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The influence of traditional and alternative energy sources on the environment in the context of a new economic development model

 

Dr. OlehSoskin
Ph.D. in Economics, Associate Professor, Professor of Entrepreneurship and International Relations Department, the National Academy of Management, Director of Institute of Society Transformation, Kyiv, Ukraine
 
Dr. Nadiya Matviychuk-Soskina
Ph.D. in Economics, Associate Professor of Entrepreneurship and International Relations Department, the National Academy of Management, Kyiv, Ukraine
 
 
Today, the global economy surged another wave of financial economic crisis.  If the first wave, that started in 2007 in the USA, where mortgage market had begun to collapse, was associated with the financial and banking sector, than the second wave is characterized by falling in the areas of traditional material production. That's why to talk about the end of economic crises is too early, as far as it is connected with deep technological changes in world economy as a whole, but not only its financial architecture.
 
We can already conclude that the economic crisis is not a spontaneous, but cyclical phenomenon that corresponds to a descending stage of N. Kondratiev’s long cycle (wave). The action of this phase began in 2007 and will have been lasting at least next 25 years. As it is known, the long cycles (waves) have a duration of an average of 50-60 years, consisting of two stages (ascending and descending), each of which, in turn, is divided into two phases: the ascending phase of recovery and growth, and the descending phase of decline and depression (stagnation)[1]. Based on N. Kondratiev’s theory, we can claim that the active process of transition to the sixth technological mode has begun.
 
The world scientists proved that the period of each technological mode actual dominance (from the first to the fifth one) took approximately as much time as the duration of the long waves of Kondratiev’s economic cycle. The mode’s lifetime consists of two key parts: the first one is its formation in the period of the previous mode crisis, and the second one is its growth as a result of structural reorientation of economics.
 
Each new technological mode makes economic interconnections more complicated and strengthens their no-linear character, enhancing the way of material production and the sphere of services transformation. The transition to a new mode is a period, which brings total changes of values, means of production, and functions of the capital, new needs and requirements to the quality of the production etc. Quintessence of the 6th technological mode is transition to an alternative economic development model, which will be based not on extensive methods of production providing usage of such traditional types and sources of energy, as: coal, oil, natural or shale gas, atomic energy (the technologies of the 3rd, 4th and 5th modes), but on intensive methods, which require the usage of alternative, renewable sources of energy, that won't damage the environment, as well as informational technologies (IT) as a new separate factor of production (the sixth technological mode).
 
New branches of the 6th technological mode is sun, wind, water, biological and wave energy, biotechnology, cell biology, aerospace, nanotechnology, new materials, optoelectronics, system of artificial intelligence, microelectronics, photonics, microsystems mechanics, information superhighways, software and simulation tools, molecular electronics, new personnel management systems, computerization of services etc.
 
Development of the 6th technological mode is connected with a new lifestyle paradigm in the developed countries, new ways of doing business in society, settling of new ecological-economical balance of interests among national governments, citizens, small and medium businesses and multinational companies. The process of international interaction to transition to the ecologically oriented capitalism model is taking place within the frameworks of organizations and working groups in structure of the UN, OSCE, OECD, APEC, and many others. As the result of expert’s and governor’s interaction, the national and regional concepts of transition to updated renewable economics have been forming.
 
Human civilization has started moving away from the approach of mega-cities building, which systems of management provide negative impact on environment. The utmostattention is given nowadays to the regional potential development and the communal systems of smaller scale promotion. 
 
It has been proved in the world practice that society etatization reached its peak in development and stops working, and this fact calls a need for deetatization to be made with the purpose to give more power to local governments. Combination of the strengths of local governments, territorial communities and the new technological mechanism is a powerful and efficient symbiosis to address issues of development, and in the first place an introduction of a new energy policy and environmental regeneration.
 
The current crisis made evident that the means of the economy’s industrial development are run dry and not capable of providing competitive, safe progress. Realizing this, the advanced countries, and by their example other states, began mass exploration the ways and mechanisms to introduction of the new, innovative-investment model of economic development and usage of alternative energy sources (solar, hydropower, wind, biomass energy branch). Now it becomes a priority for economic development of every economy.
 
The European Union (EU) is the main political subject concerned with abovementioned challenges. For example, within the mechanism of technical assistance ELENA (created in 2009) is planned to mobilize more than 1.3 billion euro of investments into sector of the EU cities energy efficiency. There are special programs for reduction the usage of energy for electricity, private and municipal buildings maintenance, heat delivery costs lowering. In Latvia, Germany and Austria the first successful project in so-called green construction (green building) were realized. Al-in-all, more than 700 EU municipalities have been participating in the initiative of green construction. In May, 2010, mayors of 500 European cities signed the Convent of Mayors (a common initiative of the European Commission, the Committee of Regions and the Parliament of the EU) in accordance to which they took a goodwill obligations to reduce carbon emission in their cities for 20% until 2020, and to promote alternative energy and energy efficient way of life among the inhabitants. Abovementioned initiative has been supported so far by another 2100 cities in 36 European countries, as well as by 100 regions representing 125 millions of people[2]. Apart this, the EU plans to reduce by 2020 the carbon emission amount in its member states for 20% in comparison to 1990 and to shorten total energy supply for 20% from the forecasted for 2020 level [3]
 
In 2009 in the EU 19.9% of produced electric energy came from renewable sources. In 2020 it is planned to increase this amount to 23-25%. To meet such a target, the EU has introduced a number of programs of priority sectors investment support, namely:
 
1.    "Energy Recovery Program" (with a budget 2 billion euros per year since 2009).
 
2.    The world's largest research on the possibilities of wind power integration to the common European grid, which involves 26 energy companies from 11 member states (the EU allocated to it 60 million euros), the development of the "Twenties" project tasks is
scheduled for the end of 2013;
 
3.    Financial instrument «NER300» for investment in low-carbon economics and alternative energy of the EU (it is planned to accumulate 4.5 billion euros) [4].
 
The European Commission has also developed in 2008 a number of specific initiatives that address the environmental impacts of products during their life cycle, with an objective of the greener products development promotion among the material industries. These initiatives are the building blocks of the European Union’s policy on sustainable consumption and production, which includes:
 
1. Integrated Product Policy (IPP). It is an approach that seeks to reduce the environmental impacts of products throughout their life cycle (from the mining of raw materials to production, distribution, usage and waste management). The intention is to address potential environmental impacts at each stage of the life cycle.  It consists of 2 phases. Phase 1 is Environmental Impact of Products study (EIPRO), which identifies the products with the greatest environmental impact during their life cycle. Phase 2 is Environmental Improvement of Products measures (IMPRO), which identifies the possible ways to reduce the life-cycle environmental impacts for some of the products that are among those with the greatest environmental impacts. The IMPRO first considers improvement potentials that are technically feasible. Following this, the associated socio-economic impacts are being considered and analyzed. IPP is aimed at keeping technologies in strong interconnection with the European environmental goals providing the common framework to the material production standards.
 
2. Thematic Strategy on the Sustainable Use of Natural Resources. The objective of the strategy is to reduce the environmental footprint of resources usage in a growing economy as it is a decisive factor of sustainable development achievement in the EU. 
 
3. Thematic Strategy on Waste Prevention and Recycling. This is a long-term strategy, which claims to transform Europe into a recycling society that seeks to avoid waste production without recycling and applies waste as a resource.
 
4. Eco-Management and Audit Scheme (EMAS). This is a reliable management instrument provided by the EU for companies and other organisations for evaluating reporting and improving their environmental performance.
 
5. Ecolabel Scheme. This is a voluntary marking scheme designed to encourage economic entities to market and promote products and services that are friendlier to the environment and for the European consumers (including public and private purchasers), making it easy to identify them.
 
6. Environmental Technologies Action Plan (ETAP). A number of actions to promote eco-innovation and the transition to environmental technologies that has been implemented since 2004 and directly addresses the three dimensions of the Lisbon strategy: growth, jobs and the environment.
 
7. Green Public Procurement (GPP). This is a public approach and a collection of promoted social and business attitudes in a huge market to reduce the environmental impact related to the production, transportation, usage and disposition of goods and related services.
 
8. Eco-design of Energy Using Products Directive (EuP). It is a conception of the environmental considerations integration at the design phase of the products and goods, which is evidentially the most effective way to improve the environmental performance of products. The environmental impacts of energy-using products take various forms, such as energy consumption and related negative contribution to climate change, consumption of materials and natural resources, waste generation and release of hazardous substances. EuP helps to reduce such undesirable consequences at the very beginning of a product’s or technology’s life cycle.
 
9. European Compliance Assistance Programme (Environment & SMEs). The European Commission has proposed a Programme to make it easier for the small and medium-sized enterprises (SMEs) to comply with their obligations and improve their environmental performances within the environmental legislation of the EU, creating to them adequate environment and providing with assistance, so that they can perform as well as their larger market counterparts[5].
 
Abovementioned institutional instruments to provide common standards, approaches, assistance and practical tools to achieve the politically stated targets of both ecological and economic development in the European economic model will lead to its actual transition towards innovative 6th technological mode. These experiences are vital to Ukraine as it aspires to become a part of the common European market and, as the result, an economic model oriented on eco-friendliness.
 
Talking about the prospects of human ecological footprint reduction, we can not, nevertheless to avoid several serious dangers that the EU and the rest of the world are facing. We would like to concentrate here at such unsafe energy resources which boost the economy though damage in real terms or potentially the world’s eco-system as nuclear power and the shell natural gas production, which we consider to be the examples of innovations of the destructive chaos mainstream from the prospect of sustainable development.
 
Nowadays in the EU countries 143 nuclear power plants are operating (representing 13.5% of the EU energy consumption), and most of the states still have no plans to abandon nuclear energy. Despite being equipped with modern passive safety features, the new generation of nuclear reactors in Europe are recognized by the experts still basically the same “old-fashioned light-water reactors with solid-fuel cores that are cooled and moderated by water”[6], which means the same high level of environmental risks of exploitation and further conservation.
 
The main slogan of a new model of economic development is that people should not leave behind a single kilogram of waste in any form. The economy should be aimed at restoring of the ecological environment suitable for safe social life. This economic model is an alternative to the existing, traditional industrial model, in which natural resources are used inefficiently. Today, any country can afford such an approach, as Earth's ecosystem is overloaded and unable to withstand the fierce pressure from the industrial environment. The report, released in September 2013 at a meeting of the United Nations International Panel on Climate Change (IPCC), confirmed that the cause of irreversible environmental change with the probability of 95% is anthropogenic human activities in the XX-XXI centuries [7].
 
For Ukraine an urgent task is to move to a new economic innovation technological model with using of alternative energy sources[8]. But to become really independent state and build a model of capitalism of technological innovation type, our country should by all means to become self-reliable in energy sector, overcoming its strong dependence from the Russian Federation in that issue. There are two variants of solution to this problem.
 
The first option proposed by the ruling financial corporate groups in Ukraine is to join efforts with the multinational corporations, such as "Chevron", "Shell", "ExxonMobil", which offer to produce shale gas in our territory by hydraulic fracturing. It is widely regarded to be a very dangerous technology with unpredictable environmental consequences. Especially dangerous is the fact that shale gas production will take place particularly in the Carpathian Mountains, bordering with Poland and relatively tectonically unstable areas, as well as in eastern part of Ukraine. This traditional way, though makes it possible to increase an amount of gas supplies, provides quite unfavourable results for the country, taking into account that we have already had repeatedly suffered from irresponsible applying of energy innovative technologies. We are referring to particularly havoc of the Dnipro river by building in the Soviet times the electric power plants cascade that has proven over years being economically and ecologically neither efficient, nor prospective. As the result, huge agricultural territorial arrays were graved under water. Short-sighted decision was also the construction of nuclear power plants that harm the natural environment. The catastrophe at the Chernobyl Nuclear Power Plant has caused an enormous damage to our country, its environment, Ukrainian’s health, led to premature deaths of thousands of people. The consequences of Chernobyl still have not been overcome both in Ukraine and by the European continent in general. Shown examples highlight the general authoritative approach towards the national development and deep problem of insufficient responsibility among the governing elite of Ukraine either in Soviet epoch or in independent realities. It reveals the base for worrying concerning the next risky energy technology, which is the shell gas production, to be implemented in Ukraine.
 
It should be noted that in the EU, unlike Ukraine, an organizing of shell gas technological processing is prudent, precise, detailed and gradual, with all effort to not harming local eco-systems. There is a package of legislations which state the rules and clarify proper procedures in this business. The first of them is Hidrocarbon Directive, which permits companies to mine and produce energy resources, in particular the shale gas, at the EU territory[9]. The second document is the Water Framework Directive[10], aimed at direct protection of water resources during the production of fuels. The third document is Directive on Waste Arising during the Development of the Field of Energy Resources[11]. Another important instrument of ecological protection is the Directive on the Protection of Wildlife[12], the main task of which is to maintain a safe level of biological diversity existing in nature, especially in the animal world. In the same direction is the Directive on Wild Birds Protection. Equally important is the application of the Directive on the Environmental Impact Assessment[13], which has also been implemented in the European Union. It states that all information related to extraction of energy resources and its impact on the environment must be in the public access. Another important document, on which companies operating in this sector are oriented, is the Directive on Liability for the Environment[14]. It is mainly applied in the cases of damage to the environment.
 
It is known that the largest deposits of shale gas are located in the territory of France, Poland and Norway, where there are also national legislation and appropriate institutions that regulate mining and production in these countries in addition to the common EU regulations.
 
In Ukraine, there is no relevant legislation base, also have not been conducted thorough researches on the possibilities and consequences of shale gas production, which can cause irreparable damage to the flora, fauna, population and affect a number of other aspects (like, for example, in France, where such governmental initiative has been launched).
 
Moreover, in Ukraine already many problems associated with the production of traditional energy sources exist, such as coal and other fossil resources. Due to outdated technology for their production, over many Ukrainian cities like Dnipropetrovsk, Dniprodzerzhynsk, Zaporizhzhya, Kryvyi Rih, Kalush etc., an ecological collapse has threatened. Therefore, the decision on shale gas conditions, which now develops Ukraine, cannot be implemented without the risk of catastrophic results caused by either technology itself or by improper central and local administration regulation.
 
The second option is implementation in Ukraine a new economic model of innovation type, which makes it possible to efficiently use alternative environmental sources, benefit from their energy and process huge mass of biological waste. This waste is produced massively in our agriculture and through various types of human activity. Therefore, it is high time to construct biological mass converting stations, to use biotechnology, to switch onto bio-fuels. This is the path that allows us to maintain ecological environment, make its renovation, and to introduce massive usage of new technology and development sources, including alternative energy resources.
 
Highlighted vector of economic development is a part of natural realization of the European model of the national capitalism worked out by Dr. Oleh Soskin for Ukraine, taking into account the peculiarities of its development. Bringing this model into life is the best background for Ukraine’s transformation into strong, competitive state, able to lift its citizens to qualitatively new level of life and solving the challenges faced today by the human civilization. 
 


[1] Kondratyev, N. (2002). Large cycle of conjuncture and the theory of foresight. Selected works. Moscow: Economics, 2002. 550 p. (in Rus.).
[2] EU Activities Report 2010.
[3] The EU’s 20-20-20 targets for the year 2020.
[4] EU Activities Report 2010.
[5] Guide to EU environmental policy and directives, Official web-page of the European Committee for Standardization, https://www.cen.eu/cen/Services/EHD/Policy/Pages/default.aspx
[6] The Nuke that might have been, The Economist Journal, Nov 11th 2013, http://econ.st/17s8Iho
[8] Soskin Oleh, Role of state regulation in formation of modern economic model: changing imperative in the conditions of chaos, The Economic Annals-XXI Research Journal, 1-2(1)’2013, p. 3-7 (in Ukrainian), http://soskin.info/ea/2013/1-2/20132.html
[9] Directive 94/22/EC of the European Parliament and of the Council of 30 May 1994 on the conditions for granting and using authorizations for the prospection, exploration and production of hydrocarbons, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31994L0022:EN:HTML
[10] Directive 2000/60/EC of the European Parliament and of the Council establishing a framework for the Community action in the field of water policy, 23 October 2000,  http://ec.europa.eu/environment/water/water-framework/index_en.html
[12] Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora, http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CONSLEG:1992L0043:20070101:EN:PDF
[13] The Environmental Impact Assessment Directive (85/337/EEC) of 1985 with amendments of 1997, 2003, 2009, http://ec.europa.eu/environment/eia/eia-legalcontext.htm
[14] Directive 2004/35/EC of the European Parliament and of the Council of 21 April 2004 on environmental liability with regard to the prevention and remedying of environmental damage, http://ec.europa.eu/environment/legal/liability/index.htm

 

 

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