Faced with pub­lic pres­sure to low­er their car­bon foot­print, and the high cost of set­ting up sus­tain­able ener­gy sup­plies, busi­ness­es and gov­ern­ments now have a third option.

 

The Unit­ed Nation’s ‘Sus­tain­able Ener­gy for All’ ini­tia­tive adds weight to the grow­ing voice push­ing low-car­bon ‘green’ growth over con­ven­tion­al ‘brown’ devel­op­ment and its heavy reliance on fos­sil fuels. How­ev­er, with the high upfront invest­ment costs asso­ci­at­ed with most envi­ron­ment-friend­ly tech­nolo­gies push­ing this out of the reach of many coun­tries that real­ly need it, per­haps it’s time to con­sid­er a dif­fer­ent approach to sus­tain­able ener­gy. A new “blue” econ­o­my focus­es on invest­ing less and inno­vat­ing more.

The Unit­ed Nations recent­ly con­firmed that bil­lions of peo­ple world­wide con­tin­ue to lack access to reli­able, clean and afford­able ener­gy. Since the uptake of sus­tain­able tech­nolo­gies can­not rely for­ev­er on the offer of heavy assis­tance from wealth­i­er parts of the world, and with gov­ern­ment sub­si­dies lim­it­ed, the oppor­tu­ni­ty to “go green” remains the priv­i­lege of only a few .

The inno­v­a­tive blue econ­o­my, a phrase coined, Bel­gium econ­o­mist and INSEAD alum­nus, Gunter Pauli (MBA ’82), is dri­ven by busi­ness-lev­el inno­va­tion using local­ly-sourced resources, with a focus on job cre­ation, build­ing social cap­i­tal, gen­er­at­ing mul­ti­ple cash flows by stim­u­lat­ing entre­pre­neur­ship and busi­ness mod­el innovation.

Tak­ing recy­cling to anoth­er level

Pauli con­sid­ers the Swedish com­pa­ny Solarus AB, which began man­u­fac­tur­ing solar pan­els out of recy­cled car­bon fibres dis­card­ed by the aero­space indus­try. Today, Solarus AB is able to offer cost-attrac­tive and com­pet­i­tive solar tech­nolo­gies with­out the aid of gov­ern­ment sub­si­dies. Giv­en solar tech­nolo­gies can be man­u­fac­tured local­ly from recy­cled mate­ri­als, Pauli argues gov­ern­ments (and tax pay­ers) should not be bur­dened with fur­ther demands for solar-relat­ed sub­si­dies and bailouts.

As well as reduc­ing costs, the blue econ­o­my address­es tech­ni­cal dif­fi­cul­ties that pre­vent solar or wind pow­er from becom­ing main­stream sources of ener­gy. Inter­mit­ten­cy prob­lems means there will always be a need for addi­tion­al invest­ment in either pow­er stor­age or a back-up sup­ply. Since not all loca­tions have access to abun­dant hydro back-up sup­ply, busi­ness­es would have to take an inno­v­a­tive approach to using local ener­gy sources.

There are addi­tion­al ben­e­fits for com­mu­ni­ties in match­ing a set of seem­ing­ly dis­parate prob­lems with an effi­cient use of local­ly-avail­able resources. Pauli con­sid­ers the exam­ple of cof­fee which is pro­duced using just 0.2% of the cof­fee plant. Instead of dump­ing the remain­ing 99.8%, the cof­fee com­pa­ny could gen­er­ate addi­tion­al rev­enues by grow­ing mush­rooms in the dis­card­ed plant and turn the waste from that process into pro­tein-rich live­stock feed, which could them be con­vert­ed into a nat­ur­al source of energy.

Chal­leng­ing the rules

To gen­er­ate more rev­enue streams, whilst simul­ta­ne­ous­ly ben­e­fit­ing the com­mu­ni­ties involved, ‘blue entre­pre­neurs’ should not shy away from inno­vat­ing new busi­ness mod­els that chal­lenge the rules of the game. Anoth­er ‘blue’ INSEAD alum­nus is Sameer Hajee (MBA ‘04D), co-founder and CEO of Nuru Ener­gy. Using recy­clable plas­tic parts and local­ly-avail­able mate­ri­als, Nuru Ener­gy has devel­oped an award-win­ning, human-pow­ered cycle that pro­vides clean pow­er across Africa. In the U.K., Cyn­di Rhoad­es cre­at­ed a fash­ion label named Worn Again for prod­ucts made from a host of unusu­al recy­cled mate­ri­als includ­ing leather scraps from car seats, para­chutes and prison blankets.

The idea of reusing mate­ri­als to extract their max­i­mum val­ue, is not a new one. It has recent­ly been revived with the emer­gence of the ‘Cir­cu­lar Econ­o­my’ as a trend. A 2012 report by the Ellen MacArthur Foun­da­tion esti­mat­ed that Euro­pean Union has the oppor­tu­ni­ty to save $380 bil­lion a year in mate­ri­als for con­sumer durables with medi­um lifes­pans such as cars, fur­ni­ture and house­hold elec­tric appli­ances. Fol­low-up reports esti­mat­ed the annu­al glob­al oppor­tu­ni­ty for sin­gle-use con­sumer goods such as pack­aged food and bev­er­ages, could be as much as a $700 billion.

Be it green, blue, eco­log­i­cal, self-suf­fi­cient, bot­tom-top, closed-loop or cir­cu­lar – calls for a new eco­nom­ic mod­el will only get loud­er, as we head towards dis­as­trous lev­els of resource deple­tion. And there are many peo­ple will­ing to put their mon­ey where their mouth is.

Har­ness­ing the finan­cial power

There are now around 500 crowd­fund­ing plat­forms in exis­tence and, with the world becom­ing increas­ing­ly con­nect­ed through social media, it is becom­ing even eas­i­er for entre­pre­neurs to tap into a large pool of finance from small investors. In May 2013, Eureeca.com was cre­at­ed in Dubai as the first tru­ly glob­al crowd-invest­ing mar­ket­place where busi­ness­es can raise fund­ing. Unlike oth­er crowd­fund­ing plat­forms that typ­i­cal­ly oper­ate on the basis of a dona­tion mod­el, Eureeca.com is an online forum that enables entre­pre­neurs to source fund­ing from the crowd in exchange for equi­ty. By har­ness­ing the pow­er of social media, such plat­forms have made it pos­si­ble to access a mas­sive pool of resources, con­tacts and exper­tise in order to sup­port entre­pre­neur­ial moves towards achiev­ing a sus­tain­able economy.

Since gov­ern­ments have a lim­it­ed finan­cial capac­i­ty, the best bet for envi­ron­men­tal­ists is those vision­ary entre­pre­neurs who can spot oppor­tu­ni­ties from poten­tial chal­lenges. And with advances in infor­ma­tion tech­nol­o­gy and boom­ing trends in busi­ness mod­el inno­va­tions like crowd­fund­ing, col­lab­o­ra­tive con­sump­tion, pay-per-use, shar­ing and leas­ing mod­els, excit­ing changes lie ahead.