The trilemma of sustainable development

Through an analysis of almost 50 years of historical data, using both the ADRL and non-linear ADRL methods, this study has presented a trilemma among industrial growth, infrastructure development, and the emission reduction of air pollution and greenhouse gas.

The EKC of industrial growth

The current study is among the first to explain the EKC between industrial development and air pollution using the aggregate microeconomic data—the average industrial firm size calculated by the division of the total shipment value by the total number of firms in the city. From the aggregate microeconomic approach, this study validates the EKC hypothesis in terms of NO 2 and CO emissions per capita but rejects the EKC hypothesis in terms of falling dust particle and O x emissions per capita.

The initial decrease of air pollution in relation to the industrial growth after 1967 provides evidence for the effectiveness of the pollution prevention agreement between Kitakyushu government and the private sector in alleviating air pollution. This viewpoint is also supported by the fact that, from 1963, the municipal government had faced tremendous pressure from the local community due to poor environmental quality because of industrial development (Fujikura, 2007).

In this study, the existing inverted N-shaped relationships of NO 2 and CO emissions with the industrial firm size hint at the vital contribution of large industrial enterprises to pollution reduction, as NO 2 and CO are primarily the waste products of combustion of fuel for power generation and manufacturing. This result can be explained by previous studies, which have found large industrial firms to be more capable of replacing old, polluted, and energy-inefficient machines with better ones than small and mid-size firms (Andreoni and Levinson, 2001; Merlevede et al., 2006; Nielsen, 2018). Gaining the advantage of economies of scale over smaller firms, large firms are also able to consume fewer units of energy to produce a unit of output (Machado et al., 2016; Oh and Lee, 2016; Park et al., 2016). In addition, the energy sources in Kitakyushu city has been gradually shifted from coal and oil to natural gas and renewable energy since 1967, which leads to lower emissions of greenhouse gases and NO 2 (De Gouw et al., 2014; Higazy et al., 2019; OECD, 2013). With 66% of energy in Kitakyushu city is consumed by industrial activities and energy conversion is more affordable to larger industrial firms, the emissions of NO 2 and CO might be reduced as industrial firms grow. It has been reported that despite accounting for the largest proportion of energy consumption in Kitakyushu city, the industrial sector keeps growing while air emissions from energy generation are still under control (OECD, 2013). As such, the evidence points toward the EKC of NO 2 and CO emissions are the results of (1) stringent pollution monitoring, controls and financial support of local government, (2) replacement of energy-efficient technologies, (3) economies of scale effects, and (4) the energy source conversion from coal and oil to natural gas and renewable sources.

However, our analysis also shows that the amount of falling dust particle and O x , after the initial decline, starts to rise when the industrial sector expands to a level of $9.32 million to $10.91 million of shipment value per firm depends on the model of analysis. In 2013, the OECD report warned that where a rising number of large firms in iron steel, chemical, and automobile sectors, etc. are reported to outsource their activities to smaller firms to whom enforcement and inspection are more difficult to apply. This could essentially explain the analysis result. Hence, policy-makers in Kitakyushu city are suggested to revise inspection regulations with regards to small and medium firms in order to stay abreast of the changing dynamics of the industry.

The problems with infrastructure development

Besides the significant relationship between firm-level industrial growth and air pollution, we also found both negative and positive correlations of road infrastructure development with air pollution. On one hand, our analysis shows a positive effect of road construction on alleviating the amount of falling dust and CO concentration. These findings can be explained by the fact that as higher quality road is built, the manufacturing and recycling productivity and efficiency are elevated (Duran-Fernandez and Santos, 2014; Gibbons et al., 2019), which, in turns, leads to air emission reduction.

On the other hand, the emissions of NO 2 and O x are found to increase according to road infrastructure development. This finding points out the adverse effect of the policies facilitating recycling industrial growth in Kitakyushu city. Initially, the eco-industrial park in Kitakyushu city was planned to achieve industrial symbiosis, a closed system where the waste of an industry or a firm is fully consumed by others within the system. However, due to the demand for the revitalization of local economy, the eco-industrial park in Kitakyushu city has been turned into a hot spot of recycling industry, which was hoped to generate more economic profit, as well as to reduce environmental degradation (Ogihara, 2007). To attract investment to the recycling industry, the Kitakyushu government offers cheap and vast land located away from the residential area (Hammer et al., 2011), while more roads have been built to ensure the connectivity of industrial recycling firms with other industries and residential areas. In addition, to keep the growth rate of recycling industries, the road infrastructure needs expanding to make recycling materials and outputs flow among regions within and outside of Kitakyushu city. During the period from 2005 to 2010, the total amount of waste inputs from outside Kitakyushu city tripled, while the total amount of recycling outputs transported to locations within the eco-town, Kitakyushu city, and Fukuoka prefecture increased substantially (Tsuruta et al., 2016). Air pollution from transportation might rise dramatically due to recycling industrial activities, not to mention the increase in the number of personal vehicles because of increasing traveling demand (Cervero, 2003) and urban sprawl (OECD, 2013) when more roads are built.

Even in a stringent green growth regulation context, like Kitakyushu city, some air pollution emissions still eventually increase according to industrial growth and infrastructure expansion. This, as a result, creates a trilemma among industrial growth, infrastructure development, and air and greenhouse gas emission reduction. Indeed, dealing with climate change and air pollution while fostering industrial growth and road infrastructure development is a complicated business, which requires the involvement of multi-stakeholders, not only the government, the private sector, academia, but also the local community. We recommend policy-makers in Kitakyushu city promoting the usage of public transport instead of personal vehicles within the local community by raising awareness of air pollution and climate change.

Kitakyushu as a reference point of green growth for the global south?

It is clear that Japan has put significant efforts in finding a balance between the “industrial” and “green” parts of growth. Since the end of the 1990s, the Japanese government has considered the improvement of energy efficiency and energy innovations as the heart of a mission to achieve growth which was later upgraded into green growth (Government of Japan, 2007, 2010, 2014; Ministry of Economy, Trade and Industry, 1999). Many policies and strategies have been planned and implemented until currently, such as the Top Runner Program, Japan’s Strategy for a Sustainable Society, New Growth Strategy, Strategic Energy Plan, all of which consistently concentrate on fostering economic growth sustainably by creative innovations and the development of energy-related technologies (Government of Japan, 2007, 2010, 2014; Ministry of Economy, Trade and Industry, 1999). In the case of Kitakyushu city, the combination of political orientation, technological development, and economic incentives have resulted in two diverging patterns: the success with the general decline of NO 2 and CO emissions when plotted against industrial growth, the worrying increase of dust particles and O x after an early decline. It is clear there are limitations to the pioneering efforts of the local and national government in pursuing green growth.

Thus, the Kitakyushu city case can act as an important reference point for the pursuit of green growth in Japan, as well as the Global South. As a matter of fact, green growth orientation development has become more visible recently in many Global South countries, such as India and China (Death, 2015). One can argue if developing countries in the Global South manage to successfully implement green growth policies, the world can enjoy a much more sustainable future. To date, however, the effectiveness of the existing green growth practices in these developing countries has not been properly assessed (Li and Qiu, 2015). Hence, the lessons offered by Kitakyushu can be taken into account when policies are formed and progress is measured in the course of pursuing a green economy. The next parts will offer some of the suggestions from our results and the review of the literature.

In terms of CO emission, which is closely correlated with CO 2 emission, this study found notable results that CO emission eventually declines when plotting against industrial development and road infrastructure expansion. This success partly thanks to the implementation of eco-town project—recycling industries, which have been shown in previous studies to significantly reduce the CO and CO 2 emissions from the manufacturing process (Gielen and Moriguchi, 2002; Johnson et al., 2008; Zheng and Suh, 2019). As a result, three aspects of Kitakyushu’s eco-town project can be recommended. First, to achieve green growth development, collaboration across and within levels of government is required (Hammer et al., 2011). It is important for national and local governments to play a complementary role to each other. For Kitakyushu city’s eco-town project, while the national government provides legislative and financial support to the local government, the local government is responsible for collaborating with the private sector, providing any necessary support, and enforcing environmental regulations.

Second, technology innovations and green technology applications are the leverages of green growth in Kitakyushu. To enhance technology innovations and effectively apply green technology in the industrial sector, not only investment into green R&D and financial subsidy, but the cooperation among three stakeholders—government, private sector, and academia, need to be promoted (City of Kitakyushu, 2018). Through mutual corporation, the research outcome can be applied in practical context, and economic subsidies are given to multiply the effect of new technologies.

Third, the transparency of the green growth agenda in regional policies can also be one of the main contributors to the success in the alleviation of CO 2 emissions in Kitakyushu city. Usually, the national green growth agenda is driven by sectoral ministries rather than people in charge of regional and spatial planning (Hammer et al., 2011). Nonetheless, Kitakyushu city has not only integrated the green growth agenda of Japan focusing on GHG emission reduction while maintaining the economic development (Government of Japan, 2010; Ministry of the Environment, 2016), but even set its own agenda reducing at least 50% of greenhouse gas emissions by 2050, while increase economic growth up to 40% by 2050 (OECD, 2013).

Last but not least, other cities in the Global South can indeed learn from the trilemma of Kitakyushu in pursuing industrial growth, infrastructure development and emission reduction of air pollution and greenhouse gas. It appears that this problem can be traced back to the strategic turn toward a focus on recycling activities rather than industrial symbiosis, as well as the trend of outsourcing to small and medium firm whom regulation is more difficult to enforce. Clearly, future studies that focus on the causes of this complex relationship and how to solve it will bring further insights. Nevertheless, the current lessons from the pioneering efforts of Kitakyushu will be helpful in the policy-planning for green growth in other cities.

Data policy and society 5.0 for the green growth future

This section will discuss the current data policy in Kitakyushu city, which is currently an OECD SDGs pilot city and the leading Asian green-growth city that might be the role model for other cities in the Global South. Apart from the openness of data, there are still several deficiencies in data management and stewardship in Kitakyushu city. First, judging by FAIR principles of data stewardship proposed by Wilkinson et al. (2016), the language barrier is one of the main problems hindering the findability and the interoperability of data. Currently, the data deposit on Kitakyushu’s website is only available in Japanese. To advance more and better science, as well as to play a role model for other cities in green growth development, Kitakyushu city is recommended to have its data related to green growth development available in other common languages in the Global South. Open and well-structured database not only enable scientific exploration but also enable the involvement of the general public in this process, thus, increasing the public trust (Vuong et al., 2018).

The data collection needs to be more detailed and specific to deal with the complex connections among emissions, concentrations, climate change, and impacts (National Research Council, 2011). For instance, with a more detailed and specific data on types of industrial firms, the results from this study could have explained more clearly the main sources of air pollution and greenhouse gas emissions. To acquire such detailed information from multiple sectors and sources, we suggest the local government to invest in the application of big data, which will offer new insights and address specific problems for innovating scientific research, as well as facilitating evidence-based policymaking (McNeely and Hahm, 2014; Michael and Miller, 2013; Vuong, 2018; Vuong, 2019).

Society 5.0, proposed in the 5th Science and Technology Basic Plan, aims to incorporate new technologies, such as IoT, big data, artificial intelligence (AI), for achieving economic development and solutions to social-environmental problems concurrently (Cabinet Office, 2019). As the Japanese government is nurturing the ambition of Society 5.0, Kitakyushu city can take this opportunity to revise its data policy employing big data for better green growth development. The complex interaction among industrial growth, road construction, and air pollution highlighted in this study might be a befitting case for the application of big data and artificial intelligence to solve urban problems (Duarte and Álvarez, 2019).

Methodology for future research

When employing the linear and non-linear ARDL analyses in this study, we found one shortfall of the non-linear ARDL model. The non-linear ARDL model seems to not work well with cumulative data, for instance, the total area of paved road. In fact, the total area of paved road in Kitakyushu accumulated over time and only declined in 2014, which creates outlier in the variable “lnRoad_n”, and eventually leads to inaccurate estimation of the asymmetric effect and the relationship between “lnRoad_n” and “lnAirPollution”. Thus, later studies should be aware of the properties of a variable before using non-linear ARDL analysis.

Future studies examining the EKC should employ not only the augmented model by squared and cubic variables, but also the new approach of Narayan and Narayan (2010), comparing the long-run and short-run coefficients of economic indicators, for comparison. Comparing the results from the two methods will help verify the robustness of the current findings, as well as cover some shortcomings of both methods; for example, the econometric weakness of the augmented approach and incapability to find a turning point of Narayan and Narayan’s approach.