A considerable literature has emerged recently on experiences with technologies, practices, and products that increase resource productivity and ecological efficiency, and thereby reduce the volume of resource input per unit of economic output. The ultimate hope is to shed light on ways in which economic growth and social security can be sustained while resource flows decline in developed countries and/or grow more slowly in developing countries. This literature cites macroeconomic trends with relative reductions in the intensity of resource use coupled with slight increases in absolute levels in the developed economies (Adriaanse et al., 1997). It deals with issues that are central to alternative development paths that are also discussed in the SRES (IPCC, 2000a) and Chapter 2. It also notes leapfrogging phases of technological development for developing economies (UNDP, 1998, p. 83). On the micro level, it identifies experiences with cleaner, more economical energy systems, and the potential for information technology to increase resource efficiency. In either case, authors uncover policy options that pertain mainly to support the proliferation of these trends. These options emerge from a broader conception of climate mitigation than has typically been captured in the energy supply and demand technologies represented in existing energy–economic models. Each option has the potential to reduce GHG emissions, but each needs to be carefully evaluated in terms of its impacts on economic, social, and biological systems. Moreover, each of these options needs to be evaluated alongside conventional energy supply and demand alternatives in terms of their impacts. Expanding the analysis of the set of available options in this way should make us better off, as some of the new options will be attractive upon further analysis, although others will not.

1.4.2.1 Eco-intelligent Production Systems

Many authors argue that progress in developed countries has been driven largely by the technologically based substitution of natural resources for labour. As a result, labour productivity has generally grown faster than resource productivity. Against the background of environmental scarcities, though, this pattern has and will continue to change so that innovation may increasingly be shifted away from labour-saving advances towards resource-saving technologies.

Possibilities include:

• Eco-efficient innovation, that is making products in ways that minimize resource content, utilize biodegradable materials, extend durability, and save inputs during use (Stahel, 1994; Fussler, 1996; Weaver et al., 2000).
• Industrial ecology, that is moving from the nineteenth century concept of a linear throughput growth–in which materials flow through the economy as if through a straight pipe–to a closed loop economy in which industrial materials are fed back into the production cycle (Graedel et al., 1995; LTI-Research Group, 1998; Pauli, 1998).
• Products to services, that is shifting the entrepreneurial focus from the sale of hardware to the direct sale of the services through leasing or renting to facilitate the full utilization of hardware, including maintenance and recycling (Deutscher Bundestag, 1995; Hennicke and Seifried, 1996; Hawken et al., 1999). ²⁵
• Eco-efficient consumption, that is changing patterns of consumption (using new technologies) to achieve greater efficiency and to reduce waste and pollution (OECD, 1998) in sectors such as transport, food, and housing. Dematerializing consumption may go hand-in-hand with a shift from resource-intensive goods to service-intensive and knowledge-intensive goods (UNDP, 1998, p. 91).

1.4.2.2 Resource-light Infrastructures

In a complementary strand of literature attention has focused on the greater scope for a transition in developing countries by decoupling investment from resource depletion and the destruction of ecological processes. More specifically, since the physical infrastructure in developing countries is still being designed and installed, they have a better opportunity to avoid the resource-intensive trajectories of infrastructural evolution adopted by developed countries (Shukla et al., 1998, p. 53; Goldemberg, 1998a). Specific examples cited in this context are efficient rail systems, decentralized energy production, public transport, grey-water sewage systems, surface irrigation systems, regionalized food systems, and dense urban settlement clusters. These can set a country on the road towards cleaner, less costly, more equitable, and less emission-intensive development patterns. The costs of such a transition are probably higher in places where considerable capital investments in infrastructures have already been made and where turnover is rather slow. For this reason, the timing of such choices is vital, as decisions about systemic technological solutions tend to lock economies onto a path with a specific resource and emission intensity.

In the context of climate policies, innovations in energy systems are of particular importance. Possible strategies advanced in the literature include a shift from expanding conventional energy supply towards emphasizing energy services through a combination of end-use efficiency, increased use of renewables, and new-generation fossil-fuel technologies (Reddy et al., 1997, p. 131). Developing countries that take advantage of these sorts of innovations could follow a path that leads directly to less energy-intensive development patterns in the long run and thereby avoid large increases in energy and/or GDP intensities in the short and medium term.

In many places, renewable energy technologies seem to offer some of the best prospects for providing needed energy services while addressing the multiple challenges of sustainable development, including air pollution, mining, transport, and energy security. For instance, 76% of Africa’s population relies on wood for its basic fuel needs; but research and policy design targetted to improve sustainability has been largely absent. Solar energy has a significant potential in sahelian Africa, but slow technological progress, high unit costs, and the absence of technology transfer have retarded its installation. The Brazilian ethanol programme to provide automotive fuel from renewable resources (see Box 1.4) is another example. Throughout the developing world the exploitation of hydro potential also remains constrained because of high capital requirements and environmental and social concerns generated by inappropriate dam building.

1.4.2.3 “Appropriate” Technologies

Development of so-called appropriate technologies could lead to environmental protection and economic security in developing countries. The label “appropriate technologies” is used because they build upon the indigenous knowledge and capabilities of local communities; produce locally needed materials, use natural resources in a sustainable fashion, and help to regenerate the natural resource base. They may enable developing countries to keep an acceptable environmental quality within a controlled cost (Hou, 1988). Low-cost, but resource-efficient technologies are of particular importance for the rural and urban poor (see Box 1.5). There is a latent demand for low-cost housing, small hydropower units, low-input organic agriculture, local non-grid power stations, and biomass-based small industries. Sustainable agriculture can benefit both the environment and food production. Biomass-based energy plants could produce electricity from local waste materials in an efficient, low-cost, and carbon-free manner. Each of these options needs to be evaluated alongside conventional energy supply and demand alternatives (see Chapter 3) in terms of the impacts and contribution to sustainable development. Expanding the analysis of the set of available options in this way should make us better off, as some of the new options will be attractive upon further analysis, although others will not.

It is important, in light of these examples, to realize that the results of greater resource efficiency differ according to the performance level of the technology under consideration. Technologies devised for high eco-efficiency and intermediate performance levels consume, for example, lower absolute amounts of resources than comparable technologies designed for high eco-efficiency and high performance levels. By design, performance levels can vary in such dimensions as level of power, speed, availability of service, yield, and labour intensity. Indeed, intermediate performance levels are often desirable because of their higher employment impact, lower investment costs, local adaptability, and potential for decentralization. For this reason, technologies that combine high eco-efficiency with appropriate performance levels hold an enormous potential for improving people’s living conditions while containing the use of natural resources and GHG emissions.

1.4.2.4 Full Cost Pricing

Changing macroeconomic frameworks is often considered indispensable, in both developed and developing countries (Stavins and Whitehead, 1997), to bringing economic rationality progressively in line with ecological rationality. Economic restructuring and energy-pricing reforms both compliment and are a prerequisite for the success of many environmental policies (Bates et al., 1994; TERI, 1995). As long as natural resources, including energy, are undervalued relative to labour, the tendency should be to substitute the cheaper factor for the more expensive one. Giving a boost to efficiency markets requires, first of all, the elimination of environmentally counterproductive subsidies (at least over the medium-to-long term), as on fossil fuels, motorized transport, or pesticides, as much as concessions for logging and water extraction (Roodman, 1996; Larraìn et al., 1999). Reform of environmentally destructive incentives would remove a major source of price distortions. Finally, shifting the tax base gradually from labour to natural resources in a revenue-neutral manner could begin to rectify the imbalance in market prices (European Environment Agency, 1996; Hammond et al., 1997). A more extensive discussion of eco-taxation, reporting a wide-ranging debate, is given in Chapter 6 of this report.

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