Factor X

This chapter provides an overview of trends in worldwide resource use and resource productivity based on material flow data. In the light of overall expanding resource use and limited biological capacities on the planet, two main types of resource scarcities are presented. Implications of growing resource use reach from increasing competition for natural resources to severe damages to the ecosystem. In order to achieve the necessary worldwide absolute reduction of resource use we suggest to comprehensively measure and report global resource use on micro and macroeconomic levels, i.e. for products, companies, industries and countries as well as implementing policy measures such as information campaigns, environmental tax reforms and global regulation.

Conventional wisdom is expressed by the International Energy Agency (IEA) which projects unabated growth of all fossil energy sources for the foreseeable future. This is in sharp contrast to the scenarios done by the Energy Watch Group (EWG) and the Ludwig-Bölkow-Systemtechnik (LBST). According to these analyses – and also validated by production statistics – the global supply of crude oil reaches its peak around 2006. Supply of natural gas will peak between 2015 and 2025. Coal is also not as abundant as generally assumed. Reserves and production are concentrated on few countries and global production is expected to rise by perhaps 30 % to reach its peak around 2030. Following the peak of oil, as it were the leading fossil energy currency, the supply of all fossil and nuclear energy sources will peak some 10 years later around 2015. The twenty-first century will see the transition to a post fossil energy world.

Global warming, the overall extraction of minerals and the expansion of cultivated land for biomass harvest are growing globally. These “Big Three” represent key environmental pressures which may lead to a continuous degradation of the living environment, if not controlled at levels with acceptable low risk. The situation is complex, because countries and regions consume products which require resources such as minerals and land in various parts of the world. Nevertheless, it is possible to measure the global resource use which is associated with the domestic consumption. In order to inform policies at the national and supranational level whether it may be necessary to adjust the incentive framework for industry and households, reference data are needed to compare the status quo of their countries with what may be deemed acceptable at a global level. This chapter outlines a rationale for the derivation of possible long-term targets for total material consumption of abiotic materials (TMC_abiot) and global land use for crops (GLU_cropland). The indicated targets are expressed in tentative per capita values which may serve as a first orientation and basis for further debate and research.

The aim of the article is to elaborate the close interdependencies between protection of natural resources, efficient use of energy and materials and sustainable land use. Especially the ongoing expansion of settlements and transport infrastructures as well as the continuous maintenance and running of the enlarged system requires enormous inputs of materials and energy. Therefore, one of the most demanding challenges in resource protection policy consists in slowing down urban sprawl and reducing the speed of consumption of new land (land take) for settlements and transport infrastructure. Goals, policies, actions and experiences in order to reduce land take in Germany are discussed.

To avoid the most severe impacts of climate change, global temperatures must not rise by more than 2° C compared to pre-industrial levels. According to the IPCC, this target implies a reduction of greenhouse gas emissions by 50 % until the middle of this century compared to 1990 and a peaking of global greenhouse gas emissions the current decade. Germany is strongly committed to lead in the fight against climate change, so it has to reduce its emissions by 95 % until 2050. Due to Germany’s large share of total emissions and lack of mitigation options in other sectors, this requires a full decarbonisation of the energy sector and its subsector, electricity production. This can only be achieved by reduced energy consumption, by a more efficient electricity production, and by using energy from renewable sources. These measures require a well-established, long-term political will to push for the necessary instruments, which comprise inter alia strict energy efficiency standards, obligatory energy management systems, further development of the Renewable Energy Sources Act (EEG), efficient demand- and supply-side management and adaptation of the electricity grid. Furthermore, the potential negative environmental and social impacts of these changes have to be minimized. This possibility of the described change is not limited to Germany. On the contrary, by moving in this direction on a European level, significant synergy effects can be used.

There is shortage of water, land, and raw materials and too high greenhouse gas emissions – already now we run an economy ‘crashing against the Earth’. At the same time the global economy will need to grow another factor of 4 until 2050 to provide decent lives for all. We need drastic enhancement of resource-efficiency, particularly for the most resource-intensive consumption domains feeding, shelter, and moving. This paper identifies and explores the potential of five strategies to realize such radical decoupling: (1) reducing emission factors of processes and products; (2) producing more products with similar or lower inputs; (3) intensifying use of products; (4) reducing the material or product intensity of consumer expenditure and (5) enhancing quality of life at the same expenditure levels. The paper shows that none of these strategies is the silver bullet but that they have to be combined to realize the reduction factors needed. Macro economic and environmental monitoring tools based on environmentally extended input output analysis are well suited to monitor the contribution to decoupling of the first four strategies. To monitor the contribution of the fifth strategy, next to GDP quality of life must be monitored, e.g. via indicators like the new economics foundation ‘Happy Planet Index’.

The microeconomic foundation of environmental economics focuses on avoidance of emissions. From a macroeconomic perspective an environmental policy based on this approach faces severe problems: Instruments which succeed in reducing certain emissions often induce others. The article gives concrete examples of this phenomenon. The solution to the problem lies in supplementing the emission-oriented climate policy by a policy that improves material efficiency. The paper discusses results of policy simulations with an economic environmental model which show that an improvement of material efficiency might allow at least a relative decoupling. A combination with a policy that concentrates on technical change in resource important sectors, which the paper identifies, might enable an absolute decoupling. This can also be part of an engaged climate policy, since the most important material input is that of coal in electricity production.

While the world is talking about climate change, the real challenge of sustainability lies in a diminishing resource base for humans that calls for radical action. Sustainable economic conditions cannot be reached without increasing the resource productivity of the industrialized world dramatically. The price structure as well as economic boni and mali must be adjusted for approaching sustainability. The necessity to change lifestyles needs to be encouraged by all means of public policies. By 2050, the world-wide average per capita consumption shall not exceed 8 tons of material per year. System policies need be developed and applied to ascertain success. We need to start acting now.

This article argues in favour of including a drastic increase of natural resources use efficiency (RE) among the primary goals of society, with a higher priority level than that of increasing labour productivity (LP). This need is connected to that for a change of the way we look at natural resources (NR) use as well as at its final results. This change of perspective has impact on the very definition of RE. Indeed, RE should not be identified with resource productivity (RP), as RP expresses nothing more than the efficiency with which NR are used in production, regardless to the well-being implications of how production takes place, and of which “needs” does it satisfy. RE is thought in this article as of a more general ability to generate socially desirable results from NR use. The narrow-minded identification of the desirable effects of NR use with production’s economic value – represented by GDP in the numerator of RP – implies an inherently un-solvable trade-off between saving what remains of nature and keeping high living standards. A drastic reduction of NR use is necessary for sustainability; as a consequence dematerialisation should be an overarching goal of policy. Given these premises, drastically enhancing RE is, almost by definition, the only way to reconcile well-being and dematerialisation. This does a-priori not imply a decrease nor an increase of GDP, but requires radical structural changes of the way society is organised to respond to individual and social needs. An ecologically rational policy would strive to transform LP increases into non-working time, rather than into more production. This is one key element of the many far-reaching changes that are necessary in all aspects of the socioeconomic framework to drastically enhance RE. Well-being should be pursued, and not just defined and measured, beyond GDP, by active economic and non-economic policies, encouraging the emergence of new social, institutional and organisational arrangements that enable people to live less resource intensive – but possibly happier – lives. This requires that the domain where rational social choice rules, as opposed to competition and finance, be substantially expanded.

Progress in improving resource efficiency is a precondition for a sustainable development on the national and global scale. At the same time, it is a key factor for competitiveness and welfare in the next decades. A proactive policy is therefore strongly needed to establish and strengthen markets for resource efficient products and services, not only for ecological but also for economic reasons. This paper gives an overview of strategies and instruments that can contribute to meet this challenge effectively. It is based on an analysis of the obstacles on the micro- and macroeconomic level hindering the increase of resource efficiency and shows that coherent, long-term and comprehensive strategies are necessary combining long-term efficiency targets as guardrails for investors and consumers with a reform of the general economic framework, institutional reforms and market specific instruments. The strategies must tackle demand side constraints as well as supply side constraints and promote the development and market diffusion of innovations.

Despite the broad recognition of the need for decoupling the material use and the economic development, enterprises are still not using all the opportunities for material efficiency improvements. This chapter proposes material efficiency services as one solution. It also introduces a conceptual framework for analyzing business models of eco-efficient services and applies this framework to material efficiency services. Four business models are outlined and their feasibility is studied from an empirical vantage point, with special emphasis on the financial aspects. Depending on the business model, prominent material efficiency service providers range from large companies with variety of products and/or services to smaller, specialized ones. Typical potential clients for these services are firms that lack the resources to conduct material efficiency improvements themselves. Customers are more likely to use material efficiency services that relate to auxiliary materials or side-streams rather than those that relate to their core business. Potential client organizations with a strategy of outsourcing support activities and with experience of outsourcing are keener to use material efficiency services.

The increasing demand for raw materials will continue to exert pressure on resource availability and on the environment with all the negative consequences for the economy and society. The long term goals are the reduction of consumption on the one hand and a reduction of negative impacts of unavoidable resource use on the other. There are many approaches to increase resource efficiency, to reduce the absolute amount of resource use and to reduce the negative environmental impacts of resource use across product lifecycles. Many of these measures can be implemented on a national level. However as the world economy is very much integrated, an internationally coordinated policy will gain better results. Resource consuming and resource extracting countries should adopt a strategy of resource governance which seeks international agreement on global targets for natural resource extraction and consumption and coordinated measures for an increase of resource efficiency.

This short, argumentative paper reflects the necessity and the spectrum of possible modes of policy intervention for sustainable resource use. The focus is on material productivity and its environmental, economic and employment advantages. A variety of possible interventions along the supply chain is being discussed. A new phenomenon of “policy acceleration” is described using the “experiment” of climate policy in Germany as an example. Are there lessons to be drawn from climate policy? It is time for a more ambitious policy. Nevertheless, taking the complexity of material flow management into account, trial and error still may be important.

Environmental and resource economics do not give the emphasis to ecosystem functions and the natural world that their importance to human welfare and the economy warrant. Insights from ecological economics, in contrast, suggest that the overall material throughput of the economy, in addition to the wastes it emits to air, sea and land, need to be greatly reduced. While environmental economics suggests that market-based instruments would be an efficient means of achieving both resource and environmental objectives, there are in fact many reasons, revealed by Public Choice analysis, why these are not implemented. Notwithstanding, it seems likely that, to address the pressing resource and environmental challenges facing humanity, policies will need to be implemented at both the international and national levels. This paper suggests that existing climate policy, based on international targets and national policies to meet them, could be supplemented by a similar policy on resource use, involving: either a global level of taxation to meet resource use targets, with transfers to poorer countries to aid their resource-efficient development; or a global resource permit trading scheme, with diminishing resource allowances over time. The latter could begin with a small group of larger, industrialised countries, which encouraged others to join the group by imposing taxes on imports from non-members equivalent to their own self-imposed resource surcharges. Coupled to a regime of Sustainable Commodity Agreements, to promote environmentally sound resource extraction, such a system could lead over time to the globally sustainable development which has as yet quite eluded the global community.

Growing population and economic activity in the last decades have correlated with increasing use of finite natural resources and environmental degradation. With a predicted 9.3 billion people on the Earth by 2050 and the imperative to eradicate poverty, our economic system will need to become much less dependent on the use of these resources if major crises are to be avoided. The World Resources Forum was launched in 2009 in order to transcend the current political focus on climate change and to bring the broader issues of global resource consumption and resource productivity back onto the agenda. The first meeting in 2009 led to the formulation of a joint declaration which advises to seek international agreements on world-wide per-capita targets for natural resource extraction and consumption, the overarching objective being to bring about an absolute decoupling between economic development and resource use. The 2011 World Resources Forum continued the discussion and concluded with 14 recommendations for converting to a green economy. Establishing an international platform for increasing worldwide resource governance was the main recommendation of the 2012 World Resources Forum.

The topic of a sustainable use of natural resources, often understood as resource efficiency, has made its way up on the political agenda. But so far a fundamental change towards a sustainable use of resources has not been achieved. Not only the resource consumption is still growing and destroying more and more the ecosystems but also too often the exploitation of natural resources is still a story of violation of human rights and of intra- and intergenerational unfairness. This chapter describes in a first step the current resource policy landscape, then identifies challenges on the way to further progress and finally outlines next steps for addressing the challenges of the management of natural resources in the context of sustainable development. The analysis of the resource policy landscape shows three clusters of resource policies. The more operational the approaches are the more they are neglecting the inter-linkages amongst the various natural resources and/or the general requirements of sustainability. The challenge is to broaden the perspective of these more implementation oriented resource efficiency concepts into approaches which manage natural resources within a framework of sufficiency, fairness and responsibility, consistency and resilience. Important steps are seen in deeply rooting these principles into the public and private sector, in changing the institutional settings towards a more sustainable resource management. But also in a more systemic thinking, which addresses the nexus of the various resources and in implementing sustainable resource use in the civil society as a practice of daily life.

The German Resource Efficiency Program is shaped by a total of four guiding principles: