Friday, February 20, 2015

Climate change and manufacturing

Or, when you’re in a hole … stop digging 

The subtitle to this posting, the so-called “first law of holes,” is attributed to various sources (earliest going back to 1911 in the Washington Post) and is usually interpreted as “if you find yourself in an untenable position, you should stop and change, rather than carry on exacerbating it.” (from Wikipedia)

China became the world’s biggest greenhouse gas emitter in 2006 overtaking the US due primarily to electricity generation and industrial processes. However the per capita carbon footprint of a Chinese person is still much lower than the average US person. This is not good. Increasing industrialization and the slippery slope to more consumption.

So, what’s the hole and how do we stop digging?!

Michael Oppenheimer, a Princeton University climate scientist, recently commented on a public radio talk program broadcast on KQED in the San Francisco Bay Area (Michael Krasny’s  Forum program) about the recent release at the end of last year by the United Nations of one of its bluntest and bleakest reports to date on the dangers of global warming. The UN study, prepared by he Intergovernmental Panel on Climate Change (IPCC) warns that the world must cut nearly all greenhouse gas emissions by 2100 in order to head off the worst effects of climate change. U.N. Secretary General Ban Ki-moon urged world leaders to act, saying that “the science is unambiguous”.

The IPCC study now argues that humans are affecting the climate with 95% certainty (this is the same degree of certainty with which the medical community links smoking to lung cancer … there is always a possibility that it is not the case but the preponderance of evidence indicates there is a cause-effect relationship).

By way of background, the aims of the IPCC are to assess scientific information relevant to:

    1    Human-induced climate change,
    2    The impacts of human-induced climate change,
    3    Options for adaptation and mitigation.

One of the first items in the IPCC “Summary for Policymakers” is the following clear and concise statement:

“Human influence on the climate system is clear, and recent anthropogenic emissions of greenhouse gases are the highest in history. Recent climate changes have had widespread impacts on human and natural systems.” 

This view (and statements like the one above) has come under fire … specially in the US … where for some odd reason there is a movement against education, logical scientific thought and reason, in favor of the opinions that might be politely characterized as “less informed.” It’s not clear why that is. Everyone has a right to their own opinion, of course, but consideration should be given to facts and reality in coming to it, or one would think.  Maybe the truth is hard to face, harder to accept and plan for and harder still to accept that there are others that may know more about a subject than we do. Education used to help with this. But, many of the same anti-science (or at least anti-this science) folks also are not big supporters of education. So it goes. 

Two things it would be good to remind ourselves of … 1) there is value in scientific expertise, properly and transparently carried out and 2) humans will always want to improve their status/affluence.

People say manufacturing productivity will save the day but labor productivity misses the point. We really need to think in terms of resource productivity. You may recall that we had this discussion in a posting in July 2013 as part of a discussion about the effective utilization of resources and how resource productivity, rather than labor productivity, might play into the argument ( This discussion included again a reference to the IPAT equation (and the attention given to the “T” part - impact per unit of GDP or the so-called technology term) and need to increase by factor of 10 this “productivity” to offset the growth of population and affluence.

How so?

Take a look at how affluence (and the pursuit of it) as measured by GDP/capita impacts energy demand/capita. The figure below, from McKinsey Global Institute’s (MGI) report in 2013 on Resource Revolution: Tracking global commodity markets shows the link between

the consumption of energy and the growth in standard of living (as represented by GDP/capita). As countries become more affluent their energy use grows. This is due to a couple of contributing elements - for example, acquisition and use of more and more products that use energy and other resources (think refrigerators, automobiles, televisions, plumbing, etc.), transition from agricultural based economies to industrially based economies and the generation of electricity to power all of this.

And, as it turns out, with the increasing levels of green house gases in the atmosphere from all this unbridled development the atmosphere gets warmer, polar ice starts melting and weather becomes more extreme. And for the unfortunate individuals living in low areas along major bodies of water (think Bangladesh) land is flooded and agricultural activities either are moved elsewhere or, more likely, abandoned. So, another driver then is the increased urgency of industrializing these economies to reduce the dependence on flood or weather challenged agricultural production - further aggravating the problem

That’s digging the hole faster.

How do we stop digging or, at least, slow down the rate of digging until we can stop?  One solution lies in the slope and amplitude of the above curve (meaning how fast it is rising and to what level does it eventually get?). We can see from the above figure that the US is already there, and higher, than any of our competitors. But others, developing (or emerging countries) are determined to climb the affluence path. And we cannot really stop them. 

But, is there any reason that the link between a certain level of affluence (as represented by GDP/capita) and the energy consumption to get to that level is fixed?  It is if we think in the same way of resourcing, making, distributing and disposing of products. If every country that is working to increase the affluence of its inhabitants follows the lead of those that have gone before we are stuck (still in the hole).

But why should they? The real question is how do we serve this inherent need but more effectively and not at the expense of the world - how do we stop digging?

If we can find a way to resource, make, distribute and, instead of disposing of products, extend, rebuild or re-use products wouldn’t that be better? And, if we can do this while maintaining (or increasing) the value of the product in the eyes of the market or the consumer wouldn’t that be one way to address the “T” in the IPAT? Meaning, driving the impact per unit of value (or GDP) lower.

From the manufacturing side, the things that can be adjusted to accomplish this include using cleaner (or renewable) sources of energy (same product value but at lower energy, hence, greenhouse gas, creation), using better manufacturing technology (same or better product value but at lower energy cost of production) to convert our materials into products, and better materials (reduced impact from extraction and processing of materials, less material, recovery of materials, etc.)

But there’s more! How can we implement these novel manufacturing impact reducing ideas not just in the countries that are already way up the curve (or “developed”) but those that are climbing? We should be able to implement production technology in emerging economies as well so they don’t have to create all the challenges we have first. This will be the topic of a future posting since, obviously, the technology must match the situation.

Wouldn’t this be better than just betting on productivity, traditionally measured, to save the day? Isn’t betting on productivity sort of like saying the solution is digging faster?

In fact, our friends at McKinsey are already worried about this. In a recent, January 2015 MGI report they ask the question with respect to global growth - can productivity save the day in an aging world? The manufacturing strategies mentioned above to reduce impact per unit of GDP will not work for service industries - a large part of the McKinsey study and many economies - but a more enlightened view of productivity, meaning resource productivity, will help drive these technologies for both emerging and developed economies alike.

So, not only will we stop digging … we’ll throw away the shovel!


  1. glad to find this interesting website .

  2. Dear Sir,

    It is indeed a nice post. As always, I get an opportunity to look at the manufacturing from a new perspective.

    Thank you for sharing the info. Looking forward to seeing more of your posts.

    Mahesh Teli


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