a good disruption · 3 global population growth was 1.6 percent per year during the period. 55 ......
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A Good Disruption –Systemic change and ourcircular future
BI Green Economics Seminar
Prof. Dr. Martin R. StuchteyMay 23rd, 2019
11
Congruence, anomaly, or new paradigm?
Source: Thomas Kuhn, Structure of a Scientific Revolution (1964)
22
Growing together “The great Divergence”
400
100
200
300
500
50 90 95551947 60 65 70 75 80 85 2000 05 2010
We are seeing a “great divergence”
U.S. labor productivity, GDP per capita, employment, median income, and Global GPI per capita Indexed to 1947
Source: Stuchtey, et al (2015), Federal Reserve Bank of St. Louis, Brynjolfsson and McAfee, Kubiszewski et al. (2013)
Global GPI per capita
Real GDP per capita
Private employment
Labor productivity
Median family income
33
Annual GDP Growth rates in Germany, France, and the USA
-4
1960
-6
65 70 201575 80 9085 10
-2
2000
2
0
4
6
05
8
95
Deutschland
Frankreich
USA4.8%
3.2%
2.7%2.5%
1.3%
Source: Insee, Statistisches Bundesamt, U.S. Bureau of Economic Analysis
SOURCE: Insee, Statistisches Bundesamt, U.S. Bureau of Economic Analysis
44
Measures of societal development that include natural capital depletion grow much slower than GDP
Considerations
SocialEconomicCapital Natural
Human Development Index
Gross Domestic Product
0,8
Genuine Progress Indicator
Inclusive Wealth Index -0,2
2,0
-0,1
Source: UNEP (2014a), Kubiszewski et al. (2013)
Progress per capita3, globally, 1990-2010, real terms
1 1990-2005, as later data not available globally,2 IWI exists in two versions, one unadjusted, and one where adjustments are made for environmental damage, oil capital gains, and total factor productivity. The adjusted version is shown here3 Global population growth was 1.6 percent per year during the period
55
Paradigm shift: Most of the world’s resource using industries negative
Source: Trucost
Profit margin (EBIT) before and after natural capital costs, based on top-2 companies in each Morgan Stanley Composite Index category, Percent, 2012
3 3
9 11 9
15 15
5 5
11
-8
-1 -1
9 11
-6
3
-11
Cattle farming
-78
Silver mining
CementWheat farming
Synthetic fertilizer
Paper-board
Bauxite mining
Iron & Steel
Non-ferrous metals smelting
Coal power generation
-165
Before
After
66
Paradigmshift – Erath systems in transition
Source: SYSTEMIQ projects: STOP, KAZA, Energy Transition Commission
1 : 31 : 1 3% 10Gt
77
Our future operating space – uncharted
Source: Global Footprint Network, 2012; UNDP, 2014a
Hectares per person per year
‘Very high human development’
Human Development Index
88
15,000 35,000
60
80
20,0000 5,000
100
90
30,000
110
10,000
120
25,000
70
40,0000
10
20
30
40
50
130
Japan
China
United States
Sweden
India
Spain
Mexico
Germany
Brazil
Canada
South Africa
Italy
Russia
Saudi Arabia France
Taiwan
ThailandUnited Kingdom
South Korea
Waiting for Kuznets – example commodity plastics50mnPopulation
COMMODITY PLASTICS
Plastic consumption1, Kg per capita
GDP per capita, EUR1 Includes EPS, HDPE, LDPE, LLDPE, PET Resins, PP, PS, and PVC
Source: Global Insight
99
The vision of a decoupled, net positive industry model
Source: Stuchtey et al. : A Good Disruption (2015)
Material backbone
Abundant clean energy
Highly productive systems
Good, not less bad – as a new norm Dcouplied growth as an economic standard 4
1 3 2
101010
In the ETC decarbonization pathways, all emissions from remaining fossil fuel use are abated with CCS/U
Coal consumptionBillion tonnes per year
Oil consumptionMillion barrels per day
Natural gas consumption000 bcm per year
Notes: All fossil fuel trajectories are based on scenarios reaching a 2°C objective with at least two-thirds probability. The charts show median fossil fuel use in 21 scenarios with less than 15 GtCO2 removal in any given year. Average removals 2050-2100 are 3 Gt/year through CCS on fossil fuels and 8 Gt/year through BECCS or other negative emissions.
SOURCE: Historic data from BP. Projects are Copenhagen Economics calculations on data from IIASA AR5 database; SYSTEMIQ analysis for the ETC (2018)
2000 2010 2020 2030 2040 20500
1
2
3
6
4
5
1.81.81.8
0.20.1
-67%
-96%
2000 2010 2020 2030 2040 2050
3.0
2.0
1.0
4.03.63.63.6
3.1
2.0
-43%
+2% -12%
5
0
10
20
30
40
50
60
70
80
90
100
110
120
130
2000 2010 2020 2030 2040 2050
636363
10
-32%
-89%
Central scenarioSupply-side decarbonization illustrative pathway Supply-side decarbonization and efficiency illustrative pathway
Towards a 1,5°C-compatible energy system – fossil consumption pathways
Source: SYSTEMIQ
1111
2016, at the European Commission in Brussels
"Circular economy will be a similar mega trend in economy as globalisation. I'm convinced that the circular economy can enable a triple win: economic, environmental and social."
"I passionately believe in the opportunities of the circular economy. The future is not making things with finite components."
"I am very impressed by the findings of Growth Within report, looking forward to developing our shared agenda"
Jyrki Katainen - EU Vice President Jobs, Growth, Investment and Competitiveness
Karmenu Vella, EU Commissionner Environment, Maritime Affairsand Fisheries
Frans Timmermans, EU Commission First Vice President
Source: SYSTEMIQ
1212
Major structural waste in the mobility system
LAND UTILISATION:
Car utilisation
Rolling resistance
Energy used tomove people
Aerodynamics
Transmissionlosses
Idling
Engine losses
Inertia vehicle
Auxilliary power
86% of fuelnever reacheswheels
Tank-to-wheel energy flow - gasoline
12:1 dead-weight rati
30,000 deaths in accidentsand 4x as many disablinginjuries
˃95% ofaccidentsfrom human error
Deaths and injuries/yearon road
5% driving1% sitting incongestion
▪ Typical Frenchcar parked 92% of time
▪ Average European car has 5 seats but carries 1.5 people/trip
1.6% looking for parking
Source: SYSTEMIQ
▪ Road reaches peak throughput only 5% of time and only 10% covered with cars then▪ 50% of most city land dedicated to streets and roads, parking, service stations,
driveways, signals, and traffic signs
1313
Waste, waste, everywhere – example EuropeValue development of manufactured products, % of GDP, EU, 2012
20
0
10
5
15
100 5 15 30 35 40
Unutilised
Utilised
Value recovered through waste and recycling industry
A
B
CD
Source: McKinsey Center for Business and Environment, Ellen MacArthur Foundation & SUN (2015)
Product lifeYears since production
1414
Cost-reduction potential in the three real life systems
~9,600
REgenerate
Share
Optimise
Loop
Virtualise
Exchange
Remaining cost
Today‘s cost ~6,600~5,500
6%
40%
<5%
5%
25%
25%
60-80%
Mobility Food Built environment
25-40% 25-35%
<2%
2%
35%
<2%
<2%
6%
10%
15%
15%
<2%
2%
<2%
Total annual cash-out costs per household; EU average 2012, EUR Improvement potential for 2050
Source: McKinsey Center for Business and Environment, Ellen MacArthur Foundation & SUN (2015)
Total savings
X
151515
ReSOLVE – a menu of business actions for a better economy
SOURCE: McKinsey Center for Business and Environment, Ellen MacArthur Foundation & SUN (2015)
▪ Share assets (e.g. cars, rooms, appliances)▪ Reuse/secondhand▪ Prolong life through maintenance, design for durability, upgradability, etc.
▪ Increase performance/efficiency of product▪ Remove waste in production and supply chain▪ Leverage big data, automation, remote sensing and steering
▪ Remanufacture products or components▪ Recycle materials▪ Digest anaerobic▪ Extract biochemicals from organic waste
▪ Books, music, travel, online shopping, autonomous vehicles etc.
▪ Shift to renewable energy and materials▪ Reclaim, retain, and restore health of ecosystems▪ Return recovered biological resources to the biosphere
REgenerate
Share
Optimise
Loop
Virtualise
Exchange▪ Replace old with advanced non-renewable materials▪ Apply new technologies (e.g. 3D printing)▪ Choose new product/service (e.g. multimodal transport)
Examples
161616
In search of a new logic
Source: Martin R. Stuchtey (2013)
1717
In search of a superior design - outline of a circular economy system (75 million downloads)
Minimise systematic leakage and negative externalities
Refurbish/remanufacture
Reuse/redistribute
Share
Stock management
RestoreVirtualise
Technical materials
Maintain
Biochemical feedstock
Cascades
Extraction ofbiochemical
feedstock
Soil restauration
Biogas
Farming/ collection
Renewables
Biological materials
Renewables flow management
BiosphereProduct
manufacturer
Service provider
Parts manufacturer
Collection Collection
Substitute materials
Finite materials
Renewable materials
Consumer User
Recycling
Source: Ellen MacArthur Foundation (2013)
1PrinciplePreserve and enhance natural capital by controlling finite stocks and balancing renewable resource flows
Optimise resource yields by circulating products, components and materials in use at the highest utility at all times in both technical and biological cycles
Foster system effectiveness by revealing and designing out negative externalities
2Principle
3Principle
Regenerate
1818
Better economic and environmental outcomes
Source: SYSTEMIQ
Indexed (2012 = 100)Current development scenarioCircular scenario
GDPEU-27, indexed (2012 = 100)
Direct user cash out costsEU-27, indexed (2012 = 100)
CO2 emissionsEU-27, indexed (2012 = 100)
Primary material consumption EU-27, indexed (2012 = 100)
104 115111127
2030 2050
907481
59
2030 2050
693952
17
2030 2050
785968
47
2030 2050
191919
Countries are making the circular economy part of national policy priorities
The European Commission presents the Action Plan for the Circular Economy
EU 2018 Circular Economy package is passed
2.12.2015 22.5.2018
02/2016
09/2016 06/2017 11/2017
04/2018 06/2018
Making things last: A circular economy strategy for Scotland Leading the Cycle –
Finnish road map to a circular economy 2016-2025
A Circular Economy in the Netherlands by 2050
Recommendations for the Danish Government -Reduce. Reuse. Recycle. Rethink.
Towards a new model of circular economy for Italy - Overview and Strategic Framework
Roadmap towards the circular economy in Slovenia
50 measures for a 100% circular economy
ProgRess II
12/2014
Luxemburg as a knowledge hub and testing ground for the CE – National roadmap to positive impacts
03/2016 Spring 2018
Norwegian Circular Economy Benchmark
Circular Economy Institute Czech Republic
International development:
• CHINA 2017 release of a circular economy policy portfolio -“ecological civilization”
• JAPAN focus on resource efficiency and recycling potential;
• CANADA thematic integration via the logic of sustainable value creation ("smart prosperity”)
09/2018
Strategy for Circular Economy Denmark
Circular Futures –Platform Circular Economy Austria
Circular economy roadmaps and relevant initiatives
Source: SYSTEMIQ
2020SOURCE: Historic data from BP. Projects are Copenhagen Economics calculations on data from IIASA AR5 database; SYSTEMIQ analysis for the ETC (2018)
Industries are starting to react to the new global context - avoiding “stranded asset” risks
Re-orientRe-configure
Re-invent
Integrated soilmanagement
Yield insurancePrecision farming
Products-as-a-service Health-as-a-serviceEnergy efficiency
Car-as-a-service Mobility-as-a-serviceLow carbon fleet
Low-carbon value chains Chemistry-as-a-serviceClean chemistry
Responsible commodities Material bankEfficient mining
Source: SYSTEMIQ
212121
Plastic packaging, EV batteries and food waste may be inroads for Siemens
(95% of its value) is lost to the economy every year
2%
€70-105 billion
of plastic packaging today made out of recycled material
value of global annual food loss and waste$990 billion
1.3 billion tonnes global food loss annually
of the cost of a battery is driven by the cost of its metal materials
25%
2X demand for cobalt is still expected to more than double by 2025, driven primarily by electric vehicle sales
Plastic & packaging 1
Mobility & batteries 2
Food & land use 3
Only
2222
Particularly cities will use huge amounts of materials and cause emissions beyond the planetary boundaries – if left to follow past models
Source: The Weight of Cities. International Resource Panel (2018).
“If developing countries expand their infrastructureto current average global levels, the production of infrastructure materials alone would generate around 470 billion tonnes of CO2 emissions by 2050 (IPCC, 2014b), much of this in sprawled cities.”
Context: IPCC calculates a remaining carbon budget of 420 GtCO2 for a two-thirds chance of limiting warming to 1.5°C, and of about 580 GtCO2 for an even chance (medium confidence)
“Business as usual could result in the annual resourcerequirements of urban areas growing from 40 billiontonnes in 2010 to nearly 90 billion tonnes by 2050.”
2323
Future cities must leapfrog to “circular urban metabolisms”
Source: Graphic adapted from UNEP (2018). Sustainable Urban Infrastructure Transitions in the ASEAN Region: A Resource Perspective. UN Environment. Numbers from IRP (2018). The Weight of Cities.
Circular houses in a circular urban system
5) Easy access through (active) mobility
2) Diversity of Use and Income in Neighbourhoods
1) High Density Nodes with strong interconnection and low-density surrounding
4) Small distance to inter-node transit
Can also enable better appliance and transport sharing
3) Design for activity, nature and community spaces
• Land – and material efficient
• Heating-efficient• Mobility efficient• Natural spaces
between nodes for light, wind, air quality, heat moderation, biodiversity
Facilitates intensified use and reduced floor space demand
• Reduces commuting• Enables waste-heat reuse• Enhances service/leisure (building)
use intensity
The ideal circular urban system could reduce energy use by x10, support social cohesion and boost productivity
2424
The food system is failing, generating USD 5,7tr of ecologicl, economic and health costs –with 75% of food entering the „urban nutrient sink“
*Such as fertilizers or pesticides; **Human wastes includes solid and liquid wastes ***Food wasted in cities include distribution and consumption stagesSource: FAOSTAT Food balance sheets 2013, livestock manure data 2013, WBA global bioenergy statistics 2017, The World Bank, 2012: What a Waste, Scialabba
et al., 2013; Food Wastage Footprint: Impacts on Natural Resources, United Nations University, Valuing Human Waste as an Energy Resource, SYSTEMIQ
Freshwater
Chemical inputs*
Fossil energy
Soil
7.1 billion tn
PRODUCTION FOR FOOD GLOBALLY
4.3 FOOD FOR
HUMAN CONSUMPTION
2.9 FOR CITIES
1.4 OUTSIDE CITIES
1.7 ANIMAL FEED AND OTHER USES
1.1 PRODUCTION AND PROCESSING LOSSES
2.4 EATEN IN
CITIES
2.3 billion tn
HUMAN WASTES IN CITIES**
0.5 WASTED IN CITIES***
2.8 billion tn
ORGANIC WASTE IN CITIES
<2% looped by cities
2525
Cities are the crystallization point for circular food systems
Source: https://www.ellenmacarthurfoundation.org/our-work/activities/cities-and-circular-economy-for-food
Brussels (Belgium)
Reconnecting the city’s food needs with the agriculture
surrounding the city
Guelph (Canada)
Innovating solutions to turn food by-products into
valuable inputs
Porto (Portugal)
Influencing healthy food production in the peri-urban
area
Sao Paulo (Brazil)
Developing a regenerative food system
Focus cities
2626
We need a theory of change – for every economic system
L A N D U S E E N E R G YM A T E R I A L S
BUILDING COALITIONSEnergy Transition Commission Blended Finance Task Force
New Plastic EconomyMade_in_Germany_2.0
TRANSFORMING PIONEERSEurope’s Largest Fertilizer Group
World Largest Environmental Service Company Two Oil Majors
Largest Enzyme Producer
INCUBATING PROJECTS AND COMPANIESBuilding the “Grüner Punkt” in Indonesia
The Uber of Waste STOP
Rebuild
VENTURINGBioCarbon engineering
Electron Upside Energy Open Invest
REDIRECTING LARGE-SCALE CAPITALTemasek Blackrock
IFC Green Finance Institute
Open Invest
Source: SYSTEMIQ
2727
The next 20 years – towards an economy that prospers whilst natural systems thrive
Source: SYSTEMIQ
75 Billion USD
TRANSFORM! RETHINK!
75 Billion USD
+
TRANSFORM RETHINK
First economy(1820 – 2017)
Second economy(2018 – 2038)
