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Developing Economical Green Technology

March 12, 2013 By Salman Mitha, Fellow

The second in a two-part series. Read part one.

Despite sustainability bashers’ efforts, electric cars, LED lights and wind-power are becoming more widely available and accepted in the marketplace. However, barriers for wide scale distribution of other green technology remain.

To have a tangible impact on global carbon emission, green technologies have to be deployed on very large scales. While regulatory drivers are important they are dependent on the availability of cost effective green technology. As these technologies become cheaper, it becomes easier to build the political consensus needed to drive broader regulatory change.

Unfortunately, the for-profit marketplace has not been effective in rapidly reducing green technologies’ cost. But pure profit makers aren’t the marketplace’s only source of goods and services. Altruism and passion are also huge drivers in the overall economy. Take art, which is driven by the passion of the artist and the connoisseurs. But artists and social workers are not the only types of people with passion and altruism. Surprisingly the computer industry rapidly expanded in the early days due the passion and altruism of software engineers.

Since the early days of the computer industry, technophiles have constantly improved technology for the sake of improving technology. Individuals would and still do write software and put in the public domain for everyone to use. It is called open source software because the source code, the inner workings of the software, is open and available for anyone to modify or use for free. Enthusiasts quickly embraced open source software and it helped the early spread of computer technology. Open source software is also the foundation of many very profitable commercial products.

Companies like Apple and Google have used open source software in their core products, especially during lean times. Both companies were able to reduce both R&D costs and risk by using community verified open source software. For the industry as a whole, open source software acted as an investment multiplier that attracted investors and entrepreneurs. The industry prospered and grew as a whole while consumers got cheaper technology.

The green technology industry is in need of an “open-source” movement. Any system or process that can reduce the cost of green technology has the potential to initiate the green economy. Open source green projects will attract greater support than they did in the computer industry because many people view climate change as an existential threat for our children. However green technology development requires a much broader suite of skills than those required for computer technology, one of reasons an open source green movement has not already arisen. A successful open source green movement requires institutional support to gather critical mass of passion and skills and get started.

The Opportunity

Climate change represents both a threat and an opportunity. The threat is straightforward; if we don’t act on climate change our children will suffer. The great opportunity in addressing climate change is often misunderstood even by supporters. Any action on climate change prevention is usually regarded just as a cost. But climate change prevention can become a great opportunity for creating wealth.

Thinking of climate change prevention as a cost is the result of misunderstanding how national economies develop. The long-term wealth of a nation does not come from merely reducing costs and exploiting natural resources. The tangible wealth of any nation is based on the cycle of economic activity. As the economic activity increases the national wealth will go up. For example resource poor nations like Japan became very wealthy by generating economic activity based on knowledge and then imported all the necessary resources. Economies based on resource exploitation do generate some wealth but never produce the scale of wealth of knowledge economies.

Typically resource based economies only grow when knowledge economies create demand for their resource. And therefore these resource economies also become politically subservient to the much greater wealth of the knowledge economies. It is entirely possible to kill or reduce a market for a natural resource and replace it with a knowledge and technology industry while becoming wealthier in the process. When done correctly the green economy has the potential to generate vast amounts of wealth. And Minnesota with its educated workforce, technology economy and research universities is well positioned to take a leadership role in the green economy.

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