ENV GLOBAL FORUM OCT 2016 - Janez Potocnik (UNEP) - Opening Session "Natural Resources and Economic Growth"

1. NATURAL RESOURCES
AND ECONOMIC GROWTH
OECD
GLOBAL FORUM ON ENVIRONMENT
OCTOBER, 24th-25th 2016
Janez Potočnik
Co-Chair UNEP International Resource Panel (IRP)

2. •Growth of population by a factor 3.7
•Annual extraction of construction materials grew
by a factor of 34, ores and minerals by a factor of
27, fossil fuels by a factor of 12, biomass by a
factor of 3.6
•Total material extraction grew by a factor of 8
•GHG emissions grew by a factor of 13
•Globalisation
20th CENTURY
THE GREAT ACCELERATION

3. “PLANETARY BOUNDARIES”
Source: Steffen et al. 2015

4. • Population growth (2050 – 9.7 billion)
• Per capita consumption growth (McKinsey
estimates 3 billion consumers moving from
low to middle class consumption till 2030)
• Example: China used more cement in the
three years 2011-2013 than the USA used
in the whole 20th Century
21th CENTURY
FACTS WE CAN NOT IGNORE

5. • Poverty and social inequality (Oxfam
Report: 62 people own the same as half of
the world and the richest 1% is more
wealthy than the rest of the world)
• 60% of ecosystems already degraded or
used unsustainably
• Increasing evidence of the climate change
threat
21th CENTURY
FACTS WE CAN NOT IGNORE

6. DEVELOPMENT TRAJECTORY …
Source: Global Footprint Network, 2012; UNDP, 2014a

7. IN THE RECENT SIX MONTH …

8. THE NEW UNEP IRP MATERIAL FLOW AND
RESOURCE PRODUCTIVITY DATA SET
• A coherent account of material use in the global economy and for
every nation, complementary to the System of National Accounts
• A large data set covering 40 years (1970–2010) and most countries of
the world.
• Presents direct and consumption-based material flow indicators,
covering total usage, per capita use and material use per US$.
• Information will help identify opportunities, risks and vulnerabilities
related to the global supply of primary materials and show the
potential for efficiency gains and reductions in material use in the
global economy

9. SUMMARY OF THE MAIN POINTS (1970-2010)
• Global material use has accelerated
• Material extraction grew unevenly in the global economy
• Trade in materials has grown dramatically and mobilizes primary materials
extraction
• Consumption has been stronger driver of material use that population growth
• The richest countries consume on average 10 times more materials as the
poorest
• Since 2000 we face an overall decline in material efficiency
• The level of well-being achieved in wealthy industrial countries cannot be
generalised globally based on the same system of production and
consumption!

10. AND …
SOLUTIONS

12. • Developed economies will need to adopt strategies that
bring their resource consumption down to globally
sustainable levels (ABSULUTE DECOUPLING)
• Developing nations must strive to improve resource
efficiencies and cleaner production processes as their net
consumption of natural resources increases for a period
until they achieve a societally acceptable quality of life
(RELATIVE DECOUPLING)

13. IN THE RECENT SIX MONTH …

14. “With concerted action, there is significant potential
for increasing resource efficiency, which will have
numerous benefits for the economy and the
environment”

15. “Improving resource
efficiency is
indispensable for
meeting climate
change targets cost
effectively”
Total anthropogenic GHG emissions (Gt CO2eq per year)
by economic sector

16. LAND MATERIALSGHGWATER
CARBON MANAGEMENT
DECOUPLING
CLIMATE
RESOURCES

17. “Resource efficiency can contribute to
economic growth and job creation”
Modelling results differ in size, but
all of them show that increasing
resource efficiency can lead to
higher economic growth and
employment, often even when
environmental benefits are not
accounted.

18. “There are substantial areas of opportunity for
greater resource efficiency ”
The top 15
categories of
resource efficiency
potential

19. “Increased resource efficiency is practically
attainable”
Energy consumption and saving
potential by equipment type in
US mining industry

20. EU
APPROACH

21. 1. Hunting and fishing
2. Can take both post-harvest and post-consumer waste as an
input
Source: Ellen MacArthur Foundation; McKinsey Center
for Business and Environment; Stiftungsfonds Für
Umweltökonomie und Nachhaltigkeit (SUN); Drawing
from Braungart & McDonough Cradle to Cradle (C2C)
1
PRINCIPLE
Preserve and enhance natural
capital by controlling finite
stocks and balancing
renewable resource flows
2
PRINCIPLE
Optimise resource
yields by circulating
products, components
and materials in use
at the highest utility
at all times in both
technical and
biological cycles
3
PRINCIPLE
Foster system effectiveness by
revealing and designing out negative
externalities

22. STRUCTURAL WASTE IN THE MOBILITY SYSTEM

23. The mobility system of tomorrow
Low CO2
level
Parking spots
returned to land
Zero
accidents
Fewer lanes
needed
X X
Personalized
multimodal route. Car
preferred for last mile
Universal access and
higher affordability
Based on individual
preferences (e.g. fast vs.
cheap, sharing, etc.)
Renewable energy
Shared cars is the
norm: autonomous
cars on demand
Wireless contents
provided to the
user
A FUTURE END-STATE COULD LOOK VERY DIFFERENT FROM TODAY’S MOBILITY SITUATION
The car of tomorrow
3D printed
Electric
and silent
propulsion
Connected
Driverless
Long
battery
duration
Designed for
disassembly
Durable, upgradable
and easily repairable
Remanu-
factured
locally
Illustrative vision
SOURCE: SUN, ELLEN MACARTHUR FOUNDATION AND MCKINSEY & COMPANY: TEAM ANALYSIS

24. CONCRETE ACTIONS
• ECO-DESIGN to include reparability, durability, recyclability
• Legislation on FERTILISERS, including organic and
waste-based fertilisers
• Minimum requirements for the REUSE OF WASTEWATER
• Actions on GREEN PUBLIC PROCUREMENT
• FUNDING of €650 million for ‘industry 2020
in the circular economy’
• Quality standards for SECONDARY RAW MATERIALS
• STRATEGY ON PLASTICS, including marine litter
• Interface CHEMICALS, PRODUCTS AND WASTE LEGISLATION

25. GROWTH WITHIN: A
CIRCULAR ECONOMY
VISION FOR A
COMPETITIVE EUROPE

26. Shift to advanced materials (less resource intensive)
Shift to different technologies (electric vehicles, LED)
Shift to different product/service (e.g., car to public transport)
Shift to renewable energy (wind, solar, etc.) and materials
THE RESOLVE FRAMEWORK
SOURCE: S. HECK AND M. ROGERS, “RESOURCE REVOLUTION: HOW TO CAPTURE THE BIGGEST BUSINESS OPPORTUNITY IN A CENTURY”,2014 ; COMPANY
INTERVIEWS; WEB SEARCH; SUN, ELLEN MACARTHUR FOUNDATION AND MCKINSEY & COMPANY TEAM ANALYSES
Examples
SHARE
▪ SHARE ASSETS
▪ REUSE/SECONDHAND
▪ PROLONG LIFE
OPTIMISE
▪ INCREASE PERFORMANCE/EFFICIENCY OF PRODUCT,
VALUE CHAIN, CONSUMER
▪ LEVERAGE BIG DATA, INTERNET OF THINGS, ETC TO
MAKE PRODUCT OR VALUE CHAIN MORE INTELLIGENT
LOOP
▪ REMANUFACTURE
▪ RECYCLE MATERIALS
▪ REPURPOSE RENEWABLE MATERIALS TO OTHER USES
▪ EXTRACT BIOCHEMICALS FROM ORGANIC WASTE
VIRTUALISE
▪ DIRECT DEMATERIALISATION, E.G., BOOKS, CDS, DVDS,
TRAVEL, OFFICE SPACE
▪ INDIRECT DEMATERIALISATION, E.G., ONLINE SHOPPING,
AUTONOMOUS VEHICLES
EXPLORE
▪ RECLAIM, RETAIN, AND RESTORE HEALTH OF
ECOSYSTEMS
▪ RETURN RECOVERED RESOURCES
REGENERATE
▪ ADVANCED MATERIALS
▪ DIFFERENT TECHNOLOGIES
▪ DIFFERENT PRODUCT/SERVICE
▪ RENEWABLE ENERGY

27. 1 Note that this is not a forecast of how costs will develop. It is an assessment of how costs could develop if Europe aggressively went after this
agenda, and if all improvements were captured as cost savings.
COST REDUCTION POTENTIAL INHERENT IN BROAD CIRCULAR ECONOMY LEVERS1
Total savings, %XTotal annual cash-out costs per household; EU average 2012, Euro,
Improvement potential for the year 2050
SOURCE: SUN, ELLEN MACARTHUR FOUNDATION AND MCKINSEY & COMPANY TEAM ANALYSES REPORT
60-80%
~5,500
25-35%
~9,600
<2%
<2%
15%
15%
10%
2%
25-40%
~6,600
6%
<2%
<2%
<2%
35%
2%
Mobility Food Built environment
Share
Optimise
Loop
Virtualise
Exchange
REgenerate
Today’s cost
Remaining cost2
6%
40%
<5%
5%
25%
25%

28. 2050
2030
2050
2030
Current development scenario
Circular economy scenario
EU-27, indexed (2012 = 100)
Household
disposable
income
GDP
SOURCE: Economic modelling expertise provided by Professor Christoph Böhringer, University of Oldenburg, and Professor Thomas F. Rutherford, University of Wisconsin; Company and expert interviews; Web search; Eurostat household expenditure data; ACEA, The Automobile Industry Pocket Guide, 2015; Todd Alexander Litman, Transportation Cost and Benefit
Analysis: Techniques, Estimates and Implications, Victoria Transport Policy Institute, 2009; Udo Jürgen Becker et al., The True Costs of Automobility: External Costs of Cars: Overview on existing estimates in EU-27, TU Dresden, 2012; ICCT, European Vehicle Market Statistics Pocketbook, 2013; ICE database of CO2 embedded in material; Frances Moore and
Delavane Diaz, Temperature Impacts on Economic Growth Warrant Stringent Mitigation Policy, Nature Climate Change, 2015; MGI, Overcoming obesity: An initial economic analysis, 2014; FAO, Global food losses and food waste – Extent, Causes and Prevention, 2011; EEA, Towards efficient use of water resources in Europe, 2012; EU Commission, Official
journal of the EU, Commission Agriculture and Rural Development, 2012 budget, 2012; FAOSTAT; Kimo van Dijk, Present and future phosphorus use in Europe: food system scenario analyses, Wageningen University, 2014; Josef Schmidhuber, The EU Diet – Evolution, Evaluation and Impacts of the CAP, FAO, 2008; Gregor Zupančič and Viktor Grilc,
Anaerobic Treatment and Biogas Production from Organic Waste, 2012; Joint Research Centre (JRC) of the European Commission et al., Precision agriculture: an opportunity for EU farmers – potential support with the CAP 2014-2020, 2014; Laure Itard et al., Building Renovation and Modernisation in Europe: State of the art review, TU Delft, 2008; BPIE,
Europe’s buildings under the microscope: A country-by-country review of the energy performance of buildings, 2011; Per-Erik Josephson and Lasse Saukkoriipi, Waste in construction projects: call for a new approach, Chalmers University of Technology, 2007; Mark Hogan, The Real Costs of Building Housing, SPUR, 2014; Cushman & Wakefield Research
Publication, Office space across the world, 2013; Ellen MacArthur Foundation, Delivering the circular economy toolkit for policymakers, 2015.
COMPARISON OF POTENTIAL DEVELOPMENT PATHS: IMPACT ON THE ECONOMY

29. 2050
2030
2050
2030
Current development scenario
Circular economy scenario
EU-27, indexed (2012 = 100)
CO2 emissions
Primary
material
consumption
COMPARISON OF POTENTIAL DEVELOPMENT PATHS: IMPACT ON THE ENVIRONMENT

30. ACHIEVING ‘GROWTH WITHIN’
10 CE investment opportunities to accelerate Europe’s circular economy transition

31. INTERNATIONAL
DEVELOPMENTS

32. SDGs offer unique opportunity to move to an
integrated, universally relevant and potentially
transformative Global Development Agenda.

33. SDGs DIRECTLY DEPENDENT ON NATURAL
RESOURCES

34. Sustainable Consumption and Production is the most
efficient strategy to avoid trade-offs and create
synergies to resolve the development and
environmental challenges articulated in the SDGs.

35. SDGs DIRECTLY DEPENDENT ON NATURAL
RESOURCES

36. Source: Literature review; AlphaBeta analysis
SUSTAINABLE BUSINESS COMMISSION: QUANTIFYING THE SDG PRIZE
Environmental
Social
Economic
Governance
 Shift to circular models could generate an opportunity of
over $3 trillion by 2030
 Reducing food waste could be worth over $580 billion by
2030
 Gender equality could be worth up to $28 trillion by 2025
 Matching Poland’s improvement in education could boost
OECD GDP by 1.5% by 2030
 Technological upgrading and innovation could deliver an
economic prize of $25 trillion by driving productivity growth
 Annual incremental infrastructure opportunity of $1.7
trillion
 Potential economic prize of up to $6 trillion from addressing
corruption, illicit financial flows, and reducing all forms of
violence
DRAFT

37. GROWTH AND JOBS
PARADIGM

38. GROWTH … IN TRANSITION
• LEADING EU POLITICAL GOAL: FROM GROWTH AND JOBS TO
JOBS AND GROWTH
• GROWTH RATES IN EU BY DECADES - OECD DATA:
Sixties 5.4%
Seventies 3.8%
Eighties 3.1%
Nineties 2.3%
First decade of this century 1.4%

39. GROWTH … IN TRANSITION
• Growth is generally considered as a positive
phenomena
• Growth expressed as GDP – Beyond GDP agenda
• “Good” growth -“Bad” growth (externalities) –
how much of the “growth” in the past actually
qualifies for growth?

40. -15
-10
-5
0
5
10
15
AGRICULTURE MINING STEEL
WITHOUT
WITH
EVALUATION OF EXTERNALITIES
PROFIT MARGINS WITHOUT NATURAL CAPITAL COSTS INCLUDED
AND WITH NATURAL CAPITAL COSTS INCLUDED
SOURCE: TRUECOST STUDY - 2013

41. GROWTH … IN TRANSITION
• Growth as a future political priority
(developed and developing countries)
• 10% growth – doubling in 7 years
• Viable economy - building resilience or
improving efficiency?

42. IS WEALTH (GDP) MAKING US HAPPIER …
• Win-Gallup Survey
(December 2014, 64000 people, 64 states)
• 70% of people satisfied with their lives
• The happiest people live in Africa (83% very happy
or happy)
• The least happy people live in western Europe
(11% very unhappy)
• In improvement of quality of life believes 75%
Africans and 26% western Europeans

43. TO CONCLUDE …

44. SUSTAINABLE, LOW-CARBON, CIRCULAR,
GREEN, RESOURCE EFFICIENT, ENERGY
EFFICIENT, DECOUPLING, 3Rs, ECOLOGICAL
CIVILISATION, BIOECONOMY, ECO-ECONOMY,
BLUE …
• What we actually talk about

45. NECESSARY
AND UNAVOIDABLE
NEW ECONOMIC MODEL BASED ON SCP
INTEGRATING ALL THREE PILLARS OF
SUSTAINABILITY IS
WE HAVE TO FIX A BROKEN
COMPASS
(PAVAN SUKHDEV)
SCIENCE

46. • If prices do not reflect the true value and costs of resources,
• If rewards to capital are disproportionate to other inputs,
• If managers on annual contracts are induced to make short
term investment decisions overly influenced by bonuses based
on short term share price,
• If …
MARKETS
CANNOT ENSURE EFFICIENCY IN THE
ALLOCATION AND USE OF RESOURCES …

47. • INNOVATION (Incentives)
• PRODUCTS (Design)
• CONSUMERS (Behaviour)
• BUSINESS MODELS (Sharing -
Products to services)
MARKETS AND REGULATION

48. ALL POLICIES SHOULD BE SYSTEMATICALLY ADJUSTED
Beyond GDP, natural capital accounting, corporate sustainability
reporting, tax policy, state aid, public procurement, product
design, use of banking potential, R and D and innovation,
investments in infrastructure, education, consumers awareness,
new business models, support to SMS, …
ACTIVE DIALOGUE WITH ALL STAKEHOLDERS IS NECESSARY
Transition is only possible if we actively involve those loosing in
the process of transition
POLICY APPROCH

49. WE CAN NOT SOLVE OUR PROBLEMS WITH THE
SAME THINKING WE USED WHEN WE HAVE
CREATED THEM
INSANITY – DOING THE SAME THINGS OVER AND
OVER AGAIN AND EXPECTING DIFFERENT
RESULTS
ABOUT OUR TIME ...
EVERYTHING HAS TO CHANGE TO REMAIN THE SAME
GIUSEPPE TOMASI
DI LAMPEDUSA
ALBERT EINSTEIN
SCP
ENV
ECO
SOC

50. THANK YOU
www.unep.org/resourcepanel