Eco-innovation &

Future Actions with OECD

2007, June 22 Director, R&D Div., METI/Japan

Yuko Yasunaga, Ph.D.@OECD workshop on Sustainable Manufacturing

Production and Competitiveness / Copenhagen

<Contents>

1. Why do we discuss “Eco-innovation” ?2. What is “Eco-innovation” ?3. Current Situation surrounding “Eco-innovation”4. Technologies/ Business-models/ Institutional

Scheme for “Eco-innovation”~Ｃase Ｓtudies from Japan’s Experiences~

5. Related Questions6. Future Actions with OECD (for discussion)

1. Why do we discuss “Eco-innovation” ?

○ Emerging constraints：

- Environment (CO２,Hazardous wastes,···)

- Energy (Peak-out of Oil / Gas, BRICs consumptions.)

- Resource (Rare metals, Rare earth)

○ Critical importance for the whole picture of “new ”

society and “new” industries.

Need a novel growth model in the 21st. Century

2. What is “Eco-innovation” ? (1)

○ “Create” environment / energy / resource rather than “consume” those

Sustainable industrial structure / technologySustainable social infrastructureSustainable life-style

Technology / Business model / Institutional framework

○ Need a long-term and global viewpoint (need a paradigm change)

○ Dimensions and approach« 3 dimensions »

« Comprehensive approach »

《Technology side》

- Decrease Fossil Fuel Dependence /ＣＯ２ Emission Apply Non-carbon Input for EnergyApply Non-fossil Carbon Input for chemicals

- Decrease Critical Element (Rare-metal, Rare-earth, etc.) Consumption and Develop Manufacturing Technologies with Ubiquitous Resources

- New Manufacturing Process out of High-temperature / High- pressure / Large-scale process

- Cyclic Eco-friendly Production Complex - “Small Factory”

(Small products from small production facility)- On-demand/Reconfigurable/No-warm-up Production- Biomimetic Technology- Energy/Resource Conserving Infrastructure

(IT network, Electric Power Generation/Grid, Transportation)

2. What is “Eco-innovation” ? (2)

Industry Society/City Infrastructure Life-styleManufacturing service Energy Supply City/Transportation Home Office

Technology

Biz-model

InstitutionalSystem

Sustainable Industry Structure

Sustainable Manufacturing

Green Servicizing

“Small Factory”

Gov’t Support for Market Penetration

Cyclic resource use

Sustainable Social Infrastructure

Superconductivity Elec.Transmission

Renewable Energy ＥＶＦＣＶ

Modal shift

Comprehensive energy biz

Sustainable Life style

ＳＯＨＯ/tele-work

３Ｄ-VR

Energy-dependent Housing

Community-Scale Fuel Cells

Auto leasing /sharing

Sustainable Town Building

Civil Engineering with Cyclic Resource Utilization

Ultra long life housing

Localized supply/consumption

HydrogenFueling Station

“Compact City”

Sustainable Office Supply

No Commuting

Personal-contract base office work

2. What is “Eco-innovation” ? (3)

“eco-innovation”

Environment-centric Human-centric

Biz Model

Specific

Comprehensive

Social/public Personal

bio-mass

Social System

Sustainable society

R&D

“Low Carbon Society”

ergonomics/human-inspired engineering

Energy conservation

secured life

International Penetration/cooperation

Trans-por-tation

manufacturing

service industry

TechnologyRenewable Energy

2. What is “Eco-innovation” ? (4) - Wider Concept

Industry / Society of 21st.Century

Sustainable Industry Sustainable Society Sustainable Life

●Biomass-based Chemical Industry/Green Chemistry

●” Small Factory ”

●”Eco-Friendly-Complex”

● Bio-mimetics

<Transportation>

●Sustainable Energy Supply System<Energy>

<Home>

<Office>

<Industrial Sectors>

<ＩＴ>Environment-friendly IT Infrastructure

(NGN, Low power device, Low power display, etc. )

2. What is “Eco-innovation” ? (5)

●High-tech Industry with Ubiquitous Elements

Renewable, Nuclear, Hydrogen, Superconductivity, etc.

FCV / EV, energy- saving ITS, new road infrastructure

●Environment-friendly Transportation System

●Low Energy Consumption andLong-life Housing

●Energy / Resource Saving Office

3. Current Situation Surrounding “Eco-innovation”

○ Very Weak Linkage between Science/Technology/Business !

Technology (Corporate Lab.)

Science (Univ.)

（Biz Unit）

Potential

Market

Weak Signal

Business Weak Signal

(Almost) Only “Kaizen” & “Combination and Optimization” Type Development

(Almost) No Basic Research by Industry

(Almost) No Interdisciplinary Research Effort between Different Fields

Smaller Biz than Expected

Weak Linkage between Science & Technology

Chemistry

Biology

Physics

Energy Scie

nce

Weak linkage

(1)Technologies for Sustainable Industrial Structure

(1)Indium(In)

Used in Flat Panel Display as Transparent Electrode

(2)Tungsten（W）

Used in Super-hard

Manufacturing Tool

Substitution (ZnO,etc.),Conservation with Nano-level Thin Film

Flat Panel TV

Substitution

( Ti-based Alloy, etc.)

<New Manufacturing with Ubiquitous Resources>

Large-scale production in large

facilityMicro-reactor &

continuous process

Small Chip Micro Reactor

<Table – Top Chemical Factory>

Stacked Micro-reactor

4. Technologies / Business-models/ Institutional Scheme for “Eco-innovation”

(2)Biz Model for Sustainable Industrial Structure

Panassonic’s “Light Service” Biz: contract only providing ” light”, with light bulb owned by Panassonic

●Automobile Shredder Residual

●PCB from Appliances Appliances

(contents)Cu 2～10%Au 0.3～0.7g/tAg 0.3～0.7g/tPb 0.2～0.5%

input 44,400ｔ/yr

Cu 1,780ｔ/yr

Au 22ｋｇ/yr

Ag 440ｋｇ/yr

Pb 180ｔ/yr

●milling

●de-chlorization

Steam Factory

Reduction in Heavy Oil Consumption (5,000kl/yr)

<Metal Smelter as a Recycle Plant>

Metal Recovery

processing

metal recovery furnace

4. Technologies / Business-models/ Institutional Scheme for “Eco-innovation”

(3)Sustainable Social Infrastructure in a “Compact City”

Renewable Electricity Generation and

Superconductivity Transmission Line

Local Heat/Electricity Supply from

Production Facility to City Infrastructure

Local Water Recycle electricity

heat

water

biomass fuel

Local supply of Biomass Fuel

material recycle

Waste–fuelled power plant

4. Technologies / Business-models/ Institutional Scheme for “Eco-innovation”

5. Related Questions (1)

○Relationship between “number ,price & function of product ”

and “size of production process” needs “rebalancing”?

《Example》

·Why MEMS (Micro Electro Mechanics System), logic-LSI and memory LSI are produced with the “same”

production technology ?

·We need the optimal production technology for

“variable quantity - many kinds ” products.

Total production cost

amount of production

MEMS

Variable Cost（Logic-LSI）

Variable Cost（MEMS）

Fixed Cost（MEMS）

Variable Cost（Memory LSI）

Memory-LSIlogic-LSI

5. Related Questions (1) ～illustration～

Fixed Cost（Memory-LSI）

Fixed Cost（Logic-LSI）

5. Related Questions (2)

○ Question of “how to realize the optimized

society ” is interpreted as the question of

“how to overcome lock-in associated with

“legacy” economic / technological regime

(as initial / boundary conditions) ” ?

5. Related Questions (3)

○Total optimization approach (NOT partial) requires

various methodologies for:

1) treating different time-horizon issues simultaneously (both

technologically and socio-economically)

2) solving many equations with many variables and historically-

cohesive initial / boundary conditions

3) creating solutions varied with each economy’s economic /

environmental / cultural reality (sector approach)

4) harmonizing political / economic / ethical requirement

6. Future Action with OECD

○ Learn more from member countries’ best practices and find implications to each member country’s industrial / governmental / consumer sectors

○ Involve more industrial sectors and academia to discuss “sustainability indicators” and methodologies to incorporate dynamic factors, such as R&D

○ Discuss each member country’s policy / technology roadmap

The resonance of science and technology

The integration of technology and

management

Business/Manufacturing

Corporate Biz. Div.

Technology

Corporate R&D Section

Science

University / Public Research Org.

○ Hypothetical Model of Industrial Innovation

Science

Technology

Business/Manufacturing

(Reference 1)

○ Sector Analysis (1) ～ drug discovery , medical equipment

Mechanical engineering

Electronics

Material engineering

Applied physics

⑨ regulation (Pharmaceutical Affairs Law)

⑧Cross-sectional understanding between equioment and medicine ?

⑬iSufficient ntra-governmental collaborations ?

Chemistry, Material Medicine

Technology

Busi-ness

Market

Wall

Clinical

Fundamental

①Sufficient “cross-cutting”researcher ?

② Deepest river / highest wall ?How to deepen pathology / system biology ?

③Divided?

⑤ Sufficient researchers at the cutting-edge biotechnology?

⑦Hesitation to new technologies ?

⑩ insurance score

⑪IPO as an Exit forstart-ups ?

⑫Aging society and insurance can be saved with biotechnology ?

⑥ Can compete withoverseas megacompanies ?

MEXT MHLW

METI

MechatronicsAnalysis Equipment

Electronic Devices

④Sufficient researcher’s inflow from nanotech, IT, physics, etc.?

Chemistry

(med

icine

)

medica

l scie

nce

(pha

rmac

y)

phar

macy

(agr

icultu

re)

agric

ultur

al bio

logy

(Scie

nce)

bio

logy (Eng

ineer

ing)

fermen

tation

engin

eerin

g

Science

(Reference 2)

S

T

B/M

Brain Science

AI software

Market

Industrial robots

Consumer Electronics

Automobiles, ITS

Service robot Mach

anics

②Include brain science?

robots for the special environment

Electronic

s

Control The

ory

Machine

Sensor

Control

④Sufficient overlaps and bi-directional flows?

①Hogh wall between different areas ?

Artificial Intelligence

③Sufficient research activities?

Ergonomics

⑤Sufficient consideration on safety ? (insurance, guideline, and gathering system of accident information)

⑥Unique biz-model / profitable value creation ?⑦Suitable robot applied for specified use ?⑧Balance between function and cost ? ・ The next generation industrial robot

・ Business/home-use Robot ・ RT in consumer electronic/automobile/house)

○ Sector Analysis (2) ～ robot

(Reference 3)

②Sufficient multi-disciplinary researches ?

S

T

B/M

⑦Intra-company silo among researcher/engineers ?

① “Silo” sectionalism ? Comfortable but not aggressive

⑨Equal partnership established between company-company collaborations ?Smooth interaction ?

⑧Long and winding innovation path?

⑤Sufficient multi-disciplinary collaborations between academia and industry ?

⑥Can device manufacturer / system integrator properly lead direction ofmaterial technology ?

⑫Current strength continuing ?

④Does university research hit the critical industry challenge?

⑩ Can compete with foreign giant?

⑬How the resource / energy constraints affect the future chemical industry structure ?

⑪No wall among different business sectors?

③π- type researchers?

○ Sector Analysis (3) ～ functional chemicals

(Reference 4)

S

T

B/M

④Sufficient resource for core technology for the next generation ?

①Human resource with sufficient bases of physics/chemistry/mathematics ?

④Even after NTT privatization, sufficient semiconductor basic research at universities ?

③Sufficient basic research for the age of “beyond Si-CMOS” ? (10～15 years later)

⑤Competitive design power ?

⑥Challenging multi-disciplinary research between semiconductor and nanotechnology/ biotechnology/robotics?

⑦Proper strategy for intellectual property rights ?

⑧”Do-all-by-itself” but self-distrust ?

⑨Now’s the time forrestructuring the value chain ? Chance or crisis ?

⑩Still “try-and-error” type of operation at fabrication process development?

⑪Proper business environment to foster start-ups to facilitatedisruptive innovation?⑫Sufficient investment for R&D and

manufacturing capacity under thesituation of lowering market share?

⑬Strategic market segmentation and suitable business model?

○ Sector Analysis (4) ～ semiconductor, electronics

(Reference 5)