From cleaner production to sustainable industrial production modes

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  • Journal of Cleaner Production 12 (2004)

    From cleaner production to sustainable industrial production modesJurg M. Grutter a,, Hans-Peter Egler b

    a Grutter Consulting, Guggenbuhl 21, 8586, Andwil, Switzerlandb Swiss State Secretariat for Economic Affairs (SECO) Effingerstr.1, 3003 Bern, Switzerland

    Received 15 November 2002; accepted 6 March 2003


    The Swiss State Secretariat for Economic Affairs (SECO) is currently financing 11 Cleaner Production Centers (CPCs) in Africa,Asia, and Latin America. Center design has evolved over time shifting the focus from traditional cleaner production centers (CPCs)focusing on awareness raising, training, information and good housekeeping measures towards centers with a stronger focus ontransfer of environmentally sound technologies (ESTs) combined with financial services such as those offered by internationalenvironmental treaties. A concentration on good housekeeping measures in particular has proven to be commercially non-viable,meeting only partially the needs of enterprises and generating impacts with limited dissemination potential. The more successfulcenters are business oriented ones working best as independent entities directed by national and international stakeholders. 2003 Elsevier Ltd. All rights reserved.

    Keywords: Sustainable development; Cleaner production; Sustainable production; Technology transfer

    1. Introduction

    1.1. Background of SECOs involvement

    The background of SECOs involvement in CleanerProduction (CP) is the Rio Conference on Developmentand Environment 1992. Equal to other internationalenvironmental conventions the Rio Declaration calledfor a vigorous transfer of environmentally sound techno-logies and for effective technology transfer mechanisms.In response to this demand SECO decided to develop acoherent instrument to promote technology transferworking through Cleaner Production Centers (CPCs) orenvironmental technology centers. The core objectivesare to assist the industrial sectors of developing countriesto produce in a sustainable manner, thus improving theircompetitive position. CP is thereby an approach thatreduces environmental pollution with positive financialbenefits for the enterprise.

    Corresponding author. Fax: +41-71-646-03-82.E-mail addresses: (J.M. Grutter); hans- (H.-P. Egler).

    0959-6526/$ - see front matter 2003 Elsevier Ltd. All rights reserved.doi:10.1016/S0959-6526(03)00094-5

    1.2. Structure of centers

    The idea of CP is simple, the concept convincing: Pro-duce goods and services at the same or even better qual-ity with less resources and less pollution while improv-ing the bottom-line [1]. The environmental andeconomic aspects of the sustainability triangle go handin hand. Through CP the trade-off between economicprosperity and environmental protection is reduced oreven eliminated. While a significant number ofenterprises apply at least partially the CP conceptmostly under the notion of good housekeeping or goodmaintenance and operation practicesa majority ofenterprises in developing countries are not applying thisconcept. Obstacles to a stronger outreach of the conceptare various. The most important hurdles encountered fora widespread application of CP include [2]:

    Rules and regulations favor an end-of-pipe approach.CP alone can often not achieve legal compliance ( attain required concentration levels of pollutants).CP measures thus only reduce partially the cost ofend-of-pipe equipment and entrepreneurs prefer tochoose a simple, recognized and quick fix.

    The impact of CP measures is often ex-ante notexactly quantifiable and consultants in a general over-

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    estimateion of potential benefits (evidence to supportthis statement is available from many CP assessmentswith ex-ante and ex-post measurements; see also evi-dence in the field of energy efficiency [3]. Also manyCP measures, which involve management changes,are not sustained over time or need constant re-train-ing. CP measures are thus riskier for the entrepreneurthan many conventional technology measures.

    The economic attractiveness of CP depends to a con-siderable extent on the internalization of environmen-tal and resource costs including full cost charges forenergy, water etc. Low or subsidized costs forresources make the scope of economically attractiveCP options much smaller.

    Information and know-how on attractive CP optionsare not commonly available. This obstacle gives thebackground for the build-up of a system or a focalpoint which can promote hands-on the CP approachand which can pave the way for a wide disseminationof CP.

    The CP concept is promoted by SECO through theestablishment of one or various centers or focal pointswhich have a critical mass on information, know-howand practical experience on CP. CPCs act as multipliers;they train and advise other service providers on CP.They do not act directly as competitors to other serviceproviders in the market for environmental services as theservices offered by the CPC are in general new and notyet profitable in the market. After some years the roleof the CPC is however to retire from established andprofitable services embarking upon new frontiers as wellas on establishing quality service systems, trainingupgrades etc. The business areas in which CPCs areinvolved vary from center to center but include CP,environmentally sound technologies (ESTs) matchedwith technology transfer, LCA (Life-CycleAssessments), Eco-labels, global environmental conven-tions, social standards (e.g. SA 8000) and labels, EMS(Environmental Management Systems) including ISO14001 and financial services.

    Different types of CPCs have been established overtime, due to experiences made with existing centers aswell as an adaptation to local circumstances and theexisting status of CP promotion in the country. In Indiaor China for example SECO has entered the field aftervarious years of basic CP promotion thus enabling theproject to go a step further. New centers established orentering into new phases are shifting their attention frombasic CP promotion to a more integrated approach insustainable industrial development and towards astronger focus on ESTs and technology transfer pro-motion including financial instruments. Table 1 gives anoverview of CPCs financed by SECO.

    An important component of the strategy of SECO isalso to link CP activities with other projects in the field

    of sustainable industrial development financed throughthe Swiss government. Such links are e.g.:

    in the field of climate change linking CPCs with thecapacity building efforts realized through theNational Strategy Studies executed by the WorldBank (finished or in progress with SECO finance inChina, Colombia, India, Peru and South Africa)

    in the field of environmental finance with the estab-lishment of a Green Trust Fund as pilot project inColombia

    in the field of social standards through a SECOfinanced ILO project on social standards and labels.

    2. Accomplishments of Cleaner Production (CP)projects

    SECO has developed for all its CPCs a standard indi-cator scheme that compares the centers performanceover time, in relation to their targets and in relation to theperformance of all other centers. Based on this indicatorscheme and on individual center reports some coreaccomplishments of CPCs are presented in this chapter[4].

    2.1. Role as focal point for CP

    The CPCs have established as one of their centralgoals to be recognized as focal points for CP. Qualifiedsuppliers and potential clients for CP services shouldrecognize the quality and outreach of CP services. A truefocal point can make a massive dissemination of the CPconcept thus complying with the ultimate goal of the CPproject. Also an effective policy dialogue depends on therecognition of the CPC as a key player in the field ofsustainable industrial development. Policy dialogueagain is an important measure to improve the frameworkfor CP application. Their recognition as a key actor inthe CP field also improves the financial sustainabilityof CPCs because it improves the potential for receivingnational or international funding for the execution ofspecific activities and it attracts more clients willing topay for services. Outstanding examples of centers, whichhave been able to position themselves as focal point forCP, are:

    The CPC in Vietnam plays an active role in draftingnew environmental regulations, which prominentlyinclude CP. The CPC has also received contracts forassistance to neighboring countries.

    The CPC in Colombia works actively together withprovincial authorities in establishing andimplementing market based mechanisms for waterpollution control. The CPC has also received con-tracts by national authorities for CP promotion as well

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    Table 1CPCs financed by SECO (status 1.2003)

    Country Current funding period Total funding from Funding per Cleaner production centre Executing agency forfrom/to SECO (US$) year SECO

    Brazil 20012006 1,800,000 360,000 Centro de Producao Mais Limpia FHBBChina 20022007 2,900,000 580,000 Not yet identified UNIDO and Carbotech

    AGColombia 19972002 3,300,000 660,000 Centro Nacional de Produccion Mas EMPA

    Limpia y Tecnologias AmbientalesCosta Rica 19982003 1,100,000 220,000 Centro Nacional de Produccion mas UNIDO

    LimpiaEl Salvador 19982003 1,100,000 220,000 Centro Nacional de Produccion mas UNIDO

    LimpiaGuatemala 19992003 1,100,000 220,000 Centro Guatemalteco de Produccion UNIDO

    mas LimpiaIndia 20022007 2,900,000 580,000 National Cleaner Production Centre UNIDO and Basler&

    of India HofmannMorocco 20002005 1,300,000 270,000 Centre Marocain de Production UNIDO

    ProprePeru 20012006 1,300,000 260,000 Centro de Eficiencia Tecnologica EMPASouth Africa 20022005 900,000 300,000 South African National Cleaner UNIDO

    Production CentreViet Nam 19982003 2,600,000 510,000 Viet Nam National Cleaner UNIDO

    Production Centre

    FHBB: Basel Institute of Technology and Management. Colombia: new project-phase starting 2003. EMPA: Swiss Federal Laboratories for MaterialsTesting and Research. Peru: joint program with US AID; US AID funding additional $1,300,000. South Africa: joint program with Austria; Austrianfunding US$750,000.

    as by another international donor for assistance in CPprojects in Ecuador.

    2.2. Capacity building results

    Capacity building through training has been one of themajor activities of the CPCs. While some CPCs optedfor in-depth modular training of CP consultants (e.g.CPC Vietnam) others wanted short courses on differenttopics related to CP. Courses were designed mainly forconsultants and company staffhowever some specificcourses were also targeted towards policy makers.Capacity building also includes strengthening of the hostinstitution supporting the CPC or the CPC itself. Con-siderable effort was also dedicated to this task. Traininghas been one of the areas where self-finance has beenhighest, with some centers even making modest profitson training. Like all other services, training also includesa fee to make them as demand-oriented as possible.Some outstanding results in this area are:

    Training of over 3000 persons in more than 100courses in CP topics in Central America.

    The CPC Vietnam has been certified successfully bySGS for ISO 9001 and 14001.

    2.3. Results at company level

    First results at company level show the potential of CPin enterprises. Quantified and measured implementation

    resultsin contrast to often reported theoretical potentialof optionsare however only available for CPCs withsome years of work. SECO tracks options implementedex-ante and ex-post to assess the economic and environ-mental impact of measures taken. Some preliminaryresults are:

    In Colombia CP options implemented by a total of60 enterprises have resulted in quantified annual sav-ings of more than US$ 2 million. In Vietnam with 15enterprises, US$ 1.2 could be saved annually.

    Some quantitative environmental results are savingsof more than 1 million m3 water and 50 tons SO2reduction in Vietnam, 10,000 tons less industrialwaste including about 60 tons less hazardous wastein Colombia and around 7000 MWh of saved energyin Guatemala. All these achievements have beenimplemented in a time frame of two to three years.

    2.4. Demand-orientation of services and financialsustainability

    Services need to be demand oriented and assist a clientin solving his problems, thus creating value added.Demand can be stimulated through an effective market-ing strategy. This should however not be confused withworking in areas without a significant potential demand.A clear indication of demand orientation is the willing-ness of clients to pay for services. This also fosters inCPCs a business oriented approach, improves the quality

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    of services and increases the CPC efficiency. Last butnot least it is an important component of financial sus-tainability of a center. The business-oriented approachfollowed has led to clear business plans for all CPCsfinanced by SECO, which are periodically updated andrevised. Some results of this client orientation are:

    Self-finance rates of over 60% in Central America andColombia of CPCs. Around half the income of theCPCs is generated directly through contracts with cli-ents while the other half are tied or untied contri-butions by national organizations.

    Significant increase of marketed services over timewith a broader client base.

    3. Lessons learnt

    Lessons learnt can be divided into conceptual lessonsconcerning the CP approach and its usefulness and oper-ational and management issues linked to an efficient andeffective implementation of the approach.

    3.1. Conceptual aspects

    Conceptual lessons learnt include the limited scope ofCP with a focus on good housekeeping. Another con-ceptual problem is a client focus driven more by environ-mental needs than by the entrepreneurs demand.

    3.1.1. Limited scope of no-regret optionsThe corporate profit due to CP depends on factors

    such as: raw material prices, importance of a greencorporate image, environmental regulations of govern-ment and pressure from the financial sector. There areinvestments in CP that under current conditions areprofitable for one company while others do not considersuch an investment as opportune. The same holds trueof course for a similar company working under differentconditions e.g. in countries with different environmentalregulations and different resource prices. Often it isassumed that a large number of CP options represent awinwin situation exist. This is true if winwin isreferred to win for the society and win for theenvironment as this implies the internalization of allenvironmental costs. If the term win refers howeverto increased company profits as well as environmentalimprovement doubt exists over the real mag...


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