Technological Innovation as a Panacea? Bah Hambug!

A discussion on technological innovation in China and its limits to achieving true sustainability.

I attended a talk on the role of innovation in combating climate change last week. The focus of the discussion was on technological innovation and the role of governments in channeling investments into technology across multiple sectors. However, much of Q&A session was devoted to how technological innovation is not enough—to achieve true sustainability, there needs to be social and policy innovation. But more on that later. Let’s first talk about innovation in China and relate that to sustainability.

It has been generalized that Chinese society today lacks the innovation. This is purely anecdotal, but perhaps the pharmaceutical industry buffs amongst you can confirm or correct the following account by a friend of an acquaintance that recently visited some India as part of his MBA program. According to him, the competitive landscape of the pharmaceutical industry in terms of China vs. India is going to result with a clear winner—India. The observation is that while both countries are big players in the generic drugs industry and thus heavily reliant on the expiration of global patents on drugs developed by the west, Indian companies actually channel some portion of their profits into R&D to develop proprietary drugs, whereas Chinese companies reserve all profits to their shareholders. The Chinese, in this case, perpetuate the generalization that they are better at reverse engineering and replication, but less savvy on the R and the D.

An excellent article comparing two emerging wind energy giants, Suzlon from India, and Goldwind from China, suggests a similar observation. Dr. Joanna Lewis observes that Suzlon’s success is the product of effective licensing of advanced foreign technologies and accessing global learning networks through the acquisition (and continued innovation) of proprietary technologies, whereas Goldwind’s success relies more heavily on licensing foreign technologies and a little less on innovation, which is restricted to tapping learning networks that are more local than global in nature.

In his book, China, Inc., Ted Fishman, analyzes the electronics (specifically DVD/VCD) market and hypothesizes that the penchant for reverse engineering and replication in the Chinese economy stems from a very practical urgency of satisfying the needs of the world’s most populous nation in the in a reasonably short amount of time and at a very affordable cost.

But as China searches for a more sustainable energy path, it is clear that the old way, or even current way, of doing things, or that old or current technologies, will not be enough. Radical, disruptive innovation (as opposed to incremental, gradual innovation) is necessary for the breakthroughs in cleaner ways of producing and using energy. Mere licensing, reverse-engineering and replication of technologies, means that China will be reliant on foreign countries for innovation and the development of proprietary intellectual property. Even then, how willing will foreign enterprises be willing to bring their state-of-the-art technologies to China if their intellectual property rights are not protected? The “China strategy” of many foreign companies is to bring to China technologies that are at least two generations behind in order to hedge against the risk of piracy.

There are interesting articles on the blogosphere about the innovativeness (or lack thereof) of the Chinese (check out this nicely written piece by Bill Dodson). I take the stereotypes for what they are—mere stereotypes. Without performing empirical studies, it is impossible to generalize, but for what this is worth, it looks like, according to the USPTO, the number of US patents granted to Chinese inventors are on the rise, increasing by 64% in 2006 (661 patents) with respect to 2005 (402 patents).

The Limits of Technological Innovation

Technological innovation is, as the guys at The Breakthrough Institute say in this paper, absolutely essential as the main driver to tackling climate change. The authors decry regulation-only approaches, and propose that any sort of cap-and-trade to curbing greenhouse gases serve as only a supplement to an ambitious US$300 billion U.S. government investment into clean energy technology research. One of the underlying rationales of this approach is that while regulation is effective in raising the price of carbon, only through massive investments in basic R&D can the cost of renewables and clean tech be simultaneously reduced. While I wholeheartedly endorse an aggressive public investment in clean tech, I postulate that technology innovation and cap and trade regulation by themselves will not be enough to set us on a green path.

First, sustainability can (and has to) be accelerated by social and lifestyle innovation. Energy and material (see second point below) conservation should be considered as hitherto untapped natural resources. Conservation and energy efficiency do not entail mere technological fixes; often, they simply require using existing technology in different, more efficient ways, implicating changes in behavior, lifestyle or even mentality. Due to inefficiencies and energy losses through transmission, every watt of energy saved is a more than watt of fossil fuel energy that does not need to be produced. I am not just talking about reducing one’s driving trips to the grocery store or replacing all the incandescent light bulbs in one’s house with more efficient compact fluorescent light bulbs. I am also talking about radical and integrative changes in our living arrangements, the way we think about how cities should be built and laid out (think ecocities), the way we think about reorienting our industrial supply chains so that waste from one chain can be converted into inputs for another, the way we can redesign our everyday household products to reduce toxic content and the amount of waste generated in their manufacture. In short, we need innovations that can close the loop on energy and materials flow in the innovative technologies that we deploy.

Second, technological innovation will only help us develop clean up the dirty nature of our current energy sources, but does not affect the way we use other stuff when we use energy. Even in a world of abundant, cheap and clean energy, I question if production and consumption patterns will truly be sustainable. The simple reason is this—while renewable energy sources are, by definition, renewable and inexhaustible, material resources such as copper, tin, pulp and the myriad of other commodities that support our increasingly urban lifestyles, are finite. Ramping up (even clean) energy supply, without additional consideration for how we design our everyday products or modification of our consumption habits, will accelerate the depletion of our non-energy natural resources. Take the automobile industry as an example–what good is a limitless supply of biofuels if the proliferation of automobiles leads to the exhaustion of all our steel resources?

Consider this blog post a teaser. After all, the raison d’etere of The Green Leap Forward is to track the social, policy and technological innovations in China in the field of sustainability, so keep reading!

Author’s note on the picture: While the lighted bulb supposedly represents technological innovation, note the irony in that the bulb is an incandescent light bulb, which is highly inefficient and is being phased out for energy conservation reasons in a small but growing number of countries, including China! Just one example of policy innovation for you!