A new framework for resource productivity: a case in South

Korea

Sangwon Suh

1

Sangwon Suh

Assistant ProfessorUniversity of Minnesota

U.S.A.

OECD / UNEP Conference on Resource Efficiency, Paris, 23 – 25, April, 2008

Introduction

MFA / resources productivity projectsEuropean Commission:

FORWASTEXIOPOLEXIOPOL

South Korea:Industry-level Material Flow AnalysisFeasibility study for national resources account

USA:Vision study -- Resources Conservation and Recycling Act (US EPA)

2

Introduction

Often subtle but important differences in perspectives and strategies for resources productivity.Interpretation and communication of resource Interpretation and communication of resource productivity figures with policy makers require a caution.

Global life-cycleCompetitive impact

Example: Int’l comparison of EW-MFA results3

Temptation of quick international comparison

4

Xu and Zhang (2007): Journal of Industrial Ecology

“Economic growth is the way to improve Resource Productivity”

5Source: GDP/DMI data for the EU15: Eurostat online database (accessed in 2008); GDP/DMI data for candidate countries: EEA (2004); GDP/DMI for Japan: NIES (2007); GDP per capita-PPP data: CIA (2000).

Perspectives on resource productivity

The case of the Ministry of Industry, South Korea

Competitiveness of South Korean Industry’s resource-productivityresource-productivityResilient economic structure against potential price hikes or material scarcity crisis.Reducing environmental impacts of resources use throughout the life-cycle.

6

Analytical framework

EW-MFA has limited applicability in this case.3 Key industry sectors are selected (1st year)

Petroleum refineryAutomotiveAutomotiveLiquid Cristal Display (LCD)

Hybrid IO-MFA frameworkMethodological / accounting framework well established and practiced since 1990s (CBS).Combination of process information and national accounts. 7

Analytical framework (cont’d)

Key resources identified for each industry Material flows are tracked down

Along the supply-chain .Regardless of the national border.Regardless of the national border.Ex) Indium

Material-specific characterizationCommonly practiced in LCAE.g., 1kg Pt has different resource-base implication compared to 1kg gravel.

8

Materials Production

Alloy

Zinc Ore

CopperOre

Bauxite

kaolin

Silica

Limestone

Iron Ore

Coal

Steel

Brass

Aluminum

Glass

Iron

Ingot, Plate,Bar, Rod,

Tube

Ingot

Fused Mass

Ingot, Bar,Billet, Plate

Plate, Ingot

Shot,Ingot,Wirebar

Slab

Copper

Zinc

End-of-Life Management

DismantledParts for

Remanufacturing/ Reuse

DismantledParts forRecycling

Retired AutoShreddedHulk

SecondaryMaterial

FerrousFracion

non-ferrousMetal

OtherProductSystem

(magnetic Separation)

Secondary Material

Vehicle Use and Service

AftermarketParts

RemanufacturedParts

Auto in Use/Service

Manufacturing and Assembly

AssembledAuto

Module

Power-train

Chassis

Body

Sub-module

engine block

clutch system

transmissionassembly

...

steeringsystem

suspensionsystem

brake system

...

ReplacementParts

NaturalRubber

Lead Ore

Other

Water

Metals

NaturalGas

Petroleum

Lead Oxide

Lead

Rubber

Refined Oil/Recycled Oil

Ingot

Lead OxidePaste

RubberPellet

Plastics

PaintPigments

Extenders

Solvents

Resin/OtherMaterials

Oil

Prefabric.Material

AbandonedAuto

Used Parts,Fluids forRecycling

ASR

Non-ferrousFractio

n

(air separation,classification)

ReplacementFluids

Used Parts, Waste

Body

Exterior

Interior

...

floor panel

side bodypanel

...

lamp

bumper

...

console

seat

instrumentpanel

9

Basic Structure of a hybrid account

Accounting framework

11

Price volatility of resources

12

Supply-security index

Rank Symbol Name

Supply Security index Major producers with low credit rating

1 Co Cobalt 32% Zambia, Congo2 Hg Mercury 65% China

New Caledonia, Cuba, Dominican Republic, 3 Ni Nickel 66%

New Caledonia, Cuba, Dominican Republic, Zimbabwe

4 Sn Tin 67% Indonesia, Peru, Bolivia, Brazil5 Ti Titanium 67% Sierra Leone6 Cr Chromium 70% South Africa, Kazakhstan, India

7 Pt Platinum 70% South Africa, Russia, Zimbabwe, Colombia

8 Al Aluminum 71%Guinea, Jamaica, India, Russia, Venezuela, Kazakhstan, Suriname

9 Mn Manganese 72% South Africa, Gabon, Ukraine

10 Pd Palladium 73% Russia, South Africa, Zimbabwe13

Own calculation. S&P country credit rating in 2008 applied to ore producing countries. AAA: 1; AA: 0.9; … D or SD: 1

Top 10 characterization factors

Rank Symbol Name Reserve year ^-1

1 Sr Strontium 0.086

2 Ag Silver 0.072

3 Sb Antimony 0.0643 Sb Antimony 0.064

4 Au Gold 0.060

5 Pb Lead 0.050

6 Zn Zinc 0.045

7 Sn Tin 0.045

8 Cr Chromium 0.042

9 Cd Cadmium 0.039

10 Hg Mercury 0.03214

Weighting factor example

According to the study by Dr. Halada, Cu has half of the reserve-year of Fe. 0

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

5 0 5 0 5 0 5 0 5 0

Fe (K t

on)

reserve

reserve base

already mine

60 years

of Fe.Extraction of 1kg Cu can be considered to be equivalent to extraction of 2kg of Fe in terms of its scarcity.

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

0

500,000

1,000,000

1,500,000

2,000,000

2005

2010

2015

2020

2025

2030

2035

2040

2045

2050

Cu

(K t

on)

30 years

Source: Halada, 2007 15

Overall picture

National MFAcc

Industry-specific, material-specific

hybrid MFA • Industry-based

RP benchmark Innovation

16

Corporate MFAcc

Additional data

hybrid MFA framework

RP benchmark• Hot-spot

identification• Material• Process• Supply-

chain

Database on price-risk, supply

security

Innovation

Ind-specific RP

improvementstrategy

Data Analysis Results Outcome

Summary

Resource productivity figures across nations should be carefully interpreted.Trade liberalization and “global division of labor” make it increasingly difficult to interpret resource productivity figures based on DMI across nations.figures based on DMI across nations.Especially, resource productivity discourse may need to take the socio-economic and historical trajectories of an economy into consideration.An industry-specific, material-specific approach that is based on hybrid IO-MFA and LC thinking is proposed.The project is at its early stage and comments / suggestions are welcomed. 17

Thanks

18

World-wide Economic Structural Change

Percent of income from services

Simon Kuznets (1958)

Import trend – Japan

1E+11

1,2E+11

1,4E+11

1,6E+11

1,8E+11

2E+11

pan

by

cate

go

ryn

US

D)

Basic materials

Source: WTO international trade statistics 2007: own grouping and aggregation (fuels excluded)

0

2E+10

4E+10

6E+10

8E+10

1E+11

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Imp

ort

s b

y Ja

pa

(Mill

ion

Basic materials

Semifinished and finished products

Import trend – U.S.

5E+11

6E+11

7E+11

8E+11

9E+11

US

by

cate

go

ry

US

D)

Basic materials

0

1E+11

2E+11

3E+11

4E+11

5E+11

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Imp

ort

s b

y th

e U

S(M

illio

n U Basic materials

Semifinished and finished products

Source: WTO international trade statistics 2007: own grouping and aggregation (fuels excluded)