Green Industrial Revolution in Indo-Pacific Region: Economic and

Political Implications

Albert Sutanto

and Maydi Amorzy

Department of International Relations, Universitas Airlangga

Keywords: green industry, political implication, and economic implication.

Abstract: The dynamics of International Economy and Politics is strongly shaped by the industrial revolution an era

has. A few decades ago, the dominant industry was mining industry. In comparison to the mining industry,

the contemporary green industry is more sustainable and environmental friendly. The green industry is used

often in the world of developmental policy, hence the shift from the unsustainable policies towards the more

sustainable ones is a very significant change in the modern history. The shift can be seen in the ratification of

Paris D’accord and the governments’ official statements of their commitment to be a part of Sustainable

Development Goals. The trend of green industry is caused by the public awareness of its necessity, and

therefore the trend creates a huge market for entrepreneurs and job opportunities. However, the implication

of the green industry is not always positive due to amount of reasons. For instance, the U.S market was getting

better when Trump administration announced their withdrawal from the Paris D’accord, and therefore in some

cases the absence of green industry results in positive economic outcome which implies that the presence of

green industry can result in negative economic outcome. Besides the economic implication, the rise of green

industry also impacts other sectors including the political sector. The green industry and sustainable

development that once was a second-tier political issue has now entered the main political stage. The

implication of green industry as one of the main political issues results in the possibility of politicization of a

necessity that green industry is. In this paper, the author(s) will try to understand the gap of what theoretically

ought to happen and what really is happening in regards of green industry rising trend and its implication via

qualitative methodology.

1 INTRODUCTION

Over the course of last few decades, it has become

apparent that the green sector has an undeniable

increased significance in our daily lives. The green

industry is experiencing massive growth in all parts

of the globe. The use of solar photovoltaics (PV),

wind, solar powered water heating system, and

biofuels have been growing on average 15-50%

annually. Environmental regulations established by

states also doubled since 2005 to 2012 with 119

countries having some sort of regulations. Along side

with the regulations, the investment on green industry

due to the implementation of Green Industrial Policy

shows paramount increases; an increase of 32% in

2011 to $211 billion (Larry and Stevenson, 2012: 8).

Corporations and firms that are expected to have

more than 60% of their projects being green-certified

is anticipated to double from 18% in 2016 to 37% in

2018. The outliers in such statement lies in the

developing green markets like China, India, and

South Africa. China’s firms which have done more

than 60% green-certified projects amounts only 5% in

2015 and is rising to 28% in 2018. India on the other

hand will have its number rise from 20% to 52%.

Large parts of such rises are attributed to

environmental regulations for green economy and the

market demand on green industry. Such recognition

applies to most developing green market in the globe,

including China and India (SmartMarket Report,

2016: 5). While discussing green industry in large-

populated nations, Indonesia is a great subject due to

its significance in the Indo-Pacific region. Referring

to Indonesian Green Economy Model by UNDP, the

amount of agricultural green jobs is predicted to

increase exponentially under green economy while

conventional agricultural employment is decreasing

(UNDP: 105). Indonesia’s biggest industry is

agriculture and the transition brought upon by the rise

of green industry appears to be economically

beneficial to Indonesia. Such transition is also

apparent as shown by the decrease of annual carbon-

Sutanto, A. and Amorzy, M.

Green Industrial Revolution in Indo-Paciﬁc Region: Economic and Political Implications.

DOI: 10.5220/0010273500002309

In Proceedings of Airlangga Conference on International Relations (ACIR 2018) - Politics, Economy, and Security in Changing Indo-Paciﬁc Region, pages 86-91

ISBN: 978-989-758-493-0

dioxide emission from 2015 to 2016, and such

decrease will only continue in an exponential manner

(UNDP: 109).

Public policy is affected by the political and

economical sector, hence the sectors also inevitably

affect the formulation of public policy. Corporate

economy has significant implications on the

operations of political system, whereas political

system is reflected in actual policy outcomes

(Salamon & Siegfried, 1977). The implication of

green industry on the economy and politics can be

linked to the rising significance of Green Industrial

Policy around the globe. For instance, the rise of

green industry and its policies also creates trade

issues between countries such as the dispute between

the US & Brazil and the US & China (Larry and

Stevenson, 2012: 1). Besides the economic sector, the

rise of green industry also affect the political domain

of our lives. Other than the increases of GIP

implementation, green industry which harness

sustainable energy as the foundation for society’s

productivity also imply the tendency to support

democratization, in particular the developing

countries which are not yet democratically advanced.

Such statement is based upon Ross’ statement which

says that tendency for reliance on oil wealth has a

good amount of anti-democratic effects in poor

countries. Ross believed that the link between oil

reliance and authoritarianism could be caused by the

combination of social and political factors that

demobilizes the public (Ross, 2001). By that logic,

the switching priority and the increase in GIP

significance will inevitably create implications on the

political domain, mainly by increasing

democratization.

2 BACKGROUND

Green Industry is a situation where economies are

striving towards a more sustainable future in terms of

growth. Green industry is achieved by undertaking

green public investments and implementing public

policy initiatives that encourage environmentally

responsible private investments (UNIDO, 2010). It

can be said that the rise of green industry is closely

tied to Green Industry Policy (GIP), up to the point

where both terms could be used interchangeably. GIP

means that the government attempts to hasten the

development of low-carbon alternatives to fossil fuel

(Larry and Stevenson, 2012: 1). Nowadays, due to the

massive increases in the trend of Green Industry

around the globe, some would call the phenomena as

Green Industrial Revolution (GIR) (Clark, 2015).

Green Industrial Revolution started when the middle

class in developing nations grows rapidly. Such

people begins to want to have nicer things that

previously could only be enjoyed by the middle class

in developed countries. To keep up with the immense

demand brought by the middle classes, sustainability

is no longer prioritized by the producer of goods. The

lack of sustainability caused environmental damages

and climate changes, up to the point where the leaders

of the world have to unanimously acknowledge the

need for solutions. Therefore, a new era based upon

sustainable green energy generation, innovative smart

green technologies, and public sensitivities toward

the environment has emerged. It started in Asia in the

1980s and catches up to Nordic countries in the

1990s, resuming its wave with Germany leading at

the end of 21st century. It has been proven to be

successful in its growth. As a result, GIR has been

proven to be viable, economic, and succesful in

Japan, Korea, and the Nordic countries. Arab Oil

Embargo of the 1970s plays a huge part in the success

of GIR. After starting in Korea and Japan, Germany

caught up with its Energiewende and its feed-in-tariff

(FIT) program. That made Germany to be the number

one producer and installer of solar panels from 2006-

2009. In 2010, Italy took the FIT concept and

implement it until it has became one of the distinct

world leader in solar panel installation. In 2011,

China took the lead as the number one solar panel and

PV manufacturer and installer. The GIR is currently

trying to make its way in America along with its new

technologies and the prospect of new green jobs

(Clark, 2015).

GIR does not guarantee or even promise to protect

environmental degradation, but instead it serves as a

trigger for a new wave of growth that will get

industrialized countries out of the problems imposed

by their outstanding growth. The main instruments

that might support Green Industrial Revolution to

achieve its purpose are technological advances and

market potential (Demailly and Verley, 2013).

Looking back at past technological innovations, the

innovations unintentionally drastically increase

productivity. There is an optimism about how green

industry might revolutionize productivity and

therefore also boosts the economy. Green industry is

projected to improve welfare and worthy to be

prioritized in long-term investment. Such optimism

that is taking place due to increased awareness has

given green industry great significance in influencing

outcomes and trajectories. The significance that

further leads to extensive pursuance of green industry

can be observed in every part of the globe including

the Indo-Pacific region.

Green Industrial Revolution in Indo-Paciﬁc Region: Economic and Political Implications

Arguably, the most important region when

discussing the rise of green industry in Indo-Pacific

region might be the Southeast Asia region. The coral

triangle in Southeast Asia is one of the most

biologically diverse and economically productive

marine regions in the world (Strange & Bayley, 2008:

8) Southeast Asian countries have benefitted from

rapid yet unsustainable growth in the recent years

(Strange & Bayley, 2008:4). Hence, Southeast Asia is

highly vulnerable to climate change that will hurt

farmers and people in coastal cities. Most Southeast

Asian countries also face infrastructure challenge.

Green growth however is believed to lay the

foundation for a stronger, cleaner, and fairer

economies and societies in ASEAN (Strange &

Bayley, 2008: 5). In another word, generally around

the globe but especially in Southeast Asian region,

green growth should not be separated from economic

development strategies. Southeast Asia is currently in

the phase that constitutes perfect timing for transition

towards green growth. Green growth and GIR main

keys for activation is the political leadership in the

region in combination with the policies and

institutions. In the recent years, the rise of green

industry in Southeast Asia is triggered by the three

golden opportunities; sustainability of natural wealth,

locking in clean and resilient infrastructure, and the

possibility of becoming a hub for green investment.

The most strategic actor in the global political stage,

China, has managed to seize on the opportunities and

ride on the demand of green industry. Solar power in

china has risen for approximately 50% in 2015

(World Economic Forum, 2016). China is also acting

as the biggest investor in renewable energy, with its

investment amount twice of those of Europe’s. China

is just one of the instances that showcases Indo-

Pacific’s very positive attitude towards green

industrial revolution, making the rise of green

industry an apparent phenomena in the Indo-Pacific

region.

3 IMPLICATIONS

In an attempt to explain the implications GIR has over

Indo-Pacific region, we ought to refer back to green

politics theory and green economy theory. These

theories serve as the foundation to green growth

theory. According to Barry (1996, 60), green politics

theory mostly talks about environmental ethics. The

most distinct feature from green politics theory is that

the relationship between human and nonhuman world

is a legitimate object of moral concern. In other

words, the preservation of development as much as

conservation for development of the future or

ecological restoration, all within a broad 'ecological

management' framework (Barry 1996, 143). Even

profound ecological experts that held typically

contradictory pinrciples as their main position ended

up acknowledging that wildlife conservation requires

social intervention and an especially active

institution. The distinction between the two subjects

— human and non-human opens up a space within

green moral theory that talks about anthropocentrism

and ecocentrism. That space is an effort to overcome

the fact that the legitimate object of moral concerns

has been largely neglected by contemporary moral

theories. The moral concern should be applied to

green politics because of its ability to accommodate

the normative thrust of the ecocentric concern

through public policy while protecting the interests of

the nonhuman world. We need the right guiding

principles that could help us make the right choices to

create a better live for all human beings (Strange and

Bayley 2008, 16). The deep ecological idea of the

preservation of wilderness, the preservation of the

nonhuman world from certain types of collective

human transformation, in the form of 'development',

paradoxically requires another form of human

management, in the form of institutional structures

and practices which serve as forms of social

governance to limit and / or change development, in

order to achieve the aim of preserving the wilderness.

The political issue for green politics is on the type,

scale, and institutional structure to manage social-

environmental interactions that best suit the values

and principles of green lifestyle. The

institutionalization of green values in the collective

management of ecology must be considered in terms

of 'governance' as opposed to 'government' (Barry

1996, 143-4).

Economic system and policy execution could not

be separated in their application (Hacket, 2006).

There are three assumptions supporting the theory.

First, economic system gets its input mostly from

natural processes like ecological, hidrological, or

geological system. Second, economic activity could

get negatively effected by misconduct of system and

natural processes, albeit these effects can be

substantially reduced through public policy. Such

assumption acts as the premise for the third

assumption; activities that endanger the environment

can be reduced through an economic scheme. This

scheme may take the form of ecolabels, subsidies, and

taxes, and aims to change the incentives of people or

businesses. The relations between green political

theory and green economic theory that leads to green

growth theory can simply be seen from the stringent

ACIR 2018 - Airlangga Conference on International Relations

definition of green growth, which means fostering

economic growth and development, while ensuring

that natural assets continue to provide the resources

and environmental services on which our well-being

relies (Jacobs 2012, 4).

The fact that GIR trend has been going upward

happen because people start to understand the

challenges that are being faced. Balancing between

the use of sustainability and profit will produce true

impact. Keeping the ecosystem in balance is very

important that it reaches beyond environmental

concerns (Strange and Bayley, 2008: 11). As we can

see in the society, the balance between births and

deaths, or emigrations and immigration bring huge

implication in demography hence society. Therefore,

people have to manage the balance of the system

because societies will not able to stay stable when

resources are limited. It is worth nothing that

ultimately, humankind will grow and develop. The

imbalances of supply and demand, in savings and

expenditure, in loans and investments, can lead to

economic collapse, recession and depression (Strange

and Bayley 2008, 16). It is very important for society

to preserve the balance of the systems. Development

of greener industry has been a really great help to

preserve the balance of the systems. It all could

happen because the world is facing threat from the

imbalance of nature that is happening now. Human

beings need to be more aware and understand the

importance of green living. A human will acquire

more capabilities, evolve, and getting better while

getting bigger (Hess 2013, 313). But because growth

could also serve as an obstacle for the progress of

human beings, there exist the need for better welfare.

Green Industry acts as a way to increase welfare by

minimizing the amount of pollution released to the

environment. The growth of the population and the

increased per capita consumption have affect the

production of goods. The increasing production will

require more resources and also will produce more

wastes (Hess 2013, 314). GIR will add an important

dynamic dimension towards economic development.

As stated by Tracey Strange and Anne Bayley (2008,

15), economic development has made it possible for

advancements that fundamentally changed the way

people lived from the previous century, but this

economic activity could also create problems with

potentially dramatic consequences.

The significance of GIR in Indo-Pacific regions

have been adequately apparent, however the

significance in Southeast Asia is particularly standing

out. Southeast Asian countries possess an abundant

amount of natural resources, unfortunately

accompanied with lacking human resources to

properly manage the natural resources. That serves as

an opportunity for the core countries to exploit the

condition; using Southeast Asian countries as the

main producer of goods without having to face the

environmental consequences. As time goes by,

Southeast Asian countries started to realize the

importance of prioritizing economic growth and

growth in other sectors, which therefore also realizing

the importance of sustaining such tremendous

economic growth (Observer Research Foundation,

2017). There are three basic components of

sustainable development that are identified by Harris

et al (2001, in Hess 2013, 317); economic,

environmental, and social. Those three components

are related to each other. A nation will always put the

best effort to maintain their economy by controlling

their goods and services production. The production

needs to maintain the environmental equilibrium,

both in the source and sink functions that are provided

by natural resources and the environment. As for the

social dimension, it serves as the key that connect the

other two components because equity and

opportunity ought to be upheld in order to optimize

how a country works. The three components work to

strengthen the need and therefore the progress of

Green Industrial Revolution. If the combination

between those three works, the systems will be in

balance, and the run of the production will be ensured.

Ensuring production means increasing the chance of

welfare increases. We do know that economic,

environmental, and social systems must all be kept in

relative equilibrium point and must be balanced with

each other, in order to maintain sustainability

(Strange and Bayley 2008, 16). The rise of climate

awareness in Indo-Pacific implies human growth and

development. Societies started to understand more

about the importance of environment, because

environment can make a huge effect to economy and

when economy is affected, politics and other social

sectors will be effected too. In the end, with the rising

awareness regarding climate change, the political and

economical sector is also affected. The chain reaction

between those three components are undoubted. For

example, countries that experience greater economic

growth have been more successful at reducing

absolute poverty and not only increasing life

expectancy, but also improving their quality of life

(Hess 2013, 314). When a country could not manage

their economic growth, what will happen is poverty

and the absence of improved quality of life. That

condition will brings a lot more problems, because the

political system will also get affected. And when it

reaches the political area, things will just become

more complicated. The climate change could

Green Industrial Revolution in Indo-Paciﬁc Region: Economic and Political Implications

symbolize a larger and wider problem of the danger

that inherent in pushing our ecosystems out of

balance (Strange and Bayley 2008, 15). Climate

almost certainly undergoes significant changes as a

result of human activity , but human activity could

also be affected by the climate change. Tracey

Strange and Anne Bayley (2008: 46) stated that

climate change issue has always face the same

problem about how to fairly share the burdens

between the developed countries and developing

countries. The fact that most of the developing

countries have to face climate change and other

problems they never create is considered unfair.

Therefore, the way to solve this is that the developed

countries could help by giving technologies and

financial aids to tackle down this issue.

GIR trend has been undeniably going upwards.

The implication of GIR has on economic and political

sector is to bring and stimulate balancing trajectory.

There are plenty of evidence and indicators that

guarantee that fact. The political significance of GIR

which reflects its progress can be seen in the

establishment and growth of Indo-Pacific Greens

Federation (APGF). APGF is a federation of national

green parties, social and environmental organizations

from countries across Asia and Oceania, established

with the purpose of realising the Global Greens

Charter. APGF can be used interchangeably and is

formerly known as APGN (Indo-Pacific Greens

Network). The root of APGF can be traced with the

rises of greens in Australia & New Zealand,

eventually leading to the first ever Planetary Meeting

of Greens in May 1992. In the meeting, 250 greens

from 28 countries gathered in Rio De Janeiro. The

next summit was held in August 2000 where Asia

pacific Green Politics Workshop was held by Asia

Pacific Green network in Brisbane. The first ever

Global Greens Congress was held in 2001 and since

then, the Greens have been increasing its political

influence; notably winning 34 seats in European

Parliament in on June 2004 and contesting Australian

Federal Elections. After the first APGN congress is

held on February 2005, the green parties continue to

consolidate political power, including the 2009

victory in Senegal Regional Seats. This also plays a

part on the fact that Inamura has managed to become

the first popularly elected Greens Mayor of Japan in

late 2010 (Global Greens, 2010). Green policies can

maintain and appreciate natural capital stocks along

with creating a structurally higher rate of innovation.

Such are based upon Hotelling’s (1931) statements of

the value on non-renewable stocks and the

Schumpetarian (1942) view of fundamental role of

innovation in value creation. These statements apply

in specific on Indo-Pacific economic condition of

GIR (Fankhauser, Sam, et al 2017, 3). Economically,

from an industrialized continent that were obviously

unsustainable, Indo-Pacific has undoubtedly became

one of economically greenest continent. The process

of estimating the size of green industry in Indo-

Pacific can be done by observing Low Carbon

Environmental Goods and Services Sales (LCEGS)

sales and Climate Change Mitigation Technologies

(CCMT) trade data. Indo-Pacific boasts the highest

value of LCEGS in absolute terms and per unit of

GDP. Asia also accounts for 44% of global climate

change mitigation exports (Fankhauser, Sam, et al

2017, 7). The Indo-Pacific region is experiencing

green economy growth due to the GIR and the trend

upwards is going to be continuous for a great amount

of foreseeable future. Referring to the political and

economical implications brought by GIR in the Indo-

Pacific region, plenty of occurrences available. On

the macro level, there are the establishment of

international organizations like UN ESCAP, and

regimes such as UNCSD and MCED. On the micro

level, there are green growth success stories which

reflects political and economical implications which

otherwise wouldn’t exist without Green Industrial

Revolution. Such stories would include Solar Tuk-

Tuk in Thailand, BYD Electric Bus in China, Green

Subsidy Reform in Indonesia, et cetera (Nikolova,

n.d.).

4 CONCLUSION

The rise of Green Industry around the globe has

become very apparent these last decades. Such rise is

named as Green Industrial Revolution (GIR) by the

experts. Global GIR is started due to the exponential

rise of middle class in the demographic hence the rise

of goods consumption. In order to keep up with the

increased demand of goods, sustainability is

sacrificed to prioritize efficiency. The rise of middle

class however also opens up the access to information

and therefore green awareness, which ends up

producing pressures to apply and implement green

policy that further enhances the GIR. Economically,

there are two basis for the rise of green industry,

which are; market potential and technological

advances. Market potential is reflected by the demand

caused by the increased awareness. Technological

advances on the other hand is the optimism on

technological innovations that believe that

innovations will increase productivity and boost the

economy.

ACIR 2018 - Airlangga Conference on International Relations

The implications brought by GIR in the sector of

politics and economic can be attributed to the theory

of green politics. Green politics theory focuses mostly

on environmental ethics. Green politics theory stated

that wildlife conservation and green trajectory require

social involvement. Green policy is therefore

established in order to address the moral concerns

brought by green politics. Policies execution require

human management, governance, and economic

system. That is because environmental equilibrium is

required to maintain economic equilibrium; as

sustainability must be prioritized to make sure that the

supply provided by nature can keep up with the rising

demand of goods. The implication of GIR upon

politic and economic can simply be summarized that

GIR brings upon balance for societal system in

accordance with the 3 components of sustainable

development which consist of economic,

environmental, and social. The motive of balance is

reflected in a lot of evidence as the rise of greens in

the political world and the rise of green sales in the

significantly growing economy of Indo-Pacific.

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Green Industrial Revolution in Indo-Paciﬁc Region: Economic and Political Implications