Policy incentives for a cleaner supply chain: the case of green chemistry.

• Author: Matus, Kira J.M.

There is a great deal of interest in the development and deployment of green technologies and the actions required on the part of industry, academia, governments and civil society to drive them forward. This paper uses the case of green technology in the global chemical sector to better elucidate the challenges of implementation of innovations for sustainable development, to analyze which approaches have been effective, and to provide generalizable knowledge about the types of strategies required to move these technologies from niche applications into widespread use. For green chemistry, and innovations for sustainable development more generally, there is a need for greater public intervention, including regulatory regimes that are strictly enforced, investment in basic research and education to build human capacity, more outreach programs in collaboration with industry to aid with technology transfer and implementation, and economic incentives for firms that may have the desire but not the financial capacity to make use of these innovations. Voluntary collaborations and the influence of major supply chain actors, on their own, are not powerful enough to catalyze the increases in scale that are needed for a real transition to sustainability.

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The past century has been an era of technological miracles. Advances in transportation, communications, agriculture and health have drastically improved the quality of life for billions of people around the globe. Malthusian predictions of exploding populations pushing the earth's resources to their limit have yet to materialize, thanks in part to the genius and dedication of generations of scientists, engineers, industrialists, entrepreneurs and public servants. (1) Still, many believe the planet is in a more precarious position today than ever before; population growth, while slowing, continues to put pressure on resources. (2) Increased standards of living compound these stressors as industrial activity intensifies to meet the growing demand for goods and services. Many technologies are a so-called double-edged sword, contributing to an overall improvement in quality of life while simultaneously degrading public health, deteriorating the environment and threatening the sustainability of resources. (3)

One of the foremost technological challenges confronting the world today is the ability to sustain improvements in quality of life without permanently compromising the human and natural systems on which we rely. This is the underlying goal of sustainable development. (4) The transition to a more sustainable trajectory is complex and requires a variety of responses, but one critical element of a more sustainable future is that we continue to harness the power of innovation. While technological innovation is a source of many of the environmental challenges that we now face, it is an integral part of development. Technological advancement has not been without cost, but its benefits are undeniable. For example, it is unimaginable to envision returning to an era before modern medicine or high-yield agriculture. A return to pre-industrial society is, quite simply, no longer an option.

This means that our future technological trajectory has to not only increase benefits, but also reduce costs. In other words, we need innovation for sustainable development. Such innovations improve the quality of life through efficiency and performance improvements, while at the same time reducing negative impacts on humans and the environment. These innovations are more than just abatement technologies, like sulfur dioxide scrubbers or effluent treatment systems; environmental performance is inherent in their design via a systemic, life cycle approach to development, adoption and diffusion.

Overall, innovations for sustainable development require complex analysis, interdisciplinary thinking and greater engagement with the underlying social, political and natural systems in which they occur. (5) One reason is that technological innovations are a global public good. A challenge of global public goods is that there is a mismatch between those who pay the bulk of development costs and those who reap the benefits. The costs are usually incurred locally and privately, but the benefits may be felt globally. Another reason is that innovations themselves can be complex and uncertain, as innovators take into account a whole set of technical, political and social considerations. For new technologies, net costs and benefits are usually unclear. There are questions about the risks of unintended impacts on people, the environment and even other products in the market. Complex situations can arise where a social benefit might generate an increased economic cost, or where one environmental improvement requires environmental costs in another area, such as decreases in emissions requiring increases in energy use. Decisionmakers are often faced with difficult trade-offs.

There are many areas in which innovations for sustainable development have begun to emerge. In recent years, for instance, there has been a great deal of investment in energy technology. (6) Important innovations have also occurred in transportation, materials, water purification and water use. (7) These advances have all been important, but they have taken place, for the most part, in isolation. Taking the global production-consumption system into consideration, this approach is a potentially haphazard way of evaluating and implementing changes in areas where large and broad impacts are sought. For finished products, a major challenge is the complexity of manufacturing supply chains. For instance, while electric or hybrid vehicles may reduce the energy required for transportation, the vehicles themselves are still very intensive in terms of the resources required to produce them. This highlights the need to think about innovations for sustainable development throughout the entire life cycle of products.

There are many innovations that have the potential to generate important positive impacts. This article will explore one particular set of innovations for sustainable development in the chemical sector. These innovations, known as green chemistry, are important not just for improvements from the perspective of sustainability, but also because they are integral pieces of the supply chains that produce some of the most products necessary for our day-to-day lives. Green technologies in the chemical sector have an impact on a range of areas from building materials, textiles and fuels to plastics, personal care products and cleaners. In other words, chemicals are at the heart of many of the products needed to improve the quality of life of people around the world in the face of increasingly constrained resources.

Green chemistry also gives a model for how rapidly developing countries, such as China and India, can follow a sustainable trajectory of growth. It provides a pathway for the continued expansion of industry and economic growth, and the ability to provide key goods and services without permanently damaging the environment or depleting natural resources. Ideally, green chemistry and similar technologies have the potential to help reduce the tension that exists between the need for economic growth and the recognition that such growth often comes at the expense of the environment, health and the provision of basic necessities, such as clean air or drinkable water.

This paper will describe green chemistry in more depth, including some of the barriers to its implementation in the United States and China. It will then describe policy approaches that have been used to tackle these challenges. Finally, the paper will draw lessons about what strategies will be required in the future to increase the impact of green chemistry and other innovations for sustainable development.

GREEN CHEMISTRY: SUSTAINABILITY THROUGH THE SUPPLY CHAIN

One sector in which the life cycle concept is being taken very seriously is chemicals. Chemical production is a major industry not just in economic terms, but also in terms of reach. In the United States, it is estimated that nearly 96 percent of the economy is impacted by the chemical sector in some fashion. (8) From basic petrochemicals all the way through to pharmaceuticals, chemicals play a vital role in manufacturing key goods. They play a role in energy generation (biofuels and petroleum are both parts of the chemical industry), agriculture, transportation, clothing, building materials, furnishings, consumer health and hygiene products, paper goods, electronics, plastics--the list is nearly endless. Chemicals are a global industry with complex supply chains that stretch across borders. A large portion of new capital investment in the chemical industry is occurring in developing countries. (9) Despite being, in some ways, an established and entrenched industrial sector, the chemical industry also retains a strong tradition of innovation, entrepreneurship and growth. As such, innovations for sustainable development in the chemical industry have the potential to serve as an important foundation for a system of production that is more sustainable overall.

Green chemistry is the science behind bringing sustainability into...