Time - Man of the Year/Time_Man_of_the_Year_Compact_Publishing_3YX-Disc-1_Compact_Publishing_1993.iso/moy/060192/06019936.000

Text File | 1992-09-10 | 10KB | 192 lines

                                                                                COVER STORIES, Page 62

RIO: SUMMIT TO SAVE THE EARTH

The Big Green Payoff


Who says what's good for the environment is bad for the economy?
From electric cars to solar cells, products that protect the
planet will earn hefty profits in the future.

By MICHAEL D. LEMONICK -- Reported by Helen Gibson/London, Rhea
Schoenthal/Bonn and Dick Thompson/Washington


    At the Frankfurt Auto Show last fall, BMW unveiled its
vision of the future of driving. Called the E1, it is a
four-seat car with a top speed of 120 km/h (75 m.p.h.) and a
range of up to 250 km (155 miles). Not so swift, you say? But
this car is a clean machine: it gives off no pollution that
could foul the air in any way. The E1 runs on an electric motor
powered by high-energy sodium-sulfur batteries. Although it
takes electricity to charge the batteries, the power plants can
be far from smoggy cities.

    BMW is not alone. Just about all the world's major
automakers, from Citroen to Chrysler, are revving up to produce
electric cars. They realize that in the 21st century, consumers
will increasingly favor -- and governments will mandate --
technology that preserves and protects the environment. The
fortunes of companies and nations will rise and fall on how well
they heed the call to save the planet.

    The global market for environmentally friendly products is
worth an estimated $200 billion a year, and has just begun to
take off. Every potential innovation, whether a new kind of
windmill or biodegradable plastic made from plants, is
attracting attention from companies in a host of industrial
nations. The U.S.'s Du Pont is in a race with Germany's Hoechst
and Britain's ICI, among others, to develop replacement
chemicals for ozone-destroying chlorofluorocarbons (CFCs).
Germany's Siemens is vying with such firms as Amoco in the U.S.
and Sanyo in Japan to produce cheap, efficient solar electric
cells.

    Who wins the races to perfect and sell green technologies
will depend to a great extent on who has the edge in
engineering and marketing skills. But equally important may be
the encouragement companies get from their countries' political
leaders. Governments can exert enormous influence over how
aggressively businesses take the environment into account, using
sticks and carrots -- sticks in the form of tough standards for
products and manufacturing processes, carrots consisting of tax
breaks and other incentives that reward innovation.

    The U.S. government has, for the most part, done a poor
job of spurring business to come up with breakthroughs. In the
past, federal agencies issued environmental compliance goals,
like standards for the amount of pollutants coming out of
smokestacks, and then mandated the acceptable methods for
achieving the targets. There was no incentive to do better than
the standards or to develop innovative tools for meeting the
goals -- tools that U.S. companies might market around the
world.

    The Clean Air Act of 1990 tries to change the old way of
doing things; it allows companies to meet pollution goals by
whatever means they can. With regard to emissions of noxious
sulfur dioxide, the new law sets up a clever system in which
companies and utilities will be issued permits to produce
certain amounts of the gas. If a company finds ways to produce
less SO2 than it is allowed to, it can make money by selling
unused pollution permits to other firms. "This is the frontier
of environmental policy," says Robert Stavins, an economist at
Harvard's Kennedy School of Government. "It allows a firm to go
out and choose the best technology it can. And it also provides
an incentive to cut pollution below government requirements."

    Meanwhile, the U.S. is stepping up support for research
into energy conservation and renewable power sources. Funding
in these areas has risen from $324 million in 1989 to $540
million this year. But the President and Congress have not shown
much interest in politically tough measures such as sharply
higher gasoline taxes or more stringent auto-fuel-economy
standards, both of which would force Detroit to design more
efficient cars.

    In Japan furious competition among companies is the main
force behind innovation, but government policies, in the form
of strict antipollution laws and encouragement of technological
research, are a big help. One of the government's latest
initiatives is the New Earth 21 project, which is aimed at
meeting the threat of global warming. As envisioned by the
Ministry of International Trade and Industry, it will promote
two activities: the development of technologies designed to
reduce production of carbon dioxide and other greenhouse gases,
and the sharing of those methods with developing countries. miti
is financing an ambitious effort to generate clean-burning
hydrogen, which would not contribute to global warming, by using
genetically engineered bacteria. There are also tax breaks and
low-interest loans available for environmentally sound
industrial projects, and local governments can get tax relief
when they purchase electric- rather than gasoline-powered
vehicles.

    European nations are also moving to coax, and if necessary
force, their industries to see the potential profits in
environmental responsibility. In France the best example of a
marketable, earth-saving technology is the TGV, a 300-km/h
(186-m.p.h.) train that has won passengers away from polluting
planes on the Paris-Lyons run and other routes. The train, whose
operations are subsidized by the government, is now being
considered for several routes in the U.S. -- a profitable
triumph for French industry. In addition, the government is
laying plans for a waste tax that will finance advanced
waste-treatment plants, which could lead to an entire export
industry.

    In Britain, where the total market for environmental
products has been estimated at $50 billion a year by 1995, the
government has set up a $20 million fund to support innovations
in recycling, environmental monitoring and reduction of waste
and pollution from manufacturing processes. It is giving farmers
grants of up to 50% of the cost of building new slurry and
silage storage facilities to cope with fertilizer-heavy farm
waste.

    Britain's National Rivers Authority has been especially
active. Its interest persuaded the electronics industry to come
up with a briefcase-size monitor that can be used on a riverbank
to measure the amount of dissolved oxygen and ammonia in the
water, along with its acidity and turbidity. The authority also
spurred the development of a remote-sensing water monitor, as
well as an experimental technique that injects iron into stream
beds to neutralize polluting phosphates. All three inventions
are considered good export prospects.

    Perhaps the greenest of nations is Germany, where commercial
banks will grant low-interest loans for pro-environment projects
and hotels urge guests to forgo daily towel changes to save
water and energy. Environment Minister Klaus Topfer has ordered
the phaseout of cfcs by next year -- two years earlier than most
other countries -- and called for a 25% to 30% reduction in
carbon dioxide emissions by 2010. The government is investing
heavily, having spent $90 million since 1974 on development of
recyclable, high-efficiency batteries for electric cars and
planning annual outlays of $182 million on solar-wind- and wave-
energy research. Last year a government-supported, high-speed
train called ice started whizzing between Hamburg and Munich.

    There is action as well at the level of the European
Community as a whole. Last January, E.C. environment
commissioner Carlo Ripa di Meana got initial approval for a tax
to be levied on fuels that give off carbon dioxide. He figures
this will eventually push the price of natural gas up about 30%
and coal 60%, increases that will spur businesses and consumers
to conserve energy. The E.C. has been helping finance
development of clean technologies, such as 100%-recyclable cars
and low-polluting power generators, since 1987.

    Many companies recognized long ago, without any nudge from
governments, that respect for the environment can boost profits.
In the U.S., 3M has drastically reduced pollution and waste at
its manufacturing plants and, despite the conventional wisdom
that says environmentalism is a luxury, has steadily increased
its profits. Once industrialists think about it at all
seriously, they almost inevitably see the financial advantages
of investments in environmental technology, says Hugh Faulkner,
executive director of the Business Council for Sustainable
Development. The council was set up to advise the Earth Summit
about industry's views on environmental issues. After a year's
work, executives from such firms as Chevron, Mitsubishi, Royal
Dutch/Shell and Volkswagen agreed on a set of business
principles, including the need for sustainable management of
resources, the charging of environmental costs against
corporate profits, and the rule that polluters, not the public,
must pay for cleanup.

    Yet even with greater industrial environmental
consciousness, says Faulkner, "there could clearly be no
prospect for sustainable development in either the developed or
the developing world without government incentives." The nations
that wield those carrots and sticks most skillfully will be the
leaders of the new green revolution, and their industries will
eventually be the ones to profit from it.