Green tech is used as tools for sustaining capitalism

At least since the advent of the modern environmental debate during the 1960s, economic and environmental goals have been perceived to be in conflict with each other. Business decisions, it has been argued, build on pursuing profit-maximization; attempts to address environmental concerns simultaneously will therefore imply lower profits and reduced productivity. However, along with increased concerns about the environmental footprints of the global economy and the growth of organic products and labels, material waste recycling, climate compensation schemes etc., sustainability issues have begun to move into the mainstream business activities. In fact, many large companies often no longer distinguish between environmental innovation and innovation in general; the environmental footprints of the business operations are almost always taken into consideration during the innovation process (e.g., [47]). Some even puts this in Schumpeterian terms, and argues that sustainable technological change implies a “new wave of creative destruction with the potential to change fundamentally the competitive dynamics in many markets and industries,” ([37], p. 315). The literature has recognized the potentially important roles that so-called sustainability entrepreneurs can play in bringing about a shift to a green economy; these types of entrepreneurs seek to combine traditional business practices with sustainable development initiatives (e.g., [25]). They could disrupt established business models, cultures and consumer preferences, as well as help reshape existing institutions. Just as conventional entrepreneurs, they are agents of change and offer lessons for policy makers. However, the research in this field has also been criticized for providing a too strong focus on individual success stories, while, for instance, the institutional and political factors that are deemed to also shape the priorities made by these individuals tend to be neglected (e.g., [13]). Ultimately, it remains very difficult to anticipate how far voluntary, market-driven initiatives will take us along the long and winding road to the green economy. In addition to a range of incremental developments, such as increased energy and material efficiency following the adoption of increased digitalization, industrial firms and sustainability entrepreneurs are likely to help develop new and/or refined business models (e.g., to allow for increased sharing and recycling of resources) as well as adopt innovations commercially. In the future, businesses are also likely to devote greater attention to avoiding future environmental liabilities, such as the potential costs of contaminated land clean-up or flood risks following climate change. Far from surprising, large insurance companies were among the first to view climate change as a risk to their viability. One response was the development of new financial instruments such as ‘weather derivatives’ and ‘catastrophe bonds’ [35]. In other words, there is an increasing demand for businesses that work across two logics that in the past have been perceived as incompatible: the commercial and the environmental. There are however huge uncertainties about the scope and the depth of green capitalism in this respect. Moreover, the answer to the question of how far the market-driven sustainability transition will take us, will probably vary depending on business sector and on factors such as the availability of funding in these sectors.Footnote5 As indicated above, there are reasons to assume that in the absence of direct policy support, businesses will not be well-equipped to invest in long-term green technology development. Green product innovations may often be easier to develop and nurture since firms then may charge price premiums to consumers. In fact, many high-profile sustainability entrepreneurs in the world (e.g., Anita Roddick of The Body Shop) have been product innovators. In contrast, green process innovation is more difficult to pursue. It is hard to get consumers to pay premiums for such innovations. For instance, major efforts are needed to develop a carbon-free blast furnace process in modern iron and steel plants (e.g., [1]). And even if this is achieved, it remains unclear whether the consumers will be willing to pay a price premium on their car purchases purely based on the knowledge that the underlying production process is less carbon-intense than it used to be. Moreover, taking results from basic R&D, which appear promising on the laboratory scale, through “the valley of death” into commercial application is a long and risky journey. Process innovations typically require gradual up-scaling and optimization of the production technologies (e.g., [29]). For small- and medium-sized firms in particular, this may be a major hurdle. In brief, the above suggests that it is difficult to anticipate what a baseline scenario of the global economy – i.e., a scenario involving no new policies – would look like from a sustainability perspective. Still, overall it is likely that green capitalism and sustainability entrepreneurship alone may have problems delivering the green economy transition in (at least) two respects. First, due to the presence of knowledge spillovers and the need for long-term risk-taking, the baseline scenario may involve too few radical technology shifts (e.g., in process industries). Second, the baseline scenario is very likely to involve plenty of digitalization and automation, in turn considerably increasing the potential for material and energy efficiency increases. Nevertheless, due to rebound effects, the efficiency gains resulting from new technologies alone may likely not be enough to address the sustainability challenge. This therefore also opens up the field for additional policy support, and – potentially – a rethinking of the role of the state in promoting sustainable technological change.