" "THE TIME ISRIGHT FOR G8GOVERNMENTS TOGRASP THE GREENOPPORTUNITY TO SUPPORT INNOVATION ANDUNLEASH HUGE PRIVATE INVESTMENT OPPORTUNITIESTHE NEW ECONOMY013energy industrial revolution presents. However,innovators and investors seek credible governmentpolicies, at the national and international levels, inorder to ensure that this revolution is efficient, rapidand on a sufficient scale to make substantial profits. The further good news is that green technologicaldevelopment has continued apace over the last twoyears, with growing recognition of the potential of thisnew energy-industrial revolution. Across all keyeconomic sectors - agriculture, building, transport,new materials, renewables, or smart grid - innovationis advancing and new competitive technologies arebeing developed. Not all will work, but there are somany exciting innovations underway that we can beconfident that many will. The time is right for G8 governments to grasp the greenopportunity to support innovation and unleash hugeprivate investment opportunities. If instead countriesfail to act, they risk locking themselves into a high-carbon infrastructure, falling behind technologically,unnecessarily delaying economic recovery and beingshut out of markets a decade or two from now. nABOUT THE AUTHORSNicholas Stern is I.G. Patel Professor of Economicsand Government and Chair of the Grantham ResearchInstitute on Climate Change and the Environment atLondon School of Economics and Political Science.Dimitri Zenghelis is a Senior Visiting Fellow at theGrantham Research Institute on Climate Change and the Environment at London School of Economicsand Political Science and a Senior Economic Advisorto Cisco.invest in change is when economic activity is slow andthe competition for natural and human resources isreduced. There is currently very little fear of "crowdingout" alternative investment, or displacing jobs. Thechallenge is to launch a new industrial revolution inenergy: putting the science and the economicstogether tells us that we must start it now.The good news is that many emerging-marketeconomies such as South Korea and China haveunderstood the logic of this approach. China has moveddecisively to embrace low-carbon growth, notably in itsstimulus package of 2008-2009 but also, and moreimportantly, in its outline for the 12th five-year plan. This plan sets strong targets. China and other countriesthat recognise the way forward will lead the "greenrace," one that has already begun. Those thatdeliberately opt out may find they miss out on thefastest growing markets and have their exports taxed as"dirty" a decade or so from now. History shows thatinvestment flows to the pioneers of the revolutions. Even in the developed world, we are likely to seeEurope press ahead with action to reduce emissionsand with the possibility of raising targets for emissionsreductions between 1990 and 2020 from 20 to 30 percent. And it should not be forgotten that many states,cities, and firms in the United States are applyingambitious climate policies. California, for example, hasdeveloped a successful cluster of "clean invention,"and in November 2010 an attempt (Proposition 23) toundermine climate legislation was defeated and aclimate-aware governor, Jerry Brown, was elected. Many businesses see the opportunities that will bepresented by the transition to the low-carbon economy,and are recognising the opportunities the comingAbove: Dimitri ZenghelisLeft: Nicholas Stern

oday, as we tackle the challenges ofdwindling global resources (energy, rawmaterials, water and food), sustainabilityand climate change, the direction weneed to go is crystal clear, but the momentum is just too weak. We are simply not getting to the solutionsquickly enough. When it comes to the mind-set needed to build a low-carbon economy, society can be divided into threebroad categories. First there are the "eco-innovators"who actively seek action, but who are in a minority. Atthe other end of the spectrum are what we call the"eco-laggards," who do not recognise, or even refute,the need for action; this group is also in a minority. Andthird, in the middle, we have the vast majority ofsociety: people who are to some extent "eco-conscious" and agree that action is needed, but whomay need a helping hand to commit their support. Ourtask, then, is to win the hearts and minds of this "eco-majority" and power-up the momentum for change. In creating momentum for change, it is imperative tounderstand the core of the issue at hand. Over the pastdecades, we have created a society that is optimisedtowards lowest initial cost. Our behaviour has becomeprice-tag focused; most of our decision-makingprocesses (e.g. public tendering) as well as the way we(e.g. consumers, media, politicians, businesses) makeour judgments are based primarily on obtaining thelowest initial cost and receiving the fastest instantgratification. This "lowest initial cost" mentalitymeans we are consistently pushing the operational,economic and ecological bill into the future. But wealready know that the next generation will not be ableto pay this bill, let alone ourselves today. In fact, we arethe only species in nature that still lives in afundamentally linear society (with GDP as the keyindicator) that extracts, consumes and emits resources(energy, water, materials, food), and actually still insome places considers the amount of waste weproduce as a sign of prosperity. So we need to movefrom a linear to a circular society (with Quality of Lifeas the key indicator) where an effective use and re-useof resources - starting with energy - creates acompetitive economy centered on the health andwellbeing of our citizens. Our second challenge in winning the hearts and mindsof the eco-conscious majority is to shift emphasis tothe social benefits of sustainability programmes andactivities. We all know the economic arguments aboutenergy-efficient products and processes. Lighting, forexample, represents 19 per cent of global electricityconsumption. Significant savings are possible - onaverage 40 per cent - by switching to energy-efficientlighting solutions. In fact if this "switch" is completedbefore 2020, on a global level these savings canamount to ?128 billion in reduced electricity cost,670 million tonnes of CO2, or the equivalent of 642power plants - in itself representing a ?300 billionsavings in reduced need for power infrastructure. Yetthese arguments alone have not propelled sustainedaction. We must now focus on the social benefits of sustainability drivers, rather than the driversthemselves, to ensure emotional resonance and secure commitment. Our third challenge is to develop and apply a new, moreemotionally appealing lexicon that highlights thebenefits of making positive resource-efficiency choices.How many ordinary people would be inclined to sendtheir children to a "low-carbon school?" It sounds quiteoff-putting. Or a "green" school - it sounds better, butcould carry a political connotation for many parents. AtPhilips, we call schools with energy-efficient systemsTOWARDS A "CIRCULAR"SOCIETY: BUILDING AN ECO-MAJORITY FOR CHANGE014THE NEW ECONOMYHARRY VERHAAR, SENIOR DIRECTOR ENERGY AND CLIMATE CHANGE, PHILIPST