Is it time to ditch the green economy and go blue?

The best bet for environmentalists are visionary entrepreneurs who can spot opportunities from potential challenges.

Nuru Energy engineer Jean Paul Mushimireimana demonstrates the world’s first portable pedal powered generator in Kigali, Rwanda. Steve Terrill / AFP

Environmentalism and eco-conscious policy measures have been advocating “green” growth as opposed to more conventional “brown” development, which heavily relies on fossil fuels. However, the high upfront investment costs associated with most environment-friendly technologies means this is often a costly affair and, with government subsidies limited, the opportunity to “go green” remains the privilege of only a few.

Since the uptake of sustainable technologies cannot rely forever on the offer of heavy assistance from wealthier parts of the world, has the time arrived to aim higher and consider the prospects of a new “blue” economy?

The notion of a blue economy was coined by the Insead alumnus Gunter Pauli in his book The Blue Economy: 10 years – 100 innovations – 100 million jobs. In it he calls for a shift in our society from scarcity to abundance through investing less and innovating more, while simultaneously focusing on creating jobs, building up social capital, generating multiple cash flows through stimulating entrepreneurship and business model innovation.

Take the Swedish company Solarus, which began manufacturing solar panels out of recycled carbon fibres that had been discarded by the aerospace industry. Today, Solarus offers competitive solar technologies without the aid of government subsidies. Since such entrepreneurs have demonstrated that solar technologies can be manufactured locally from recycled materials, Pauli argues that we should not burden our governments with any further demands for solar-related subsidies and bailouts that will eventually be paid back by taxpayers.

Additionally, our enthusiasm for reducing the cost of renewable energy technologies should not mask the technical difficulties that prevent solar or wind power from becoming mainstream sources of energy. Besides the massive transmission and distribution requirements needed to accommodate large-scale contributions from renewables, the technical issue of intermittency is yet to be solved. One cannot, therefore, escape the reality that there will always be a need for additional investment in either power storage or a backup supply. The only possible way to attain a 100 per cent renewable electricity system seems to be a situation where there is an abundant hydro backup supply. Since not all locations can have access to this privilege, the time has come to make use of all forms of energy and resources that are in abundance around us. This is the essence behind the idea of blue economy.

There are attractive benefits in matching a set of seemingly disparate problems with an efficient use of locally available resources. Mr Pauli gives an example of a cup of coffee, stating that it is typically made of only 0.2 per cent of the coffee plant. Instead of dumping the remaining 99.8 per cent to waste bins, a coffee company could generate additional revenues by using the waste to grow mushrooms. Anything that is left over after harvesting the protein-rich fungi forms an excellent livestock feed, which could also be converted into a natural source of energy.

To generate more revenue streams, while simultaneously benefiting the communities involved, “blue entrepreneurs” should not shy away from innovating business models that challenge the rules of the game by adopting creative ideas of how to do things in a smarter way for both themselves and their communities. Another “blue” Insead alumnus is Sameer Hajee, the co-founder and chief executive of Nuru Energy. Using recyclable plastic parts and locally available materials, Nuru has developed a human-powered cycle that provides clean power across Africa – an innovative technology that has received multiple awards.

In the UK, Cyndi Rhodes created a fashion label named “Worn Again” for products made from a host of unusual recycled materials such as scrap leather from car seats, parachutes and prison blankets.

Promoting the idea of continuous or closed loops of materials, ie reusing materials to extract their maximum value, is not a new one. It has recently, however, been revived with the emergence of the "Circular Economy" as a trend. In 2012, a report entitled Towards the Circular Economy was released at the World Economic Forum. This report, launched by the Ellen MacArthur Foundation in collaboration with McKinsey, provided the first assessment of the circular model at a macroeconomic level.

The report estimated that the European Union alone has the opportunity to save US$380 billion a year in materials for consumer durables with medium lifespans such as cars, furniture and household electric appliances. The second and third volumes of this report, released at subsequent Davos gatherings, estimated the annual global opportunity for single-use consumer goods such as packaged food and beverages, could be as much as a $700bn.

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

There are now about 500 crowdfunding platforms and, with the world becoming increasingly connected through social media, it is becoming easier than ever 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 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.

Yasser Al Saleh is a senior research fellow at Insead Innovation and Policy Initiative, Abu Dhabi

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