The Elusive Saviours

Chapter 5: Environmental technology as solution

Foundation for progress

Technological innovation is an economic necessity. It enhances the productivity of companies, which in turn contributes to lowering the cost price. It also enhances the quality of a product. If a company wants to compete on the basis of price and quality, technological innovation is a prerequisite. The industrialized world strongly believes in the blessings of technology, seeing it as the vanguard of economic progress and welfare, and, currently, the answer to environmental problems.
Transnational corporations own ninety per cent of all technology and product patents in the world. (Only six per cent of the 3.5 million patents in the world are owned by transnational companies in developing countries <14>). It is little wonder then, that they have such an important role in developing, applying and disseminating environmentally friendly technology in the South.
(The term technology is a general term. We use it here to mean both knowledge and techniques, which aim at preventing and reducing environmental pollution and its risk.)
For analytical purposes, it is important to distinguish between production-integrated technology and "end of the pipe", or purification technology. Environmental technology is production-integrated if it is an integral part of the production process; when it is only applied externally to the production process, to modify emissions and waste discharges, it is known as purification technology. This latter is always added to the process and therefore always increases the cost price of the product, whereas production-integrated technology is preventive and may lower the cost price. Because it raises costs, purification technology is almost always applied to meet government requirements concerning pollution.
The question we have to ask, however, is whether it is wise to leave progress in the area of environmental technology to the voluntary initiatives of transnational corporations.

The fundamental limitations of company technology

From looking at a finished product you cannot see how environmentally sensitive its production process has been. Consumers are not willing to pay extra for a cleaner product if they can't see the damage a dirtier product causes to the environment (and to the health of the workers). They give preference to a cheaper product from a competing firm, even if it was produced under worse labour conditions and in an environmentally damaging way. Good behaviour is not rewarded. Bad behaviour is. The result is that producers and consumers shift as many of the costs as possible onto society and nature. Even when a product visibly pollutes when used, the average consumer is not willing to pay extra for a less polluting product. Thus, the market mechanism, working from these incomplete signals, will always act as a constraint to sustainable development.
This same defective market mechanism also determines which form of technological renewal is important to the business community. Corporations will only introduce new technology if it promises lower costs and increased sales. This applies to all technology, including environmentally friendly technology and, in particular, to production-integrated technology. This economic principle not only determines the application, but also the development of new technology; any technology developed on other principles will simply not sell in the long run. The technology that finds its way to the work floor or the market is not necessarily the best (environmental) technology, it is the one that will not increase but rather decrease the price of a product.

The marriage of financial and environmental advantages

The post World War Two history of pot oven technology for aluminium smelters provides a perfect example of the marriage of financial and environmental advantages in the development of technologies.
A modern aluminium smelter is capable of producing approximately 200,000 tonnes per year and requires 300 megawatts of electric power. The average western, coal-fired modern electric power plant has a capacity of 600 megawatts. An aluminium smelter which uses the modern 175,000 ampere pot oven technology developed by Pechiney requires approximately 13.5 kilowatt per hour per kilogram of aluminium. Previously, pot ovens that were used (1940 to 1955) required approximately 19.4 kilowatt per hour per kilogram of aluminium. This improvement in energy-efficiency has reduced the cost price of aluminium, while other improvements in pot oven design have decreased costs of construction.
They have also resulted in considerable reductions in fluor and fluoride emissions, which were 15-25 grams per kilo of aluminium produced in 1940 - 1955 and are now 0.5-1 gram. By introducing purification technology, sulphur dioxide emissions were also reduced. Only CO2 emissions remain high. But none of these changes would have been made if they didn't reduce the cost price.

The inherent economic limitations to production-integrated environmental technology, developed and applied by the industrial community, ensure that it will not provide solutions leading to pollution prevention or reduction. The aluminium smelter example demonstrates that business economics do provide openings for progress from an environmental point of view, but these improvements have not, as yet, been able to reduce CO2 emissions, and fail to solve global and many national and local environmental problems.
Fundamental and far-reaching intervention is required for solving present day environmental problems. It is unrealistic to assume that the business community will voluntarily develop the necessary environment-technical solutions.

Unattainable environmental technology

This is not the only problem. Technological know-how is unevenly distributed throughout the world: the newest technology - and particularly production-integrated environmental technology - is either inadequate or financially unattainable in developing countries.

There are three major phases in the development and application of production technology:

The transnationals design and develop the new technology in specialized Research and Development units, generally located in the North, where the highly educated personnel needed for this work live. Some of the basic scientific research and laboratory experiments are also conducted by universities and government-subsidized organizations in the North.
The new technology is usually scaled-up in one of the company's existing plants close to home, i.e. in a developed country, and is largely adapted to the scale of production, ennvironmental conditions and market size there, as well as to patterns of consumption and consumer demand.
Later, the technology is distributed throughout the world. One of the most important goals is to acquire a return on investment on R&D and production costs within the shortest possible time. If no competitive technology exists, there is a strong tendency to patent the technology, to protect it, and disseminate it only within the transnational which owns patent. If there are competitive technologies available, the company will license the technology to ensure maximum return on investments.

Licences

A licence is the right to use a specific technology. Licenses are widely used in the world of chemical production, where corporations sell, not only their knowledge of production in the form of licences, but also calculate the cost of the licence into their own costs of production. The general practice is that the company using that particular technology pays the owner of the technology, a sister company, for the licence. In this way licences do not interfere with competition or inhibit technology transfer, and provide a flow of income into the company that owns the licence.

This process of developing, introducing and spreading technology has two important consequences. First, per definition, existing production installations (especially in the South) are always outdated, due to the continual development and introduction of new technology in the North. Older and outdated production installations cause more pollution than can be justified by the state of technology. Secondly, technology cannot simply be transplanted, unchanged, to the South - to countries with other socio-economic, ecological and climatological circumstances.
These two points are frequently brought up in the debate on the transfer of (environmental) technology to the South. We will look at them in more detail.

Double standards in environmental technology?

A limited, but growing, number of transnationals apply the same environmental standards to their global activities. Recent management literature indicates a trend in the direction of globalizing company environmental management, and of companies basing their world-wide environmental standards on the strictest laws. The most important impetus is the need to minimize liability and avoid a confusion of environmental standards within one corporation, rather than an increased corporate environmental awareness.

Agenda 21 Recommendations

There are several references in Agenda 21 to the need to create identical international environmental standards within transnational enterprises, for example, Article 30-22 of the chapter on Business and Industry:

"Business and industry, including transnational corporations, should be encouraged to establish world-wide corporate policies on sustainable development, arrange for environmentally sound technologies to be available to affiliates owned substantially by their parent company in developing countries without extra charges, encourage overseas affiliates to modify procedures in order to reflect local ecological conditions and share experiences with local authorities, national Governments, and international organizations."

The Benchmark Survey carried out in 1991 by the United Nations also shows that while only a handful of transnationals intend to introduce this sort of policy, still fewer have actually done so. <15>

The concept of global environmental management is a step in the direction of sustainable development. Put differently: if the transnationals apply the same environmental technology and practices in Third World countries as they do in the parent country, this is often a step forward relative to the situation in which they only heeded local government laws.
But it is no more than a step. Business economics, we noted earlier, defines what the "best available environmental production technology" for global application is. This is not the same as the best solution in terms of the environment. In practice, it also means that a company will only introduce and apply better (production-integrated environmental) technology in its new investments throughout the world. Existing installations will avoid having to apply the new environmental technology.
No single production process is clean. Purification technology is an environmental necessity. Because it increases the cost price of the product, companies tend to adapt their purification technology to the demands placed of the environmental laws on emission and discharge standards in the host country. This places high demands on the efficiency of regulatory bodies. Local standards and the way they are enforced differs from country to country. These circumstances make it all too easy for transnationals to delay introducing a general policy of applying the best purification technology throughout all their plants.

Unadjusted environmental technology

The application of the best production-integrated environmental technology will not necessarily lead to the least pollution, for various reasons:

The breakdown-sensitivity of the technology. Break-downs are the cause of most emissions and risks. In chemical production industries, for example, there are variable conditions from one country to the next. Technology can be affected by climatological differences and the quality of raw material, cooling water and electricity supply. Advanced forms of preventive maintenance that are common in the North are often not available in the South.
The speed with which disorders are repaired also varies from region to region. Northern technical teams often have to be brought in to carry out specialized repairs in the South. This is not only expensive, but time-consuming. There is often a lack of spare parts (due to the dearth - or absence - of other industries and dependence on distant suppliers).
Inadequate grasp on the technology. In general, the South has fewer specialized, highly educated personnel at its disposal and there is often an inadequate grasp of the technology.
Geography also plays a part, through the differences in vulnerability of the natural environment. The toxic activity of complex chemical substances, for example, varies under different climatological conditions. The effectiveness of agricultural herbicides has a shorter duration in the tropics than in cooler climates. In the case of dam construction, however, the tropical natural environment is more susceptible than a temperate one. Artificial lakes for hydro projects in tropical and subtropical regions house various insects and disease-bearing organisms which cause public health problems to local populations. In warm, wet regions, toxic wastes often seep through waste storage deposits (this often occurs with phosphate gypsum stored on land). The so-called pond or sedimentation system (used in depositing various mine tailings and the toxic red mud in alumina production) is more vulnerable in the warm, wet tropics than elsewhere.

Ecological carrying capacity and international environmental standards for companies

There are regional differences in the vulnerability of ecological systems. The term "ecological carrying capacity" denotes the varying levels of pollution which different areas can tolerate before the environment's natural regerative ability is affected. This suggests that it is possible to vary pollution standards from region to region and that an internationally operating company can justifiably apply different environmental standards in different regions. However, it is an unsound conclusion in the context of economic development and the scientific concept of "eco-space".

If one single company is allowed to pollute to the extent of the ecological level of tolerance, that company lays claim to all of the locally available ecological usage area. In other words, no other industries can come to the area, and there is no room for economic growth. In terms of "sustainable development" (which aims at integrating both ecological and economic ideas), it is preferable to have globally uniform environmental standards based on the best technical solutions.
We can conclude that, as the environmental risks and repercussions of a particular technology differ according to region, new and already known environmentally sound technological solutions have to be adapted to the local situation in order to guarantee the best results.

Redundant technology

Industrial companies are links in global chains of production which begin with the extraction of raw materials and ends with the consumer, and, in the most positive scenario, the recycling of wastes and their return to the chain. The manufacturing process brings emissions and environmental risks at each stage of the chain. In separation, refinery and extraction processes, a cleaner raw material produces fewer toxic emissions (and risk of emissions). Similarly, if the more chemical and hazardous substances are extracted from the raw material at the beginning of the chain, there will be fewer environmental risks and effects at the end of the chain. (In the case of synthetic production, the purity of raw materials is a less important factor.) As a rule, the sooner environmental technology is built into the production processes of the manufacturing chain, the more effective and more preventitive it will be.

Cadmium purification at the source

Phosphate rock, mined in Togo and Senegal, has the highest cadmium-holding percentage in the world (172-234 mg of cadmium per kilo). Togo exports all the phosphate it extracts, and 20 percent of its government income comes from this source. In Senegal, some of the phosphate ore is processed into phosphoric acid and phosphate fertilizer.
From 1986, phosphate export to Germany, Belgium, the Netherlands and other European countries declined, after the introduction of tighter European and national environmental laws. These countries gradually lowered the permitted levels of cadmium in production wastes and produced goods. Fertilizer and feed-phosphate producers switched to the "cleaner phosphate ores".
The governments of Togo and Senegal applied for an EC grant (from the Sysmin fund) to research the purification of phosphate ore. Without success: at present, while it is technically possible to remove the cadmium, it was not economically viable. A Danish engineering company reviewed the technology. <16> At a pilot plant in Taba, Senegal, they were able to remove 80 per cent of the cadmium from the ore. The Togolese government failed to interest foreign investors in a 500-million-dollar phosphoric acid / phosphate fertilizer plant. <17>

As we can see from the above example, much of the end-of-chain purification technology becomes redundant if purification occurs earlier. Corporations are not necessarily interested in this principle. No government regulations require companies to use pure or purified raw materials. Most government regulations merely aim to limit damage. There is no environmental policy based on "integral chain management" and companies are completely free to choose where they buy their raw materials. Pure raw materials are usually more expensive than impure ones. Thus, only large, vertically-integrated transnational corporations, or those with a key position in the production chain are able to shift the application of environmental technology to the first stages in the production chain.

Inadequate technology

Applied environmental technology can have tremendous results. As we have seen, fluor emissions from aluminium smelters were drastically reduced over several decades and productivity increased considerably. These sorts of changes in the level of pollution have been observed on the local level in the industrialized North over the past ten years. However, the number of production locations has expanded globally, bringing new sources of local pollution to more areas. Wherever industries are established, they are accompanied by the destruction and pollution of the local environment. Because of this process of uncontrolled production growth, regional and international environmental problems are actually increasing instead of decreasing. The growth in production in new locations not only effects local air and water but increases global problems of environmental destruction, exhaustion and the problem of waste.

To embark on the road to sustainable development, therefore, the expansion in production has to be accompanied by an absolute reduction in environmental pollution in the entire production chain. Very few large concerns have set themselves the task of reducing their absolute levels of emission and risk. The majority continue to measure the success of their environmental policy by the relative efficiency of applied purification technology.

Summary

Transnational corporations have a central role to play in the development and dissemination of environmental technology. The inherent limitations and deficiencies of their perspectives lead us to conclude that sustainable (industrial) development cannot be achieved if the corporations are entirely free in developing initiatives:

Transnational corporations develop and apply only profitable (environmental) technologies. In corporate strategy, contributing to sustainable development will always be of secondary importance.
The development and introduction of new technology mainly takes place in the North and conforms to the scale, potential and surroundings of production in the North as well as with the size of the market, quality demands of buyers, and consumer behaviour there. New (environmental) technology will only be disseminated, under licence, if there is a competing technology. Otherwise the transnational will protect the technology with patents.
Transnational corporations rarely apply the best technology throughout all their divisions. Investments in the newest and best technology only occur when new installations are constructed.
The application and effectiveness of purification technology depends largely on the demands of local governments and on the level of enforcement of local legislation.
The same technology will have different risks and consequences for the environment in different regions. This means that only local adapted - technological - solutions will lead to the best results. Modern environmental technology is, however, mainly applied without proper adaptation to the local situations.
Only when expansion in production is accompanied by a reduction in environmental pollution throughout the entire chain of production will we have started on the road to sustainable development. Although many transnationals hold strategic positions within production chains, this is not expressed in preventive management through the application of as much environmental technology as is available at the earliest stages of the chain.
Current environmental technology is often inadequate because the successes in reducing pollution are outweighed by the increases pollution caused by the expansion of the number of polluting industries in the world. Very few large corporations have - and only recently - set themselves the goal of decreasing emissions and risks. The majority measure the success of their environmental policy on the relative efficiency of applied purification technology.

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