Systemic transition through smart resource management

 This article is part of Friends of Europe’s latest discussion paper ‘The overlooked side of the ecological transition’, available here. 

Completing the ecological transition – and accelerating more ambitious action – is the only option for maintaining human wellbeing. Continuing with the historical model of consumption and production we currently live in would far overshoot the planet’s capability to host humanity.

Without fundamental change, the costs of dealing with global heating, extreme weather events and the consequences of biodiversity loss will soon become very difficult to sustain. For example, according to the ‘Co-designing the Assessment of Climate Change Costs’ (COACCH) project, the costs of coastal flooding in Europe alone could rise to €631bn per year by the 2080s and climate change could lead to a 20% mean food price rise, globally, by 2050.

Averting this damage needs to be seen as an investment in human wellbeing and the foundation of a stable future-proof economy. It is an investment – much rather than a cost – with much synergy potential for more just and happier societies. This undertaking can only be achieved through concerted and committed mid- and long-term measures.

Having said that, of course we can strive to minimise costs in this endeavour and make our investment strategies both more effective and cost-efficient. One possibility is to avoid trade-offs between different ecological goals such as climate change and air pollution, or between ecological and social goals, like climate mitigation and quality employment.

The keyword has to be ‘systemic’. There must be a systematic transition that is less fixated on being ‘less bad’ and more focused on strategically investing in a new model of integrated prosperity. Such a model would need to effectively marshal natural, social and financial capital.

The next question often is – and should be: What does ‘systemic’ mean for decision-makers in terms of planning, monitoring and investing? Additionally, can we make those parameters more concrete?

The International Resource Panel (IRP) suggests ‘sustainable resource management’ as the core of a systemic approach.  Natural resource extraction, trading and use is a common denominator in 12 out of 17 SDGs. It is the key driver of the most pressing environmental impact challenges humanity is facing today, chief amongst them climate change, biodiversity loss and air pollution. Although many global governance and science bodies have been addressing the listed impacts for decades, their underlying drivers and pressures have not yet been targeted systematically.

The Global Resource Outlook 2019, published by the IRP, reveals that the extraction and processing of natural resources causes 90% of global land-use related biodiversity loss and water stress, and more than 50% of global climate change impacts. About 20% of greenhouse gas (GHG) emissions are caused by the extraction and processing of metals and non-metallic minerals alone.

The use of resources globally has more than tripled in the last 50 years. Resource use per capita has almost doubled, showing that not only population growth but economic growth has been driving increased consumption. This trend became particularly pronounced as resource productivity started to decline around 2000 and has stagnated in recent years due to a structural production shift from more to less resource-efficient countries.

These findings tell us that shifting production and consumption of natural resources could be significantly impactful. It is currently an underrated instrument for the reduction of environmental risks.

This is apparent when one examines decarbonisation. We know that, to have a chance at limiting global heating to 1.5°C, our total CO₂ emissions need to reach net-zero by mid-century. The latest special report by the Intergovernmental Panel on Climate Change (IPCC) shows that industry is the largest emitter of GHG and needs to reduce its emissions by 75-90% below 2010 levels by 2050.

Material production – specifically of steel, non-ferrous metals, chemicals, non-metallic minerals – plays a central role in this challenge. These processes are particularly energy and emissions intensive and tricky to decarbonise through solutions such as electrification, demand management, circularity and energy efficiency.

Additionally, supplying a rapidly growing total global electricity demand stirred on by population growth, income growth and enhanced electrification inherently demands more resources. Solar panels and wind parks will need significant amounts of metals and construction minerals and will require large areas of land and sea surface.

The production of materials for energy provision will likely produce CO₂ and particulate matter, affect biodiversity systems and increase competition for land use. Opinions diverge on the level of scarcity of some of the specific metals. Shifting to renewable energy technology is highly beneficial (traditional energy production has much larger externalities) and must be rapidly scaled, but this cannot be the only solution pursued.

Clearly, we need to urgently innovate on existing decarbonisation strategies that are more effective, affordable and produce synergies with other environmental and public health goals. These strategies must go beyond the usual focus on the supply side of the economy. We need a systems-shift in production and consumption that reduces the need for energy-intensive production in the first place, while maintaining, or increasing, the quality of vital services, such as housing.

Materials management is a powerful – and potentially the key – tool in systemic decarbonisation efforts. This is because materials extraction and processing are particularly emissions-intense and produce additional challenges, such as air pollution.

For example, the Energy Transitions Commission calculated that decarbonising heavy industry and heavy-duty transport by mid-century can cost less than 0.5% of the global GDP. Demand management, meaning the smart intensification of use and looping of products and materials, plays a key role in this transition as it is capable of reducing 40% of emissions in these sectors and 45% of the costs.

The natural resource lens is not only a mitigation tool focused on becoming ‘less bad’ or ‘less costly’. It is a powerful approach to guiding systemic innovation for a new type of economic prosperity that overcomes our dependency on natural resource consumption – which is of particular importance for import-dependent regions like Europe.

Smart resource usage in decoupled business models is a huge untapped field for innovation. It can have positive effects on economic development and wellbeing. IRP modelling sees an increase of 8% over a historical trends scenario in the global economy until 2060 through resource efficiency and climate-, land- and behaviour-related measures.

Fully embracing the decoupling transition by employing it as the general innovation principle across sectors could deliver far greater benefits.  The circular economy is a powerful concept in this transition and needs to be regarded as a cross-sectoral instrument by EU decision-makers.

Decoupling prosperity from resource use and environmental impacts must become our economic paradigm. It is essential to secure a safe future for humans and should become an explicit ingredient in climate and industrial policies.