gci: circular economy paradigm for global sustainability · 2018. 10. 28. · day 5/topic: circular...

Day 5/Topic: Circular and Green Economy Paradigm for Global

Sustainability

Dr. Anthony Halog

Source: WRF 2014 Conference: Shaping the Future of Natural Resources, Oct. 19-22

26/10/2018Industrial Ecology and Sustainable

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The Coupling of Human-economic and Natural

Systems

“To produce 46% of global aluminium, 50% of steel and 60% of the world's cement in 2011, China consumed more raw materials than the 34 countries of the OECD combined: 25.2 billion tonnes.” As a result of this, China has shifted towards circularity and ratified a Circular-Economy ‘Promotion Law' .(Mathews & Tan, 2016. “Circular economy: Lessons from China”, Nature, 23 March.


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What Complex System Problems Are We Trying to Solve?

1. Energy & Food Security

2. Economic Security

a) National

b) Personal

3. Environmental & Resource Security

How can we address the above challenges when transitioning to resource efficient, low

environmental impact, and circular economy in the Philippines and beyond?

Decoupling Representations (UNEP, 2011)

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Our Global Challenges• 3 billion additional middle class consumers by 2030• 80% rise in steel and cement demand by 2030• Price rises in food, energy, materials and water• Cost of extraction of oil and metals doubling• Recycling potential for many metals underutilised• Converging pressure points of supply security and

climate change• Large investment in resource systems needed to satisfy

demand• Investment needs to be redirected to achieve human

well-being (e.g. job security, good health) at much lower environmental cost

Source: Decoupling Global Environmental Pressure and Economic Growth | Heinz Schandl26/10/2018Industrial Ecology and Sustainable

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Global total primary energy supply (TPES), 1990 to 2050

Industrial Ecology and Sustainable EngineeringSource: Schandl , Hatfield-Dodds et al. 2014

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Global carbon dioxide emissions (CO2), 1990 to 2050

Industrial Ecology and Sustainable Engineering

Source: Schandl , Hatfield-Dodds et al. 2014

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Global Green Economy Index 2014

Source: THE GLOBAL GREEN ECONOMY INDEX GGEI 2014: Measuring National Performance in the Green Economy 4th Edition – October 2014 http://dualcitizeninc.com/GGEI-Report2014.pdf

There are concerning results related to more developed countries notably Australia and the United States – where perceptions of their green economic performance dramatically exceed their actual performance on the GGEI. These countries appear to receive more credit than they deserve.


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http://dualcitizeninc.com/GGEI-Report2014.pdf


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Sustainable, Circular Systems

Environmental

SocialEconomic

Transitioning towards Circular Economy

Re-thinking Progress: The Circular Economy

Research Projects• Determining Viable Paths for a Circular Economy (Case of Mobile Phones in

Australia)• Moving towards Sustainable Construction in Malaysia: An Integrated Framework for

Construction Waste Management using the Concept of Circular Economy• Transitioning to a Low Carbon Electricity System in Indonesia: A Hybrid Multi-level

Perspective and Systems Thinking Approach• Life Cycle Sustainability Analysis of Large Scale Adoption of Solar Energy• Using Circular Economy Principles to Increase Resource Efficiency in the Australian

Food Industry26/10/2018Industrial Ecology and Sustainable

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https://www.youtube.com/watch?v=zCRKvDyyHmI

• Maximise the sustainable use and value of resources,eliminating waste and benefiting both the economy and theenvironment;

• Moving away from our current linear economy (make-use-dispose) towards one where our products, and the materials theycontain, are valued differently;

• Aims the elimination of waste through the superior design ofmaterials, products, systems and business models;

• Replaces the end-of-life (EOL) concept with restoration, shiftstowards the use of renewable energy, eliminates the use of toxicchemicals;

• By taking a whole-of-systems perspective for CE, we canunderstand the main components and impact areas (hotspots)within an industrial or urban system.


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Circular Economy—an industrial system that is restorative or regenerative by design


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6 PRINCIPLES OF “IDEAL” CIRCULAR ECONOMY (CE)

• All materials are recycled indefinitely.

• All energy is from renewable or otherwise sustainable sources.

• The integrity of the biosphere and its natural capital are supported and strengthened through human activities (within the ecological carrying capacity).

• Human culture and social integrity are supported and strengthened through human activities.

• Human health and happiness are supported and strengthened through human activities.

• Resources are used to generate value (recognizing a broad range of value beyond financial gains) – value chains

The overall objective that shines through these principles is an imperative to create an economy that will efficiently manage and recycle material flows and base its operations on renewable energy.

Source: Current state and future vision: Agri & Food sector athttps://www.rabobank.com/nl/images/03-07_CE_Rabobank_AgriFood_Circle_Scan.pdf26/10/2018


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₊ Privately owned automated vehicles− Congestion and pressure on resources

₊ Multi-modal mobility ₊ Shared, on-demand, durable, automated vehicle

₊ More efficient value chain₊ Energy efficient − Increased sprawl/land take

₊ Smart urban planning unlocking land in cities

₊ Modular and shareable buildings

₊ More efficient value chain ₊ Waste reduction − No land rehabilitation− Limited impact on health

₊ Closed nutrients loops ₊ Preserved and rehabilitated natural

capital ₊ Healthier food and diet

Optimise elements of the system independently

Optimise elements of the system and interconnections between them

Overall Benefits

Disposable Income

GDP

Resources and Externalities (CO2)

€0.9 trillion resource, non-resource and externality cost

€1.8 trillion resource, non-resource and externality cost

↑ 7% ↑ 18%

↑ 4% ↑ 11%

↓ 31% emissions and ↓ 22% primary material consumption

↓ 48% emissions and ↓ 32% primary material consumption

Source: Ellen Macarthur Foundation


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Moving towards a circular economy


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https://www.youtube.com/watch?v=6OrSOWXkPGM&feature=youtu.be

CE Paradigm in Agri-Food Systems for Food Security

(Pathway to Change)


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Source: Simon Michaux, ,Presentation on “Peak Natural Resources” in Fenner Conference on the Environment http://www.ies.unsw.edu.au/about-us/events-workshops/2014/07/fenner-conference-environment


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Source: Current state and future vision: Agri & Food sector athttps://www.rabobank.com/nl/images/03-07_CE_Rabobank_AgriFood_Circle_Scan.pdf26/10/2018


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Current Situation of Global Agri-food Sector (Linear Economy)

• From the total global consumption of resources global agri-food system is responsible for 70% of the total water usage, 40% of the land’s surface area, 30% of the energy used and 70% of all fertilizers used.

• Moreover, along this chain 30-50% of the 4 billion tonnes of food totally produced is wasted while 2 billion people suffer from one or more micro nutrient deficiencies.


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Main Hotspots in Global Agri-food (A & F) Sector• Energy and Material Impacts

– Throughout the chain, processes related to harvesting, processing, transport, storage, and fertilizer production rely heavily on fossil fuel inputs, causing the A&F sector to account for 22% of the global GHG emissions, with 14.5% of the global GHG emissions coming from livestock.

– Fresh food products need to be preserved throughout storage and transportation stages, and processed food needs to be conserved for pretty much indefinite time. This requires intensive heating and cooling, the use of preservatives and packaging, and thus the input of scarce materials.

• Biodiversity and Ecosystem impacts– Vast amounts of freshwater and land surface are being used for crop and meat production, putting a strain

on the competition for water in water scarce areas and land that would otherwise be available for natural ecosystems and native communities. Nowadays agriculture is responsible for 75% of global deforestation.

– Current crop production systems comprise 90% monocultures and require continuous inputs of artificial fertilizers, pesticides, herbicides and insecticides, contaminating surrounding land and water bodies.

– Meat production requires 50% of all the crops produced as feed input and strongly relies on the usage of antibiotics in the generally densely packed stables, leaving only half of the crops for human consumption and animal welfare and antibiotic resistance as a global issues to deal with.

– The fossil fuel intensive wild fish capture has resulted in 70% of the world’s fish species to be either fully exploited or depleted, and goes hand in hand with 8% of the fish wasted by throwing back millions of tons of dead, dying and unusable fish.

– For the production of 1kg of farmed fish, 5kg of wild fish is caught for fish feed, and 10- 100gr of antibiotics is used. Pesticides and toxins as arcene, PCB’s, dioxins, FF-B, are being used to kill the parasites and worms attracted by the high concentration of feces in the densely packed basins, and to create artificial flavours.

– Access to food and water is skewed, causing about 1 billion people to be overweight and over 860 million people to be food insecure. Beyond the social cost, the cost to the global economy caused by malnutrition could account for as much as 5% of global GDP. This equals about US$3.5 trillion per year.26/10/2018


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Main Hotspots in Global Agri-food (A & F) Sector

• Societal impacts– From the 4 billion tonnes of food produced between 30-

50% is lost throughout the chain. In industrialized countries more than 40% of losses happen at retail and consumer level, while in developing countries 40% of losses occur at post-harvest and processing levels. If only 25% of these food losses could be saved, this would be enough to feed the 860 million hungry people in the world.

– Besides the many different channels throughout the chain which cause little room for profit margins, purchasing companies and supermarket chains have enormous buying power due to the consolidation of the chain, causing farmer prices usually to be far less than 30% of the consumer prices.


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Potential Hotspots for Australian A & F sector • Global nutrient displacement and leaks

– Three fertilising nutrients are essential to agricultural production: nitrogen (N), phosphorus (P) and potassium (K). Challenges in the production and supply of the nutrients differ, while P is a finite mineral mined in a few places globally, N is an abundant element that requires a lot of energy to be fixed in a usable form.

• Effects of other inputs are large– The associated greenhouse gas emissions, land use and water use and its effects can be

significant.

• Food waste– Most food is wasted at point of production and at consumer level . (FAO)

• Harmful pesticides– Use of pesticides and herbicides could still be below standards for safeguarding

environmental impacts on ground water quality, drinking water quality, health safety through food residues.

• Low profits primary producers– There are large companies and supermarket chains, which have enormous buying power.

The large scale production of food has caused a supply surplus and as supermarkets have difficulty differentiating they are instead competing on price, causing price reductions throughout the chain with the lowest profit margins for primary producers.

• Changing consumer patterns– Consumers show increasingly hybrid patterns: increasing demands for both low costs

common products, and premium products with emotional or social feel.


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Circular Economy Vision for Australia’s A & F Sector

Australian Agricultural Exports

Source: Current state and future vision: Agri-Food sector athttps://www.rabobank.com/nl/images/03-07_CE_Rabobank_AgriFood_Circle_Scan.pdf26/10/2018


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Circular Vision for Food Security• From global to bio-regional

– Bio-regions are the basic feature of a more circular state of the A&F sector: these regional areas, varying in size, host most of the actors in the chain - from producer, processor to consumer/ user. In bio-regions, resource flows are optimized in such a way that external inputs for fertilization, energy, water are sourced locally from renewable resources, and reduced where possible, and that waste outputs are eliminated. More regional production, processing and consumption largely decreases the need for long logistical chains that are energy intensive because of transportation and cooling. Within bio-regions a variety of business actors collaborate to optimally serve the local demands and create a resilient regional economy.

• Shorter and more transparent chains– In bio-regions the food chain is becoming shorter and more transparent. Shorter and

collaborative, transparent chains allow for more rapid adjustment of supply to demand, and give shared insight in specific product information, sales volumes, margins and food waste. Entrepreneurial producers will get more influence on the actual product display and composition at point of sales. These new chain configurations give opportunities for increasing overall sales and margins, and delivering high quality products and continuous supply, while reducing environmental impacts and financial costs related to transport, storage, food waste and the mismatch of supply and demand. Shorter chains circumvent several chain partners that individually take part of the margin, leaving larger margins for primary producers. There is much less import and the import that does happen is for specialty crops that can not be grown locally. 26/10/2018


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Circular Vision for Food Security• Cross-sectoral integration

– Another key feature of a more circular sector is cross-sectoral collaboration and integration. Primary producers collaborate with bio-refineries, other businesses and utilities to exchange and cascade resources that were previously regarded as wastes. Scarce resources like phosphate are recovered from waste water. Residual organic streams are upgraded in bio-refinery processes for example to lipids and acids that can serve the packaging industry to create packaging. Examples are already visible, such as tomato leaves or mycelium (the grow-bed of mushrooms) for packaging. From global to regional means that end-users can become more engaged in the sector, through experiential programs, education, local foods stores, and self-cultivation technologies.

• Applying advanced agronomic techniques– Innovative cultivation techniques help increase the overall efficiency of production per m2 while at the

same time reducing the need for inputs such as nutrients, water, land and energy. Precision farming through balance fertilization, no or low til(lage) techniques, can increase nutrient cycling, reduce emissions and maintain soil fertility. Polyculture cropping, although increasing labour, further helps reduce inputs and eliminating pesticides. Renewable substrate based on techniques such as aquaponics and aeroponics are also essential in a circular future.

• Valorising waste streams– Bio-refining of residual waste flows to amongst others nutrients, chemicals and biogas offers large

economic potential and eliminates waste from the AGF chain. Already existing are companies such as Waste2Chemical which are specialized in upgrading organic and agricultural residues into chemical substances.


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Circular Vision for Food Security• Product diversification and innovation

– To add more value and increase margins, primary producers are diversifying their product(s) portfolio’s. Examples include the development of sweeter tomato varieties and re-branding them as a snack or the slicing and mixing of vegetables to cater to convenience seekers. Other examples include new breeds on the market containing elements with health benefits like bananas with more beta-carotene that the body transforms into vitamin A. Related are also genetically modified crops, with contain anti-carcinogen substances. Since the meat and fish industry causes the largest impacts, innovation in new protein meat replacements based on insects or mushrooms open doors to new markets.

• Renewable energy opportunities– Mostly non-renewable, the AGF chain has tremendous potential to de-carbonize by

utilizing residual heat for heating, solar or wind energy, reduced or electrified food miles and reuse of CO2 for CO2 fertilization. Utilizing waste heat from industry is also part of the opportunities. Not only will the replacement of fossil fuel by renewable energy eliminate the emission of CO2, the financial savings potential is also large.

• Packaging innovation– Innovative packaging solutions revolve around RFID tagging and bio-based

packaging using crop’s waste to minimize food loss and eliminate waste. Waste streams such as tomato leaves, or mushroom mycelium, can form the ingredients for bio-based packaging .


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Participation of SMEs in Green and Circular Growth in the Economy


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SMEs in Green GrowthSMEs can bridge the gap between maximizing

commercial profit and minimizing negative environmental impact.

Green growth (eco-innovation) offers SMEs huge opportunity to save costs, expand new markets, create new jobs and reduce pressure on the environment.

It enables SMEs to maintain a high level of legitimacy given the emergence of an array of environmental rules and regulations imposed by governments and international organizations.


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Green Innovation and TechnologiesCountry Green Initiatives

Philippines Biodiversity Partnerships

Eco-town Framework

Vietnam Payments for ecosystem services (PES) project to cover

water regulation, soil conservation, and tourism

landscape protection

Singapore Energy efficiency and clean energy, green buildings and

construction, water and environmental technologies,

green transport and shipping, waste minimization,

environmental initiatives and capability development

Brunei Sustainable resource management, ecological tourism

development, environmental security, and stakeholder

development, green buildings (new idea)


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Investments for Green GrowthCountry Investments

Indonesia • Indonesian state budget (public climate finance) – USD 822 million

• Indonesia investment institutions managed by the Ministry of Finance (for renewable energy, environmentally friendly transportation, waste management, water management, biomass, bioethanol and REDD+)

• Asian Development Bank Energy Efficiency Project Finance Program -USD 30 million

Vietnam • IFCs Vietnam Energy Efficiency and Cleaner Production (EECP) Financing Program-Techcombank – EUR 23.5 million

• For implementation of the Green Growth Strategy – EUR 28.3 million

• Vietnam Environmental Protection Fund – EUR 41.2 million

• Sustainable Energy Cooperation Program – EUR 346 million

• Vietnam Green Credit Trust Fund26/10/2018Industrial Ecology and Sustainable

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Singapore • Energy Efficiency Improvement Assistance Scheme• Grant for Energy Efficient Technologies• Energy Innovation Research Programme• Clean Development Mechanism Documentation Grant• Green Mark Incentive Scheme for Existing Buildings • 3R Fund• Environment Technology Research Programme• A*STAR-MND Joint Grant Call for Green Building R&D• Skyrise Greenery Incentive Scheme• Sustainable Construction Capability Development Fund• Environment and Water Research Programme• Technology Enterprise Commercialization Scheme• Innovation for Environmental Sustainability Fund• Carbon Emissions-Based Vehicle Scheme• Green Technology Programme


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Thailand • Energy Conservation Promotion Fund• Global Environment Facility• Energy Efficiency Revolving Fund• Solar Rooftop Program• Community-based Solar Program

Philippines • Philippine Industrial Energy Efficiency Project• Clean Development Mechanism• Project for the Introduction of Clean Energy by Solar

Electricity Generation System


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Strategies to Strengthen and Expand Green Business in SMEs

• Linkages with Research Centers of Excellence, R&D cooperation and joint ventures

• Institutionalization of government’s promotion of green technology

• World-class technological expertise and innovation system

• Substantial green investments

• Economic incentives and drivers

• Government and industry working together in search of technological approaches (e.g. to increase efficiency)

• Government policy on energy efficiency, increasingly strict enforcement of pollution regulations and national attention to cleaner production concepts and circular economy


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Enabling Policies and Mechanisms to Promote Private Sector Development

in Environmental Service Markets • Well-designed environmental standards (capable to provide both financial

and operational benefits to companies)

• Senior management support or commitment from top to middle management

• The adoption of ISO 14000 standards in terms of environmental labels or green products

• Incentives for financial institutions to increase loan packages for the SMEs

• More information on economic and environmental benefits of SCP should be made available to SMEs.

• Financial institutions should be encouraged to use an SCP product portfolio to position themselves in the market.

• More capacity building for financial institutions to increase their understanding of resource efficient technologies and SCP business models


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Main Barriers and Challenges for Private Sector Development

• SMEs not sufficiently aware of options for funding

• Informality and a lack of financial information hamper SMEs creditworthiness

• SMEs not sufficiently aware of the business opportunities of green investments

• SMEs not generating demand for green SME financing products

• Very high capital costs and collateral requirements

• Loan approval can be long and complicated

• Financial institutions lack understanding of green finance and do not see it as a potential market

• Possible tradeoffs between economic and other sustainability goals

• Technical barriers (availability of green chemistry and green engineering technologies)

• High transaction costs for establishing business relations and trust makes SMEs and green investments less profitable and attractive to financial institutions

• As banks are risk averse and classify SMEs as risky customers, they are generally hesitant to provide SMEs with funding

• Lack of continuity of donor-financed programmes26/10/2018


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Food Security Planetary Boundaries

EconomyPopulation

Circular Economy for Sustainable Systems

Cradle Grave

UNSDG

(Minimisation) Resources consumption

(water, land, energy, metallic & non metallic)

Waste & Emissions ≈ New ResourcesNew products/

New markets

Circular economy Circular

economy

Cleaner Production/Eco-Innovation

Closed Loop Supply Chain

Sustainable Consumption & Production


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gci: circular economy paradigm for global sustainability · 2018. 10. 28. · day 5/topic: circular...

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