Denmark Shows the Way

By Laurie Dougherty

This article is from the May/June 1997 issue of Dollars and Sense: The Magazine of Economic Justice available at http://www.dollarsandsense.org/archives/1997/0597dougherty.html

This article is from the May/June 1997 issue of Dollars & Sense magazine.

issue 211 cover

Industry has a long record of resisting even the old-style regulations for cleaner air and water—the mandates to reduce, for instance, emissions of ozone-harming CFCs or the greenhouse gases which contribute to global warming. So it's difficult to believe a 1996 report by the Organization for Economic Cooperation and Development (OECD) that suggests environmental protection in the United States is entering a welcome new phase.

But the U.S. Environmental Protection Agency (EPA) is indeed watching innovative approaches that don't just regulate pollution after it has been produced but try to reduce and reuse materials at the outset. When fully developed, a cluster of industries begins to function like an ecosystem in which, as Eban Goodstein points out in this issue, "waste is food" and the byproducts and end products of one plant enters the life cycle of another.

An industrial ecosystem is not an easy thing to accomplish, particularly in a capitalist system which fosters competition rather than cooperation, and isolated effort rather than collective synergies. But there are several projects in the United States and abroad in which an ecological approach to industry has taken some hold.

The small town of Kalundborg in Denmark is a living symbol of what this model could look like. Several industries, the town itself and nearby rural areas have developed a web of relationships that funnel heat, energy and byproducts from one to the other. John Ehrenfield, Director of the Technology, Business and Environment Program at the Massachusetts Institute of Technology, sent one of his graduate students, Nicholas Gertler, to Kalundborg to "find the master plan" of the network. What Gertler found is that there is no master plan: "The symbiosis developed gradually and without a grand design over the past 25 years, as the firms sought to make economic use of their byproducts and to minimize the cost of compliance with new, ever-stricter environmental regulations."

Early initiatives in Kalundborg were motivated by a desire to cut costs by using resources more efficiently. For example in the 1970s, Gyproc, a manufacturer of plasterboard, began buying waste gas from the nearby Statoil refinery to fire its drying furnaces, partly because it was cheaper than oil. Asnaes, the local coal-fired electrical power plant, began capturing the fly ash from its smokestacks to sell for cement and other construction purposes. Then as Danish environmental mandates and energy conservation needs increased, Kalundborg began to seek cost-effective ways to comply. As Gertler documents, both the refinery and the power plant had to reduce sulfur dioxide (SO2) and carbon dioxide (CO2) emissions. Statoil built a desulfurization plant yielding liquid sulfur, which it sells to another company, and a purified gas which it sells to Gyproc and Asnaes. Asnaes now saves 30,000 tons of coal a year while reducing CO2 and S02 emissions. In line with a national energy plan to reduce dependence on oil, in 1981 the town began using waste heat from Asnaes for houses and buildings. This now meets over 90% of the town's heating requirements and by 2005 everyone must use this district heating. The town guarantees loans to install the necessary pipes.

As time went on, those involved became more conscious that they were part of a new approach to resource use. Valdemar Christensen, a product manager at the Asnaes Power Station, coined the term "industrial symbiosis" and emerged as an architect of its evolution in Kalundborg.

The town attracted attention as a prototype; however, the factors which make Kalundborg tick as an industrial ecosystem may be difficult to replicate elsewhere. Kalundborg is a small town. People who work there live there. Managers, engineers and workers meet in local stores and restaurants on a daily basis. This contact promotes trust and an easy exchange of information. Companies in Kalundborg are not in direct competition, so there is little fear of revealing trade secrets or jeopardizing competitive advantage by sharing information about materials and processes.

Denmark has a high level of environmental awareness and a strong, but flexible, regulatory regime in which performance is mandated but industries are free to consider a variety of techniques to get results. Managers back up arrangements to exchange energy or waste products with contracts and contingency plans so that one industry is not caught short by fluctuations in production by the partner firm. Business people keep an eye on the bottom line, but at the same time take pride in efforts to develop green technologies. Gertler puts it this way: "As managers they are profit-seekers, but as individuals they are environmentalists."

According to Christensen, cost cutting is enough to encourage some "symbiosis," but political efforts to require environmental benefits are necessary to develop it further. "Regulation has played a major role in inspiring linkages and forcing the use of pollution control technologies which made linkages possible," says Gertler.

No regulation at all allows the least expensive way to do business to win out, but once regulations are in place they set a floor below which environmental performance must not fall. The game then becomes finding the most cost effective way to meet those standards. For example, required to reduce sulfur emissions, Asnaes installed a scrubber. Out of several options, it chose this technology because it produces gypsum which Asnaes can sell to Gyproc for its plasterboard and so recover at least some of the scrubber's operating costs.

In the United States and Canada, several communities are looking at this model to plan new industrial areas or retrofit older ones, often with support from the EPA, the President's Council on Sustainable Development (PCSD), and university consultants. Cornell's Work and Environment Initiative (WEI) developed workshops to help communities think through the potential for ecologically based industry. Baltimore, Trenton, Plattsburgh, N.Y., Chattanooga, Tenn., Londonderry, N.H., Brownsfield, Texas, and Lake Charles, Va., have projects planned. Researchers at Dalhousie University in Nova Scotia envisioned a further step in their analysis of a large industrial park by looking at ways to integrate the park as a whole into the local ecology: taking advantage of solar and wind energy and natural drainage patterns, buffering buildings from the harshest effects of winter wind or summer heat, and encouraging pedestrian and bicycle traffic.

The Fairfield Eco-Industrial Park in Baltimore encourages new practices among 60 existing businesses with the support of Project XL, an EPA program that encourages companies to go beyond existing pollution standards by voluntarily adopting innovative technologies. Project XL also encourages communities to become involved in developing benign industrial processes. Mike Palumbo, who manages the industrial park for the Baltimore Development Corporation, sees this as a mandate to incorporate environmental justice in its planning. About 13,000 low- to middle-income people live nearby who would be affected by the park, mostly in two distinct communities, one African-American, one white. The project conducts regular meetings with these communities, sharing information and listening to community concerns. According to Palumbo, it is laborious and time consuming to bring those affected by the project together and meetings can easily become confrontational. But in the absence of the small town cohesion that exists in a Kalundborg, such settings may be a step toward building a common base of information and trust.

The Project XL concept fits well with the insight from Kalundborg that high standards for environmental performance coupled with flexibility in achieving them encourage creative solutions and efficient use of resources. But there is a danger. The voluntary aspects of the U.S. program can offer loopholes for industries to resist regulation. One XL project, Intel's new semiconductor factory in Chandler, Ariz., generated criticism from community and regional activists, and the Campaign for Responsible Technology, a national coalition for safe practices in the electronics industry. Their letters to the EPA suggested that permit requirements were relaxed, limits for some effluents were less stringent, workers were potentially exposed to toxic levels of chemicals despite the emission standards, the process for involving community "stakeholders" affected by the factory was flawed, and there was no independent monitoring of Intel's voluntary commitment to meet and beat current environmental standards.

Gertler, now a consultant to an eco-industrial park project in Londonderry, N.H., feels that while it is more difficult to monitor a company's compliance with environmental laws in a more flexible atmosphere, the Kalundborg experience shows that strong environmental protections can be enforced, and in fact, can establish a standard which industry must meet with creative, cost effective and resource efficient practices. Cooperation is also key to developing ecological industrial practices, but Gertler favors a business-to-business, rather than an economic development approach. Businesses need information about what is possible, contracts that offer assurances of quality and reliability, and cost incentives for new undertakings. Brokers, or industrial park managers playing that role, can take the place of the casual exchange of information in Kalundborg by seeking out opportunities for mutually beneficial links and negotiating arrangements between parties. But this can leave the community and the workforce out of the picture. If trust and cooperation are essential to making this concept work, then all stakeholders must have access to information and meaningful participation in the transition to an environmentally sound industrial base.

There is still a strong role for regulation in this model. It becomes one of many tools for designing and supporting environmentally sound industrial practices. Tad McGaillard of Cornell's WEI feels that projects like the ones mentioned here are on the cusp of what we need to know—taking the first steps in a process that evolved over 25 years in Kalundborg. By working through problems and sharing solutions with the emerging business, government, community, labor and academic network, they foster what folks in Kalundborg call "close mental distance"—the consciousness of interdependence that must undergird a sustainable human society.

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