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State of the World 2008: Innovations for a Sustainable Economy

Entrepreneurs, non-profit groups and governments around the globe are busy inventing what experts call the world's first sustainable economy. These "green" business ventures, driven by growing concerns about the environment, are the focus of this year's State of the World report [1/09/08] by the Washington-based World Watch Institute

Economies of every scale are threatened by environmental problems and that's why, says Worldwatch president Christopher Flavin, business leaders at every level, from government ministries to private enterprise, must adapt in fundamental ways. "At the local level," he says, "the collapse of a local fishery or the fact that water is simply not available can be undermining to an economy."

Flavin says the same forces are at play as the global economy reaches a scale in which it begins to "harm some of the very natural resource systems on which it ultimately depends."

The Worldwatch report finds that the same environmental problems that put an economy at risk have also been the impetus for new business ventures.

For example, an estimated $52 billion was invested in renewable energy technologies in 2006, up 33 percent from the previous year. Preliminary data shows those numbers jumped to $66 billion in 2007.

Carbon trading in 2006 (some $30 billion worth) was nearly triple the amount traded the year before.

Flavin says the most significant investments have been made by small start-up companies that have been willing to take risks on a wide range of environmentally-friendly or "clean" technologies. He notes these small venture firms invested $8.6 billion in clean technology in 2006, up 69 percent in a single year, now the third largest sector of venture capital investment, having even passed the semi-conductor [electronics] sector, now only trailing the Internet and biotechnology [in investments]"

The report also notes a major change in business attitudes. In corporate America last year more than two-dozen of the nation's largest companies — and some of its largest polluters — called on the U.S. Congress to regulate climate-changing emissions. Flavin says this move is helping to shape public policy. "You now have a segment of business joining very strongly and forcefully with the non-governmental organizations and other advocates of change to create the kind of political coalition that can make things happen."

The Worldwatch president believes that the only way we can avoid a global economic collapse is for governments and businesses to steer investment away from destructive enterprises like oil, gas and coal extraction toward a new generation of sustainable industries.

The Worldwatch report describes, for example, how Germany and Japan over the past decade have adopted policies that promote development of solar energy, the fastest growing sector in the clean energy market. Germany and Japan now dominate the $10-billion per-year industry, which Flavin notes, is growing worldwide. "It is affecting the (electronics) industries of Silicon Valley [in California]. There are (many) new solar startups that are getting into this area and, interestingly, it has spurred a huge takeoff in solar energy development in China."

Yet, China is set to overtake the United States as the world's largest polluter, contributing more than 25 percent of global climate-changing greenhouse gases. On the one hand, China is aggressively pursuing renewable energy, while on the other it has plans for more than 500 new coal-fired power plants.

Flavin questions whether China can make the transition quickly enough to offset its massive building program. "I think that there is a chance of that, but I think there is going to have to be a lot more policy development in China, and frankly a lot more support for China's efforts on behalf of the United States and Europe."

Flavin says that shifting to an economy based on ecological or sustainable practices will require change on many levels. But he adds this new way of doing business is allowing the nations of the world to meet the needs of the planet as they grow their economies.