Increased resource efficiency can also lead to economic gains

More efficient use of natural resources, together with ambitious global action on climate change, could achieve big cuts in greenhouse gas emissions while at the same time adding to economic growth.

The International Resource Panel, composed of eminent scientists and experts in natural resource management, and hosted by the United Nations Environment Programme (UNEP) since 2007, on 15 May 2016 released a summary of the findings of its latest report, Resource Efficiency: Potential and Economic Implications, at the G7 Environmental Minister’s Meeting in Toyama, Japan. The full report will be released later this year.

The report, based on new modelling carried out for the IRP by Australia’s Commonwealth Scientific and Industrial Research Organization (CSIRO) and Austria’s International Institute for Applied Systems Analysis (IIASA), projects that under existing trends – increasing population, urbanization, and an expanding global middle-class – natural resource extraction will increase from 85 to 186 billion tonnes over the next 35 years. However, it suggests that effective resource efficiency policies and ambitious global action on climate change could:

• reduce global resource extraction by up to 28 per cent by 2050, compared to a reference scenario based on existing trends;

• cut global greenhouse gas emissions by 74 per cent by 2050 relative to 2015 levels; and

• increase economic output (GDP) by 1 per cent in G7 countries and globally.

The report also finds that the 1 per cent potential increase in GDP is at the low end of results from a compendium of other studies on increased resource efficiency, using different kinds of macroeconomic models. This evidence suggests that addressing issues of climate change mitigation and efficient use of natural resources together can generate increased economic output and employment while meeting the climate targets in the Paris Agreement and the SDGs.

United Nations Under-Secretary-General and UNEP Executive Director Achim Steiner said, “The potential positive impact of greater resource efficiency on tackling climate change is massive. But building a resource-efficient economy will require all countries to change the way natural resources are used, managed and conserved. Only effective international cooperation can accelerate the transition to a resource-efficient future, which in turn will create new jobs and drive sustainable development.”

The IRP says that markets will be unable to achieve higher rates of resource efficiency on their own. “Rather,” the report says, “higher growth and employment arising from greater resource efficiency will only be brought about through higher rates, and different directions, of innovation and technical change than those driven just by markets. It will require higher investments in resource-efficient infrastructure and products, and intelligent, targeted regulation.”

Less than a year ago, at the G7 Summit in Germany, the leaders of the seven largest economies expressed a commitment to promoting resource efficiency as a key element of sustainable development, and asked the IRP to prepare this report on the potential and promise of resource efficiency. The report demonstrates that while it is significant for the G7 to champion resource efficiency, that alone will not be sufficient; global cooperation will be crucial to realizing climate change and sustainability targets.

The IRP report was released alongside the OECD’s Policy Guidance on Resource Efficiency, which says advanced economies have room to do much more to design and produce goods in a way that uses fewer natural resources and produces less waste.

Governments can do more to preserve material resources and cut waste

Advanced economies have reduced their consumption of raw materials and improved waste management, but more should be done to design and produce goods in a way that uses fewer natural resources and produces less waste, according to a new OECD report.

Resource consumption by Group of Seven countries has flattened out since 1980, despite economic growth, but their per capita consumption is still around 60% above the world average. Soaring demand from developing and emerging countries, and rapid population growth, means global resource consumption could double by 2050, putting serious pressure on the environment.

Policy Guidance on Resource Efficiency, presented to G7 Environment Ministers in Toyama, Japan, calls on governments to apply resource-efficiency policies to the entire life cycle of products and to align them with existing policies in areas like innovation, investment and trade. More harmonisation of environmental labelling and information could also raise standards in resource efficiency, it says.

“Our objective has to be achieving a circular economy where we maintain the value of products and materials for as long as possible and we minimise waste generation. The challenge is to create more value from fewer natural resources,” said OECD Deputy Secretary-General Rintaro Tamaki. “This is foremost a matter of national policy decisions, but our report also highlights the value of international co-operation in this area.”

The OECD report finds that measures have been applied more to the downstream than the upstream part of products’ lifecycles. For example, at the downstream end, higher landfill taxes have been effective at diverting waste into recycling and energy recovery, but too few incentives are in place to encourage greener product designs or more environmentally friendly consumer behaviour. It offers advice on extending policies to cover entire product lifecycles.

Other recommendations in the OECD report include:

• Strengthen and expand Extended Producer Responsibility schemes (already used by a majority of OECD countries in areas like electronic equipment, packaging and tyres) whereby manufacturers take responsibility for collecting and treating end-of-life products.

• Better integrate resource efficiency considerations into public procurement programmes.

• Encourage partnerships among businesses working along value chains so that, for example, one company’s waste can become another’s material input.

• Improve data collection and analysis so policies can be evaluated and improved.