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The Ecological Allowance of Enterprise Dr. André Reichel Scientific Coordinator GSaME

The Ecological Allowance of Enterprise Dr. André Reichel Scientific Coordinator GSaME Associate Cluster Director . Barbara Seeberg Doctoral Student GSaME. What size is right?. MU Marginal Utility. Economic growth. Uneconomic growth. b = sustainable scale (MD = MDU).

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The Ecological Allowance of Enterprise Dr. André Reichel Scientific Coordinator GSaME

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  1. The Ecological Allowance of Enterprise Dr. André Reichel Scientific Coordinator GSaME Associate Cluster Director Barbara Seeberg Doctoral Student GSaME

  2. What size is right? MU Marginal Utility Economicgrowth Uneconomicgrowth b = sustainablescale (MD = MDU) Marginal Utility MU e = futilitylimit (MU = 0) a MU = 0 d = catastrophylimit (MDU = ) ab = bc e d b c Material throughput Marginal Disutility MDU MDU Marginal Disutility MDU =  Source: Daly, H.E.; Farley, J. 2003. Ecological Economics: PrinciplesandApplications. Washington DC: Island Press

  3. Business in the balance 1. Boundarycondition 2. Boundarycondition Economicbalance Revenues Costs Ecological balance Impact  Allowance

  4. Case of uneconomic firm growth Idea Every firm has the right to use ecological space in relation to (1) absolute ecological boundaries and (2) its economic value added Ecological boundary at hand: Global cap on CO2 emissions, roughly some 750 Gigatonsbetween now and 2050 Economic “allocator” variable: Gross value added (output approach of GDP accounting) ProductAllowance 873 Million private cars (2007) • 2,075 Billion US-Dollar (2008) 778 Million tonsCO2 891 kg CO2 per vehicle and year Industry in focus: Automotive

  5. Case of uneconomic firm growth Pick a firm from the automotive industry: Calculate CO2 intensity throughout average product’s lifecylce(data from internal Lifecycle Assessment report) Product Impact ProductAllowance 170 g CO2 per km 1,833 kg CO2 in production 12,000 km travelled per year 2,040 kg CO2 per year in use 430 kg CO2 end oflife 2,228 kg CO2 per year 891 kg CO2 per vehicle and year 

  6. Strategic framework for ecological allowance Impact  Allowance Impact  Allowance Rightsize Business Ecological Excess Increasingallowance • Reducing product sales and product population (dominant strategy) • Reorientation on longer lifecycles and/or product use • Technology (Eco-efficiency and eco-effectiveness) • Increase value added at the expense of other firms or industries • Economic competition for “ecological space” • Reducing product sales and product population Revenue  Costs Reducingimpact Economic Loss Eco-Eco Disaster Revenue  Costs

  7. Prospective case of economic growth? Product impact of a Smart: 1,628 kg CO2per year Replacement rate of carsharing ~ 1:4 to 1:8 private cars Potential for CO2 reduction ≥ 80% “Virtual” impact of car2go: 407 kg CO2per vehicle and year 2.228 kg CO2Impact of old business model

  8. Modeling (un-)sustainable businesses

  9. “The automotive industry need not worry, but it will have to make cars that consume dramatically less fuel. The great green vision is to transform this strong industrial region into a country with green product lines. We want to prove that economy and ecology can go together without destroying our livelihoods, economic as well as ecologically… Fewer cars are of course better than more. We cannot continue to sell just cars but have to move on to mobility concepts; this includes walking, cycling, driving cars, and using public transportation. We have to build intelligent mobility networks in order to stay mobile without destroying the environment. We have to show here in Baden-Württemberg that prosperity without destruction is possible. That is our responsibility, that is why a Green is going to be Prime Minister. Otherwise the others could do it!” Winfried Kretschmann, PM-elect of Baden-Württemberg

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