
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Video Talk
The wisdom of designing cradle to cradle, by
William McDonough
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The Rise of Clean Technology
Emergence of a new economic sector oriented
around the commercialization of clean
technologiesAn eclectic mix, ranging from
electric cars to renewable energy, which is
designed to meet demands of society in an
environmentally sustainable fashion, whilst also
refiguring the kinds of behaviour (e.g. lifestyle
choices, modes of travel, energy supply) that
give rise to those demands
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Going Green in a Digital Paradise
The digital economy provides a fertile seedbed
for the development of clean technology
Hardware and the wiring of clean technology
Software and the programming of clean
technologyTo set the scene, it is useful to
consider broader debates about the physical and
environmental dimensions of the digital economy
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The Stuff of the Digital Economy
Popular notion that the digital economy is a
post-industrialized, weightless, dematerialized
spaceThe Information Age. Cyberspace. The
images are clean and lean. They offer a vision of
business streamlined by smart machines and
high-speed telecommunications. With this in
mind, communities everywhere have welcomed high
tech under the banner of clean industry and as an
alternative to traditional manufacturing and
traditional exploitation of natural resources.
But the high tech industry is far from clean
(Grossman, 2006 4).
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A Hidden Resource Base
Although an environmentalist doctrine has
developed around the information commons, there
have been relatively few efforts to examine the
resource base that underpins and enables the
digital economysee the article by Zehle (2006)
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Exposing the Dark Side of Silicon
Recent books have sought to expose the material
and environmental impacts of computing,
communications, electronics and other
Silica-based technologies production
consumption disposal
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Production Resource Extraction
e.g. extraction of ores, precious metals, use of
toxic materials, pollution from manufacturing
facilities
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Consumption Energy Use
e.g. widespread use of digital devices, migration
of services online, requiring energy-intensive
data centres
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Disposal Rising Tides of E-Waste
Guiyu, China - one of many locations in the
developing world that now act as sites for the
collection and disposal of electronic waste (e.g.
locals risk their health to extract precious
metals and other valuable parts)
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Health Risks of Technology
Widespread use of toxic materials in computing
and electronics goods Lead (old CRT
displays) Arsenic and Mercury (LCD displays)
Polyvinyl Chloride Brominated Flame
RetardantsPressure for companies to remove
these and other materials by environmental groups
and non-financial ratings agencies
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Environmental Scorecards
Environmental groups such as Greenpeace have
pioneered the development of environmental
scorecards, which rank companies according to
various benchmarks
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The Green Turn in High Tech
A broader green turn is underway in technology
clusters such as Silicon Valley, where
entrepreneurs and investors begin to explore the
commercial opportunities of clean technology
executives migrating from computer and internet
businesses to green ventures venture
capitalists directing increasing flows of finance
to clean technology start-ups
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Recent Clean Tech Ventures
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Regional Advantages
Silicon Valley emerging as a hub for investment
and commercialization in clean technology
culture - a messianic belief in technology
economic - entrepreneurial energy, untraded
flows institutional - presence of University
research labs
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Digital Synergies
The development of clean technology is being
fuelled by skills and technologies linked to both
digital hardware and software hardware
creating energy-efficient micro-processors,
long-life batteries, energy storage software
programming of clean tech devices, managing
complex, large-scale systems (analogous to
networked computers on the internet)
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Creating the Energy Internet
Use of software programming to make energy
networks more efficient saving costs and
demandTransforming the energy grid into a
two-way network, in which energy can be generated
closer to the point of consumption (e.g.
bio-mass, wind, solar)Distributed
micro-generation appealing to investors in
Silicon Valley who are familiar with the idea of
disrupting established networks and businesses
(e.g. through the internet)
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Capturing Sunlight
Solar energy is a key component of the energy
internet but still a relatively new
frontierPlants gather our solar energy for us
and store it as fuel To release that energy, we
burn the plants or plant products The problem
is, weve been burning the heirlooms made from
ancient sunlight, ignoring the fact that
contemporary sunlight was streaming in every
window (Benyus, 1997 61).
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Solar Thermal Power Plants
Growing commercial interest in solar energy
worldwide e.g. solar thermal power plants can be
built quickly, generating large amounts of energy

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Solar Potential
On a sufficient scale, solar thermal power plants
could supply all of our energy needs as a
civilization 10,000 KM2 could produce 500 GW
(enough to supply the entire US each year)
300,000 KM2 (1 of the earths surface) could
produce 15 TW (enough to supply the entire world)
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Lighting up Silicon in the Valley
Solar energy resonates powerfully with the
history and culture of Silicon Valleys computing
industry Solar cells are just another form of
semi-conductor (generating rather than consuming
power)they also draw upon existing
technologies, e.g. those used to make computer
hard drives and thin-film LCD displays
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Nano-Solar Technologies
New nano-scale, printable solar cells can be
built directly into materials, machines and even
buildings to provide a source of energy
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Competition in Clean Technology
Silicon Valley is just one cluster among many
that are exploring clean technologies but its
history and resources will afford it a
significant leadGovernments worldwide are
funnelling subsidies into clean technologies such
as solar and wind e.g. Germany and Japan are the
worlds leading producers of solar cells
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Barriers to Clean Technology
The development and adoption of clean technology
faces a series of barriers the extended time
horizon for investment returns the sunk costs
of established infrastructures reshaping policy
to remove inefficient subsidies changing
consumer behaviour and expectations