www.unep.org United Nations Environment Programme P.O. Box 30552 Nairobi, 00100 Kenya Tel: (254 20) 7621234 Fax: (254 20) 7623927 E-mail: [email protected] web: www.unep.org Decoupling 2 Technologies, The followingOpportunities is an excerpt and of the report Policy Options decoupling natural resource use and environmental impacts from economic growth

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This document highlights key findings from the report and should be read in conjunction with the full report. References to research and reviews on which this report is based are listed in the full report.

The full report can be downloaded from www.unep.org. If you are reading a hardcopy, the CD-Rom can be found in the back cover. Additional copies can be ordered via email: [email protected], or via post: United Nations Environment Programme Division of Technology Industry and Economics, 15 rue de Milan, 75441 Paris CEDEX 09, France II technologies, opportunities decouplingdecoupling 2 and policy options 2 special permission from thecopyright holder,provided acknowledgement ofthesource ismade. This publication maybereproduced in whole orinpartandanyform for educational ornonprofit purposeswithout Copyright The mainresponsibility for errors remains withtheauthors. Li, Tomas Marques, Lowri ReesandCaroline Freier. The Secretariat oftheInternational Resource Panel coordinated thepreparation ofthisreport withthesupportofShaoyi comments. as well asto themembers oftheInternational Resource Panel anditsSteering Committee for theirconstructive Special thanksgoto AshokKhoslaas Co-Chair oftheInternational Resource Panel for hisdedication andcommitment, Panel Secretariat. Theauthors thanktheanonymouspeerreviewers for theirconstructive comments. The report went through apeer-review process coordinated byMaarten Hajer,together withtheInternational Resource Heinz Leuenberger, CherylDesha,AngieReeve, DavidSparks. Contributors: Hargroves, Christian Hudson,MichaelHarrisonSmith,andMariaAmeliaEnriquezRodrigues. Lead Authors: Working Group onDecoupling Editor: Acknowledgements ISBN: Job Number: Rodrigues, M. de Larderel, J,Hargroves, K., Hudson,C.,Smith,M., to theInternational Resource Panel. von Weizsäcker, E.U., options policy UNEP (2014) Programme, nordoescitingoftrade namesorcommercial processes constitute endorsement. the views expressed donotnecessarily represent thedecisionorstated policyoftheUnited NationsEnvironment country, territory, cityorarea orofitsauthorities,concerning delimitation ofitsfrontiers orboundaries. Moreover, opinion whatsoever onthepartofUnited NationsEnvironment Programme concerning thelegal status ofany The designationsemployed andthepresentation of thematerial inthispublication donotimply theexpression ofany Disclaimer Cover photos ©: Printed by: Design/layout: from theUnited NationsEnvironment Programme. publication maybemadefor resale orfor anyothercommercial purposewhatsoever without priorpermission inwriting UNEP would appreciate receiving acopy ofanypublication thatusesthispublication asasource. Nouseofthis 978-92-807-3383-9 International Resource Panel ©United NationsEnvironment Programme, 2014

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technologies, opportunities and and opportunities technologies, paper from sustainable including including forests sustainable from paper recycled fibre. The paper is chlorine free free chlorine is paper The fibre. recycled Our distribution policy aims to reduce to reduce aims policy distribution Our activities. This report is printed on on printed is report This activities. practices globally and in its own own its in and globally practices and the inks vegetable-based. vegetable-based. inks the and UNEP’s carbon footprint. UNEP’s carbon environmentally sound sound environmentally UNEP promotes UNEP promotes United NationsEnvironmentProgramme P.O. Box 30552Nairobi,00100Kenya www.unep.org E-mail: [email protected] Fax: (25420)7623927 Tel: (25420)7621234 web: www.unep.org The following isanexcerpt ofthereport 75441 Paris CEDEX09,Franc Programme DivisionofTechnology Industry andEconomics, 15ruedeMilan, ordered viaemail:[email protected], orviapost: United NationsEnvironment hardcopy, theCD-Romcan befound inthebackcover. Additionalcopies can be The fullreport can bedownloaded from www.unep.org. Ifyou are reading a report isbasedare listed inthefullreport. conjunction withthefullreport. References to research andreviews onwhichthis This documenthighlightskey findingsfrom the report andshouldbe read in Produced bytheInternational Resource Panel e decoupling from economic growth environmental impacts natural resource useand www.unep.org United Nations Environment Programme P.O. Box 30552 Nairobi, 00100 Kenya Tel: (254 20) 7621234 Fax: (254 20) 7623927 E-mail: [email protected] web: www.unep.org Decoupling 2 Technologies, The followingOpportunities is an excerpt and of the report Policy Options decoupling natural resource use and environmental impacts from economic growth

Produced by the International Resource Panel

This document highlights key findings from the report and should be read in conjunction with the full report. References to research and reviews on which this report is based are listed in the full report.

The full report can be downloaded from www.unep.org. If you are reading a hardcopy, the CD-Rom can be found in the back cover. Additional copies can be ordered via email: [email protected], or via post: United Nations Environment Programme Division of Technology Industry and Economics, 15 rue de Milan, 75441 Paris CEDEX 09, France IV technologies, opportunities decouplingdecoupling 2 and policy options 2 Contents

List of figures and tables VIII Abbreviations and acronyms X Preface XII Foreword XIV Executive Summary 2 1 Changes in Resource Use and Scarcity 20 1.1 The drivers of changes in resource use 21 1.1.1 Population 21 1.1.2 Income 21 1.2 Future trends in these drivers of resource use 21 1.2.1 Implications for resource demand 22 1.3 The Consequences of increasing resource use 23 1.3.1 Increasing resource prices 23 1.3.2 Increased price volatility and price shocks 24 1.3.3 Increasing resources scarcities 25 1.3.4 Increased disruption of environmental systems 27 1.4 Why these problems appear unlikely to be solved by a “leave it to the market approach.” 29 1.4.1 The scale and rate of change often outpaces the supply side response 29 1.4.2 Historically, growth in developed countries has used resources from other countries 29 1.4.3 Declining ore grades and impacts on other resources 30 1.4.4 Linkages between energy production, water, resources and food 31 1.4.5 Tipping points, sudden or irreversible declines 32 1.4.6 Many of the essential resources are not accurately priced by the market 32 2 Responding to Change 34 2.1 Strategic implications of trends in resource use 34 2.1.1 A changing basis of competitive economic advantage 34 2.1.2 Potential advantages for developing countries 35 2.1.3 Risks of disruption to existing economic growth patterns 36 2.2 Decoupling as a response 37 2.2.1 What is decoupling? 37 2.2.2 Choices involved in decoupling 38 2.2.3 The “‘rebound effect”’ from resource productivity gains 39 2.2.4 Choosing decoupling is an active choice 39 3 Technological Responses Allowing Significant Decoupling 42 3.1 The widespread opportunity 43 3.2 Technologies to save energy 44 3.2.1 Technologies directly reducing fossil fuel consumption 45 3.2.2 Technologies directly saving electricity in industry 46 3.2.3 Technologies for reducing fossil-fuel demand in transportation: trucks and ships 48 3.2.4 Technologies for reducing fossil-fuel demand in transportation: rail and road passengers 49 3.3 Technologies saving metals and minerals 50 3.3.1 end use in construction 50 3.3.2 Reduction in metal use 51 3.3.3 Saving materials from streams 53

V VI technologies, opportunities decouplingdecoupling 2 and policy options 2 6 5 4 3.4 7 Facilitating Transition: Removing barriers to decoupling Deepening understanding aboutthenature ofdecoupling What currently holdsbackdecoupling? Technologies savingfreshwater andbioticresources An overview ofpoliciesthathave promoted decoupling 6.4 6.3 6.2 6.1 5.3 5.2 5.1 4.8 4.7 4.6 4.5 4.4 4.3 4.2 4.1 7.1 6.5 6.3.2 6.3.1 6.2.4 6.2.3 6.2.2 6.2.1 4.7.4 4.7.3 4.7.2 4.7.1 3.4.4 3.4.3 3.4.2 3.4.1 7.1.4 7.1.3 7.1.2 7.1.1 6.4.4 6.4.3 6.4.2 6.4.1 Creating theconditions for decoupling Decoupling resource useacross awhole economy Case studies of decoupling Decoupling can happen Decoupling whatmatters Understanding thedrivers behinddecoupling Burden shifting–or‘decoupling through trade’ Inertia inpolitical systems andsystems lock-in Biases against investment ininnovation The legacy policyframework Bias ininnovation investment decisions Innovative capacity Cycles ofGrowth andTransition Growth, development andtransition Introduction Strategies Life -cycle thinking Multi-level perspective ontransition The challenges for decoupling Decoupling economic growth from airpollution Decoupling inSingapore Decoupling inAustralia Decoupling economic growth from freshwater extraction Other institutional norms,includingshort-term incentives Organisational –includingbiasesagainst finance for resource productivity Behavioural biases Physical andtechnological biases Combinations oftechnologies Technology- savingbioticresources Technologies protecting soilfertility Technologies savingfreshwater extraction Advisory strategies Creation ofnew institutional structures Creating policycoherence Reducing uncertainty andproviding direction Selecting thescope Long-term thinking Creation ofpolicymixes Many policymakers have acrucialrole 78 72 60 54 92 85 82 79 78 74 73 72 68 66 63 62 62 61 60 60 92 89 83 82 81 80 79 79 68 67 66 66 58 57 56 54 95 94 93 92 88 88 87 86 7.2 Innovation enabling policies 95 7.2.1 Policies increasing capacity to innovate 95 7.2.2 Policies reducing the downsides of change 96 7.3 Policies directly affecting resource prices 96 7.4 Price-based instruments: fees and charges, taxes and subsidies 98 7.4.1 Fees or charges 98 7.4.2 Taxes 98 7.4.3 Subsidies 98 7.5 Reform of taxes and subsidies 99 7.5.1 Benefits of reform 100 7.5.2 Challenges for reform 101 7.5.3 Finding an appropriate level of taxes 102 7.5.4 Induced changes 103 7.6 Creating new market institutions 103 7.6.1 Feed- in tariffs (FIT) 103 7.6.2 Tradable permits 104 7.7 Bans, prohibitions and mandated requirements 105 7.8 Other ways to stimulate demand for resource productivity 107 7.8.1 Labelling 107 7.8.2 Indicative norms and standards 108 7.8.3 Green procurement 108 7.8.4 Linking eco-labels and procurement 109 7.9 Changing consumption behaviours 109 8 Considerations forFuture Policy 112 8.1 Leadership 113 8.2 Working with the institutional framework for decision making 113 8.3 Changing the institutional framework to facilitate future policy reform 115 8.4 Putting decoupling into practice – linking resource price rises to resource productivity gains 116 8.4.1 Options for pricing mechanisms 116 8.4.2 Broadening the Economic Discourse 117 8.4.3 Reducing bias against new investment by reducing uncertainty 118 8.4.4 Creating sufficient winners in favour of change 119 8.4.5 Taking account of potential losers in a policy mix 119 8.4.6 Creating new institutional arrangements 120 9 Conclusions 122 Annexes 124 References 130

VII VIII technologies, opportunities decouplingdecoupling 2 and policy options 2 List offigures Figure 0.4 Figure 0.3 Figure 0.2 Figure 0.1 Figure 3.6 Figure 3.5 Figure 3.4 Figure 3.3 Figure 3.2 Figure 3.1 Figure 2.3 Figure 2.2 Figure 2.1 Figure 1.11 Figure 1.10 Figure 1.9: Figure 1.8 Figure 1.7 Figure 1.6 Figure 1.5 Figure 1.4 Figure 1.3 Figure 1.2 Figure 1.1 Figure 0.7 Figure 0.6 Figure 0.5

: Virtual water trade balances 1997-2001. Estimate methaneemissions from landfills inthetop ten emittingcountries, 2010 Alternative blankingpatterns for metal components from sheetmetal. International Energy Agency–CarbonAbatement Strategies. Mapping therange ofopportunitiesfor resource productivity gains. The rebound phenomenon:energy efficiency increases butsodoesenergy consumption. FAO Food Price Index from January2004to May2011andfood riotevents. Thefigure in Expectations abouthow companies’ material costs would evolve inthe5-10years Extraction ofmany metals grew exponentially since theyear 1900 The parallel increase oflabourproductivity andofgross hourly wagesinthe Assumed benefitsfrom anEnvironmental Fiscal Reform (EFR). Mapping therange ofopportunitiesfor resource productivity gains. Resource Productivity, LabourProductivity andEnergy Productivity. Kondratiev cycles. Source: AllianzGlobal Investors –Longwaves “TheSixthKondratieff” of Commodity price indices Gross Domestic Production andDomestic Material ConsumptioninOECDcountries 1980-2000 A representation oftheextent to which humanactivityisoperating withinsafe levels Traditional grazing practices ontheleft handside,andtimecontrolled grazing practices China Water Availability Cost Curve Freshwater Abstraction byMajorUseandGDP,OECDnations(OECD,2011b, p. 78) The Climate Change,Energy, Water andFood SecurityNexus on therighthandside. Ore grades ofminesinAustralia 1840-2005. World GDP1960-2009atcurrent market prices (left scale inunitsof $1.000million) boundaries have already beencrossed. of environmental impacts,highlightingthatsafe thresholds for three outofnineplanetary parentheses isthereported numberofdeathsfrom eachriot. Price Volatility andPrices Increases ofvarious key elements. Scale andDrivers ofCommodity Volatility byDecade from 1920to 2011 following 2011 Commodity price indices. (the ordinate onthepicture beinglogarithmic) United States ofAmerica from 1947–2007. could become theoverarching characteristic ofthenew cycle prosperity, 2010.ThedescriptionofthesixthKondratieff suggests thatresource productivity logarithmic) From: Sverdrup etal,2013 Extraction ofmanymetals grew exponentially since theyear 1900(theordinate onthepicture being

30 54 51 45 43 39 13 37 55 40 32 57 31 29 28 25 24 24 23 23 21 16 8 6 3 5 2

List of figures

Figure 4.1 Kondratiev cycles. 61

Figure 4.2 Resource Productivity, Labour Productivity and Energy Productivity. 65

Figure 4.3 The lack of progress in reducing carbon intensity since 1985, shown by the IEA Energy Sector Carbon Intensity Index, 2012 data. 69

Figure 4.4 Carbon footprints (per capita CO2 equivalents, 2001) of different consumption categories, plotted against per capita expenditures in the respective countries. 70

Figure 5.1 Conceptual and stylised representation of resource decoupling and impact decoupling graph (UNEP, 2011b, Figure 1 page xiiii) 75

Figure 5.2 Comparison of per capita domestic material use and the Human Development Index 76

Figure 6.1 Australia - Absolute Decoupling of Economic Growth from Freshwater Abstraction [100 = 2001 levels] 80

Figure 6.2 Singapore GDP, population and total water consumption growth (1965-2007) [1965 =1] 80

Figure 6.3 OECD: Air pollutants recede while the economy keeps growing (OECD, 2008c, p. 16) 82

Figure 6.4 The Multi-Level Perspective of transition processes 83

Figure 6.5 Growth rates of patents relating to renewable energy technologies compared with other energy technologies. 3-year moving average, indexed on 1978=1.0) (Haščič et al., 2010, p. 12). The jump was prompted in part by the feed-in-tariffs law in Germany (see chapter 7.6.1) 86

Figure 6.6: An overview of instruments driving the economy towards sustainable energy use (WBCSD, 2011) 87

Figure 6.7 The share of primary goods in Latin American exports is still growing, indicating that the continent may not be on a sustainable path, according to UNEP (UNEP and Mercosur, 2011) 88

Figure 6.8 The Phases of Life Cycle Assessment 90

Figure 6.9 The DPSIR Framework, depicted here from a publication on air pollution control of the European Environment Agency (EEA, 1997, Fig. 1) 91

Figure 7.2 Water prices for agriculture, industry, and households in 12 OECD countries In 2001, only The Netherlands and Austria had realistic water prices for farms (Jones, 2003) 99

Figure 7.3 Assumed benefits from an Environmental Fiscal Reform (EFR). 100

Figure 7.4 The Environmentally Harmful Subsidies reform tool, or decision (IEEP et al., 2009b, p. 7) 101

Figure 7.5 Total environmental tax revenue, EU-27 (% of GDP and Total social contributions), 1999-2009, 102

Figure 7.6 CO2 emissions from fossil fuel consumption (the UK introduced the fuel duty escalator in 1993, and Germany its Environmental Tax Reform in 1999, adding to a hefty levy on petrol from 1992 to co-finance the cost of the country’s unification). One result has been notable decoupling of fuel use from GDP (not shown on the graph) as GDP rose at rates similar to those of the USA and Canada, whose petrol consumption more or less remained high and stable, UNEP, 2011b, p. 70) 103

Figure 7.7 Venture capital investments in efficiency and renewable energies after the adoption in 2000 of the first feed-in tariffs law (Knol, Beta, 2012) 104

Figure 7.8 Different types of environmental norms and standards (GTZ, CSCP and Wuppertal Institute, 2006, p. I-1) 106

Figure 7.9 The pre-2010 EU energy efficiency label shows highest efficiency (A) to lowest (G), with specified ranges for different appliances. The label shown above is for a highest efficiency refrigerator 108

IX X technologies, opportunities decouplingdecoupling 2 and policy options 2 List ofboxes, case studies andtables Table D1: Table C1 Figure B.1 Table B1: Table A1: Table 3.1: Case Study Box 7.1: Box 2 Box 1.1

:

Theparallel increase oflabourproductivity andofgross hourly wagesinthe United States Enabling Technologies to Reduce Demandfor Water andIncrease Water Climate ChangeMitigationStrategies WithWater and Food SecurityCo-Benefits Industry originalestimates ofthecost ofparticularforms of environmental protection versus Decoupling economic growth from waste production Patterns ofDecline–WhyCivilisationsCollapsed (Period 1997-2001) from 1947–2007. the actualcosts (in$US) Grazing methods and use(GMI,2011,p.3). China: under the1996Clean AirAct. USA: Packaging reduction develop andpromote cost-effective bamboobasedbuildingsystems India: in theconstruction industry Construction industry: engineering services Deutsche Mechatronics. Japan: Vycon: Australia: upgrade programme South Africa: USA: Nepal: country’s total electricity consumption China: Top-ten ofnetvirtualwater exporters (Gm3/yr)andtop-ten ofnetvirtualwater importers. The value ofclean air,biodiversity andastable climate Example ofprice change:theresponse to the1970senergy crises Carpet tiles IntheUSA,landfillgashasbeencaptured atthenation’s largest landfillsto meetrequirements LEDlightsare now often beingusedintraffic lightapplications TheUKbasedTimberResearch andDevelopment Association designedaproject inIndiato TheGauantunlandfillinChinahasbeenretrofitted to enable landfillgascapture Electric motors usedinindustry inChinaaccount for around 60percent ofthe Theloading andunloading ofcontainers from cargo ships Apico-hydro system inNepal Japanesetrain manufacturer

ThecityofSydney LEDstreet lights

ThecityofCapeTown inSouthAfrica iscurrently conducting a10-year traffic signal

There isgrowing application andsophistication intheuseofbamboo DeutscheMechatronics GmbHoperates inGermanyproviding

53 56 53 48 56 50 48 47 49 124 59 110 129 128 127 126 54 54 52 52 51 48 46 27 97 Abbreviations and acronyms

3R Reduce, and recycle IPCC Intergovernmental Panel on Climate Change AF&PA American and Paper Association IRP International Resource Panel AFD French Agency for Development ISO International Organization for Standardization BIR Bureau of International Recycling LCA Life Cycle Assessment BLGCC Black Liquor Gasification-Combined Cycle LCC Life Cycle Costing BMRA Metals Recycling Association LCI Life Cycle Initiative BMU German Federal Ministry for the Environment, Nature LCSA Life Cycle Sustainability Assessment Conservation, Building and Nuclear Safety LED Light-emitting diode CADDET Centre for the Analysis and Dissemination of NOx Mono-nitrogen oxides NO and NO2 Demonstrated Energy Technologies OECD Organisation for Economic Co-operation and Cap Capita Development CBSM Community Based Social Marketing PUB Public Utilities Board of Singapore CCS Carbon capture and storage RDCI Rathkerewwa Desiccated Coconut Industry CDM Clean Development Mechanism RMI Rocky Mountain Institute CFCs Chlorofluorocarbons SCP Sustainable Consumption and Production CO Carbon Dioxide 2 SDGs Sustainable Development Goals CSCP Collaborating Centre on Sustainable Consumption and SETAC Society for Environmental Toxicology and Chemistry Production TEEB The Economics of Ecosystems and Biodiversity CSIRO Commonwealth Scientific and Industrial Research UN United Nations Organisation UNDP United Nations Development Programme DMC Domestic Material Consumption UNECE United Nations Economic Commission for Europe DAC Development Assistance Committee (OECD) UNEP United Nations Environment Programme DETR Department for Environment, Food and Rural Affairs (UK) UNESCO United Nations Educational, Scientific and Cultural DPSIR Driving Forces, Pressures, States, Impacts, Responses Organization DTIE Division of Technology Industry and Economics (UNEP) UNFCCC United Nations Framework Convention on Climate DWAF Department of Water Affairs and (South Africa) Change ECLAC UN Economic Commission for Latin America and the UNIDO United Nations Industrial Development Organization Caribbean UK United Kingdom EEA European Environment Agency USA EFR Environmental Fiscal Reform United States of America EMAS European Eco-Management and Audit Scheme USGS U.S. Geological Survey EPA Environmental Protection Agency WADE World Alliance for Decentralized Energy ETS European Union Emissions Trading System WBCSD World Business Council for Sustainable Development EU European Union WHO World Health Organization EU-27 Austria, Belgium, Bulgaria, Cyprus, Czech Republic, WPCC World People’s Conference on Climate Change and the Denmark, Estonia,Finland, France, Germany, Greece, Rights of Mother Earth Hungary, Ireland, Italy, Latvia, Lithuania,Luxembourg, WRAP Waste and Resources Action Programme Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Yr Year Slovenia, Spain, Sweden and the United Kingdom FAO Food and Agriculture Organization of the United Nations FIT Feed-in tariffs FPAC Forest Products Association (Canada) Units G-8 Group of Eight G-20 Group of Twenty Finance Ministers and Central Bank Btu British thermal unit Governors g grams GDP Gross Domestic Product kg kilograms (103 grams) GMI Global Methane Initiative Mg megagrams (106 grams) GTZ German Technical Cooperation Tg teragrams (109 grams) IAI International Aluminium Institute T ton (106 grams) ICLEI International Council for Local Environmental Initiatives 6 ICMM International Council on Mining and Metals Mt megaton (10 tons) 9 IEA International Energy Agency Gt gigaton (10 tons) IEEP Institute for European Environmental Policy J joules IESNA Illuminating Engineering Society of North America L litres IFA International Fertilizer Industry Association W watts (J/s) IFAD International Fund for Agricultural Development GJ gigajoules (109 joules) IFPRI International Food Policy Research Institute GL gigalitres (109 litres) IGPN International Green Purchasing Network MW megawatt (106 watts) ILCD International Reference Life Cycle Data System m3 cubic meter (103 liters) INBAR International Network for and Rattan Gm3 giga cubic meters (109 cubic meters) XI XII technologies, opportunities decouplingdecoupling 2 and policy options 2 T Preface norms andassumptions thatshapeeconomic and societal decisions. sensitive to theperceived needsofstakeholders andtheinterests, relative power, the raising resource productivity iseasierandmore successful whenpolicymakers are systems, infrastructure andinstitutions asinthedeveloped world. Butinbothcases, they are notsostrongly locked-in byresource-intensive consumption patterns, production “lock-in”. Developing countries mayhave arelative advantage indecoupling, because Facilitating decoupling willthusrequire removing thesebarriers and overcoming the against innovation inresource productivity present significant barriers to decoupling. past policydecisions andtechnological, behavioural, organisational andinstitutional biases from blocks to transition which “lock-in” existing patterns ofresource use.Thelegacy of resource availability bypromoting innovation andresource productivity; they can suffer greater resource productivity. Economies often donotnaturally adjust to changes in policies to remove barriers to decoupling andintentionally promote atransition towards But while thesetechnologies are readably available, theiruptake andupscaling requires exposure to resource risks. reducing waste andsavingcosts thatcan furtherexpand theeconomy orreduce its economies. They allow economic outputto beachieved withfewer resource inputs, increases are already commercially available andusedinbothdeveloping anddeveloped Many decoupling technologies andtechniques thatdeliver significant resource productivity increased resource productivity. countries to accelerate decoupling andreap theenvironmental andeconomic benefitsof existing technological possibilities andopportunitiesfor bothdeveloping anddeveloped reality ishardly happening.Inthisfollow-up report – between humanwell-being andresource consumption isnecessary andpossible butin In itsfirst Decoupling report publishedin2011,thePanel showed thatbreaking thelink destruction. lost because ofthesimultaneous costs arisingfrom resource scarcity andenvironmental of decoupling for ensuringthatthegainsinhumanwell-being madebyeconomies are not based onfulllifecycle impactsofresource use,hasrepeatedly highlighted theimportance environment for thehighest netbenefitofpresent andfuture generations. Itsanalysis, policy relevant scientificassessments onthemanagementofnatural resources andthe Established byUNEPin2007,thePanel provides independent,coherent, authoritative and Decoupling liesattheheartofmission oftheInternational Resource Panel. deliberations ontheSustainable Development Goals(SDGs). leaders andcivilsociety. Indeed,ithasbecome akey issue intheon-going from economic growth isnow widely acknowledged bypolicy-makers, industry he urgency for decoupling escalating resource useandenvironmental degradation “Decoupling 2” “Decoupling –thePanel highlights Obviously, a high level of leadership is needed in the public and private sectors to overcome the resistance that is commonly faced by such deep policy changes and to promote the needed policy action.

This report examines several policy options that have proved to be successful in helping different countries to improve resource productivity in various sectors of their economy. It also highlights examples that demonstrate significant progress towards decoupling economic growth from resource use.

In particular, the report mentions two policy proposals which are illustrative of the type of combined policy that is needed. One proposal uses taxation or subsidy reduction to move resource prices upwards in line with documented increases of energy or resource productivity. Another looks to shift revenue-raising onto resource prices through resource taxation at source or in relation to product imports, with recycling of revenues back to the economy.

There is growing evidence that decoupling will be one of the next big opportunities for innovation, wise use of resources, and thus for continued economic development. Policymakers along with corporate leaders with vision and an understanding of political realities can take significant steps to benefit from future resource trends and decoupling opportunities.

The International Resource Panel is committed to continue providing cutting-edge scientific knowledge on sustainable resource management and promote a better understanding of the opportunities of decoupling technologies and policies. We are grateful to the lead authors of this report for their encouraging findings and incisive recommendations, and we are very much looking forward to the reaction of policy- makers to the tremendous challenges and opportunities highlighted in this report for overcoming the barriers to decoupling and collecting the economic benefits of increased resource productivity.

Dr. Ashok Khosla Co-Chair, International Resource Panel (IRP) New Delhi, India, May 2014

XIII XIV technologies, opportunities decouplingdecoupling 2 and policy options 2 O resources. resources hasaccelerated, causing severe environmental damage anddepletion ofnatural The IRP’s new wealthy countries andhelpdeveloping nationsfollow amore sustainable path. social innovation, to atleast stabilise andultimately reduce percapita consumption in economic prosperity, buttressed byamassive investment intechnological, financialand That goal,however, demands anurgent rethink ofthelinksbetween resource useand growth rate isthenotionbehinddecoupling, to theextent ofactually usingless resources. Improving therate ofresource productivity ( challenge. being from negative environmental impactsandescalating resource useto address this 2011, soughtto apply theconcept of“decoupling” economic growth andhumanwell- The first Decoupling Report byUNEP'sInternational Resource Panel (IRP), launchedin sustaining life’s natural supportsystem. Foreword are notsetupto factor intheanticipated scarcity ofresources. adequately bysimply raising thesupply ofresources to meetdemand,especially whenthey the samequantityofmetal extraction asacentury ago. and tin.Asaresult, three timesasmuchresources andmaterials needsto bemoved for has led to adeclineinaverage ore grades for several key metals, suchascopper, gold ecosystems –undertoo muchstress can lead to sudden,non-linearcollapse. Over-mining Placing theworld’s environmental resources –suchaswater, , fishstocks and cent intheprevious decade. of food prices, for example, increased to 22.4percent in2000-2012compared to 7.7 per have already beenobserved across arange ofkey materials andcommodities. Thevolatility carries significant economic consequences. Price volatility andsupply shocksofresources A global economy, basedonthecurrent consumption models,isnotsustainable and income levels inthenext twenty years, compared to 1.8billiontoday. incomes continue to rise.More than3billionpeople are expected to enjoy “middle class” This explosion indemandissetto accelerate aspopulationgrowth andtheincrease in sustainable levels. the sametime,useofresources, suchas freshwater, land andsoilhastransgressed Annual material extraction grew byafactor ofeightthrough thetwentieth century. At by 2050–allwhile keeping environmental impactswithinacceptable limitsand manage thenatural resources required for thewell-being ofninebillionpeople growth necessary to lifttheworld’s onebillionpeople outofabsolute poverty and ne ofthegreatest challenges facing humanitytoday isto maintain thehealthy Decoupling 2 Decoupling report demonstrates thattheworldwide useofnatural doing more with less with more doing Global markets cannot respond ) faster thantheeconomic The decoupling of economic growth rates from resource use is, therefore, more than just an imperative. It is the next big opportunity for green economic growth, innovation and sustainable development at large.

The Decoupling 2 report highlights that efficient technologies do exist for both developing and developed countries to significantly reduce resource intensity and, where feasible, achieve the absolute decoupling of resource use. Decoupling allows economic output to be achieved with fewer resource inputs, reducing waste and saving capital. Those funds can further expand the economy or reduce its exposure to resource risks.

This new IRP report also explores the enabling environment required for national economies to promote decoupling and prosper in the future, through identifying and removing barriers, including technical and institutional “lock-in”, which can hold back effective policy change.

The report concludes that with leadership, vision and an understanding of political realities, policy makers can take significant steps to reap benefits from future resource trends. These steps include the creation of favorable conditions for investment in technological and institutional innovation and transformation.

In 2014, the United Nations Open Working Group on Sustainable Development Goals will submit a proposal to the General Assembly that will set development priorities for the coming years.

It is my sincere hope that the findings of this important report will inspire Member States to embed sustainable resource management and the concept of decoupling in the post-2015 development agenda, and trigger visionary political and business leadership to foster policy co-ordination in the public and private domain aimed at effectively decoupling economic growth from the escalating use of energy, land, water and materials.

I would like to express my gratitude to the International Resource Panel, under the leadership of Ashok Khosla and Ernst Ulrich von Weizsäcker, for coordinating this important report.

Achim Steiner UN Under-Secretary-General and UNEP Executive Director Nairobi, Kenya, May 2014

XV 2 technologies, opportunities decouplingdecoupling 2 and policy options 2 picture beinglogarithmic) From: Sverdrup etal,2013 exponentially since theyear 1900(theordinate onthe Figure 0.1 century, asFigure 0.1shows. path since thebeginningoftwentieth followed anessentially exponential growth eight. Theextraction ofmanymetals has extraction increased byafactor ofabout biomass byafactor of3.6.Intotal, material factor of34,fossil fuelsbyafactor of12and factor of27,construction materials bya extraction ofores andminerals grew bya During thetwentieth century, theannual of economic growth from useofresources. highlights theforms ofpolicy actionthatcan make faster progress towards thedecoupling and policyoptionsthathave proved to besuccessful indifferent regions oftheworld. It that can holdbackeffective policychange,andexamines technological, organisational can take steps to benefitfrom thefuture resource trends. Thereport identifiesthebarriers It findsthatpolicymakers withleadership, visionandanunderstanding ofpolitical realities create theconditions for itseconomy to prosper inthefuture. wise useofresources. Thereport explores theactionsthatacountry would needto take to decoupling willbeoneofthenext bigopportunitiesfor economic growth, innovation and countries, andtheeconomic advantages. Itshows that there isgrowing evidence that This report highlightsexisting technological possibilities, for developing anddeveloped deliver, while usingfewer resources. suggest thatsuccessful economies willbetheonesthat can increase thevalue they to thesetrends isoneofthegrand challenges ofourtimes.Thetrends inresource use stocks andcausing negative environmental impacts(UNEP,2010a).Adjusting oursocieties resources hasaccelerated, bringingwithitthethinningordepletion ofnumerous resource As thework oftheInternational Resource Panel (IRP)shows, theworldwide useofnatural Technologies, opportunitiesandpolicyoptions Decoupling 2: Executive Summary Trends inresource use 2 1 Changes inResource UseandScarcity Introduction Extraction ofmanymetals grew

Annual global production, ton 100 10 10 10 1900 4 6 8 1 1950 2000 KEY Aluminium Niobium Tantal Helium Phosphate rock Zinc Lead Indium Gold production Silver Copper Platinum group Nickel Molybden 2050 2100 Other reports have illustrated that the use of some natural resources essential to prosperity – including freshwater, land and soils, and fish – have similarly increased, in many cases beyond sustainable levels.

The underlying drivers for this explosion in demand appear set to continue. The UN projects global population to grow by more than 2.5 billion people by 2050 (UN, 2013) and incomes (on average) are on track to continue rising. According to one estimate, in 20 years there will be 3 billion more people worldwide enjoying ”middle class” income levels, compared to 1.8 billion today (Kharas, 2010).

In our first Decoupling report, we described three future scenarios for resource use. In the scenario which represents many policymakers’ current plans – in which levels of resource use per head for all global citizens reached the levels of current use of the average European – annual resource extraction would need to triple by 2050, compared to extraction in 2000. This probably exceeds all possible measures of available resources and assessments of the limits of the planet to absorb the impacts of their extraction and use. For example, global demand for water is expected to rise by 40%, so that in 20 years’ time available supplies may probably satisfy only 60% of world demand (2030 Water Resources Group, 2009).

Consequences of these changes

It does not seem possible for a global economy based on the current high-consumption model of resources to continue into the future. The economic consequences of increasing resource use are already apparent in three areas: increases in resource prices, increased price volatility and disruption of environmental systems.

400 Food Price increases: During most of the Raw materials Energy nineteenth and twentieth centuries, Metals and minerals (including iron ore) 300 commodity prices had a tendency of declining. But recent developments of massively increased demand have caused the 200 reverse, as shown in Figure 0.2. 100 Figure 0.2 Commodity price indices Source: World Bank Commodity Price Data, 2011. 0 1960 1970 1980 1990 2010 Increased price volatility: Price volatility and supply shocks have already been observed across a range of key materials and commodities used in the economy. For instance, the United Nations Food and Agriculture Organization found that the volatility of food prices increased to 22.4 per cent in 2000-12 compared to 7.7 per cent in 1990-991. Price volatility can be more disruptive than trends of price increase – some believe that rising global food prices led to civil dissatisfaction which fuelled the “Arab Spring” (see for example: Center for Climate Change and Security, 2013).

Disruption of environmental systems: There are strong links between resource use and damage and depletion of environmental systems, including greenhouse gas emissions (UNEP, 2010a). The UN Millennium Ecosystem Assessment documented several accelerating, abrupt, and potentially irreversible changes already occurring to the world’s

1 Measured by the standard deviation around the average price. However, note that before 1990, food prices were also volatile, having a higher standard deviation than in the years 2000-12.

3 4 technologies, opportunities decouplingdecoupling 2 and policy options 2 As thecurrent modelofdevelopment isnotsustainable inthelong term, areal change conditions stand to gainandbringgreater securityandwealth to theirpopulations. implies thattheeconomies thatmove first, orfastest, to adaptto thechangedeconomic in doingsochangethebasisofrelative competitive advantage between countries. This alter therelative importance ofresources compared to otherinputsinto production –and The resource trends have strategic implications for economies. They appearlikely to challenges bysimply raising supply ofresources to meetdemand. There are several reasons whythemarket isunlikely to respond adequately to these (Stern, 2006;Brown, 2008). show thatsuchenvironmental deterioration isaffecting economies andeconomic growth to natural disasters, andcrop failures (Millennium Ecosystem Assessment, 2005).Studies possible fisherycollapses, bleaching ofcoral reefs, desertification, increased vulnerability ecosystems, andanumber anticipated to occur inthecoming decades. Theseinclude 2 some particularly important resources. most available –maynotreflect thepossibilities for decoupling economic growth from that matter most to them.Aggregate figures for resource use–whichare frequently the makers needto look asclosely asthey can attheproductivity changesintheresources inputs (bothmaterial andenergy) perunit ofvalue productivity, sothatanationcan produce greater economic value outoffewer resource decoupling (UNEP,2011andSmithetal.,2010) –theseizingofopportunitiesfor resource For economic prosperity andgrowth, oneofthemost appealingstrategies for adaptingis than inrichereconomies. and possible collapse. Theseoften cause more severe effects indeveloping countries, growth from potential resource scarcity andshocks,includingenvironmental degradation At thesametime,trends inresource useincrease therisksofdisruptionto economic and socan gainmore from change. situations locked inwasteful infrastructures andhabits,have more opportunitiesto adapt, countries meansthatthey, compared to those developed countries thatare insome habits. Somecommentators believe thattheeconomic growth ofmanydeveloping of course willbeneeded,significantly changingtechnologies, policiesandconsumption Growth is more strongly decoupled where a greater shareofaneconomy’s ismorestronglydecoupledwhereagreater Growth tolabourproductivity comesfromresourceproductivity relative growth Strategic implications 3 available ores. scarcity ofresources –butrather reflect today’s extraction cost ofstill conveniently And, importantly, markets are notadequately setupto factor inmuchoftheexpected stress maylead to sudden,non-linearcollapse (Smithetal.,2010). For environmental resources –like climate, fishstocks orlocal ecosystems, too much same quantityofmetal extraction asacentury ago. that, for manymetals, aboutthree timesasmuchmaterial needsto bemoved for the declining average ore grades for several key metals, suchascopper, goldortin,so There are real physical constraints: past miningofthemost attractive ores hasled to response. The scale andrate ofchangehasaccelerated, andoften outpaces thesupply side Choices ofResponsefor Policymakers 2 . Whenconsidering changes,decision- Decoupling, can mean different achievements. We propose to distinguish between three types of decoupling:

1. Decoupling through maturation. This type of decoupling is a ”natural” process of overcoming clumsy and inefficient techniques, of building-up of infrastructures, and of actively reducing environmental pollution. This is related to the maturation process as countries shift from an extraction and production-based economy towards a service economy.

2. Decoupling through shifting to other countries the more material intensive stages in product life cycles (burden-shifting). If domestic extraction and production is replaced by imported materials and products, resource use may decline domestically, but still occur elsewhere in the world where the more material intensive, often more polluting, stages in products life cycles may be taking place. This type of decoupling is often labelled as burden-shifting, where resource-intensive activities and their environmental impacts are shifted offshore.

3. Decoupling through intentional resource productivity increase. This is what is really needed to reduce pressures on limited resources, on climate, and on the environment in general. It requires technological innovation, infrastructures conducive to resource efficient and low material intensity and living, and appropriate attitudes and consumption patterns. Intentional decoupling is the main focus of this report.

Investments in resource productivity can bring multiple gains, ranging from reduced operational costs for companies and the public sector to better environmental quality and the creation of jobs (Smith et al., 2010). For example, energy efficiency policies in California are estimated to have created nearly 1.5 million jobs from 1977 to 2007. Similar figures emerged from Germany’s resource productivity policies in the years before 2004, creating or saving more than 1 million jobs (Fischer et al., 2004).

Economic growth comes, partly, through investments in innovations, and policymakers can influence the nature of the innovations that receive investment through their enabling policies. A vivid visualisation of the relationship between innovation and economic growth is given by “Kondratiev cycles” (Freeman and Louçã, 2001). Economic growth has been observed to come in waves of prosperity, each driven by the spread of new technologies and structural economic change. Figure 0.3 illustrates the way that growth usually involves changes in technologies.

4TH Kondratie 5TH Kondratie 6TH Kondratie Roling 10-year yield on the S&P 500 1930 - 1970 1970 - 2010 2010 - 20XX Automobiles, Information Technology, Environment Technology? Petrochemicals Communications Nano/Biotechnology? 18% 1ST Kondratie 2ND Kondratie 3RD Kondratie Technology Health care 16% 1780 - 1830 1830 - 1880 1880 - 1930 Steam engine Railway, Electrification, 14% Steel Chemicals 12% 10% 8% 6% 4% 2% 0% -2% ST ND -4% 1 & 2 Oil Crisis Long Depression 1974 - 1980 -6% 1873 - 1879 -8% Panic of 1837 Great Depression 1837 - 1843 Financial Crisis -10% 1929 - 1939 2007 - 2009 1819 1829 1839 1849 1859 1869 1879 1889 1899 1909 1919 1929 1939 1949 1959 1969 1979 1989 1999 2009 Figure 0.3 Kondratiev cycles. Source: Allianz Global Investors “The Sixth Kondratieff” – Long waves of prosperity, 2010. The description of the sixth Kondratieff suggests that resource productivity could become the overarching characteristic of the new cycle

5 6 technologies, opportunities decouplingdecoupling 2 and policy options 2 Source: EEA, 2011 EEA, Source: Figure 0.4 at faster rates thanotherfactors ofproductivity (Figure 0.4). focus onincreasing labourproductivity –withtheresult thatlabourproductivity hasgrown (UNEP, 2011; pp. 48, 74). In the past era of declining resource prices, business has tended to meaning thatthesteep riseinresource productivity requires courageous policychanges In practice, there are several barriers and biases that hold back thedesired improvements, one ofthedrivers ofthenext periodofgrowth insuccessful economies. by increasing innovations inresource productivity. Thatimpliesthatdecoupling would be expect awell-functioning economy to naturally respond to information onresource scarcity Considering thetrends in global resource useandenvironmental degradation, we might cent by2050.OECDcountries would needto absolutely decouple theirgrowth from emissions needto peakby2015,andthenreduce by25-40percent by2020and80per Report, publishedin2007, warnsthatto maintain anagreeable kindofclimate, global For instance, theIntergovernmental Panel onClimate Change’s (IPCC)Fourth Assessment previously seen. inputs by2050(WBCSD,2010),amuchgreater rate thanresource productivity gains production isproduced usingbetween 25percent and10percent ofitscurrent resource the goodsandservices they importfrom othercountries. Thisimpliesthateachunitof of today’s material usage/unitofproduction), includingalsotheresources embeddedin productivity by2050would berequired for OECDcountries (resulting injust 20percent approximately afactor five improvement (Weizsäcker etal.,2009)intotal resource Indeed, for resources – althoughpressures differ greatly byresource andcountry – contrast, resource usedeclines,irrespective ofthegrowth rate oftheeconomies. resource useislower thanthegrowth rate oftheeconomy. Withabsolute decoupling, in absolutely asaneconomy grows, oronly relatively –sothattherate ofincrease in a whole. Thisiscalled “decoupling”. Decoupling can eitherreduce theuseofresources increases would needto begreater thantherate ofeconomic growth for theworld as maintain stable future economies andnatural life supportsystems, resource productivity seems unlikely to meetthechallenges ofthefuture. Thetrends inresources imply thatto While theexisting policysetmayhave beensuitable for promoting growth inthepast, it 1970 -100 INDEXED 200 250 100 150 1970 Resource Productivity, LabourProductivity andEnergy Productivity. Energy productivity Labour productivity Materials productivity 1980 1990 2000 2010 their greenhouse gas emissions, at a rate that would give more room to developing countries to raise living standards until they too can achieve absolute decoupling. Apart from greenhouse gas emissions, such decoupling is also needed for a number of other resources such as forestry, fishery, food, waste, air pollution, minerals. The IPCC’s Fifth Assessment Report, published in October 2013, also confirms these findings.

The required intentional policy change should influence all aspects of economic and environmental policies, with a view of facilitating their economy’s transition to absolute decoupling.

Knowing that relative decoupling will not suffice on a global scale, the focus of this report is on the opportunities for countries to pursue strategies of better lives for their people while significantly reducing resource intensity and consumption patterns and, where feasible, even achieving absolute decoupling of resource use. As an encouragement for decoupling policies, our report shows that:

The potential exists for much greater levels of absolute decoupling to be achieved through strategic changes in technologies and design. Much of the technologies and technique “know how” to achieve significant levels of resource productivity (as much as five to tenfold improvements) already exist. A number of publications over the last 15 years (Hawken et al., 1999; McDonough and Braungart, 2002; Hargroves and Smith, 2005; Pascala and Socolow, 2004; Pauli, 2010; Smith et al., 2010; Lovins and RMI, 2011) have shown that decoupling is technically possible for material resource consumption, greenhouse gases, and water extraction. (Chapter 3) Success stories exist of countries that achieved some modest absolute decoupling of economic growth from selected aspects of resource use and greenhouse gas emissions, from which we can learn. (Chapters 6 and 7) Much of the policy “know how” required to achieve economy wide “decoupling” exists in the form of legislation, incentive systems, administrative measures, and institutional reform. But additional policy options could be opened for a yet more strategic and long-term avenue towards ecologically sound growth. (Chapters 7 and 8)

4 Technological Responses Allowing Significant Decoupling

Increasing resource productivity is technologically possible: technologies and techniques that bring very significant resource productivity gains are already available, right across the range of resource consuming activities, with different technologies applicable at different levels of economic development.

The Rathkerewwa Desiccated Coconut Industry (RDCI) in Maspotha, Sri Lanka, provides a good example. RDCI could reduce 12 per cent of energy use, 8 per cent of material use and 68 per cent of water use, while increasing the production by 8 per cent during the same period by adopting a series of recommendations on its peeling process, water treatment, and fuel switching. The total investment required for implementing these recommendations was less than US$5,000, while an annual financial return of about US$300,000 was reported.3 Sweden introduced an energy efficiency programme in 2005 for its energy intensive industries. A recent analysis showed average payback periods of less than 1.5 years (Stenqvist and Nilsson, 2013).

3 For details, see http://www.unido.org/fileadmin/user_media/Services/Environmental_Management/Cleaner_Production/RECP_SriLanka.pdf

7 8 technologies, opportunities decouplingdecoupling 2 and policy options 2 High-efficiency motors: following examples provide anillustration ofsomethepotential: subsidies, carbon prices andasocialdiscount rate (McKinsey Global Institute, 2011). opportunities hadaninternal(2011) rate ofreturn ofgreater than10percent, ifadjusted for Revolution between US$2.9trillionandUS$3.7eachyear (by2030).Ninetypercent ofthe Resource Institute. The scale oftheopportunityis very large. Oneestimate places thesavingspotential Global McKinsey Source: Figure 0.5 some ofthemore remarkable technologies andtechniques. The widerange ofexisting opportunitiesisillustrated byFigure 0.5.Ourreport describes 4 J., 2012). steel ayear, andsave 20percent ofthecosts oftheusesteel (Allwood, J.andCullen, Even partialglobal switching to higherstrength steel could save 105milliontonnes of China currently consumes 60percent ofglobal steel reinforcement barproduction.) a very goodopportunity –asthesecountries’ useofsteel isvery significant. (For example, reinforcement thatis two-thirds thestrength ofsteel averagely usedinEurope. Thisoffers and developing countries tend to uselower-strength steel, withChinausingsteel for steel columns and19percent inbeams(McKinsey Global Institute, 2011,p.105).China estimates useofhigherstrength steel achieves a32percent reduction intheweight of beams andcolumns saves steel: ArcelorMittal, theworld’s largest steel company Higher strength steel: initial investment of1.6years (UNEP,2010b). hours (kWh)ofelectricity peryear intheoilfield,withapayback periodfor recovery ofthe largest oilfieldsuggested there wasthepotential to save more than400millionkilowatt international best practice, dependingontheindustry. Apilot study atChina’s second- consumption. Theoperational efficiencyofthesemotors is10-30percent below in industry inChinaaccount for around 60percent ofthecountry’s total electricity a typical paybackperiodofoneto three years (CADDET, 1995).Electric motors used -0.5 -1.0 0.0 3.0 0.5 2.0 3.5 2.5 7.0 1.0 1.5 $ spentfor implementation per$total resource benefit Cost e ciency ofInvestment INVESTOR PERSPECTIVE,2030 The study suggests also that 70% of the opportunities have a greater than 10% IRR at currentprices. than10%IRRat agreater 70%oftheopportunitieshave suggestsalsothat The study ifcarbonisappropriately The higherfigure(3.7trillion)applies priced and perverse subsidiesphasedout. priced andperverse 0 *1 —Basedoncurrent prices for energy, steel andwater at adiscount rate of10percent perannum,Allvalues are expressed in2010 prices Iron andsteel -electricarc furnace improvemnts to light-emittingdiode-commercial Lighting switch from compact flourescent Prevention oflanddegradation Electronics -consumer, residential Electronics -o ce, commercial Mappingtherange ofopportunities for resource productivity gains. basic retrofit, commercial Building envelope — Enhanced oilrecovery Appliances —residential 500 techniques Improved irrigation water leakage Municipal Using steel withhigherstrength for re-enforcement ofconcrete, shift freight Road Thesecould potentially save 28-50%ofmotor energy use,with low politicalrisk,highinfratructure Smallholder yields—developing countries, 1,000 Higher-strength steel —construction, columns andbeams Higher-strength steel —construction andrebars E cient motor vehicle airconditioners Heavy-duty vehicle —advanced dieselimprovements Public transportPublic —buses Light-duty vehicles electric Light-duty vehicles gasoline—plug-inhybrid 1,500 high politicalrisk,low infrastructure Smallholder yields—developing countries, Building envelope —basicretrofit, residential high politicalrisk,low infrastructure Commercial yields—developing countries, Public transportPublic —busrapidtransit Public transportPublic —metro 2,000 processing, packingand distribution Food waste reduction —developing countries, Other industry energy e ciency Aviation e ciency 2030 savings, $billion Total annualresource benefit 2,500 Water Energy residential envelope —retrofit, Building builds residential new High-e ciency Steel Land 4 The 1 Blanking sheet metal: The pressing out (or “blanking”) of metal components of different size and shape from sheet metal necessarily leaves behind pieces of sheet metal that are not wanted and too small to use for other components. Intelligent organisation of the different shapes to be pressed out can realise significant metal savings. Deutsche Mechatronics GmbH operates in Germany using computer-driven shuffling and a good production planning system that could reduce metal use by 12 per cent.

Methane from waste landfill: In the United States of America (USA), approximately 480 landfill sites, representing around 27 per cent of the nation’s landfills, capture released methane gas from decomposing organic waste (2009 figures) (Bracmort et al., 2009). It is estimated that between 60 and 90 per cent of the methane in the landfill gas can be captured and burnt. Nevertheless, methane from landfills contributes 1.8 per cent to the US total greenhouse gas emissions.

Drip irrigation: Agriculture is responsible for 70% of freshwater withdrawals (Weizsäcker et al., 2009). In many countries, 90 per cent of irrigated land receives irrigation water through open channels or by intentional flooding. The waste of freshwater through these methods, through evaporation, leakage and seepage is high. Farmers in India, Israel, Jordan, Spain and the USA have shown that sub-surface drip irrigation systems that deliver water directly to crop roots can reduce water use by 30-70 per cent and raise crop yields by 20-90 per cent, depending on the crop (Postel et al., 2001). Efficiency savings can be as high as 50-80 per cent, and can be made affordable for use in the developing world (Shah and Keller, 2002) with payback periods of less than a year.

5 Creating the Conditions for Investments in Resource Productivity

Success comes from creating the right conditions for investment

Policymakers can facilitate the widespread uptake of technologies and techniques for decoupling. A wealth of experience from policies on innovation, decoupling and environment can guide future policy action. Lessons can be learned from some great successes: for example in water efficiency. In Australia, GDP rose by 30 per cent and water consumption was reduced in absolute terms by 40 per cent from 2001 to 2009 (Smith et al., 2010).

Many countries have put in places policy mixes promoting decoupling. For example, at European Union (EU) level, recent initiatives, such as the 7th Environmental Action Programme and the Roadmap to a Resource Efficient Europe, and the Energy Efficiency Directive of 2012 are long-term strategies moving energy, climate change, research and innovation, industry, transport, agriculture, fisheries and environment policy all towards decoupling.

The roadmap also deals with tax policy, making the case for a shift from labour taxes to resource taxes, and discusses the phasing out of environmentally harmful subsidies. Similarly, China has strategically improved energy efficiency writing 20 per cent and 16 per cent efficiency gains into its eleventh and twelfth Five-Year Plans respectively, and adopting regulation and incentives to make it happen.

Whether, where and how decoupling occurs may depend on national decision makers’ abilities to overcome biases which currently disadvantage investments in resource productivity. Countries that can overcome those barriers can lead the next wave of development, and gain advantage over their competitors.

9 10 technologies, opportunities decouplingdecoupling 2 and policy options 2 can beseenasphysical andtechnological biases,behavioural biases,organisational and The second group of factors holdingbackdecoupling are biasesagainst change.These resource productivity, examples ofwhichare: policy structures coming outofpast government decisionssteer economies awayfrom from theeffect ofthehistoric policyframework. There anumberofareas where current productivity andtwo areas ofbarriers for policymakers to tackle. Thefirst group arises There are currently several factors thatlead to biasagainst investments inresource resource-productive society. Policy changescan overcome thesebarriers. Indoingso, Both thesegroups ofbarriers needto betackled to make fullprogress to asuccessful, institutional biases. Changing current biases cultural norms, accepted wisdomandrules influence peoples’ behaviours andthe Organisational andinstitutional biases arisefrom thewayinwhich standard practices, refuelling stations for oil-powered vehicles). the lackofelectric vehicles’ recharging pointscompared to thelarge numberof over alternative technologies thatwould require different infrastructure (for example, existing physical infrastructure, givingexisting technologies asignificant advantage Technological biascan arisebecause manytechnologies are usedinconjunction with only reliably predict theirelectricity outputthree hours inadvance (OECD,2010). delivery. This hasputoperators ofwindturbinesatadisadvantage, because they can bidding systems for electricity supply have taken place onedayinadvance ofelectricity entry ofnew technologies. For instance, insomedeveloped country energy markets, Market regulations thathave worked well for oldtechnologies maydisadvantage the long-term managementofresources, butrather promote theirwasteful early use. Regulatory frameworks for markets have often beencreated inwaysthatdiscourage resource intensive thanitneedsto be. Taking theeconomy asawhole, itencourages development ofaneconomy thatismore reduces thereturn oninvestment inresource efficienttechnologies andtechniques. employment. Together withdistortions from subsidisationofresources, taxation into economic growth, thisfavours resource consumption rather thanincreased on resources (andenergy). Aslabourandresources are often alternative inputs Taxation ofpeople’s work through labourtaxes istypically higherthanthetax burden reducing thesavingsfrom investments to usetheresources more efficiently. Global Institute, 2011).Thesesubsidiesencourage thewasteful useofresources while Subsidies ofupto US$1.1trillioneachyear for resource consumption (McKinsey Global Institute, 2011)for whichthefinancingwillneedto befound. estimated to require around US$3trillion ofinvestment ayear globally (McKinsey through resource efficient technologies (orsupply sidetechnologies) hasbeen This represents aproblem asmeetingtheworld’s future consumption demands at asevere disadvantage wheninvestment decisionsare made(Hudsonetal.,2013). performance ofnew technologies makes themappearmore risky,andplaces them the professional expertise ofstaff. Thelackoftrack record for theinvestment organisations, positive financingdecisions tend to bemadeinareas familiar to due to theinternal incentives andcontrols found inmanybanksandfinancing decisions they make. To illustrate thiswithoneexample from thefinance sector: it would create conditions where investments in resource productivity became more attractive than alternative investments, and open up the universe of opportunities offered by decoupling for both developed and developing countries.

‘Lock-in’ to political and economic structures

Relatively few opportunities for beneficial policy change are currently taken up. Part of the reason for this seems to be that political systems have their own inertia, which often act as a brake on policy reform, or block it entirely. The close interaction in nearly all countries between political decision-making and economic interests can lead to what is called ”systems lock-in” because the policy framework is difficult to change without change to economic interests and vice versa. Political processes can therefore act as barriers to decoupling, because:

Frequently, policy is formed in response to the interests of leading economic groupings. Where these groupings are biased towards the current arrangements that have given them market power, they tend to engage strongly to preserve existing policy. This can be the case even as underlying conditions change (Iike resource availability). Segmented policy-making governmental structures – with different ministers or departments favouring different specific interest groups – lead to policy inconsistency, with the effect of some policies being cancelled out by the indirect effect of others. This inconsistency, lack of clear direction and past records of changes in policy creates unpredictability and uncertainty about future investment return dependent on lasting policy change. The institutions through which policies are made often reflect existing norms, and change is often resisted, within the institutions (for example government departments) or industrial organisations shaping policy (Ekins and Salmons, 2010, p. 132). Where economic interests are at stake, groups are likely to contest evidence showing the need for change. Where there is some degree of scientific uncertainty about the future (as is inevitable) this can be used to discredit unfavourable information. Even evidence gathered by governments seeking to promote innovation may be sceptically received and scrutinised for bias. This rejection of, or unwillingness to hear, information demonstrating the benefits of change is a key barrier to achieving policy change – as success in policy reform often involves political and economic actors perception of their own self-interest to alter (Ekins and Salmons, 2010, p. 133-4). Policy-making procedures are often lengthy, and can have additional lead-in times before policy is expected to take effect – leading to lags in the policy framework in reaction to new information. The inertia created by these political and procedural factors is frequently the primary barrier to successful decoupling. Understanding these aspects of the problem can assist policy makers in making further progress.

11 12 technologies, opportunities decouplingdecoupling 2 and policy options 2 features can beidentifiedfor policiesaimingatambitiousgoalsofdecoupling including: there isclearly no“onesizefitsall” prescription orinstrument, butsomecommon innovation, andletting market forces provide thebest solutions.For thesekindofchanges, best stimulated bycreating favourable conditions for investment inresource productive This wealth ofoptionsfor areas for positive changearisesbecause decoupling isoften employment, andtaxation. with influence onpoliciesregarding industry, development, innovation, environment, (including consumers). Insidegovernment, there are opportunitiesfor decision-makers and institutions across most partsofgovernment, theeconomy andcivilsociety for leadership for manypeople. Thisincludes individualsworking within organisations current policiesinbothdeveloped anddeveloping countries. So,there are opportunities favourable conditions -chapter 7ofthisreport gives someillustrations ofpast and to trends inresource useandscarcity. Manydifferent policychangescan create these of thisleadership willbe aclear visionofasuccessful future economy, well adjusted Policy change,intheface ofthissignificant inertia,requires leadership. Acentral part which are shapingthedecision.Thoseseekingchange: to influence thedecision,theirinterests, relative power andthenormsassumptions In practice for changesto policy,thismeansbeingaware ofthesetactors whoare able policymaker looks attheinstitutional framework inwhichthepolitical decision ismade. resistance to policyreform. Inthistask, thechances ofsuccess appearhigherwhere the Success increating theconditions for decoupling would needto unlock theobserved the reduction ofthebiasesagainst decoupling ispossible, andhasoften beenachieved. Replacement, reform orcomplementary additionto partsoftheoldpolicyframework, and Action onpolicies 6 Unlocking changeinpolicies “... needto become adeptatinstitutional analysis, identifyingthoseelements supportive, elements andweaken themore hostile ones.”(EkinsandSalmons,2010, p.132) or hostile to, thereform inquestion, andwork to strengthen themore supportive achieving improvements inqualityoflife. daily habits,theirhomesand theirnutritionsoasto consume fewer resources while consumption patterns –andsupportthecommunity to consider arranging their to resource productivity, policiesare alsoneededthatencourage changesin Although thisreport usestechnological potential astheentrypointinto atransition each ofthelife-cycle stages ofproduction andconsumption. will probably involve consideration oftheindirect effects ofachangeonresources at full setofinteractions thattheirpolicyaffects. Reachingtherightdecisionsonpolicy The potential ofresource productivity isincreased whenpolicymakers consider the avoid unwanted knock-oneffects inotherpartsoftheeconomy. Using amixofpoliciessimultaneously can maximisethepotential for innovation and others thatalignwiththoselong-term objectives. For decoupling, policyneedslong-term objectives andthecreation ofincentives for Making progress withResource Productivity For example, there are frequently synergies between policies for decoupling and other policy goals. These can be used to win support for policy change. This was the case in Germany which introduced a relevant tax reform from 1999-2003 in five consecutive steps, eventually shifting some €18 billion annually from indirect labour charges to taxes on energy. One motive for the tax reform was to reduce incentives for environmental harm, but it also allowed the corresponding reduction of other taxes on labour that lead to an estimated gain of 250,000 jobs (Knigge and Görlach, 2005). The World Bank’s summary of benefits from an environmental fiscal reform (World Bank, 2005) gives one illustration of the potential achievement of multiple goals. (Figure 0.6).

POVERTY REDUCTION

• Addressing environmental problems that affect the poor • Improved access to environmental infrastructure • Finances for pre-poor investments (e.g., education)

ENVIRONMENTAL BENEFITS FISCAL BENEFITS

• Incentives for sustainable natural resources management • Revenue mobilisation • Incentives for curbing pollution (air, water, soil) EFR • Reduced distortions • Funds for environment agencies and investments • Reduced drains on public finances

Figure 0.6 Assumed benefits from an Environmental Fiscal Reform (EFR). Source: World Bank, 2005, l.c., p. 18

Based on past experience with policy changes5, success in decoupling appears to be more likely where policymakers seeking change:

Take account of the potential losers from policy change, and consider what will bring enough of them to favour change. Help those affected by change to focus their innovation towards a consensus future goal, by changing their expectations of the future. By creating shared visions and credible strategies, future investment patterns can be changed, often without great expense, as firms shift in advance to profit from new conditions. Create, or rely on, a source of sufficiently trusted independent advice – on the science or on the impacts of change. Objective, transparent scientific evidence is very useful: information sources seen to be self-interested will be much less effective Present concrete examples of policies or practices used in different countries, or in different realms of policy. Many of the reforms to increase decoupling will require new structures, behaviours or business models that may seem initially unfamiliar, and odd. Demonstrating that different arrangements work elsewhere can be convincing. Create an institutional structure for the specific policy decision that is participatory, sufficiently broad to contain enough people who can form a pro-reform coalition and set up in a way that allows potential supporters of change to voice their support. This facilitates information flows, and can help form a common vision for the future that reconciles previously opposing views. Use a simultaneous mix of policy instruments. This can help the actors in a value- chain of economic activity (for example, from raw material extraction to final product consumption and recycling) to change profitably together. This may be necessary to

5 This section draws on Chapter 5, Ekins.P and Salmons R, in OECD (2010) Making Reform Happen

13 14 technologies, opportunities decouplingdecoupling 2 and policy options 2 One aspectofsuccessful reform isto take steps thatcreate theconditions for further, 6 decisions from short-term political influence. to theeconomy. Theaimwasto provide greater economic stability bydistancing those England. Thistransferred thepower to set interest rates –apower ofhugeimportance authority over monetary policywaspassed from thegovernment to thecentral Bankof For example, theUKisseenasastrong, liberal economy. Inpartthisisbecause, in1998, decision-making towards theshortterm. important beneficial outcomes, andthisisparticularly thecase for overcoming thebiasof Changes to institutional decision-makingstructures have long beenappreciated to have resource factors into account intheirbusiness decisions). company reporting to includeinformation onresources thathelpscompanies take changes theperception ofpotential opponentsto change(for example bychanging policy thatincreases thefuture economic and political weight ofinnovators, orfavourably management ofresources to betaken more easily. Itcould alsomeanimplementing a the mandate ofministers orcommittees) thatallows decisionspromoting thelong-term In government, thiscould meanmakingachangeto thedecision-makingstructures (like organisation orexternal, can indirectly facilitate future change. future policyreform. Makingchangesto decision-makingprocesses, eitherinternal to an The Effective Rate of The EffectiveRate aworldor bycomparingthevalueaddedofanassistedsectorwithsame valueaddedofanunassistedsector(at Assistance isestimated reference price.)Itincludes directandindirectassistance. Changing theinstitutional framework to facilitate future policyreform overcome a“lock-in” between demandandsupply, whichcan commonly happenwhen Yet, crisescan alsofacilitate reform, indifferent ways: negative consequences andgreater availability offinance for innovative investments. economic timesare often more favourable for introducing change,withless fear of Be aware ofoptionsfor reform andusepolitical opportunitieswhenthey arise.Good very large, radical changeinresource productivity inonestep. that political oreconomic conditions exists thatallow apolicymaker to bringabouta Work to increase thecumulative effect ofseveral smaller steps, asitisrarely thecase there islittle scope for eitherto innovate. a seller offers whatisbeing demanded,thepurchaser buyswhatisbeingoffered and • • sectors ofthefuture. Unemployed labourcan bere-employed withappropriate training, ingrowth Institute, 2012)whichcould bedirected byadeptpolicychangeinto new areas. companies inEurope were holdingexcess cash of on future returns oninvestments indifficulteconomic times,publically traded new investments withlow opportunitycosts. By2011,asaresult ofuncertainty activity, whenthey lead to economic slackthatcan be stimulated to enter into Crises mayalsoprovide opportunitiesfor productivity reforming economic in 1983to around zero inthe1990s. agricultural sector. TheEffective Rate ofAssistance to agriculture fell from 123% provided therationale andimpetusfor athorough reform ofstate supportfor the included thestate runningexcessive budgetdeficits(of9percent ofGDP), An unsustainable economic situationinNew Zealandintheearly 1980s,which 6 € 750 billion(McKinsey Global There have also been many examples where international agreements have acted as stimulation for domestic action. In part this is because concerted action between countries, which reduces fears of unfavourable distortions in international markets. But it is also because an international commitment can act as a persuasive tool against opponents of change, not least by indicating that change is viewed as internationally important.

7 Putting Decoupling into Practice – Linking resource price rises to resource productivity gains

Economic instruments to push technologies and markets towards higher resource productivity typically run into one characteristic difficulty: if price signals are strong, industries may just give up or emigrate, and consumers tend to contest the government imposing painful price signals. But if price signals are weak, there is a high likelihood of effects remaining insignificant.

A potential way out is a price signal that steadily increases at the pace of decoupling successes. For example, if the average efficiency of the car fleet rises by one per cent in one year, a one per cent price increase of petrol at the pump would seem fair and tolerable. However, the firm announcement of the continuation of this scheme will induce car manufacturers and traders as well as consumers to speed up efforts to reduce petrol consumption per kilometre or to avoid unnecessary trips. Hence a small signal can have a strong impact if continued over a long period of time.

A policy of this kind can combine several of the considerations to unlock inertia described above, and may come close to the type of combined policy which is needed.

One proposal for a policy could use taxation or subsidy reduction to move the price of a chosen resource upwards in line with documented increases of energy or resource productivity. In the sections below we look at different qualities of this proposal. In practical terms, one would not prescribe an exact price trajectory but a “corridor” within which prices can fluctuate a little. Interventions would only be made when such fluctuations are leaving the corridor. Interventions can also reduce prices or taxes if fluctuations leave the corridor upwards. The main purpose is predictability so that investors, manufacturers, and consumers know what is going to happen.

Broadening the economic discourse

By establishing a “ping-pong” between price rise and efficiency gains, costs (which are what influences competitiveness and livelihoods) would, on average, not increase. Under the “ping-pong” policy, on average, one would pay the same amount of money for the same quality of energy services as during the year before – paying a higher price for each unit of energy, but consuming fewer units of energy, as each unit of energy delivers more output thanks to the productivity gain. Of course, some industries and some families cannot increase their resource productivity as fast as the average gains take place. Politics will have to address this problem by a balanced mix of support measures or exemptions without destroying the incentive to innovate or adapt.

15 16 technologies, opportunities decouplingdecoupling 2 and policy options 2 Source: US Bureau of Labor of Bureau US Source: 2007. States ofAmerica from 1947– gross hourly wagesintheUnited of labourproductivity andof Figure 0.7 the USAover 60years. productivity andwagesin dynamics between labour 0.7 shows theparallel labour productivity. Figure up furtherincreases of were driven to speed wages went up,employers higher wages.Andas could successfully demand labour productivity andgross wagesperhourofwork. Asproductivity increased, workers resource productivity gainsandresource prices. Itistheincrease over atleast 150years in An interesting partialanalogy exists to theproposed “ping-pong”dynamicsbetween term andultimately dramatic increase ofresource productivity. that themutualreinforcement between prices andefficiencyincreases willlead to along laboratories to systematically invest inever more resource productivity. Itseemsplausible strong andpredictable incentive to investors, states, individualcompanies orresearch in particularlong-term uncertainty aboutthedirection ofprices. Thiswould serve asa or resource productivity increases would remain. However, uncertainty would bereduced, resource productivity, asvariations inresource prices anduncertainty aboutfuture energy The proposal would notentirely remove uncertainty aboutreturns oninvestments in positions infavour ofchange. but alsoprovides reasons for themore innovative andproductive firmsto take political provides greater incentives for competition basedonincreased resource productivity, productivity gains:thesefirmsreduce costs relative to theircompetitors. This notonly increases therelative competitive advantage offirmswhichhave above average resource Secondly, byincreasing resource tax attherate ofaverage efficiency gain,theproposal number ofunitsresource consumed decreases. productivity increases meansthatthetotal potential revenue doesnotdecline,even asthe economy, increase spendingorto reduce fiscal deficits.Linkingthesizeof tax to creating choices for thegovernment to reduce taxation onotherpeople orfirmsinthe coalition thatsupportsitsintroduction. Itwould provide asource ofgovernment revenue, The proposal hasaspectsthatgive itthe potential to create sufficientwinners to form a productivity. occur because othercountries tend to show thesamedynamicsofwagesrisingwith to moving operations to othercountries; inthecase ofrisingwagesthisisless likely to such interventions. Anditisnotclear to whatextent higherresource prices mightlead any state intervention, while theincrease ormoderation ofenergy prices doesrequire Obviously, theanalogy isfar from perfect. Wage negotiationstypically occur without Creating avisionofthefuture andreducing uncertainty Creating sufficientwinners infavour ofchange Theparallel increase 100 150 125 50 25 75 0 1947 Source: Bureau ofLabourStatistics 1951 1955 **Compensation perhourdividedby theimpicitprice deflator for nonfarm business output. *Output perhourofallpersons. Real Compensation perHour** Labour Productivity* 1959 Labour Productivity andReal Compensation perHour 1963 1967 (Nonfarm Business Sector) 1971 1975 1979 1983 1987 1991 1995 Index 2000=100 1999 2003 0 25 75 100 125 150 50 Taking account of potential losers in a policy mix

Introducing a slow, incremental, long-term increase of prices in the way suggested might allow industry and families to gradually adapt to higher price levels and yet would serve as a strong signal for all long-term investments and decisions. Often the signalling effect alone induces more resource-efficient behaviours, as firms and people adjust in anticipation.

The generation of revenues allows some recycling of those revenues to the losers from the policy change. Following a model from Sweden’s tax on nitrous oxides, the revenues from the policy could be returned to clusters of firms (such as the non-ferrous metals industries) – not per energy unit consumed but per job added or affected by price rises in ways which do not reduce the incentive effect of the resource price increase.

Countries have also found ways to protect vulnerable low-income people (who have limited capacity to improve their resource use) from policy-induced price rises. In many countries of the world, a move from generally low and subsidized energy and water prices to realistic market prices (encouraging private capital to invest in more supplies) has been accompanied by policies that allow for a preferential low price level for poor families. South Africa has set a good example within its integrated water plan.

Creating new institutional arrangements

The design of a policy mechanism that raised prices of energy or resources in line with efficiency increases would require new, presumably legally binding, institutional arrangements. Those would be context specific to autonomous countries, but would be likely to involve binding pre-commitment of government to the mechanism, with independent and credible mechanisms for monitoring and calculating documented efficiency gains.

8 Conclusions

Trends in global consumption and exhaustion of natural resources and environmental systems imply that the decoupling of economic growth from resource use will become ever more important for stable, successful economies. These trends are already sufficiently significant to influence the factors that make economies competitive.

Many technologies and techniques that deliver significant resource productivity increases are already commercially available and used in developing and developed economies. They allow economic output to be achieved with fewer resource inputs, reducing waste and savings costs that can further expand the economy or reduce its exposure to resource risks.

A well-functioning economy might be expected to naturally adjust to changes in resource availability by directing investments into areas of economic activity that bring patterns of resource use in line with society’s goals (for example, into innovation in resource productivity). In practice, we see that many economies do not naturally adjust in this way, but suffer from blocks to transition which ”lock-in” existing patterns of resource use.

17 18 technologies, opportunities decouplingdecoupling 2 and policy options 2 resource prices upwards inlinewithdocumented increases ofenergy orresource policy whichisneeded.Oneproposal uses considerations. Thereport mentionstwo, whichare illustrative ofthetypecombined There are forms ofpolicyavailable to promote decoupling thatcombine several ofthese can draw onpast experiences withpolicyfor guidance onhow to take forward decoupling. break outofresistance to policychanges norms andassumptions which are shapingthedecision. of actors framework inwhichthepolitical decisionismade.Thismeans The chances ofsuccess appearhigherwhere policymakers look attheinstitutional from resource useispossible some notable successes. the decoupling ofresource use,orimpactsofresource use, from economic growth, with There hasbeenawealth ofexperience across theworld inpolicyto intentionally facilitate institutions. in byresource-intensive consumption andproductions patterns, infrastructure and may have arelative advantage indecoupling in whichinvestments inresource productivity become widespread. Facilitating decoupling These obstacles to decoupling can becategorised asarisingfrom: back to theeconomy resource taxation atsource orinrelation to product imports,withrecycling ofrevenues productivity in resource productivity. technological, behavioural, organisational andinstitutional biasesagainst innovation resource trends wasavailable); and the legacy ofpast policy decisions (includingthosemadebefore information on whoare able to influence thedecision,their interests, relative power andthe . Anotherlooks to . will involve removing theseobstacles They indicate thatabsolute decoupling ofeconomic growth . shift revenue-raising onto resource prices through . Leaders withinthepublicandprivate sectors taxation orsubsidyreduction to move , because they are notsostrongly locked- Leadership willbeneededto , to create theconditions being aware ofthe set Developing countries Introduction

The focus of this Decoupling 2 report is to illustrate the steps by which countries can realise their strategies of better lives for their people, now and into the future, through improving resource productivity.

The report shows that the potential exists for significant increases in resource productivity (as much as five- to 10-fold improvements), and that these could be achieved through strategic changes to current policy regimes. It shows that technologies and techniques, which bring very significant resource productivity gains, are already available, right across the range of resource-consuming activities. It also shows that much of the policy design “know-how” we need to achieve significant levels of resource productivity already exists in the form of legislation, incentive systems, and institutional reform, and aspects of it have been tried out and implemented, encouraging other nations to study and where appropriate replicate such success stories.

The report shows that many nations have already achieved decoupling of economic growth from numerous pollutants, like sulphur dioxide emissions, with some having achieved modest progress in separating economic growth from growth in greenhouse gas emissions and from growth in the use of some resources.

The report aims to assist the world’s leaders in government and business understand the issues and opportunities around decoupling.

19 20 technologies, opportunities © Shutterstock decoupling 2 and policy options S winners andlosers, withtheadvantage changing conditions may create new in relative competitive advantage. The availability bringsthelikelihood ofchange firms, andchangesintheir price and growth andprosperity for countries and Resources are thefoundation for industrial success. conditions thatcurrently supporteconomic likely to continue to changesomeofthe trends ofincreasing resource useseem likely future reality. Inourview, future may often besimilarly outoflinewiththe resources like minerals, water andland commodity prices andavailability of Widely heldbeliefsaboutthe future triggered the2007-08global financialcrisis. of thiswasthemisvaluation of assets that recent, catastrophic, illustrations economic conditions. Oneofthe inaccurate beliefsaboutfuture ometimes, even experts hold 1 Use andScarcity Changes inResource 7 the twentieth century andtheir implications. significant trends in global resource usein That report (UNEP,2011b)highlightsthe of resource useandhave responded. already seennegative impactsfrom patterns countries suchasChinaandGermanyhave As we showed inourfirst decoupling report, around 2percent used intheprovision ofmaterial inputs)is energy cost (notcounting energy cost of total production cost, while thedirect processing industry isaround 40percent the costs ofmaterial inputsfor the Germany, according to officialstatistics, many industrial sectors. For example, in of otherresources are more important for economic circles, thecost andavailability are frequently discussed inpolicyand Although changesinthecost ofenergy the change. going to thosewhostrategically prepare for German Federal Office. Statistics 7 . 21 technologies, opportunities and policy options Annual global production, ton 100 10 10 decoupling 2 10 1900 4 6 8 1 From Sverdrup et al, 2013 al, et Sverdrup From the picture beinglogarithmic) exponentially since theyear 1900(theordinate on Figure 1.1 Figure 1.1shows. the beginningoftwentieth century, as an essentially exponential growth pathsince The extraction of many metals has followed times itsprevious level. material extraction increased to abouteight fuels by 12 and biomass by 3.6. In total, construction materials by 34times,fossil and minerals inthatperiodgrew 27times, It found thattheannualextraction ofores 7 billion.Therate ofglobal population of 2011,ourglobal populationexceeded more than6billion.Bythesecond half population increased from 1.65billionto During thetwentieth century, world income growth. resource useare populationandpercapita The two great drivers ofchanges sustainable levels. similarly increased, inmanycases beyond freshwater, landandsoils,fish–have essential to prosperity –including use ofsomethenatural resources Other reports have illustrated thatthe 1.1 1.1.1 1950 resource use The drivers of changes in Extraction ofmanymetals grew Population 2000 KEY Aluminium Niobium Tantal Helium Phosphate rock Zinc Lead Indium Gold production Silver Copper Platinum group Nickel Molybden 2050 2100 between countries andbetween unequally, withvery large disparities on average, beengrowing, although incomes. Per capita incomes have, correlated withthelevel ofincreasing which infact, hasbeenbroadly of resources eachcitizenconsumes, resource useisrelated to thevolume The impactofagrowing populationon 1963 (UN,2011). year isnow significantly larger thanin of additionalpeople ontheplaneteach larger now thanin1963,thenumber because thepopulationissomuch around 1.3percent today. However, above 2percent peryear in1963to growth rate hasfallen from itspeak continue: resource useseemalmost certain to These two drivers ofincreasing tonnes ofresources annually. used somewhere between 8.5and9.2 by 2005thenotionalaverage inhabitant global percapita usewas4.6tonnes; hundred years earlier,theaverage differences between individuals).One (though thisaverage alsohides great resource useperperson hasincreased With thisincome increase, average individuals withincountries. 1.2 1.1.2 All countries are aimingfor with differences between countries. predicted to continue to increase, Growth inpercapita incomes is (UN, 2013). in itsmediumvariant estimation billion bytheendofcentury continuing to grow furtherto 10.9 humans by2050,withpopulation to addmore than2.5billionextra The UNprojects global population drivers ofresource use Future trends inthese Income 22 technologies, opportunities decoupling 2 and policy options group (Brazil, Russia, India,Chinaand economic powers thatmake uptheBRICS demand isamplified.Thefive emerging resulting pace ofincrease inresource increasing incomes from alow base,the With populous lower-income nationsfast resource useisexpected. better standards ofliving,ever-greater of theglobal populationlook to reach (UNEP, 2010a).Asever-increasing shares around 18percent oftheglobal population global natural resources represent only that historically consume 80percent of when considering thattherichcountries population andincomes becomes apparent The significance ofthegrowth in – could increase by70percent by2050 one area ofresources –food, feed andfibre that dueto economic growth, demandfor Cautious predictions ofthefuture suggest the world (UNEP,2013a). larger thanallthemetals currently usedin metal needswill bethree to ninetimes and Development (OECD)countries, global Organisation for Economic Cooperation and lifestyles to thosecurrently usedin economies adoptsimilartechnologies of 25tons. As populations inemerging while aCanadianconsumes anaverage on average, four tons ofresources peryear, Currently, oneperson inIndia“consumes”, than thatofthehigh-income countries. capita incomes are still significantly lower of upto 10%peryear, buttheaverage per products (GDPs) have beengrowing atrates world population.Theirgross domestic South Africa), represent 42percent of 1.2.1 the consumption levels ofthemost the 1.8billiontoday (Kharas, 2010). “middle class” income levels, ontop of additional people worldwide enjoying next 20years, there willbe3billion Some have estimated thatwithinthe countries looking to consume more. wealthy, withthoseinthewealthiest demand Implications for resource In ourfirst report ondecoupling, we set convergence ofstandards ofliving. indications oftheglobal consequences of and increase ineconomic growth gives low estimate. ThesizeofChina’s population China andelsewhere, thisappears to bea (FAO, 2009).Lookingatthedynamicsin 8 resources to continue into thefuture. on thecurrent high-consumption modelof not seempossible for aneconomy based impacts oftheirextraction anduse.Itdoes of thelimitsplanetsto absorbthe of available resources andassessments This probably exceeds allpossible measures 2000. triple by2050,compared to extraction in annual resource extraction would needto of current useoftheaverage European – for allglobal citizensreached thelevels levels ofmaterial resource useperhead policymakers’ current plans–inwhich In thescenario thatrepresents many amount ofmaterial resources asothers world willbeable to assume thesame assumes thatby2050,every citizeninthe 2050. To reflect equitygoals,eachscenario economy –resource useincreased by the resource productivity oftheworld of whichincludedprofound changein resource use.Ineachofthese–one out different scenarios for future material 'Material resourceuse'inourfirstreportincludes:'Material constructionmaterials, mass, expressedintons. ores andindustrialminerals, by fossil fuelsandbiomassisaggregated If Chinawere to match theUSfor levels tonnes, more thantoday’s total catch. of Japan,italoneneed100million would to consume seafood at thepercapita rate outputof oil.IfChinaalonethe world were million more cars andmore thandoubling needapproximatelyperson itwould 850 of car ownership andoilconsumption per UNEP Global Status Report,2002 Sustainable Consumption– 8 . 23 technologies, opportunities decoupling 2 and policy options 400 300 200 100 0 1960 resources impactonmarkets. as speculationandascramble to acquire increased volatility inthoseresource prices, increase intheprice ofthoseresources, and for resources, two effects are likely: an the global economy reach supply constraints As thedemandsresulting from growth of and disruptionofenvironmental systems. increased price volatility, increased scarcity three areas: increases inresource prices, resource useare already apparent in The economic consequences ofincreasing 100 percent (McKinsey Global Institute, 260 percent, andfood prices bymore than per cent, energy prices byanaverage of risen 176percent, rubber prices by350 For example, since 2000,metal prices have may now have already begunarisingtrend. prices hascome to anend,andthatprices that along era ofdecliningreal resource resource prices to 2013provides apointer pressures for someresources, areview of global downturn hasnow reduced demand can beseen.Even thoughthecontinuing been reached, andthesenegative effects between demandandsupply hasalready 2011a) for manyresources, theshiftinbalance Bank, Trend (World 2011. From theevidence,Swilling itseemspossible that Data, Mark Price courtesy Commodity added, Bank lines World (Source: Figure 1.2 1.3 1.3.1 1970 increasing resource use The Consequences of Commodity price indices. Increasing resource prices Metals andminerals (includingiron ore) Energy Raw materials Food 1980 1990 2010 continue (EIO,2010). that European firmsexpect price risesto looking Eurobarometer survey indicating Figure 1.3shows theresults ofaforward- in material costs (Eurobarometer, 2011). that they have experienced anincrease cent ofEuropean businesses reported past five years found thatsome75per official EU“Eurobarometer” survey inthe significant for theworld asawhole: An Evidence from Europe mightbetaken as These price risesaffect theeconomy. (Willenbockel, 2011). accelerating past trends inprice rises will increase by120-180 per cent by2030, 2011). Somepredict that global food prices 9 poverty. prices alsomake itharder to reduce global harm economic growth. Risingcommodity short-term inflationary effects thatcould in highercosts to business, butalsorisk Rising commodity prices notonly result following 2011 material costs would evolve inthe5-10years Figure 1.3 Data fromDEMEA,Data presentedinBerlinJuly2010, andtextfrom withimage (EIO, 2010). Expectations abouthow companies’ 9

24 technologies, opportunities decoupling 2 and policy options (Source: Dobbs et al., 2012) al., et Dobbs (Source: Volatility byDecade from 1920to 2011 Figure 1.4 impacting onothercommodity prices. in onecommodity orresource rapidly resulted inshortages andprice changes production. Thesestrong linkageshave between energy, water, resources andfood This ispartly dueto stronger linkages time inthelast 100years (Figure 1.4). decade isnow higherthanatanyother commodity price volatility inthelast In additionto risingprice trends, 1.3.2 © Shutterstock Scale andDrivers ofCommodity price shocks Increased price volatility and both regarding price hikes andvolatilities. the economy, withmostly dramatic figures increase for certain key materials usedin both thevolatility andtheannualprice production, Figure 1.5below illustrates For someofthekey elements usedin Sustainable Industrial Development, Fall Issue 2008 Issue Fall Suh, S. Development, and Industrial Development”, Consumption Industrial Sustainable Resources Sustainable “Natural Source: various key elements. Figure 1.5 Price Volatility andPrices Increases of 25 technologies, opportunities decoupling 2 and policy options 10 price) standard deviation around theaverage 7.7 percent in1990-99(measured bythe to 22.4percent in2000-12compared to that thevolatility offood prices increased and Agriculture Organization (FAO), found demand. Overall, theUnited NationsFood corn for biofuelincreasing global corn prices in2007,withanincrease inuseof food prices wasonefactor inrisingcorn The linkagebetween energy demandand Security, 2013).(Figure 1.6) “Arab Spring”(e.g.Center for Climate and to civildissatisfaction whichfuelled the rising global prices for food in2010led and India.Somebelieve thatrapidly Cameroon, Senegal,Mauritania, Mexico including Pakistan, BurkinaFaso, linked to riotsinnumerous countries, 2007 and2008,higherfood prices were to have fuelled civildissatisfaction. In global demandare believed bysome caused bysupply shortfalls relative to Recent sustained spikes infood prices Source: Lagi et al., 2011 al., et Lagi Source: parentheses isthereported numberofdeathsfrom eachriot. Figure 1.6

However, before1990, foodpriceswerealsovolatile, ahigher having standard deviation thanintheyears2000-12. standard deviation 10 . FAO Food Price Index from January2004to May2011andfood riotevents. Thefigure in example, caused bypolitical factors. disruptions to theflow of resources, for substitutes are notreadily available; and declining stocks for whichcost-effective This scarcity can come from two causes: needed for thediffusionofnew technologies. in thesupply offood. Otherresources are freshwater andfish,whichplaykey roles concerns aboutscarcity. Theseincludeland, for someresources there are particular In additionto price trends andvolatility, 1.3.3 Metals andminerals expensive, asmetal concentrations Some metals riskbecoming very worried abouttheprice hikes ofrare High-tech industries are increasingly 2009, seefigure 5basedontable 1). (USGS, 2008;quoted inDiederen, A., recycling rates are rapidly increased running outwithintwo decades unless some rare earthmetals mayeven risk More pessimistic forecasts saythat in accessible ores keep declining. scarcities Increasing resources 26 technologies, opportunities decoupling 2 and policy options Freshwater metals. Better recycling could help Gleick, 2001, p.52). States (Shiklomanov, 1998,cited in producers: China,India,andtheUnited people, includingthebiggest three grain that contain more thanhalftheworld’s are already falling rapidly incountries people (Shahetal.,2007).Water tables drinking water for more than3billion extracted from wells themainsource of sustainable yields,withgroundwater in manypartsoftheworld exceeds Extraction offreshwater (Brown, 2008) 2008, Stewart etal.,2005). Jasinski, 2007;Laherrere, 2000;Lewis, 2009; Cordell etal.,2009;IFA, 2006; others significantly longer (Gilbert, a peakinaslittle as25years’ time, uneconomic. Somestudies suggest Yet declining qualitiesmaymake these enough to last somehundreds ofyears. deposits ofphosphate rock are large as fertilisers for agriculture. Known alternatives for useofphosphate timescale withrelatively limited likely to peakinarelatively short World phosphorusproduction appears (USGS, 2008). potentially affecting manyindustries metals willbefelt within50years, Shortage ofsometheworld’s key recycled (UNEP,2011a). than 1percent ofspecialtymetals are reduce suchconcerns –yet today, less clean water for over more than 1billion that regulate river flow andsupply the Himalayan andAndeanglaciers increasing rate ofdisappearance of supply changes,for example, the In part,thisisalsodueto predicted Water Resources Group, 2009,p.7). only 60percent ofworld demand(2030 available suppliesmayprobably satisfy to riseby40per cent. In20years’ time, Global demandfor water isexpected Land Fisheries continues to expand, affecting today an At thesametime,landdegradation of natural landconverted to cropland. between 320and849millionhectares continue, by2050,there could be resource base.Ifcurrent conditions only increase thepressure ontheland demand for food, fibre andfuelwill and forests, andexpected riseof expense ofsavannahs, grasslands Global cropland isexpanding atthe (OECD, 2008a). more than3billionpeople by2030 could grow from affecting 1billionto freshwater scarcity andwater stress times more water in2008than1960, people. Althoughdamscontained four per cent, andtheharvest oftheCaspian bluefin tunathathave beencutby94 Two examples are Atlanticstocks ofthe (Myers andWorm, 2003;Crosby, 2003). disappeared over theprevious 50years cent ofthelarge fishintheoceans had journal Nature concluded that90per fish. A2003study publishedinthe with severe depletion ofthelarger half fully exploited in2005(FAO, 2005b) overexploited ordepleted, andaround 25 percent offishstocks were Organization hasfound thatglobally, The UNFood andAgriculture services thatare linked to thatland. freshwater, soilfertility andecosystem land alsoimply thesale ofacountry’s production for export. Thesesales of equivalent to thearea ofFrance for 2012, foreign investors boughtland by external investors. Globally, in acquisition oflandinforeign countries One response hasbeenincreasing hectares ofcropland. abandonment andshiftof2to 5million and initssevere form leads to the estimated 23percent ofglobal soils 27 technologies, opportunities decoupling 2 and policy options because they provide benefitsto people seen asresources intheirown right– Parts oftheenvironment can easily be greenhouse gasemissions, UNEP,2010a). between theuseofdifferent resources and Impacts describestherelationship burnt. (Our2010ReportonEnvironmental the economy andthelevel offossil fuels between theuseofmaterial resources in For example, there are strong links impacts onaspectsoftheenvironment. resources isalsoclosely linked to negative The extraction anduseofmaterial well established. (SeeBox 1.1) production, stability andwellbeing isnow of environmental resources ineconomic alleviation ofpoverty. The role andvalue on factors affecting prosperity and their degradation hassignificant impact often donothave prices, orowners, Although theseenvironmental resources like fish),clean airand astable climate. fertility, stocks ofbiodiversity (rather and theeconomy. Examples includesoil 1.3.4 (e.g. from lost working hours). economic costs –bothdirect and indirect natural systems. Its pollutionhassignificant for humanhealth,andfor crops andother Clean airisaresource thatisessential 1. Clean air and astable climate Box 1.1 Sea sturgeon –source oftheworld’s yearly yield(Costello etal.,2012). provide themaximumsustainable thirds ofthelevel atwhichthey would with manystocks already below two worldwide were shrinkingyear-on-year, that more thanhalfthestocks commercial stocks in2012estimated A comprehensive analysis ofglobal 27,700 tons in1977to 461tons in2000. most prizedcaviar –whichfell from Thevalue ofclean air,biodiversity environmental systems Increased disruptionof 11 ecosystem services time, approximately 60percent ofthe Ecosystem Assessment, 2005).Atthat disasters, andcrop failures (Millennium increased vulnerability to natural bleaching of coral reefs, desertification, from overuse ofnitrogen fertilizers, ecosystems. Theseincludealgalblooms changes already occurring to theworld’s abrupt, andpotentially irreversible documented several accelerating, 2005 Millennium Ecosystem Assessment (UNEP, 2010a).TheUnited Nations’ negative impactsontheseresources increased there have beenmajor As theuseofmaterial resources has

UNEP refs at Source: UNEPrefsat from Adapted World Bank(2008), and Markandya and Muller(2007) Tamborra (2005), Strukovaetal. (2006), Bobylevetal (2002), Mendelsohn be equivalent to around 7percent ofGDP under a“business asusual” scenario would from overharvesting ofbiota andbiomass loss ofecosystems services andbiodiversity that cumulative economic costs from the biodiversity (Sukhdev etal.,2008)concluded A global 2010study ontheeconomic value of 2. Biodiversity for Russia, 0.7-2.8percent for theUSA. four percent for theUkraine, 2-5percent China, two percent for theEuropean Union, to economies include1.16-3.8percent for ozone. Estimates ofthecosts ofairpollution environment from acidrain andtropospheric and from damageto thebuiltandnatural from healthcosts andpremature deaths, with most oftheeconomic costs coming cities andcountries because ofairpollution, losses ofbetween 2-4percent ofGDPin (OECD, 2008a)have reported economic A range ofstudies per annumby2050(Stern, 2006). change between 5-20percent ofglobal GDP the economic costs ofirreversible climate instance, the2006Stern review quantified are significant, even intheshortterm. For the costs ofpostponing actiononclimate A range ofstudies have highlighted that 3. Climate around US$2-4.5trillioneachyear. per annumincosts by2050–equivalent to 11

from across the world that supportlife on 28 technologies, opportunities decoupling 2 and policy options changes increase (Rockström etal.,2009): of suddenorirreversible environmental (Figure 1.7,from 2008),after whichrisks have gonebeyond planetary boundaries human impactsontheglobal environment a representation oftheextent to which Resilience Centre and others produced Johan Rockstrom from theStockholm on Earth.Asameansto illustrate this, for providing stable conditions for ourlife like theclimate system –thatare essential local andglobal environmental systems – implications, withnegative impactson It alsohasvery seriousindirect storm damage. shortages, loss offishstocks orincreased example through damageto health,water effects onpeople andtheeconomy –for parts oftheenvironment often have direct These negative impacts,orexhaustion, to seriously degraded orusedunsustainably. soil fertility andbiodiversity, were being Earth, suchashigh-qualityfreshwater, thresholds allowing continued provision economy hasalready overshot the Empirical evidence thattheglobal 2009 al., et Rockström Source: boundaries have already beencrossed. safe thresholds for three outofnineplanetary of environmental impacts,highlightingthat human activityisoperating withinsafe levels Figure 1.7 Arepresentation oftheextent to which system researched ofthesesystems istheclimate The best known andmost deeply resilience isavoided. ensure irreversible declineofecosystem decades to changeeconomic patterns to suggests thathumanityhastwo to three World reports. Development Report DAC Development Reports Change (IPCC)assessments Outlooks Programme (UNEP)Global Environmental including theUnited NationsEnvironment in detail innumerous publications, world’s ecosystems isalsocovered of resources from manyareas ofthe 18 17 16 15 14 13 12 warming below 2°C(3.6°F)(IPCC,2013). of meetingtheUNtarget ofrestraining billion tons gives a50percent chance capping greenhouse gasoutputat840 (IEA, 2012).TheIPCCestimates that of more thanonethird from 2012to 2035 and 2030(IEA,2005),withfuture growth by more than60percent between 2004 growth, world energy demandwillincrease that, underbusiness asusual economic International Energy Agency(IEA)forecasts to theInternational Energy Agency. The track to increase muchfurtheraccording Emissions ofgreenhouse gasesare on gases thatincrease thistotal bysome25%. in 2013 1999) to anaverage ofjust under400ppm 320 partspermillion(ppm)(Petit etal., CO

http://www.esrl.noaa.gov/gmd/ccgg/trends/ See: IPCC https://www.ipcc.ch/publications_and_data/Assessments at http://www.worldwatch.org/bookstore/state-of-the-world http://hdr.undp.org/en http://www.oecd-ilibrary.org/development/development-co-operation- https://www.ipcc.ch/publications_and_data/publications_and_data_reports. http://www.unep.org/geo/ publications_and_data_reports.shtml publications_and_data_reports.shtml report_20747721 shtml Climate 2 emissions hasincreased from around 18 17 along withothergreenhouse . Since 1950,theconcentration of 12 , International Panel onClimate 16

Some ofthescience 15 , theState ofthe 14 , Human 13 , OECD 29 technologies, opportunities decoupling 2 and policy options trends: by market forces undercurrent economic – onethatappears impossible to besolved decision-makers are ofadifferent nature The resource constraints now facing very important exceptions. not lead to global resource scarcity, with consumption inthetwentieth century did the past expansion ofdemandfor resource overcame thefeared constraint. Ingeneral, progress orthefunctioningofmarkets not all–seesection4.8)ofthesecases, perhaps themost famous. Inmany(though of aquickly growing humanpopulationis was insufficientto meetthefood needs concern in1798thatthesupply ofland impossible to overcome. ThomasMalthus’s that resource constraints would be There have beenpredictions inthepast is very muchgreater, meaning thateach At thesametime,scale ofdemand 1500 to 1820(Maddison,2001)(Figure 1.8). from 1820to 1950, and0.3percent from This compares to arate ofincrease of1.6 an average growth of3.9percent ayear. increased six-fold from 1950 to 1998with changing pace ofresource demands.GDP represents areasonable proxy for the accelerated. Theincrease inglobal GDP The pace ofincrease ofdemandhas response from themarket unlikely: that make anadequate supply-side There are several distinguishing features 1.4 1.4.1 “The next 20years appearto bequite shocks thathave periodically erupted different from theresource-related 2011, p.2) in history” (McKinsey Global Institute, approach.” a “leave itto themarket unlikely to besolved by Why theseproblems appear often outpaces thesupply side response The scale andrate ofchange Source: World Bank, 2009 Bank, World Source: market prices (left scale inunitsof$1.000 million) Figure 1.8 far greater increase inresources. percentage increase indemandrequires a burning offossil fuelsto provide products same can betrueofmaterial extraction or the benefitofaconsumer intheEU.The those crops isusedinnorthAfrica for exports food to the EU,thewater to grow instance, whenanorthAfrican country takes place intheirtrading partners. For resource userelated to theireconomies countries asignificant proportion ofthe between countries, for manywealthier Although thesituationdiffers greatly supply increase are often notsufficient. investments ininfrastructure neededfor with predicted increases indemand.The currently appears unlikely to keep pace price volatility. Further supply sidechange small extra demandcreating significant of short-term supply, whichresults ineven several resources hasreached thelimits markets into sellers’ markets. Demandfor commodity markets asbigbuyers, turning other majorcountries entered theworld since roughly theyear 2000,asChinaand A majorchangeofthesituationoccurred 1.4.2 World GDP1960-2009 atcurrent countries used resources from other developed countries has Historically, growth in Source: AdaptedfromChapagainandHoekstra,2008 Net virtualwaterimport (Gm (Billion cubicmeters(BCM)/year) V Only net(import–export)flows>10BCM/yearareshown irtual W 30

technologies, opportunities 3 /year) and policy options . . . -100 100 -50 decoupling 2 50 0 ater Flows 15 80 . . . Net virtualwaterimport (Gm (Billion cubicmeters(BCM)/year) V irtual W 3 /year) . . . Central -100 100 -50 50 example China). released withintheexporting country (for in Japan,butthematerial ismined,orCO for export: theproduct maybeconsumed 20 19 another –“virtualwater”. used inoneregion for consumption in balance ofimports and exports ofwater commodities. is now usedfor exported goodsand cent oftotal global water consumption of indirect useofresources. countries appearto beincreasing thisform Recent trends show thatdeveloped academic literature examining theissue. describes theseflows, basedonagrowing Chapter 4ofourfirst decoupling report 0 ater Flows

North 15% of the water use in the agricultural sector, useintheagricultural 15% ofthewater inglobal and34%ofthewater The indirectuseofresources and resourcesembeddedintradearebeingthe industry is used in making goods for export (Chapagain andHoekstra, isusedinmakinggoodsforexport(Chapagain 2004). industry Panel, tobepublishedin2014. Resource bytheUNEP-hostedInternational object ofanewassessmentstudy 15 80 America . . . America Central South North America America 20 Figure 1.9illustrates the America South America W estern Europe 19 Sixteen per North Africa Southern

W Eastern Europe Central estern Europe Africa Africa 2 North Middle East Former SovietUnion Africa Southern be moved for thesamequantityofmetal three timesasmuchmaterial needs to For manymetals, thismeansthatabout Figure 1.10shows for several key metals. led to decliningaverage ore grades, as mining ofthemost attractive ores has Depending onthemetal concerned, past be fewer ofthesecountries. use theirresources inthisway. There will future nationalneeds,maybewillingto supply ofresources, beyond theirown world, only thosecountries withexcess demands for consumption riseacross the others withconsumption goods.As and are willingto usethemto supply freshwater supplies–to theirfullextent, not usingtheirresources –like their 2008 there are sufficientcountries whoare Hoekstra, and This economic modelonly works when Chapagain from Adapted Source: Figure 1.9: Eastern Europe Central 1.4.3 Africa Africa Middle East Central &South Virtualwater trade balances 1997-2001. impacts onotherresources Declining ore grades and Former SovietUnion Asia South-East Central &South Oceania Asia Asia South-East Oceania Asia Source: Mudd,2009 Ore grades Figur 10 20 30 40 0 1840 31 technologies, opportunities e 2.12.

and policy options 1850 decoupling 2 Or 1860 e gr ades ofminesinAus 1870 1880 production costs (UNEP,2013b). metals, andconsequentially to increased higher energy requirement perkilogram of to meetincreasing demandisleading to a tendency to process lower grades ofore same quantityofanatural resource. The water andresource inputsto extract the rarely avoids theneedfor more energy, economically inaccessible. Yet, thisvery natural resources thatwere previously and findprocess new sources of least someofthedecline inore grades, Technological innovation can offsetat freshwater bodies. and implications for groundwater and use, landdisruption,chemical release associated increases infossil fuelenergy extraction asacentury ago.Thisbrings Source: Mudd, 2009 Mudd, Source: 1840-2005. Figure 1.10: 1890 1900 tr alia, 1840–2005 1910 Ore grades ofminesinAustralia 1920 1930 1940 1950 1960 ● ● ● ● ● ●

Nickel (%Ni) Zinc (%Zn) Lead (%Pb) Gold (g/tAu) Diamonds (Carats/t) Copper (%Cu) 1970 1980 1990 2000 1.11). For instance, according to theIEA, trend thatcan exacerbate scarcity (Figure resources inthesupply ofothers –a of theincreasingly linked useofdifferent Forum, 2011;Hoff,2011)provide evidence Numerous reports (World Economic locations, where extraction ismore costly. – ormore extreme geographic deep-sea either secondary sources such as tar sands 50 countries, production isnow shiftingto production havingpeaked inmore than doubled between 2000and2010.Withoil the cost ofbringinganew oilwell online Similarly, oilproduction costs are rising: on agricultural productivity. weather events have negatively impacted agriculture isalsorising,while extreme average resource intensity ofintensive concentrations shrink(Bardi, 2014).The kilogram ofmetals isrisingasthese are increasing. Thecost ofpollutionper intensity ofresource extraction (i.e. mining) production andtheenergy andwater production, theenergy intensity ofwater Currently, thewater intensity ofenergy Grose, 2013). unconventional natural gas(Lavelle and investment inbiofuels,new coal plantsand production to double by2035mainly dueto volume ofwater consumed for energy current energy policieswillresult inthe 1.4.4 and food production, water, resources Linkages between energy 32 technologies, opportunities decouplingdecoupling 2 and policy options 2 an additionalrisk–thatthey may The environmental resources present 2012 WBCSD, Source: and Food SecurityNexus Figure 1.11 22 21 predict. Sucheffects include: difficult to understand andimpossible to interactions andfeedbacks thatare climate systems thatconsist ofcomplex because they form partofecosystems or if putundertoo muchstress suddenly collapse inanon-linearway

for further explanation see: forfurtherexplanation Smithetal., 2010a. http://www.wbcsd.org/work-program/sector-projects/water/ waterenergyfood.aspx 1.4.5 Possible fisherycollapses, illustrated to potential collapse ofgrasslands, change andloss ofbiomass leading degradation worsens dueto climate Increased desertification, asland extinct. abalone inChile, whichisnow almost Another collapse wastheLocos cod fisheryoffthecoast ofCanada. by thecollapse oftheNewfoundland TheClimate Change,Energy, Water irreversible declines Tipping points,suddenor 21 22 . Thisis – sothathigherdemandtypically leads demand through theprice mechanism Market forces work to balance supply and (Cox etal.,2000;Canadell2007). (Le Quéré etal.,2007),astheEarthwarms al., 2004)andtheweakening ofcarbon sinks from meltingpermafrost (Christensen et may occur dueto therelease ofmethane For example, irreversible climate change long periodsoftime(Diamond, 2005). either irreversible orrecovers over very over atippingpoint,into collapse, thatis additional depletion maytake thesystem support capacity), butathigherlevels change (dueto system resilience and of harm,thesystem mayaccommodate effects across thesystem. Atlow levels but rather islikely to lead to amplification is unlikely to just cause alineareffect, Damage to onepartofanatural system 1.4.6 (IPCC, 2013, IEA, 2011). (IPCC, 2013,IEA,2011). Possible irreversible climate change moisture retention andsoilstructure. priced bythemarket resources are notaccurately Many oftheessential 33 technologies, opportunities decoupling 2 and policy options of greenhouse gasses, soilfertility for freshwater, fish,fossil fuels,emission market would determine. Thisisoften true encouraging useabove levels thatthe use issubsidised,withthesubsidy to findsolutions.Frequently resource and sothemarket haslittle incentive the prices donotcurrently reflect scarcity, For manyoftheresources facing scarcity, supply, orsubstitution to alternative inputs. to higherprices thatencourage greater alone cannot provide thesolutions. Inthesecases, existing market forces reflected inprices. unpredictable, andsoalsonotaccurately in response to perceived scarcity, are restricts exports ofrare earthmetals markets, suchasthosewhenanation 4. Geopolitical risksto global commodity factors explored more deeply inChapter ecosystems. Thismispricing isaresult of and natural resources like forests and © Shutterstock. 34 technologies, opportunities decoupling 2 and policy options T patterns. disruption to existing economic growth competitive advantage andrisksof of thechanges:achanging basisof There are two widereconomic implications 2011) ifnootheractionwastaken. meet demand(McKinsey Global Institute, in new investment inresource supply to US$3 trillionperyear would beneeded the scale ofthechangeisanestimate that as to OECDeconomies. Oneindication of least asmuchto lower-income countries changed future conditions. Thisappliesat adapting theirform ofdevelopment to 2.1 economies would benefitfrom sufficiently strong thatalmost all demand andavailability appear he global trends inresource 2 trends inresource use Strategic implications of Responding to Change 1997; Hawken etal.,1999). resource productivity (Weizsäcker etal., to befound inincreasing aneconomy’s the greatest opportunities for growth are productivity gains,itappears thatsomeof While many opportunitiesremain in labour wellbeing. sources ofgrowth andfuture economic productivity andresource productivity as to alter therelative importance oflabour economic growth. They appearvery likely to resources. They have significance for the changingrisksandchallenges related economies shouldlook more closely at The trends we now observe suggest that resources asthekey to greater wealth. concerned withsecuringandexploiting For centuries, nationshave been 2.1.1 advantage competitive economic A changingbasisof 35 technologies, opportunities decoupling 2 and policy options reducing costs. efficiency offers potential for growth by ignoring increases inprices, greater the only metal considered issteel. Even of potential areas ofsaving,for example, techniques andneithercover thefullrange on currently available technologies or policy goals.Bothestimates are based and subsidiestaxation alignedwith US$3.7 trillionperyear ifcarbon ispriced resource savings.Thisestimate risesto earn US$2.9trillioneachyear by2030from resource productivity hasthepotential to McKinsey Global Institute estimates that this potential. Chapter 3describessomeexamples with periods. Thiscan increase growth rates. investment, often withshortpayback returns can betaken withlittle capital resource productivity withhighereconomic a focus inthepast, manyopportunitiesin that asresource productivity hasnotbeen Project have highlighted for sometime Mountain Institute, andTheNatural Edge such astheWuppertal Institute, Rocky Leading research institutes andthinktanks data bytheWorld Economic Forum. Competitiveness Index scores basedon Consumption, orDMC)and theirGlobal US$ perkilogram ofDomestic Material by GDPinpurchasing power parity productivity of26economies (measured positive relationship between thematerial 2010; Steger and Bleischwitz, 2011)finda Bleischwitz etal.(Bleischwitz etal,2009, competitiveness andmaterial productivity. In fact, there isarelationship between wealth to theirpopulations. competitors andbringgreater securityand are likely to beable to outperform global opportunities for resource productivity that successfully identify andseizethe Both developed anddeveloping countries under thechangedeconomic conditions. will have strategic competitive advantage economies thatmove first, orfastest, There iswidespread beliefthatthe These trends offer newly orfast-developing jobs (Fischeretal.,2004). creation orsavingofmore than1million that economic benefitsincludedthe Germany intheyears before 2004suggest impact ofimproved resource efficiencyin jobs from 1977to 2007. estimated to have created nearly 1.5million energy efficiencypolicies inCalifornia are times ofhighunemployment. For instance, This makes itparticularly attractive at accompanied byincreased labourdemand. an increase inoutputislikely to be opportunities promote employment: productivity, resource efficiency Compared to growth through labour 24 23 Annecke list thefollowing described inChapter 4.Swillingand than are found inoldereconomies, and against resource-productive investments This advantage isaresult ofweaker biases as aresult oftheirstate ofdevelopment. compared to more established economies, a relative advantage indecoupling, believe thatdeveloping countries have However, there are commentators who and greenhouse gasemissions. decoupling isunrealistic for resource flows in theirphaseofdevelopment, absolute developing countries often claimthat OECD countries. Representatives from countries potential advantage over

fromSwillingand Adapted Annecke (2012, p. Montalvo(2008). 101)following efficiency intheenergy 50jobswerecreated There aresuggestionsthat sector foreach1lostinfossilfuels(Roland-Holst, 2008). 2.1.2 countries are often less restrictive or Regulatory regimes indeveloping to defend. they donothave dominantpositions economies maybeless rigidbecause Emerging firmsindeveloping and protect theirtechnologies. the market willtend to resist change Firms thathave dominantpositionsin developing countries Potential advantages for 23 Estimates ofthe 24 : 36 technologies, opportunities decoupling 2 and policy options existing economic growth patterns: resources istheriskofdisruptionto The otherimplication oftrends in potential political unrest. risk ofdrops inincome from scarcity, and countries –particularly inreducing the can bringgreater benefitsthaninother into theireconomy, greater efficiency rely onaparticularresource asakey input In addition,for countries thatsubstantially 2.1.3 more permissive, whichcan reduce shared, ownership of goods. consumption basedonlong-term, or providing greater scope for forms of as thoseindeveloped countries, consumption withrapid obsolescence countries maynotyet besotiedto mass Consumption habitsindeveloping productive ways. that meetneedsinmore resource- opportunity for products andservices developed countries, implying greater are less saturated thanmarkets in Markets indeveloping countries associated challenges can beovercome. potential for leapfrogging, ifthe infrastructures have aninherent and consumption systems and of resource intensive production countries withoutthe“baggage” technological capacity. Developing stages inthedevelopment of Firms andcountries can “leapfrog” countries more flexible to change. economies can make developing current technologies inmore mature cultures thatfavour thedominance of The lackofembeddedconsumer financial institutions. the protection from regulatory and – byanaverage of7.2percent ayear dramatically over thepast few decades International trade hasincreased economic growth patterns Risks ofdisruptionto existing economic decisionsto nationswithout greater sovereignty andchoice over exposure to global markets andreturn on foreign imports,reduce risksfrom strategies thatreduce dependency These riskspointto theneedfor economic Security ofsupply issues andmarket Research Service, 2011). its European factories (Congressional Peugeot-Citro a plantinLouisianafor aweek, and of theworld: General Motors shutting vehicle production ontheotherside shut down, leading to disruptionin of theworld’s airflow sensors was that aHitachi factory producing 60% Japan inMarch 2011,one effect was the Fukushima nuclear reactor in country. Whenatsunamidamaged affect theeconomic health ofadistant or demandincreases in one region It bringswithittheriskthatscarcity between theeconomies ofcountries. an ever-deeper setofinteractions in monetary terms. Thisrepresents 2005a). on fisheriesfor theirlivelihood (FAO, countries (FAO; 1999),whodepend fish farmers, most livingindeveloping employs about40millionfishers and Service, 2011).Thefisheriessector respectively (Congressional Research proteins consumed inAsiaandAfrica per cent and19percent ofanimal a key partoftheirdiet,providing 22 depend onfishandotherseafood as income nationsandcommunities disruption. For example, manylower- resources, are athigherriskof imports, oronparticulardomestic Countries thatare reliant onresource reforms. shortages can underminegovernment caused, for example byregional water threats. Global food price hikes, for example, byreducing inflationary increases macroeconomic instability, volatility inimportant resources ë n slowing production at 37 technologies, opportunities decoupling 2 and policy options 1970 -100 INDEXED 200 250 100 150 1970 between 1980-2000. Figure 2.1shows thisfor OECDcountries rate thanitsconsumption ofresources. productivity, itseconomy grows atafaster When acountry improves itsresource habits. changing technologies andconsumption of course willbeneeded,significantly sustainable inthelong term. Areal change The current modelofdevelopment isnot creating anybarriers to efficienttrade. potential disruptionsfrom changesin country isexposed to therisksand country, andtheextent to which a competitiveness andgrowth ofa Policy choices can shapethe policy choice (UNEP,2011b). economy isoften largely determined by that theresource productivity ofan policy. Yet, historical evidence suggests considered asanoptionfor economic productivity hasnotalways been economic activity. Improving resource improving theresource productivity of changing resource pressures through to theopportunitiesandthreats from and civilsocietyhave thechoice to respond Decision-makers ingovernment, business 1980-2000 Domestic Material ConsumptioninOECDcountries Figure 2.1 2.2 2.2.1 Decoupling asaresponse Energy productivity Labour productivity Materials productivity Gross Domestic Production and 1980 What isdecoupling? 1990 2000 2010 greater economic value outoffewer use. Itmeansthatthenationcan produce has decoupled itsgrowth from itsresource economy (interms ofresource productivity) it iscalled “decoupling”. Asuccessful rate thanitsconsumption ofresources, When aneconomy grows atafaster cities: for example, how water issupplied. infrastructure to provide for citizensand also thekindofdecisionover what production) inacountry. Itis,inpractice, (for example biotechnology ormetal development ofparticularindustries labour productivity orfavouring the decisions regularly madeonboosting nature ofthechoice issimilarto the developmental pathofaneconomy. The resource availability. They influence the 25 2. 1. types ofdecoupling: We propose to distinguish between three activity is. indicator ofhow wasteful theeconomic per unitofvalue resource inputs(bothmaterial andenergy)

Growth is more strongly decoupled where a greater shareofaneconomy’s ismorestrongly decoupledwhereagreater Growth growth comes from resource productivity relative tolabourproductivity. comesfromresourceproductivityrelative growth Decoupling through shiftingto other Decoupling through maturation. shifting), whichhappenswhen domestic stages inproduct life cycles (burden- countries themore material intensive materials. uses proportionally less construction activity declinesandtheeconomy has satisfiedthatneed,soconstruction physical infrastructure andbuildings after aperiodof strong investment in economy. For example thiscan happen based economy towards aservice shift from anextraction andproduction- to thematuration process ascountries environmental pollution.Thisisrelated infrastructures, andofactively reducing inefficient techniques, ofbuilding-up process ofovercoming clumsyand This typeofdecoupling isa“natural” 25 . Itstands asone 38 technologies, opportunities decoupling 2 and policy options 3.Decoupling through intentional resource demand, somecountries have already In response to changesinresource report.this fewer resources, andisthemainfocus of can lead to anexpanding economy thatuses economy expands. Intentional decoupling that total resource usestill increases asthe economy, butonly to suchasmalldegree that reduces resource intensity ofthe The first two typically lead to decoupling environmental problems. and getprosperous inorder to dealwith policies ofcountries shouldbeto grow but incorrect reasoning thattheappropriate environmental pollution,andthefrequent the ideaofa“Kuznetscurve” for local observed, andplayarole insupporting The first two typesofdecoupling are often in products andservices bywhich environmental harmandchanges patterns, includingactive steps to reduce appropriate attitudesandconsumption intensity manufacturing andliving, to resource efficientandlow material innovation, infrastructures conducive This happensthrough technological and ontheenvironment ingeneral. on limited resources, onclimate, really neededto reduce pressures productivity increase. Thisiswhat offshore. environmental impactsare shifted resource-intensive activitiesandtheir labelled as“burden shifting”,where place.– Thistypeofdecoupling isoften in products life cycles maybetaking intensive, often more polluting,stages in theworld where themore material domestically, itstill occurs elsewhere Although resource usemaydecline shifts towards aservice economy. products, andthedomestic economy replaced byimported materials and extraction andproduction ispartly consumption delivers qualityoflife. examples. Chapter 4thenreviews someof by providing afew ofthemore notable greatly improve resource productivity, and techniques are already available to Chapter 3illustrates thattechnologies 2020, compared to 1994. material productivity ofitseconomy by Germany setaclear target ofdoubling goal for theperiod2011-15.In2002, per cent energy efficiencyimprovement twelfth Five-Year Plansetanadditional16 its energy efficiencyby20 percent. The from 2005-10,Chinaset atarget to improve setting outthecountry’s economy goals examples. Initseleventh Five-Year Plan, and Germanystand astwo oftheclearest aimed atfostering decoupling. China intentionally moved forward withinitiatives mentioned above willremain. the second case, the threats to stability the resources that have beensaved. In alternatively, choosethatitwill use up a more efficientandproductive path, or of thesavingswillgrow theeconomy on that determine whethertheallocation policymakers ingovernment have choices greater consumption. Inbothcases, by theeconomy into investments or to leave thosegainsto beallocated Or they can choosenotto tax, and they can decide directly how they are spent. productivity gainsthrough taxation. Then governments can capture thesavingsfrom the government’s goals.For instance, those savingscan beallocated to meet – whichbringsachoice abouthow best savings can beusedto create more growth to decidehow thesavingsare used.The has notneeded.Thisallows policymakers it saves thecosts oftheresources thatit economy saves resources bycuttingwaste, When amore resource-productive not beingtaken upmore widely. the reasons whytheseopportunitiesare 2.2.2 decoupling Choices involved in 39 technologies, opportunities decoupling 2 and policy options efficiency gainscoming from theinvention 1865) describedhow thedramatic resource In 1865,WilliamStanley Jevons (Jevons, “Jevons paradox” effect” or,whenitisparticularly strong, the inputs. Thisisknown asthe“rebound to buymore oftheresource asfurther savings from productivity gainswillbeused expected, butthatatleast partofthe dependence onthatresource to theextent for aparticularresource maynotreduce savings from resource productivity gains suggests thatwithoutpolicychange, but left inamarket economy, evidence When savingsare nottaken bytaxation, use ofenergy, amongother effects). on thecontrary would encourage wasteful alternatively insubsidisingenergy (which, output orlessening costs ofinputs),or agriculture (andsoincreasing agricultural to improve theresource productivity of by thegovernment, they could bespent For example, whensavingsare gathered 26 country today. Figure 2.2shows itapplied century phenomenon –itisseenineach The rebound effect isnotonly anineteenth resource use. rebound effects they actually increase of resource productivity withsuchlarge term usedto describesimilarsituations before. The“Jevons paradox” isnow a popular asaninputinproduction than using coal asaresource madeitmore The greater potential production from new applications for steam power. efficient useofcoal induced ever more and soared. Theexplanation wasthatmore opposite happened:coal consumption coal burnedfor industrial processes. The earlier didnotreduce thetotal amountof of thesteam enginetwo generations

Sincethe1990salsocalledKhazzoom-Brookes Postulate, e.g. in Saunders, 1992. 2.2.3 resource productivity gains The “‘rebound effect”’ from 26 . implemented. after EUefficiencystandards were efficiency standards, orinanyEUcountry China after theintroduction ofambitious is possible to findsimilarphenomenain consumption rose (right-handgraph). It economic output(left-hand graph), energy unit ofenergy inputcould produce more to energy consumption intheUSA.Aseach growth from resource consumption that successful decoupling ofeconomic The implication ofthe rebound effect is increases inresource use. productivity gainswilllead to absolute framework, atleast aproportion of is that,withoutachangeinthepolicy The implication oftherebound effect increases theabsolute useofresources. steam engines–sostrong thatiteven occasionally, asinthe case withcoal and to risksfrom resource scarcity –or,very of theresource savingsreduce exposure It can bevery weak –sothatalmost all efficiency actingonthemarket economy. strengths oftheincentives for resource dependent onthepoliciesinplace andthe different ineachsituation–because itis The strength oftherebound effect is 2007 Tal, and Rubin Source: consumption. efficiency increases butsodoesenergy Figure 2.2 2.2.4 Therebound phenomenon:energy active choice Choosing decoupling isan 40 technologies, opportunities decoupling 2 and policy options grows, oronly relatively –sothattherate use ofresources absolutely asacountry degrees. Decoupling can eitherreduce the growth from different resources to different Countries can –andhave –decoupled their physical environment. within theconstraints ofthechanging efficiency andaneconomy thatoperates targets for greater industrial resource unchecked resource depletion andsets recognises theconstraints to growth from China’s 2011twelfth Five-Year Plan (The Resource EfficiencyAlliance, 2011). than thatoftheUSandEUcombined been estimated bysometo begreater more resource-productive hasalready China’s investment inmakingitseconomy risk ofsupply disruptions)orfood. resources (includingminerals atparticular their useofenergy, freshwater, material they wantto reduce waste –for example in decouple. Countriescan choosewhere resource-saving effect ofanyefforts to system appearlikely to reduce the the interactions inourcomplex economic intentional policychange.Withoutthis, will require clarityofpurposeand for OECDcountries isshown to have been in Figure 2.3,where total water abstraction decoupling”, andisillustrated graphically decoupling” andthesecond ”relative The first oftheseiscalled ”absolute lower thanthegrowth itself. of increase ofgrowth ofuseresources is natural life supportsystems, absolute maintain stable economies andglobal, The trends inChapter 1imply thatto increasing resource use. systems from current patterns of the world’s economic andenvironmental reduce someofthegreatest risksfacing of decoupling thatwould benecessary to take abroader view to look attheextent implemented wisely. However, we can also is advantageous for acountry when It appears thatanydegree ofdecoupling less thanGDPgrowth since 1990. absolute abstraction increasing atarate relatively decoupled from growth, its water for publicsupply hasonly been almost absolutely decoupled before), but absolutely decoupled from 2005(and and GDP,OECDnations(OECD, 2011b,p.78) Figure 2.3 For example, to meettheIPCC’s productivity gainspreviously seen. 2010), amuchgreater rate thanresource current resource inputs by2050(WBCSD, between 25percent and10percent ofits unit ofproduction isproduced using four to 10by2050.Thisimpliesthateach in aggregate resource efficiencyoffactor which pointsto theneedfor anincrease Council onSustainable Development, is supported bytheWorld Business import from othercountries. Thisanalysis embedded inthegoodsandservices they production), includingalsotheresources per cent oftoday’s material usage/unitof for OECDcountries (resulting injust 20 productivity by2050would be required (Weizsäcker etal.,2009)intotal resource approximately afactor five improvement differ greatly byresource andcountry – For resources –althoughpressures decoupling would berequired. Freshwater Abstraction by MajorUse 41 technologies, opportunities decoupling 2 and policy options 27 change. TheIPCC’s FifthAssessment minimise theriskofdangerous climate cent by2020and80percent by2050to by 2015,andthenreduce by25-40per (warns thatglobal emissions needto peak (The IPCC’s Fourth Assessment Report per cent eachyear. to have already peaked andbereduced by7 intensity oftheglobal economy would need of dangerous climate change,thecarbon recommended targets for reducing therisk

OECD countries would need to reduce at a faster rate togivemoreroom afasterrate OECDcountrieswouldneedtoreduceat absolute decoupling. developing countriestoraiselivingstandardsbeforetheytoostartachieve 27

effective actionto absolutely decouple. need to make anactive choice to take The implication isthatcountries would is relative decoupling) (Stern, 2006). more than2-4percent perannum(which have rarely increased energy efficiencyby Review pointsoutthathistorically nations would require intentional action:theStern intensity impliesabsolute decoupling. This 7 percent yearly improvement incarbon growing atless than7percent ayear, a confirms thesefindings)For anycountry Report, publishedinOctober 2013,also 42 technologies, opportunities © Shutterstock.com decoupling 2 and policy options R 28 productivity. They indicate thatfor nearly currently usedto greatly increase resource some techniques thatare available or highlights examples oftechnologies and less, resource productive. Thechapter future investments thatare more, or decision-makers can choosebetween that economies, firmsandindividual This chapter is designedto illustrate range ofresource consuming activities. are already available, rightacross the very significant resource productivity gains Technologies andtechniques thatbring Indeed, itappears to bealmost ubiquitous.

This partofthereportisbasedsignificantlyonresearch anddraftingby and David Sparks. and David Edge Project, namelyKarlson ‘Charlie’ Hargroves, Desha, Cheryl Angie Reeve received researchandeditorialsupportfromthe members of The Natural Factorpublication Exchange. Five Climate andanfortheChicago Ithasalso Dr MichaelSmith(ANU)forthisreportandpreviously fortheco-authored 3 better resource management. that bringscost-savings through untapped potential for decoupling emarkably, there exists very large Allowing Significant Decoupling Technological Responses 29 reported. financial return ofaboutUS$300,000was was less thanUS$5,000while anannual for implementing theserecommendations switching. The total investment required peeling process, water treatment andfuel a seriesofrecommendations onits cent duringthesameperiodbyadopting while increasing theproduction by8per material useand 68percent ofwater use, 12 percent ofenergy use,8percent of is agoodexample. RDCIcould reduce Industry (RDCI)inMaspotha,SriLanka The Rathkerewwa Desiccated Coconut production orconsumption. be more resource-productive methodsof development ofacountry, there appearto productivity. Whatever thelevel of potential thatisholdingbackresource every country, itisnottechnological

For details, seehttp://www.unido.org/fileadmin/user_media/Services/ [accessed 12th 2014] April Environmental_Management/Cleaner_Production/RECP_SriLanka.pdf 29

28

43 technologies, opportunities decoupling 2 and policy options -0.5 -1.0 0.0 3.0 0.5 2.0 3.5 2.5 7.0 land, food, water andsteel. cost efficiencyofinvestments inenergy, the areas ofsavingpotential, basedonthe The shadedblocks provide anindication of resource useinFigure 3.1–illustrate this. as estimated cost curves for reduction of McKinsey Global Institute’s work –shown some ofthekey resources. Theresults of some oftheavailable technologies for opportunity can befound byreviewing An ideaofthescale anddiversity ofthe Source: McKinsey Global Institute, 2011 2011 Institute, Global McKinsey Source: Figure 3.1 1.0 1.5 $ spentfor implementation per$total resource benefit Cost e ciency ofInvestment INVESTOR PERSPECTIVE,2030 3.1 0 *1 —Basedoncurrent prices for energy, steel andwater at adiscount rate of10per cent perannum,Allvalues are expressed in2010 prices Iron andsteel -electricarc furnace improvemnts to light-emittingdiode-commercial Lighting switch from compact flourescent Prevention oflanddegradation Electronics -consumer, residential Electronics -o ce, commercial The widespread opportunity Mappingtherange ofopportunities for resource productivity gains. basic retrofit, commercial Building envelope — Enhanced oilrecovery Appliances —residential 500 techniques Improved irrigation water leakage Municipal shift freight Road low politicalrisk,highinfratructure Smallholder yields—developing countries, 1,000 Higher-strength steel —construction, columns andbeams Higher-strength steel —construction andrebars E cient motor vehicle airconditioners Heavy-duty vehicle —advanced dieselimprovements Public transportPublic —buses Light-duty vehicles electric Light-duty vehicles gasoline—plug-inhybrid 1,500 30 only private returns. a country’s economic goals,rather than to reflect how theinvestments perform for prices andasocialdiscount rate asaway per cent, ifadjusted for subsidies,carbon internal rate ofreturn ofgreater than10 Ninety percent oftheopportunitieshadan year by2030,ontheassumptions used. of US$2.9trillionto US$3.7trillioneach add upto aresource savingspotential technologies andtechniques surveyed In total, theopportunitiesfrom the

high politicalrisk,low infrastructure Smallholder yields—developing countries, currentprices. than10%IRRat And 70%oftheopportunitieshadagreater Building envelope —basicretrofit, residential high politicalrisk,low infrastructure Commercial yields—developing countries, Public transportPublic —busrapidtransit Public transportPublic —metro 2,000 processing, packinganddistribution Food waste reduction —developing countries, Other industry energy e ciency Aviation e ciency 30

2030 savings, $billion Total annualresource benefit 2,500 Energy Water residential envelope —retrofit, Building builds residential new High-e ciency Land Steel 1 44 technologies, opportunities decoupling 2 and policy options metals, water, soil,bioticmaterial and of resource productivity opportunitiesfor 1970s. Thischapter alsopicksexamples been agreater focus onefficiencysince the from energy efficiency,where there has Some ofthemost striking results come measures tryingto increase water supply. payback timesof10years or more for side (efficiency)measures andendupwith payback timecurves allstart withdemand sold atanadequate price). Strikingly, the vicinity offive years waste water treatment tend to beinthe for investments for water efficiencyand and generating less waste. Payback times from usingraw materials more efficiently year. Themajorityofthesesavingscome with paybackperiodsoflonger thanone savings could berealised from expenditure Afurther£33billionperyear ofannual low cost (Hollins,2011). efficiency measures that are eithernoor around £23billionperyear from resource business are estimated to beable to save short paybackperiods.For example, UK resource savingscan bemadewithvery Other evidence alsosuggests thatmany 32 31 systems cent (factor two-five) for most technical appears to beintheorder of50-80per for energy through energy efficiency The technical potential to reduce demand productivity inmore thanoneresource. that simultaneously improve resource – come from actions ortechnologies Rathkerewwa Desiccated Coconut Company many oftheopportunities–like the these technologies are resource specific, resources from waste. Althoughsomeof

3.2 Since the late 1980s, Sincethelate beenarangeofdetailedstudies therehave Onthebasisofsourcesincluding: Water ResourcesGroup(2009). achieved by2040-2050. For see: furtherinformation Smithetal., 2007. reduce theintensityofgreenhousegasemissions between40-80%tobe existingtechnologiescan that comprehensive guidanceastowhichshowing providing businessandgovernmentsaroundthe world withdetailedand Technologies to save energy 32 . 31 (provided water is countries could cuttheirannual Research indicates thatdeveloping saved byintroducing suchchanges. per cent ofglobal energy usecould be efficiency technologies found that73 and applying “best practice” energy in buildings,vehicles andindustry et al.,2011)analysing energy use Another recent research study (Cullen (Weizsäcker etal.,2009). hospitality, industry andtransport buildings, agriculture, food and water) efficiencyinsectors including: per cent improvements inenergy (and currently achieving between 60-80 efforts around theworld whichare report’s authors researched current A team whichincludedseveral ofthis greenhouse gasemissions. in thisfigure –corresponding energy consumption and–asshown the role efficiencycan playinreducing Institute, 2008).Figure 3.2illustrates return of17percent (McKinsey Global generating average internal rates of demand growth byatleast halfwhile through 2020could cut global energy energy productivity of$170billion Additional annualinvestments in lighting andproduction technologies. selecting lower energy-consuming improving insulationinbuildings,and energy-efficient cars andappliances, The opportunitieslieinchoosingmore energy consumption ofChinatoday. an abatement equivalent to theentire than itwould otherwisehave been– consumption some22percent lower next 12years. Thiswould leave energy half from 3.4to 1.4percent over the energy demandgrowth bymore than 45 technologies, opportunities decoupling 2 and policy options reductions intheenergy intensity of which now enable upto 50per cent significant advances have beenmade management ofcrushingandgrinding Mining andminerals: application indeveloping countries. processing industries, suitable for fossil fuelproductivity inkey resource- selection oftechnologies thatcan improve The following sectionsummarisesa 2009) IEA, (Source: Abatement Strategies. Figure 3.2 33 furnaces, preheating and post- process control, oxy-fuel burners, DC-arc steel (includingoptionssuchasimproved furnace system thatprocess recycled switching to astate oftheartelectric arc by usinginnovative processes suchas achieved inthesteel processing industry cent ingreenhouse gasemissions can be processes, reductions of more than80per Steel: technology withco-generation. smelting byusingadvanced furnace intensity ofzinc,tin,copper, andlead up to 40percent reductions intheenergy Enabling technologies alsoexist to achieve sector (Pokrajcic and Morrison,2009). crushing androck grindinginthemining

See AusmeltTechnologies at 2014. technologies/Smelting/Ausmelt-smelting-and-converting/, 3.2.1 Compared to inefficientsmelting International Energy Agency–Carbon fossil fuelconsumption Technologies directly reducing http://www.outotec.com/en/About-us/Our- Optimal 33 accessed 12 April 12 April accessed reduce theoverall greenhouse gas silicate (geopolymer) cement thatcan would come from theuseofalumino- 2002). However, thegreatest reductions and Mahasenan,2002;KimWorrell, at least 30percent globally (Humphreys cement manufacture can bereduced by used incurrent methodsofPortland Cement: productivity (Liedtke andMerten, 1994). productivity butalsomaterials andwater arc furnaces notonly improves energy high levels ofrecycled steel inelectric with preventative maintenance. Using and distribution between processes along management systems for energy recovery options suchasenergy monitoring and combustion processes) andimplementing 34 in thesector globally have decreased (IPCC, 2007).Since 1990, CO sourcing ofenergy from biomass sources through co-generation andincreased efficiency measures, power recovery (AF&PA, 2004),largely through energy than 50percent between 1972and2002 pulp andpaperindustry declinedbymore Paper andpulp: use for construction. by 40percent are already incommercial reduce greenhouse gasemissions perton durability. Other innovative cements that Portland cement andmayhave better cement shouldcost less to produce than commercialised atlarger scale, geopolymer and greenhouse gasemissions. efforts onreducing energy consumption of thesixkey industries onwhichto focus identified cement manufacturing asone Council for Sustainable Development has (Davidovits, 2002).TheWorld Business process emissions ofcarbon dioxide lower kilntemperatures andhasnodirect on formulation variations, asitrequires et al.,2007;Duxson2008)depending compared to Portland cement (Duxson emissions oftheconcrete by80percent,

CementSustainabilityInitiative,WBCSD (undated) org/ , accessed12 2014.April Research shows thattheenergy Fossil fuelusebytheUSA 2 emissions http://www.wbcsdcement. 34 Once 46 technologies, opportunities decoupling 2 and policy options intensive distillation processes. Useof membrane technologies to replace energy heat andpower, aswell asseparation exchangers to capture, recover andreuse catalysts, co-generation andheat this sector: chemical process innovation, savings andgreenhouse gasreductions in of technologies enable significant energy emissions profitably (Bayer, 2004).Arange 63 percent reductions ingreenhouse gas based thinktank, Bayer hasnow achieved undertaken bytheClimate Group, aUK Chemicals: According to research cycle system withahigh efficiency. combusted inagasturbine orcombined generate asynthesisgas(syngas)thatis lignifying chips,andcan beusedto Black Liquorisaby-product ofde- technologies (Worrell andGalitsky,2004). Gasification-Combined Cycle (BLGCC) exporters through theuseofBlackLiquor new millsto become renewable electricity also hasthepotential inbothexisting and investing insimilarmeasures. 2006), and40percent inCanadathrough 20 percent inAustralia (Prosser etal., by approximately 25percent inEurope, 35 through theuseofhigh-efficiencymotors, consumption can be very greatly reduced motors, anditisestimated thatenergy influence thecomparative efficiencyof of “highefficiencymotors”. Manyfactors production hasresulted intheavailability in manyaspectsofmotor designand et al.,2002).Significant improvement materials processing andhandling(Turton pumps, fans, aircompressors and cent ofindustrial electricity use,driving account for approximately 60-80per Electric motors: sectors ofindustry andsociety. to greatly reduce resource useinother innovative chemicals hasthepotential

FPAC, at available Report_2009-e.pdf 3.2.2 electricity inindustry Technologies directly saving http://www.fpac.ca/publications/Sustainability_ , accessed12 2014.April Electric motors can 35 Thesector years (CADDET, 1995). a typical paybackperiodofoneto three potentially save 28-50%ofenergy use,with 2011). High-efficiencymotors alone could demand by10%(Waide andBrunner, approaches could reduce global electricity The IEAfound in2011thatusingthese Exchange, n.d.),andappropriate sizing. pump andthrottle valve (Energy Efficiency including themotor, shaftcoupling, loadings, optimizingthewhole system (Turton etal.,2002),matching design precisely control theelectricity frequency the useofavariable speed drive to per cent ofthecountry’s total electricity in industry inChinaaccount for around 60 CASE STUDY kWh ofelectricity peryear inthis oilfield. the potential to save more than400million savings produced inthispilot study, there is 486,000 yuan(US$70,350).Based onthe service life is15years, savingatotal of investment was1.6years. Theestimated the paybackperiodfor recovery oftheinitial savings of32,600yuan(US$4,700).Hence, being 0.45yuan/kWh,thisresulted inannual (US$7,600), andwiththeprice ofelectricity cost for thesemotors was52,500yuan power savingof70,920kWh.Theinvestment power savingof5,910kWhandannual 13.2 percent. Thisequates to amonthly however theaverage power saving rate is previous motors (0.84percent higher), motors isonly marginally higherthanthe efficient motors. Theoutputwiththenew savings, several motors were replaced with To test thepotential for energy andfinancial fuel saving(Schröder andTuncer, 2010). year, revealing anenormouspotential for operating for onaverage 7,200hours per high power consumption andlow efficiency, there were 14,000motors operating with were usedbymotors. Anauditrevealed that (kWh) peryear, ofwhich 3.11billionkWh consumption was7billionkilowatt hours largest oilfieldinChina,thetotal power taken, however. For example, inthesecond gains withmotors. Someactionsare being of awareness ofthepotential efficiency the industry. There isgenerally alow level international best practice, dependingon of thesemotors is10-30percent below consumption. Theoperational efficiency –CHINA: Electric motors used 47 technologies, opportunities decoupling 2 and policy options majority oftheseresiding insouthAsiaor still lackaccess to electricity, withthe that approximately 1.5billionpeople identified bytheWorld HealthOrganization, This hasbegunto tackle theproblem (Portela etal.,2010). of lightingwithrenewable power sources people bycoupling theseefficientforms they provide goodqualitylightto more across theworld. Indeveloping countries, LED lampsare increasingly beingused efficient lightingtechnologies suchas (Portela etal.,2010).Thesenew, highly efficient thanincandescent lamps generally around 80percent more Light-emitting diode(LED)lampsare cooling demand(IESNA;2001). to account for upto 15-20percent of ventilating andcooling systems, estimated places additionalload on building generates waste heat,whichsubsequently (IEA, 2006a).Additionally, electric lighting proportion ofenergy useinbuildings global electricity use,andamuchhigher is responsible for around 19percent of Energy-efficient lighting: provide power for theefficientlamps. pedal-powered generators may beusedto pico-hydro generators, andhand-or polluting. WithLEDs,photovoltaic systems, (Mills, 2005),thatare inefficientandhighly kerosene, dieselandbiomass for lighting supplies, people rely onfuelssuchas Without access to modernelectricity sub-Saharan Africa (Legros et al.,2009). light atacost equivalent to kerosene. households to benefitfrom higherquality of thelightingsource allowed more this case, increasing theend-useefficiency installation ofLEDlamps(Mills,2002).In able to provide lightto 28housesafter the energy to three households,wasinstead in Nepal,thatpreviously suppliedlighting CASE STUDY – NEPAL: Apico-hydro system Globally, lighting 2007). Appropriate inclusionofwindows lighting qualityfor occupants (Smithetal., artificial lightingandprovide apleasing heat gainreduce or eliminate theneedfor daylight while avoiding glare andsolar design principles thateffectively utilise sensors, andeffective task lighting.Passive as lightingcontrols, occupancy/daylight strategies withsimple technologies such achieved bycoupling natural daylighting zones (Levine etal.,2007).Savingsare cent, andupto 40-80percent inperimeter consumption intheorder of10–60per reductions inannuallighting energy Effective daylightingstrategies can deliver environment for building occupants. in buildingswhile providing abetter can significantly reduce useofenergy in conjunction withdesignprinciples Energy-efficient technologies used (Commonwealth ofAustralia, 2011a). cent, leading to total savingsof90percent deliver furtherenergy savingsof5-10per emerging lightingcontrol technologies can high-efficiency lightingtechnologies with over time(Hansen,2009).Combiningthese lighting ispredicted to furtherimprove lighting. Performance ofhigh-efficiency for energy andmaintenance ofstreet lamps alsoreduce municipalexpenditure through longer service lives. Thesenewer as well asreduce resource consumption dramatically reduce energy consumption, such asfluorescents andLEDscan New andemerging lightingtechnologies, associated greenhouse gasemissions. significantly to cityenergy demandand lighting: Energy-efficient street andtraffic 1997) andschools(Plympton etal.,2000). productivity ofoccupants inoffices (Abdou, lighting hasalsobeenlinked to moodand consumption andenergy use.Adequate day and therefore reduce bothresource electric lightingover thelife ofthebuilding These technologies reduce theneedfor payback periods(Singhaletal.,2009). to give highperformance withsatisfactory ducts, andlighttubes,have beenshown technologies suchaslightshelves, light and skylightsinconjunction withsimple Street lightingcontributes 48 technologies, opportunities decoupling 2 and policy options emissions by39,000tonnes (Soloman and is estimated to have alsoreduced CO reduced maintenance. Theprogramme million) dueto electricity savingsand deliver savings ofZAR23.8million(US$2.9 programme periodandare expected to intersections willberetrofitted during the Sebitosi, 2007). Atotal of1,200majortraffic the samelightingservice (Soloman and than thelampsthey replaced, yet produce consume almost 90percent less electricity per year withLED lamps.TheLEDlamps programme, retrofitting 120intersections conducting a10-year traffic signalupgrade of CapeTown inSouthAfrica iscurrently CASE STUDY a four-year paybackperiod(Winer,1998). the citymore thanUS$430,000annually with tonnes ofCO since beenretrofitted, avoiding 1,440metric Approximately 20,500traffic signalshave traffic lightswithLEDsignalsin1996. replacing traditional incandescent requirements. TheCityofDenver began while reducing energy useandmaintenance light astraditional incandescent bulbs applications, providing thesamelevel of now often beingusedintraffic light CASE STUDY control, soasto furtherreduce energy use. controls to allow remote monitoring and technologies in combination withlighting a citywidelightingretrofit usingLED gas emissions. Thecitythenundertook electricity consumption andgreenhouse produced high-quality lightwhile reducing LED lightsmetappropriate standards and lighting retrofit (CityofSydney, 2011).The was possible, andhasled to acitywide greenhouse reductions of40percent lights found substantial energy and trial to test theviabilityofLEDstreet emissions reductions of50percent. A achieve thecity’s targeted energy and technologies asakey measure to help investigated high-efficiencystreet lighting lighting (CityofSydney, 2014). Thecouncil annual electricity usecame from public Sydney found thatonethird ofthecity’s CASE STUDY Sebitosi, 2007)). 2 –AUSTRALIA: –SOUTHAFRICA: –USA: equivalent (CO LEDlightsare 2 The cityof e) andsaving The city 2

is significant asfor heavytruckstravelling and current off-the-shelftechnology. This are possible for bothwithdesigninnovation estimates that50percent improvements resistance. TheRockyMountain Institute the aerodynamics andreducing rolling of key measures, includingimproving can begreatly improved through anumber (WBCSD, 2004).Thefuelefficiencyoftrucks more thandouble over thenext 50years Emissions from thissector are forecast to gas emissions for thetransport sector. contribute 24percent ofgreenhouse Trucking fuelefficiency: be reduced through acombination of The rolling resistance ofthetruckcan induce minimumdrag. trailers witharounded leading edgewill for trailers, designingsmooth-sidedvan Truck Company,2006,pp.7-10).Similarly, mirrors (Cummins,2006,p.10;Kenworth (3-4 percent reduction) thatcan replace cent reduction) andtruckvisionsystems handles, aerodynamic mirrors (1-2per system, recessed doorhinges, grab per cent reduction), concealed exhaust trailers) and under-hoodaircleaners (1-4 (plates whichare mounted onthesidesof extenders (1-7percent reduction), skirts slanted windshield,curved windshield, side flush headlights(0.5percent reduction), bumper (2percent reduction), airdam, per cent reduction), round corners, aero (1-3 percent reduction), sloped hood(2 10 percent reduction), chassis fairing such asaddingafullroof deflector (5- to thefreight truckandtrailer form, requires acombination ofmodifications Achieving close to thesetheoretical limits the power requirements. drag can beresponsible for more thanhalf 100 kilometres perhour,theaerodynamic along interstate highways atspeedsover 3.2.3 and ships transportation: trucks fossil-fuel demandin Technologies for reducing Freight trucks 49 technologies, opportunities decoupling 2 and policy options greenhouse gasemissions andcontributes responsible for 2.7-5percent ofglobal to thescale oftheindustry, shippingis option (Macintosh, 2007).However due as itisarelatively low-energy transport means oftransportation for many goods Shipping efficiency: al., 2004). are estimated to beachievable (Lovins et efficiency, improvements of70-80percent and downsizing andenhanced engine aerodynamism, reduced rolling resistance efficiencies created through improved fuel savings.Collectively, bycascading this reduced capacity, furtherproducing can beresized andredesigned to match reducing therolling resistance, theengine optimizing theaerodynamic form and of thetruckhave beenreduced by inflation). Once thepower requirements behavioural practices (truck speedandtyre fuel savings),tyre andaxle alignmentand optimizing tyre configuration (4-6percent the amountofsteel usedintheframe), alternative floor materials andreducing weight ofthetruck(for example byusing cumulative factors, suchasreducing the unloading containers from cargo ships, logistics operations, suchasloading and improvements inassociated container of 7-15percent (Boyd, 2012).Additional and resulted in greenhouse gasreductions This innovation wastrialled onfive vessels of shipsaidsbuoyancy andreduces drag. The inclusionofanaircavity inthehull of approximately 9percent (Boyd, 2012). around theworld anddelivered CO have beentrialled onmore than300vessels gas reductions. Low-drag hullcoatings all contributing to energy andgreenhouse wind-assisted propulsion technologies are and theutilizationofparafoils andother propeller technology, waste heatrecovery, coatings, airfloatation devices, advanced greater energy efficiency. New low-drag hull achieve better environmental outcomes and innovations isbeingusedinthesector to (Kleiner, 2007).Arange oftechnological heavily to airpollutionincoastal areas Shipping is a primary Shipping isaprimary 2 savings savings potential of40-70percent. are furtherefficiencygains, givingatotal rolling stock, better traffic flow andload efficiency, regenerative braking, lighter achieved inthissector through energy that significant efficiencies could be efficiency. TheUKCarbon Trust argues opportunities existing to furtherimprove trucking (Kamakaté,2007),withsignificant to 66-80percent more efficientthan by road, withfreight estimated to beup is muchmore efficientthantransporting Transporting passengers andfreight byrail 3.2.4 to abankofresistors where theenergy is Usually theenergy from braking isdirected in order to slowly lower thecontainers. system must generate significant resistance is energy intensive because thebraking (Pauli, 2011).Lowering thecontainers while extending thelife ofmechanical parts has cutenergy consumption drastically innovation byflywheel manufacturer Vycon to freight trains andtrucks.However, an between portsandcontainer shipsandthen utilised to move theenormouscontainers powered byonboard dieselgenerators, are container transportation. Mobile cranes, represents asignificant cost involved in requires large amountsofenergy andthus unloading ofcontainers from cargo ships CASE STUDY the system. eliminating frictionandmechanical wear in flywheel inamagneticfield,essentially bearings. Thebearingdesignlevitates the generators dueto theutilizationofmagnetic design reduces noiseandprolongs thelife of 30-35 percent (Pauli, 2011).Inaddition,the innovation reduced energy consumption by rotational energy intheflywheel. This simple by converting itskineticenergy into which slows thedescent ofthecontainer The designisaform ofregenerative brake, stored for useduringthenext container lift. could beharnessed usingaflywheel and energy generated bylowering thecontainers dissipated. Vycon realised that thekinetic passengers transportation: rail androad fossil-fuel demand in Technologies for reducing –VYCON: The loading and 50 technologies, opportunities decoupling 2 and policy options infrastructure more efficiently (UKCarbon management can assist inutilizingrail on better traffic flow andload factor consumption (Jochem,2004).Focusing savings withoutneedfor further resource logistics mayalsodeliver significant energy performance (Jochem,2004).Improved by 25percent dueto improved aerodynamic transport hasbeenshown to reduce drag covers over emptycontainers during significantly to fuelconsumption. Adding transport ofcoal, emptycars can contribute be quite effective. For example, during (Jochem, 2004).Simple alterations can still possible to reduce drag andfriction of trains isalready relatively good,itis Although theaerodynamic performance American Railroads, 2009). increased only marginally (Association of almost doubled since 1980while energy use volume offreight transported byrail has become more efficient.IntheUSA, the last few decades aslocomotives have gains have already beenrecognized over (UK CarbonTrust, n.d.).Large efficiency fuel cell enginesandrenewable electricity factor management,biodieselandhybridor Railroads, 2009). and location (Association ofAmerican as thetypeoflocomotive, weight, gradient, fuel efficiencybyconsidering factors such used to helpoptimizespeedfor maximum software andGPStechnology can alsobe savings ofmore than6.3percent. Simple such asreduced idling timecan deliver Trust, n.d.).Othermanagementpractices, greater motor efficiency. weight, effective useofbraking energy, and these savingsmainly through lighter overall Group, 2004).TheE231 seriesachieves metropolitan area commuter train (JREast than the103series,whichismajor E231 series,are 50percent more efficient design since 1993.Theirlatest trains, the the energy efficiencyofpassenger train applying arange ofstrategies to improve manufacturer JREast Group hasbeen CASE STUDY – JAPAN: Japanesetrain use lower strength steel, withChinausing China anddeveloping countries tend to beams (McKinsey Global Institute, 2011). weight ofsteel columns and19percent in steel achieves a32percent reduction inthe company estimates useof higherstrength ArcelorMittal, theworld’s largest steel concrete, beamsandcolumns saves steel. higher strength for re-enforcement of Higher strength steel: the extent ofpotential savings: used inconstruction. Three examples show Around halfofglobal steel iscurrently and Cullen, J.,2012). reinforcement inconstruction (Allwood, J. cent ofthemass ofsteel used globally for Using thesetechniques could save 15per implemented, for example byQubeDesign. technology isalready beingcommercially designed for thebuilding’s needs.This “carpets” ofreinforcement bars thatare offsite, computer-controlled fabrication of the construction’s design.Onesolutionis construction site donottake into account estimations of thesteel neededonthe design needs.Thiscan bebecause simple be neededto meet buildingcodes and more putinto constructions thanwould is frequently excessive, with15-30percent buildings andinfrastructure constructions mass ofsteel putfor reinforcement in Steel useoptimisation: and Cullen, J.,2012). of thecosts oftheusesteel (Allwood, J. tonnes ofsteel ayear, andsave 20percent higher strength steel could save 105million production.) Even partialglobal switching to per cent ofglobal steel reinforcement bar (For example, Chinacurrently consumes 60 countries’ useofsteel isvery significant. This offers avery goodopportunityasthese strength ofsteel averagely usedinEurope. steel for reinforcement that istwo thirds the 3.3 3.3.1 and minerals Technologies savingmetals Steel enduseinconstruction Using steel with Additionally, the 51 technologies, opportunities decoupling 2 and policy options savings. pressed outcan realize significant metal organization ofthedifferent shapesto be to usefor othercomponents. Intelligent metal thatare notwanted andtoo small necessarily leaves behindpieces ofsheet different sizeandshapefrom sheetmetal (or “blanking”)ofmetal components of Blanking sheetmetal: (Allwood, J.andCullen, J.,2012). of steel elements instead ofasolidbeam (or thickness) orceiling joists madeofaweb includes usingbeamswithvariable depth offering thesamephysical properties. This of thebeamsbyusingless steel while construction could come from redesign steel usedinfloor andceiling beamsfor that savingsofmore than 30percent of Cambridge University intheUKsuggest Beam andjoist redesign: Source: Closing the Eco-Innovation Gap (Eco-Innovation (Eco-Innovation 2011) Gap Report Annual Eco-Innovation the Observatory Closing Source: components from sheetmetal. Figure 3.3 3.3.2 Alternative blankingpatterns for metal Reduction inmetal use Thepressing out Estimations from Follet, 2003).Bambooisusedfor many in onaverage three years (Jayanetti and faster thananyotherharvestable timber, globally, reaching maturitythree times one ofthefastest growing woody plants Substitution withbamboo: relatively high,reaching 370megapascals, Indeed, thetensile strength ofbamboo is resistant (Jayanetti andFollet, 2003). are inherently windandearthquake that properly constructed bamboobuildings including itsstrength andlightweight, such Bamboo hasnatural structural advantages, rotations (Jayanetti andFollet, 2003). sustainably harvested inthree- to five-year Due to arapid growth rate, bamboocan be two years ofbeingplanted (INBAR,2010). to reduce soilerosion by75percent within spreading roots, bamboohasbeenfound growing suchassoilstabilisation; due to soil types,andprovides benefitswhile can grow inmost climaticconditions and in relatively poor,rural areas. Bamboo viable construction material, particularly 2003). Bambooiswell-established asa waste generation (Edwards andBennet, of material extraction, and50 percent of responsible for asmuch50percent It isestimated theconstruction sector is equipment, scaffolding andconstruction. furniture, windturbineblades,sporting bio-oil, for food, paper,clothing, co-firing inpower plants,producing less sustainable resources, suchasfor purposes thatreduce consumption of per cent. system, metal usecould bereduced by12 shuffling andagoodproduction planning variety ofshapes.Byusingcomputer-driven 100 different customer orders, withawide tonnes ofsheetmetal adayfor almost for external customers. Itusedupto 40 including pressing outofsheetmetal parts Germany providing engineeringservices, Deutsche Mechatronics GmbHoperates in CASE STUDY: DEUTSCHEMECHATRONICS. Bamboois 52 technologies, opportunities decoupling 2 and policy options least several decades (Yipingetal.,2010). can sequester thebamboocarbon for at construction andotherdurable purposes plant decomposes, theuseofbamboofor atmosphere andrereleasing thisasthe cycle, rapidly absorbingcarbon from the would normally bepartofashortcarbon as itgrows (Ghavami, 2005).While bamboo compared to bamboo,whichabsorbsCO are emitted to produce oneton ofsteel, energy thanbamboo.Two tons ofCO found thatsteel requires 50timesfor materials commonly usedinconstruction bamboo perunitofstress compared with The energy neededto produce 1m3of is sixtimesgreater thanthatofsteel. strength to specificweight ofbamboo steel (Ghavami, 2008).Theratio oftensile making bambooanattractive substitute for provide structural support(Ghavami, 2008). external joinery,to reinforce concrete andto walls, large laminated sectionsfor usein panels able to beusedasfloor boards and the construction industry, includingasflat and sophistication intheuseofbamboo INDUSTRY: CASE STUDY – concrete (Ghavami, 2005). found to outlast steel whenusedto reinforce income (INBAR,2010).Bamboohasbeen the bamboothemselves to maximizetheir countries can cultivate, process andmarket and processing, local producers indeveloping growing demand,andlow-tech harvesting countries. Dueto thevariety ofenduses, jobs andincomes, particularly indeveloping bamboo production can provide sustainable materials (Ghavami, 2008).Furthermore, and useofmore industrialized construction to training orfacilities for theproduction local construction workers withoutaccess costs, andcan enhance jobprospects for transportation requirements andconstruction in comparison to steel. Thisreduces to cure andprocess bamboo,particularly a low degree ofindustrialization isneeded available andquickto grow. Further, only developing countries asitischeap,locally particular anattractive buildingmaterial in materials (INBAR, 2010).Bambooisin difficult to achieve withotherconstruction domes andothercurved shapesthatcan be As bambooisflexible, itcan beusedto create

There isgrowing application CONSTRUCTION 2

2

36 our economies inthe coming decades. resource productivity improvements across to furthersupport significant energy and continue to reduce itsown impacts,and in regard to thecontribution ofICT to For this reason there are highexpectations computer, theApple II,wassoldin1977. 13) (Factor 1,000)since thefirst personal three orders ofmagnitude(Hilty,2008,p. a unitofICT service have decreased by material andenergy neededto provide efficiency andperformance. Thespace, making astounding progress intechnical technologies (ICT) Information andcommunication

ExtractfromFitcher etal., 2010. to need.Theuse ofbamboopresents design wasflexible andeasily adjusted environmental conditions, andthebuilding stood upto wind,earthquakes andother the sametime,they were sustainable, requirements for affordable shelter. At erect andincorporated alloftheessential or reinforced concrete, were simple to half thecost oftraditional brickblock building systems they designedwere to thatofotherbuildingmaterials. The the life ofthebamboowould beequivalent to show how to designbuildingssothat to thepoorest communities inIndia,and construction thatwould beaffordable even aimed to showcase safe, secure anddurable and education. To thisend,theproject building systems through demonstration promote cost-effective bamboobased designed aproject inIndiato develop and Research andDevelopment Association CASE STUDY food source (Jayanetti andFollet, 2003). harvesting, processing andbuilding)a cultivation and processing), jobs(bamboo through providing alocal industry (bamboo forests) andto enhance thelocal economy erosion, carbon sinkandprotection ofnative environment (habitat for wildlife, reduced the opportunityto also improve thelocal –INDIA: 36 are continuously TheUKbasedTimber 53 technologies, opportunities decoupling 2 and policy options reduced bymore than85percent. the amountofwaste destined for landfills projected underbusiness asusual,and could bemore than three timesthelevel investment, theglobal recycling rate in2050 scale, underascenario ofincreased “green” UNEP research hasfound thatonaglobal of rare earthmetals are currently recycled. waste isrecycled andless than1per cent recycled. Only 15percent ofallelectronic waste produced eachyear isrecovered or per cent ofthe4billiontonnes ofmunicipal recycling rates. Currently, however, only 25 Globally, there issignificant scope to lift properly facilitated. industry can beusedasinputbyothers if of supply for materials. Thewaste ofone provides anadditionaldomestic source and increasing recycling, whichalso This can bedonethrough waste prevention helping to decouple itsresource use. the resource productivity oftheeconomy, reduces resource wastage, whichincreases Reducing thematerial thatanationdiscards in theproducts beingconsumed. Reductions in waste can be found by design Design ofproducts to reduce waste: 3.3.3 cardboard anditsrelated life cycle impacts. Each redesigned blender saves 130gof for blending, choppingandmakingsauces. form partoftheproduct itself,andare used blender waspacked intwo containers that used for sale waseliminated. Instead, the nearly allcardboard packagingpreviously redesigned itsdomestic food blender sothat In oneinstance, Electrodomesticos Taurus CASE STUDY waste streams Saving materials from –PACKAGING REDUCTION:

developing economies. gas emissions. Several oftheseare technology to reduce global greenhouse in 2010,highlightingthepotential for this landfills inthetop 10emittingcountries estimate ofthemethaneemissions from landfill gas.Figure 3.4below shows an capture andbeneficially usemethanefrom Globally, there issignificant potential to greenhouse gasemissions, IEA,2008a) from waste contribute 3percent to total greenhouse gasandglobally emissions fuels. (Methaneitselfisasignificant as well asoffsettheuseofotherfossil can reduce greenhouse gasemissions the 40-60percent methaneinlandfillgas Hence, capturing andbeneficially using purposes suchasheatingandcooking. liquefied, transported anddistributed for industrial applications, andcan alsobe can beburnedinpower stations andfor However, methaneisavaluable fueland cause explosions andnoxious odours. difficult managementissue as itcan methane inlandfillsoften presents a decomposing organic waste. Further, large amountsofmethanegasfrom from landfill: Substituting fossil fuelswithmethane recycling during2013. around 12,000tonnes ofcarpets to feed into material, while thecompany aimsto collect product range now contains recycled More than60percent ofthecompany’s a re-engineering ofthefirm’s supply chain. constantly recycled by2020.Thisrequired to use100percent materials thatcan be and environment criteria, withthegoal are evaluated against 19humanhealth recycled over andover again.Materials substitution to usematerials thatcan be required designchanges,andmaterial for recycling. Puttingthisgoalinto practice the return ofitsandcompetitors’ carpets recyclable, while launchingaschemefor goal to make allitsproducts 100percent commercial carpet maker Desso seta CASE STUDY – Landfillsgenerate CARPET TILES:

UK-based 54 technologies, opportunities decoupling 2 and policy options energy demandgrows. management practices improve, and waste disposalrates increase, landfill p.2) Mexico, Brazil andIndiacan benefitas 2011, (GMI, Developing countries suchasChina, Initiative Methane Global Source: landfills inthetop ten emittingcountries, 2010 Figure 3.4 approximately 480landfillsites inDecember voluntary projects, suchthatthere were capture projects dueto tax incentives and not required bylegislation have landfillgas 1996 Clean AirAct.However even landfills landfills to meetrequirements underthe has beencaptured atthenation’s largest CASE STUDY cogeneration plants. heat for industrial orotherpurposes,in generator, directly usingthegasto provide burning themethaneinathermalelectricity capture and useoflandfillgasfor energy by Protection Agency(EPA) encourages the captured andburned.TheUSEnvironmental of themethaneinlandfillgascan be estimated thatbetween 60and90percent US total greenhouse gasemissions. Itis landfills contributes 1.8percent to the gas (Bracmort etal., 2009).Methanefrom the nation’s landfills,capturing landfill 2008, representing around 27percent of Estimate methaneemissions from –USA: IntheUSA,landfillgas Group, 2009). 40 technologies (2030Water Resources identified 55levers utilizingmore than supply gapinChina’s future water demand means for reducing aprojected demand- For example, onemapofthepotential only gives oneortwo illustrative examples. (Smith etal,2010c),ofwhichthischapter there isusually awiderange ofoptions Within eacharea ofpotential efficiency, 3.4 3.4.1 landfill closure date (GMI,2011). power generating capacity to 4MWbythe There are plansto ultimately increase the generating capacity to 2.5megawatts(MW). will beadded,bringingthetotal electric through direct use.Two additionalengines electricity generation and500tons ofCO gas emissions by37,100tons ofCO project isannually reducing greenhouse 500kW enginewasaddedin2008.The leachate treatment plant,andasecond 2007 to generate electricity for theonsite (kW) reciprocating enginewasinstalled in from existing passive vents. A500-kilowatt of 150extraction wells wasconverted US EPA, agascollection system consisting feasibility investigations conducted bythe 2011, p.3).Following testing andpre- enable landfillgascapture anduse(GMI, landfill inChinahasbeenretrofitted to CASE STUDY resources freshwater andbiotic Technologies saving freshwater extraction Technologies saving –CHINA: TheGauantun 2 e from 2 e 55 technologies, opportunities decoupling 2 and policy options described below. be found inAnnex A,withtwo examples reuse andrecycling oftreated water can improving water efficiencyandincreasing 77 freshwater consumptionp. through 2009, Group, A long list ofthetechnologies to reduce Resources Water 2030 Source: Figure 3.5 halved inIsrael since 1984,while the The useoffreshwater onfarms has with paybackperiodsofless thanayear. developing world (ShahandKeller, 2002) and can bemadeaffordable for useinthe savings can beashigh50-80percent, the crop (Postel etal.,2001).Efficiency yields by20-90percent, dependingon water useby30-70 percent andraise crop water directly to crop roots can reduce surface dripirrigationsystems thatdeliver Spain andtheUSAhave shown thatsub- is high.Farmers inIndia,Israel, Jordan, through evaporation, leakage andseepage of freshwater through thesemethods, or byintentional flooding. Thewaste receives water through openchannels countries, 90percent ofirrigated land (Weizsäcker etal.,2009).Inmany for 70percent offreshwater withdrawals Drip irrigation: ChinaWater Availability Cost Curve Agriculture isresponsible of 5percent losses inGermany and25 between countries, withleakage rates of municipalwater show agreat variance Estimates ofthecurrent rates ofleakage Reducing municipalwater leakage: than transplanting seedlings. sowing seedsdirectly inthefieldrather their irrigations,shoringupcanals, and through a combination ofbetter scheduling cent increase intheirwater productivity benefits. Farmers inMalaysiasawa45per better water managementstill delivers Where dripirrigationisnotappropriate, arid areas (Brown, 2008). increasing thespread ofthistechnology to irrigated land,withChinainparticular technology onjust 1-3percent oftheir India andChinacurrently usethiskindof cropland, withsimilarpotential for China. to profitably irrigate atenth ofIndia’s were estimated, in2001,to beable increase incomes of smallholders and These low-cost solutions are seento used for farming inIsrael isrecycled. farming. More than80percent ofallwater this, alongside therecycling ofwater for climb. Dripirrigationhasplayed arole in value ofproduction hascontinued to 56 technologies, opportunities decoupling 2 and policy options Currently, large-scale industrial monitoring ofwater leakage. easier bytechnologies thatallow remote location ofleaks hasnow beenmademuch required for fixingleaks. Identification and for paybackofthecapital investment or failure to invoice, pointingto thesources revenue for theutilitiesbecause ofleakage produced inIndiancities didnotproduce found thatmore than40percent ofwater Bank’s Water andSanitation Programme (McKinsey Global Institute, 2011).TheWorld into account thesubsidisedprice ofwater) could have a22percent return (even taking Institute estimates thatactioninChina economically attractive: McKinsey Global is sufficiently highto make leak-fixing The value ofwater for municipaluse (McKinsey Global Institute, 2011). municipal water demandbyfixingleaks – Indiacould save 26percent ofits is particularly large indeveloping countries opportunity to reduce wastage byleakage per cent intheUnited Kingdom.The based rotation systems can alsohelp winter cover crops andutilizingmeadow- cultivating perennial crops, employing carbon (CSIRO,2011). Practices suchas closing nutrientcycles andsequestering means ofimproving soilhealthwhile manures andcompost isaneffective carbon through theuseofcrop residues, potential ofsoils. Increasing soilorganic maximizing thecarbon sequestration systems while reducing resource useand to improve thefertility ofagricultural costing little to implement, are beingused techniques, requiring only education and productivity. Simple management resource consumption while maintaining 2011). Manystrategies exist to reduce productive output(JacksonandBerry, chemicals andfossil energy to maintain levels, relying onflows ofresources, diminishing soilbiodiversity and humus agriculture often reduces soilfertility, 3.4.2 soil fertility Technologies protecting restore food sovereignty to communities. soil organic carbon, while alsohelpingto resource consumption andsequester nutrient andenergy flows willreduce maximize thereuse potential oflocal restorative ofecological capital and or permaculture principles thatare farming systems builtuponbiodynamic from monocultures to diverse local Shifting food production systems away organic matter (Lal,2004). also beusedto sequester carbon insoil Furthermore, agricultural systems can of farm energy usage(CSIRO, 2011). realized through better understanding savings of30percent exist andcan be input offertilizer andchemicals. Energy maintain soilhealthwhile requiring less paddocks athighstock density(Cook,1994). involves moving stock through anumberof constantly grazed pasture (Voisin, 1959).This significantly greater thanthatproduced bya the biomass produced inaseasoncould be plants adequate timeto recover meantthat climates, regularly allowing grazed pasture André Voisin showed thatfor wet andcold late 1950s,French farmer andscientist as aform ofpasture management.Inthe controlled grazing” hasbeenlong used CASE STUDY – competing uses(UNCCD,2008). soil qualitycan becomplementary, not source orto sequester carbon andimprove uses ofcrop residues aspotential energy and redistributed to agricultural fields.The is transferred to aninactive carbon pool be sustained andimproved ifthebiomass productivity, andenvironmental qualitycan energy from biomass, agricultural production. While producing renewable sequestration andrenewable energy sustainable soilmanagement, provides atool to combine energy production withbiocharcarbon residues resulting incharcoal and Desertification, “pyrolysis” ofagricultural UN Convention onClimate Changeand CASE STUDY –BIOCHAR: GRAZINGMETHODS: According to the “Time- 57 technologies, opportunities decoupling 2 and policy options land globally. applied to 30millionhectares ofgrazing methods. Themethodshave now been for carbon storage through useofthese IFAD, 2006),indicates significant potential of agricultural landglobally (FAO and grazing pastures comprise 69percent carbon are stored inthesoil,whichas It alsomeanssignificant levels ofsoil soil andneedless water from irrigation. more ofthenatural rainfall isstored inthe able to grow longer indryperiodsbecause This alsomeansplantsandgrasses are of plants(Savory andButterfield, 1988). increased andmore active root systems structure andhydraulic properties and to more soilbiota activity,improved soil The combination ofthesechangesleads just thosespeciesthelivestock prefer. and vegetation isavailable, rather than grazing, livestock eatwhatever grasses Through shortduration andhigh-density and drierclimates ofsouthernAfrica. ideas to grazing systems inhotter Savoury successfully adapted Voisin’s In the1980s,Zimbabwean biologist Allan often leads to harvesting ofbiomass cooking energy needs(IEA,2006b).This agricultural residues –to meet their on biomass –wood, dung, and people indeveloping countries depend Solar cookers: (2010) Milkwood Source: on therighthandside. hand side,andtimecontrolled grazing practices Figure 3.6 3.4.3 Traditional grazing practices ontheleft biotic resources Technology- saving Two-and-a-half billion cook acomplete meal.They can alsobe require less thantwo hours ofsunshineto cook slowly, muchlike aCrockpot and aluminium foil andcosting $10each.They cookers madefrom cardboard and International operates inKenya, providing of biomass to cook food. SolarCookers cost effective, relying onsunlightinstead more thanfactor five efficienciesandare cookers have beenimproved to achieve countries, WHO,2004).Solarthermal leading cause ofdeathinpoordeveloping indoor airpollutionbeingthefourth elevated levels ofindoorsmoke, with million people eachyear from breathing the premature deathsofanestimated 1.6 and soildegradation. (Italsoresults in resource depletion, ecosystem decline beyond sustainable levels, leading to savings for thewater, soil,nutrientsand Reducing food waste hasconsequential storage anddistribution (FAO, 2011). In developing countries itoccurs mainly in in processing packaginganddistribution. developed countries thishappensmainly chain even before itgetsto consumers. In all food produced iswasted along thevalue estimated thatbetween 20-30percent of Food and Agriculture Organization has Reducing wastage offood: timber mass. beams whichcan save two thirds ofthe layers oftimberto replace massive solid Glulam beams,whichgluetogether many timber-saving development ismodern lower qualitytrees. Stillanotherimportant unit offibre, andcan useyounger, softer, conventional ’s product yieldper timber products” have about1.8–2.4times raw timberconsumption. “Engineered provides numerous opportunitiesto reduce Engineered timbers andtimberrecycling technologies (Hawken etal.,1999): forest products –timberenabling Reducing consumption ofbiomass based (Brown, 2008,p.154). used to pasteurize water, which saves lives TheUN

58 technologies, opportunities decoupling 2 and policy options declining. found andthefarming soils’ fertility was longer for firewood andtimberto be growth. Itwasbecoming harder andtaking farming practices andrapid population drought, desertification, unsustainable ago, Nigerhadsevere problems with the case withreafforestation. Forty years asset basecan beprofound –asisoften flows. Theimpactofbuildingthisnatural assets thatprovide services, orresource can alsoinvolve investments innatural Investing innatural assets: systems andtransport infrastructure. this often impliestheuseofcold-storage and transport. Indeveloping countries with technologies) inprocessing, storage widespread useofbest practices (coupled savings can come from improved or are notseenasinnovatory. Muchofthe The technologies to reduce food wastage (McKinsey Global Institute, 2011,p.94). security, aswell asincreased incomes opportunity to improve domestic food stages ofthevalue chain.Itoffers the energy usedinfood production atearlier vulnerable to natural disasters. improved andcommunities are less half anhour. Poverty islower, nutrition of Nigerhasdeclinedfrom 2.5hours to must walkfor firewood intheZinderregion with . Theaverage distance awoman area of7millionhectares wasreplanted Word ofmouthspread thebenefitsuntilan fruit for food. charcoal, foliage for animalfodder and needs. Thetrees provided wood for against crop failure andmeettheirown supplement incomes, provide insurance They became assets thatfamilies usedto topsoil erosion andsoreduced crop loss. water conservation practices, stabilised trees, along withothersimple soiland sorghum, peanutsandbeans.Thegrowing tree saplingswhensowing crops ofmillet, were taught to plough carefully around At thattime,farmers inseveral villages From themid-1980sthisbeganto change. Decoupling complementarities between technologies. enhanced savings,because offavourable technologies incombination willproduce produce greater effect. Sometimesusing technology can beaddedto others, to results: thesavingsorbenefits from one Most technologies produce additive at thesametimefor related issues. It ispossible to useseveral technologies Recycling andGaia,2010). have beenbeyond reach (Green World expensive cereals thatnormally would to sellwood inlocal markets to purchase from malnutritionbecause they were able belt ofNigerreported nochilddeaths in 2005,manyofthevillagesgreen When aregional drought andlocusts hit energy use. can simultaneously reduce water and increasing theefficiencyofhotwater use) that reducing theuseofhotwater (or per cent inChina2000. Thismeans in 2005,25percent inAustralia and27 the EUin2004,11percent intheUSA the world –representing 9per cent in consumption inresidential homesaround for asignificant proportion ofenergy storage hotwater system isresponsible water through thetraditional electric to water derives from heatingit.Heating However, thebulkofenergy userelated intensity ofwater supply. freshwater, would increase theenergy or desalination,ifappliedwidely to save – dripirrigation,water recycling and/ aspects ofsustainable water technologies doubling by2035.Elsewhere, some would result indemandfor water usage that someenergy policyapproaches energy policyandwater useandfound examined thestrong linkagesbetween consumption andlanduse.TheIEAhas has significant impactsonwater biofuels to reduce fossil fuelconsumption For example, theuseofsomeforms of interactions between solutions. In othercases, there maybenegative 3.4.4 Combinations oftechnologies

59 technologies, opportunities decoupling 2 and policy options to bemore energy andwater efficient. 8) 7) 2007) (videoconferencing +very fast trains) (Mui, air transport andalternatives to airtransport 6) 2007) vehicle freight transport (Trucks andRail)(Mui, 5) by 85% nage lighting,suchasLED,cutsenergy usage 4) 3) Efficiency 2) Furnace Steel manufacturing. (IEA,2006) Efficiency 1) albedo reducing air-conditioning loads. of buildingefficiency. Eg:Increasing building (Romm, 2008) and Power Recovery (includingcogeneration) and compressed air (IEA,2011) motor driven systems suchaspumpsandfans and commercial technologies eg:electric for thechoice oftechnologies. Itimplies from economic growth hasimplications techniques to decouple different resources The interaction between technologies or urban water sector (Kenway et al.,2008). entire energy useto supply water to the heating across Australia would offsetthe that savingsof15percent inhotwater emission savings)isgiven bytheestimate energy savings(andalso greenhouse gas An ideaoftherelative scale ofthepotential heat pumps.”(Levine etal.,2007). water systems, suchassolarthermalor and selecting low energy consumption hot hot water systems; recovering lost heat; water; improving thermalproperties of including: reducing consumption ofhot through arange ofcost effective options, can bereduced byatleast 90percent, requirements for domestic water heating The IPCCestimates that:“Energy Energy efficient street, traffic andneonsig End UseFuel Efficiency#5 End UseEfficiency#10 End UseEnergy Efficiency #7 End UseFuel Efficiency#6 Reduce Waste HeatLoss Improve Industrial Technologies Energy Improve Industrial Process Energy – Upgrade andoptimiseindustrial –For instance shiftingto Electric Arc –Designingproducts and +Waste Heat –Non-passenger –Fuel Efficient – Doubling –Doubling - 16) 15) gies. (Romm,2008,IEA,2009and2011Went etal,2008) powered byrenewable energy sources through vehicle to gridtechnolo newable transportation vehicles (cars, vans, motorbikes, trucks, buses) 14) in non-aridareas. (Elliston B,etal2012),(IPCC,(IEA,2011,2009) technologies includingwindpower atsea,solarthermalandgeothermal renewables by2030-2050through theuseofadditionalrenewable 13) ica trolled grazing principally intheSouth–Africa, Australia andSouthAmer 12) of CO 1/3 ofglobal food production), currently responsible for 3.3billiontonnes 11) electricity andreduce water losses dueto evaporation from damwater. structures ontop ofthewater behindhydroelectric damsto generate from sewerage treatment plants.Investing insolarpower generation leakage water efficiency, demandmanagement,methaneto electricity 10) materials efficiency,recycling, methanecapture from landfill(Bahor,2009) 9)

Energy/Water/Materials/Waste Nexus BehaviourChange(Romm,2008) ReducingNon-CO Smartgridtechnologies to enable plug-inhybridorfully electric re Increased soilcarbon storage ingrazing systems through timecon Significantly reduce 1.3billiontonnes ofannualglobal food waste (a Decarbonising water supply and treatment through reducing water Decarbonising theElectricity Sector 2 equivalent emissions. (FAO, 2013)

renewable electricity generation and reducing wastage offood, increased use energy efficiency,water efficiency, This can mainly beachieved through end- of nuclear electricity generation. carbon capture andstorage orexpansion investments infirst-generation biofuels, co-benefits, ascould beachieved by strategies withwater andfood security reduction through usingmitigation decoupling ofgreenhouse gasemission possibility to achieve thesamelevels of For example, literature pointsto the goals. conflicting, willbetter achieve decoupling that are complementary, rather than that, where possible, technological options would deliver theseoutcomes: briefly describestherange ofoptionsthat greenhouse gases.Table 1below very decoupling ofgrowth from non-CO2 2 Greenhouse gasemissions. (Reilly, 2008) -Transitioning to 80-100% -, - - - - 60 technologies, opportunities © Shutterstock decoupling 2 and policy options D are similarto thebarriers that holdback this respect, theblocks to decoupling to thesizeofbenefitsonoffer. In of thebarriers appear“soft”compared The answers appearsurprising.Some more widely? beneficial technologies from beingused going unused.Whatblocks manyofthese economic andenvironmental costs are lost andthatchances to avoid future profits from productivity gainsare being potential. Itinitially appears strange that lower thantheestimates oftechnological increase inresource productivity ismuch might beexpected. Asaresult, therate of productivity are notspreading aswidely as techniques thatimprove resource 4.1 4 Introduction productive, technologies and profit from beingmore resource- organizations andeconomies to espite theopportunitiesfor back decoupling? What currently holds costs can besaved, investments can be effect beingthatmore can beproduced, (or atleast cheaper)ones–withthenet things, oldproducts superseded bybetter are replaced withbetter waysofdoing growth to happen,oldwaysofdoingthings essential partofeconomic growth. For of changeinaneconomy, andisan techniques ispart ofthedynamicprocess The adoptionoftechnologies and growth andtransition. at therelationship between innovation, To understand thebarriers, we have to look successful thanothers. others, orwhysomefirmsare more some economies functionbetter than are thekindoffactors thatexplain why economic development ingeneral: they 4.2 and transition Growth, development -10% 61 10% -4% 14% -6% 16% -8% 18% -2% 12% 0% 4% 6% 8% technologies, opportunities 2% and policy options decoupling 2 1819 1 ST Steam engine 1780 -1830 Roling 10-year yieldontheS&P500 Kondratie 1829 Panic of1837 1837 -1843 1839 the backboneofliberal economic policy It isaview ofgrowth whichhasformed new waysreplace theoldto create growth. destruction” to convey thewayinwhich for theevocative phrase “gales ofcreative economic text booksandwhoisrenowned thoughts are now found across theworld in Joseph Schumpeter inthe1940s,whose 2010) or development, waspopularizedby Investors, Global This descriptionoftheprocess ofgrowth,(Allianz 2010 prosperity, of waves of livingbyconsuming more. long – made andpeople can raise theirstandardKondratieff” Sixth “The Investors Global Allianz Source: Figure 4.1 (Anyadike-Danes etal., 2011). and around thesame number created of private sector jobs are lost every year, jobs. For example in theUK,28percent succeed andfail andemployees change grow through day-to-day changesasfirms where changeisnotsovisible, economies skills) ischanging.Even incountries whose stock ofinvestments (including in developing countries. Itisaneconomy when thismaynotbeasapparent asitis economy undergoing atransition, even It meansthatagrowing economy isan expansion ofmore productive firms. innovators, leading to growth through the firms andbringgreater rewards for competition willpushasideless productive by thebeliefthatincreased market goods, labourorcapital) beingjustified liberalization ofmarkets (for trade in recommendations across theworld, with 1849 2 1859 ND Kondratiev cycles. 1830 -1880 Kondratie Railway, Steel 1869 Long Depression 1879 1873 -1879 1889 1899 3 Electrification, RD 1880 -1930 Chemicals Kondratie 1909 1919 Great Depression 1929 1929 -1939 1939 A vividvisualisationoftherelationship resource degradation, evidence suggests global resources andenvironmental decisions. Considering,the trends in investment, production and consumption it would befactored immediately into about future challenges became available, highest returns for society. Asinformation investments to theareas thatdeliver functioning economy willnaturally direct We start from theassumption thatawell- it intransition to?” growing economy isintransition –where is expected. Thisraises thequestion: “Ifa in 2008,anew cycle ofgrowth could be After thedownturn intheglobal economy illustrates these. exhaust theirgrowth potential. Figure 4.1 slowed astheoldeconomic structures growth are periodswhere growth has From thisperspective, thedeclinesin economic change. of new technologies andstructural of prosperity, eachdriven bythespread some economists to come inlong waves Economic growth hasbeenobserved by cycles” (Freeman andLouçã,2001). economic growth isgiven by“Kondratiev between economic transition and 1949 4 Petrochemicals TH Automobiles, 1930 -1970 4.3 Kondratie 1959 and Transition Cycles ofGrowth 1969 1 ST &2 1974 -1980 Information Technology, 1979 ND Communications 5 OilCrisis TH 1970 -2010 Technology Kondratie 1989 1999 Financial Crisis 2007 -2009 2009 Environment Technology? Nano/Biotechnology? 6 2010 -20XX TH Health care Kondratie 62 technologies, opportunities decoupling 2 and policy options the kindoftechnologies describedin Together these factors determine whether between: country asaresult of theinterplay decoupling actually takes place inany We can envisagetheextent to which competitors andsecure economic growth. of transition, gainadvantage over their those barriers can lead thenext wave transition. Countriesthatcan overcome that actasbarriers andbrakes on makers’ abilitiesto overcome biases occurs maydependonnationaldecision- In practice, whether,where andhow it growth insuccessful economies. be oneofthedrivers ofthenext periodof implies thatdecoupling would naturally innovations inresource productivity. That naturally beplacinggreater investments in that awell-functioning economy would formal andinformal rules inacountry economists to betheproduce of These factors are now seenbymainstream the rightincentives (Lundvall, 2007). each other,theavailability offinance, and networking ofactors whocan learn from which itisreplaced bynew knowledge, the the extent ofknowledge, thespeed with interacting factors. Thesefactors include: to beclosely linked to acombination of the academic literature oninnovation greatly across countries, andisseenin general. Thecapacity to innovate differs or constrained byitsabilityto innovate in improve itsresource efficiencyispromoted The abilityofaneconomy (orafirm)to Chapter 3become widespread. 4.4 resource productivity systems whichholdbackinnovation in Biases intheeconomic andpolitical and The innovative capacity ofaneconomy; Innovative capacity productivity, middle andlower-income 2.1.2 notes, for innovation inresource variation between countries. AsSection in more developed countries, withagreat rate ofgrowth –isoften muchhigherthan change indeveloping countries –andthe Yet, itisworth notingthattherate of 2008, p.4.) (Commission onGrowth andDevelopment, institutionalised capabilities ...”– is precisely thecreation ofthese Indeed, animportant partofdevelopment market andregulatory institutions. “Developing counties often lackthese between countries: and leadership. Thesediffer greatly themselves dependentonculture, norms - institutional arrangements thatare limited. advantageous, andinvestment funds are alternative investments are seenasmore and still notwidely taken up,because other in resource productivity can beprofitable investments iswhatmatters: investments for investment. Therelative return on financial return over thetimescale sought investing intheopportunitiesthatmaximize decisions. Inpractice, thisusually means be thecase for government investment available. Thisisoften alsobelieved to investments outofthealternatives that firmsinvest inthemost advantageous The starting pointfor investment theories is productive innovations. away from investment inmore resource- also factors thatbiasinvestment decisions of innovation for decoupling. Theseare as holdingbackthewidespread adoption There are factors thathave beenidentified institutions can alsoholdbackchange. these institutions, notleast because some more thancompensate theweakness of countries mayhave advantages whichcan 4.5 investment decisions Bias ininnovation 63 technologies, opportunities decoupling 2 and policy options hold, norhasfullknowledge ofallthe investor really knows whatthefuture will to bemadeintheface ofuncertainty. No decisions aboutfuture investments have This isnotthewhole story. Nearly all 1. found in: (OECD, 2011c).Thebarriers are often compared to otherpossible investments to investment inresource productivity the appropriable private financialreturns decoupling are thefactors thatreduce finds thatthebiasesholdback Much oftheliterature on thetopic these biases. for theeconomy. There are several of invest intheareas withthehighest returns natural functioningoftheeconomy to process for investments willdistort the Any factors thatbiasthedecision-making within aworkplace, received wisdom group members, theincentive structures important: itincludestheviews ofpeer- The institutional andcultural context is 4. 3. 2. include: factors thatinfluence thisperception. They faced withuncertainty. There are many perceives to bemost advantageous when of investment thatthedecision-maker making can bedescribedasthechoice perform. Bearingthisinmind, decision- alternatives available andhow they could The factors whichinfluence theprices The situationinwhichthedecision- The knowledge atthefront oftheirmind The characteristics ofthedecision are clear examples. all key factors. Subsidiesandtaxation materials, energy, capital andlabourare Influences ontheeffective prices ofraw returns for alternative investments. and costs thatdetermine financial culturalcontext. maker decides –theirinstitutional and when deciding,and maker (e.g. theirattitudetowards risk); influences: framework for investments. Thiscontext conduct, socialnormsandtheregulatory about whatisgoodpractice, codes of the economy acknowledge theprofound appropriate role and sizeofthestate in Both sidesinthedebate aboutthe categories: lead to biasagainst decoupling into two section, we gatherthemainfactors that being heldback.Inthefollowing sub- productivity thatwould naturally take place they can lead to investments inresource against resource productive investments, When anyofthesefactors hasabias 4.6 uncertainty abouttheperformance How thedecision-maker resolves government policy); world, resource scarcity andfuture about changedfuture states ofthe future prices, oraccept majorityviews current market prices asindicative of (for example, whetherthey take uncertainty aboutfuture conditions How thedecision-maker resolves whether reputational riskmatters); short-term paybackshouldbe,or is advantageous (for example, how How thedecision-maker judgeswhat Biases against change,or“inertia”. from past decisions bygovernment; The legacy policyframework, resulting financial andtechnical capacity). other blocks to innovation, including in banks,ormanagementboards, or risk-averse, suchascredit committees organizational structures thatare maker to act(includinghierarchical Constraints ontheabilityofa decision- performance), and do nothave aknown track record of of unfamiliar technologies (which framework The legacy policy 64 technologies, opportunities decoupling 2 and policy options Governments have furtherinfluence inthe countries, taxation can bemuch lower. relative rewards from investments. Inother prices bychangingthoseprices andthe Foundation, 2013).Taxes influence market per cent and45percent ofGDP(Heritage taxation ishigh,withtax levels between 25 countries, thestate’s influence through Additionally for themajorityof high-income 2012, p.91.). 2008, p.4;quoted inSwillingandAnnecke, (Commission onGrowth andDevelopment, on Growth andDevelopment 2008 between buyers andsellers,” –Commission prices andbridgeinformational gaps property rights,enforce contracts, convey underpinnings, institutions thatdefine “[M]ature markets rely ondeepinstitutional different typesofinvestments. are setchangestherelative advantage of efficiently. Thewayinwhichthoserules practices thatallow amarket to operate framework thatdetermines therules and choices market actors take. Itisthepolicy effect thatgovernment policyhasonthe These indirectly influence prices and environment, energy andconsumer policy. industrial policy, employment, innovation, regulation, butmanyothers, including taxation, subsidizationanddirect market economic decisionsplayarole, notonly through fiscal policy. Allpolicieswhichaffect prices ofeconomic inputs.Thisisnotjust a significant effect ontherelative effective governments. Thepolicyframework has of thepolicydecisionsmadeinpast by investments compete istheresult, or legacy, As aresult, theplayingfieldonwhich Foundation, 2013). spending at35-45percent ofGDP(Heritage income countries, withvery manycountries taxation revenues, particularly for lower- often significantly higherthanthelevel of of funding.Government spendingis of thetaxation revenues andothersources economy through choice inthespending policy can have alarge effect ontherelative Even relatively smallchangesingovernment productive. or whetheritismore orless resource- example, whichsectors grow fastest, development pathofaneconomy –for a key role indecidingthenature ofthe an economy. Government policieshave determines thedevelopment pathof in aneconomy. Thenature ofinvestments the direction ofinvestment andinnovation attractiveness ofinvestments, andshape a very strong influence ontherelative government policiesissufficientto have The cumulative effect ofthewiderange of non-price barriers ordisadvantages. investment returns, andremove orcreate This framework doesnotappearsuitable successfully promoted labourproductivity. EU countries –apolicy framework that trend withtheexample oftheoldest 15 Figure 4.2illustrates theresult ofthis rather thanan opportunityfor growth. risks to growth (e.g.from shortages), of resources hasbeenasawayto avoid like askilled labourforce, consideration of theessential inputsinto aneconomy, productivity. Although resources are one realize significant growth related to labour policy framework hashelpedeconomies from labourproductivity gains.Theresulting time, tended to look primarily atgrowth aiming to increase growth has,for along because mainstream economic policy We highlightthelegacy ofpast decisions (Senator theHon.Penny Wong, 2010). US$30 billionin2008,for thefirst time capacity exceeded thatfor fossil fuelsby investments innew renewable-power a year in2011.Onaworldwide basis, in renewable energy reaching US$300bn countries could beadriver for investments changes intheenergy policyofmany the 1980s,few would have imaginedthat attractive to mainstream investors. In innovation, ormake investments financially legal ororganizational blocks holdingback advantage ofinvestments: they can remove 1970 -100 INDEXED 200 250 100 150 65

technologies, opportunities 1970 decoupling 2 and policy options productivity: steer economies awayfrom resource coming outofpast government decisions of areas where current policystructures The literature isvery clear onanumber 2011 EEA, Source: Productivity andEnergy Productivity. Figure 4.2 productivity offers greater returns to society. for achangedsituationwhere resource Energy productivity Labour productivity Materials productivity 1980 energy) inmanycountries. Aslabour the tax burden onresources (and labour taxes are relatively higherthan Taxation ofpeople’s work through efficiently. investments to usetheresources more resources byreducing thesavingsfrom encourage thewasteful useof Institute, 2011).Thesesubsidies year for resources (McKinsey Global Subsidies ofupto US$1.1trillioneach have often beencreated inwaysthat Regulatory frameworks for markets technologies and techniques. on investment inresource efficient resources, taxation reduces thereturn with distortions from subsidizationof more resource intensive. Together development ofaneconomy thatis the economy asawhole, itencourages than increased employment. Taking favours resource consumption rather inputs into economic growth, this and resources are often alternative Resource Productivity, Labour 1990 2000 2010 wasteful early use.Clear examples are: of resources, butrather promote their discourage long-term management • • • hours inadvance (OECD,2010a). predict theirelectricity output3 because they can only reliably wind turbinesatadisadvantage, delivery. Thishasputoperators of one dayinadvance ofelectricity electricity supply have taken place markets, biddingsystems for some developed country energy new technologies. For instance, in effects ontheentryandspread of small issues can have significant of new technologies. Even quite but whichdisadvantage theentry worked well for oldtechnologies, Market regulations whichhave incremental or uncertain intheir with timelags.Effects can be on environmental systems, or so indirectly, through impacts are “externalities”. They can do benefits from theresource: they person usingor consuming the on someoneotherthanthe because thecosts orrisksfall or products. Thisisfrequently in thecosts ofmanufacturing material scarcity are notincluded and costs related to increased from environmental damage overlooked. Similarly, costs as aneconomic asset is capital value ofanecosystem are often notvalued, andsothe services provided byecosystems in market prices. Inparticular, resources isnotvalued properly The economic value ofmany resource. the value over timeofthe the collective goalof maximising individuals whichmayconflict with competition for resources between stock, orforest) thatcreates control (for example for afish of individualproperty rightsor The absence, oruncertainty, 66 technologies, opportunities decoupling 2 and policy options can categorise four typesofbiasesfrom to innovation inresource productivity. We against innovation. Thesevery often apply current economic structures create biases There are alsovarious waysinwhich 4.7 • • in innovation Biases against investment magnitude. Asaresult, this measures, butmaynothave the bills through energy efficiency tenant would save onenergy example occurs whenabuilding The clearest “landlord tenant” legal rightsover thatinvestment. because they donothave sufficient get areturn ontheirinvestment, is notinapositionto besure to reduce resource consumption to benefitfrom aninvestment to in whichtheperson whostands or “landlord-tenant” problems, are called “agencyproblems” Policies have alsooften left what existence ofasystem ofsubsidies. of effect isasmuchalegacy asthe absence ofpolicyto limitthiskind resource productivity. The consequences negatively affecting produced significant unintended term direct effects, andsohas has frequently focused onshort- Past regulation ofmarket activity products andservices. less environmentally damaging of theconsumer market for resource, andholdbackgrowth that damagetheunpriced use ofresources oractivities They alsopromote excessive offer attractive financialreturns. the economy (asawhole) donot good returns for productivity of in ecosystems services thatoffer usually meansthatinvestments move outofthebuilding. value ofthose investments ifthey and cannot besure to recover the rights to invest inthebuilding, illustrate thewidenature ofbiases: examples ofeachthesecategories (European Commission, 2011a).Some behavioural; organisational, andinstitutional the literature: physical andtechnological; 4.7.1 4.7.2 technologies asignificant advantage infrastructure, givingexisting conjunction withexisting physical Many technologies are usedin tend to reduce production costs. its production atcommercial scale established technology over time,and as continued development ofthe a price advantage over innovations, Established technologies tend to have firms they work in–tend to berisk- and Stoker, 2013).People –andsothe et al.,1990,ascited e.g.byMoseley did before we possessed it(Kahnemann what we currently have more thanwe also suggests thatwe naturally value disposal habits.Experimental evidence choices, transport choices orwaste behaviour –for example inpurchasing to existing habits,socialnorms,orpast People have ageneral tendency to keep disadvantage. but are notwidely networked, are ata compete to offer asimilarservice, already have). New technologies that the technologies thatotherpeople their abilityto communicate with of communication technologies is a common technology (theadvantage of networks, withwidespread useof function well because they are part Rather similarly, manytechnologies oil powered vehicles). large numberofrefuelling stations for recharging pointscompared to the (e.g. thelackofelectric vehicles’ would require different infrastructure over alternative technologies that technological biases Physical and Behavioural biases 67 technologies, opportunities decoupling 2 and policy options 4.7.3 averse, whichcan constrain theability ways thatcreate additionalrigidityin relationships between people in Organisations often defineworking move to changethem. continuation ofcurrent patterns or which can eitherwork to promote example andmarketing: allof influenced byeffective leadership, Social normsdochange,andare 2012). accessible overview ofhabitsDuhigg, (Healy etal.,2011orfor amore vehicles andotherconsumer goods service basedapproach for appliances, shift from personal ownership to a particularly challenging for efforts to demand for innovation, andcan be norms are changing.This affects Sharp, 2013),unless thesesocial behavioural patterns (Thomasand context, whichcan alsoactto lock-in groups –andsothesocial normsand are alsostrongly influenced bypeer use. Individualbehavioural patterns change inhabitsfor theirwidespread technologies thatwould require a a barrierto theuptake ofnew of existing technologies, creating Behaviours are often tiedto theuse adopt new innovations (OECD,2011d). of firms,consumers andsocietiesto do notreceive information from directors makinginvestment decisions within thefirmcan mean thatfinancial practices andflows ofinformation Additionally, existing accounting innovation). incentives against risk-taking (andso organisational structures can create hinders innovation inthatrole. The perform inapre-defined role, which workers isoften judgedonhow they habits. For example, thesuccess of resource productivity biases against finance for Organisational –including Many ofthesefactors are found inthe financiers controlling funds.This addsto into areas which willbenew to manyofthe it would require ashiftoffinancingcapital energy intheabsence ofdecoupling. But steel, water, agricultural products and investment to meet future demandfor a year thatwould berequired for capital only fractionally higherthanthe$3trillion (McKinsey Global Institute, 2011).Thisis $3.1 trillionofinvestment ayear globally efficient technologies would require consumption demandsthrough resource estimate thatto meettheworld’s future productivity. McKinsey Global Institute considerable hindrance to resource These barriers to financingare a al., 2013). investment decisionsare made(Hudsonet them atasevere disadvantage when makes themappearmore risky,andplaces performance ofnew technologies also The lackoftrack record for theinvestment familiar to theprofessional expertise ofstaff. financing decisionstend to be madeinareas banks andfinancingorganisations, positive incentives andcontrols found inmany economic investments. Dueto theinternal issues for changesinthepattern of finance sector, andthiscreates particular techniques). in thespread ofefficientconstruction to spread ofnew ideas (for example, or previous training, whichholdsback strongly basedonexisting techniques and business modelscontinue to be Both theskillsetofworkforce destruction often biasesdecisions. less valuable. Resistance to thiscapital make theexisting capital redundant or beneficial, butcan simultaneously and networks). Innovation maybe machinery, stocks, workers’ skills in existing capital (equipment, Organisations have often invested potential ofresource efficiency. staff (inoperations) whoknow ofthe 68 technologies, opportunities decoupling 2 and policy options norms.) also beseenassubsetsofinstitutional norms, andsomebehavioural biasescan cultures andover time.(Organisational vary between areas ofeconomic activity, social andeconomic interactions, andcan constrain ouractivities laws andcodes ofconduct thatshapeand Institutional normsare thepatterns, rules, recent years. in practice, beeninvested inresources in trillion higherthanthevolumes thathave, estimates ofcapital needsare more than$1 an already considerable challenge –both 37 political decision-makingandeconomic interaction innearly allcountries between reform, orblock itentirely. Theclose which often act asabrake onpolicy Political systems have theirown inertia, investments inresource productivity. returns raises asignificant biasagainst institutional focus onshort-term are longer-term issues, thewidespread As manyoftheissues withresources

4.8 See, forexampleNorth, 1991. 4.7.4 focus ontheshortterm. management oflisted companies to markets leads to incentives for the of quarterly reporting ofprofits onstock example, therelatively new institution requires alonger-term perspective. For term economic success andstability short-term actions,whilst long- investments byfirmsinaseriesof term financialgain.Thesepromote are incentives thatreward short- innovation andresource productivity disadvantages investments in One widely found normwhich and systems lock-in Inertia inpolitical systems incentives including short-term Other institutional norms, 37 . They structure as barriers to decoupling, because: versa. Political processes can therefore act change to economic interests andvice- framework isdifficultto changewithout “systems lock-in” because thepolicy interests can lead to whatiscalled promotes employment overall, rather policy for economic success isonethat availability). Althoughrecommended conditions change(Iike resource can bethecase even asunderlying strongly to preserve existing policy. This market power, they tend to engage arrangements thathave given them are biasedtowards thecurrent groupings. Where thesegroupings to theinterests ofleading economic Frequently, policyisformed inresponse Where economic interests are atstake, about theimpactsoffuture changes. balancing ofconflicting information Political decision-makinginvolves the Salmons, 2010,p.132). organisations shapingpolicy(Ekinsand government departments)orindustrial within theinstitutions (for example norms, andchangeisoften resisted, are madeoften reflect existing The institutions through whichpolicies return onlasting policychange. uncertainty aboutfuture investment in policycreates unpredictability and direction andpast records ofchanges This inconsistency, lackofclear 120). (McKinsey Global Institute, 2011,p. weakens incentives for investment by theindirect effect ofothers. This of somepoliciesbeingcancelled out to policyinconsistency, withtheeffect different specificinterest groups leads ministers ordepartmentsfavouring governmental structures –different Segmented policy-making existing jobs. pressure often lead to theprotection of than protecting specificjobs,political 69 technologies, opportunities decoupling 2 and policy options too long to past industrial structures that in thedeclineofcountries thatheldon believed to beastrong explanatory feature The existence ofsystems lock-in is prices inenergy generation are strongly of therisksclimate change.Market spread ofrenewable energies intheface comes inthe(often) relatively slow Another illustration oftheseeffects harm (Diamond,2005). irreversible threshold, creating non-linear ecological system hasbeenpushedpast an exploitation untilitistoo late andthe have notrealised theimpactsofresource appear to have come whensocieties (Diamond, 2005).Often thesedeclines central America, ortheEaster Islanders conditions, for example, oftheMaya of of past civilisationsfaced withchanging change, asoneofthedrivers ofcollapse and socialorganisation whenconditions pointed to aninabilityto changepractices of whole civilisations.Jared Diamondhas and inthestarker examples ofthedecline were uncompetitive inachangingworld, groups are likely to contest evidence information. policy framework inreaction to new take effect –leading to lagsinthe in timesbefore policyisexpected to lengthy, andcan have additionallead- Policymaking procedures are often Salmons, 2010,pp.133-134). own self-interest to alter (Ekinsand and economic actors perception oftheir in policyreform often involves political achieving policychange–assuccess benefits ofchangeisakey barrierto to hear,information demonstrating the bias. Therejection of,or unwillingness sceptically received andscrutinisedfor seeking to promote innovation maybe evidence gathered bygovernments unfavourable information. Even inevitable) thiscan beusedto discredit uncertainty aboutthefuture (asis there issomedegree ofscientific showing theneedfor change.Where

Carbon intensity (2010=100) 100 120 one third ofSweden’s energy andhalf of quarter ofCalifornia’s installed capacity, distributed energy accounted for one and inpractice, already by2008,renewable by usingamixofsources (Tickell, 2005) solutions for thatexist (Diesendorf,2007) baseload electricity demand.Inpractice, be guaranteed to meetbothovernight sources are too intermittent andcannot energy supply, because renewable energy cannot bethemajorpartofanation’s argument ismadethatrenewable energy of new technology. For instance, astrong and incorrect perception ofthepotential of consumer preferences andunfamiliarity network infrastructure, weak expression generation technologies, distribution regulation, economies ofscale ofpast determined byexisting, slow-changing 38 broken in anysector of theeconomy, as GDP appears only rarely to have been correlated withrisinglevels ofpercapita rising energy consumption, whichare also emissions beingstrongly coupled with The historic trend ofgreenhouse gas 2013 IEA, Source: Sector CarbonIntensity Index, 2012data. intensity since 1985,shown bytheIEAEnergy Figure 4.3 shocks ofthe1970s.(Figure 4.3) appear to have changedsince theoilprice intensity Hargroves, 2008).Nevertheless, thecarbon cent ofitselectricity from wind(Smithand Norway’s, withDenmarkgenerating 20per 20 40 60 80 1970 0

This isthenumberoftonnes CO (data fromIEA,(data 2013). 1980 38 The lackofprogress inreducing carbon oftheglobal economy doesnot 1990 2000 2 emitted for each unit of energy supplied emittedforeachunitofenergy 2010 2020 2030 2040 2050 70 technologies, opportunities decoupling 2 and policy options Source: UNEP 2010, Fig. 4.6, p. 55 p. 4.6, Fig. 2010, UNEP Source: plotted against percapita expenditures intherespective countries. Figure 4.4 of decoupling maybethatof“services”, disappointing graph from thepointofview and percapita carbon footprints. Themost between percapita consumption levels in Figure 4.4,whichshows thecorrelation Some ofitskey findingsare encapsulated Consumption andProduction hasshown. Report ontheEnvironmental Impactsof the International Rersource Panel’s 2010 Carbonfootprints (percapita CO 2 equivalents, 2001)ofdifferent consumption categories, represents aggregate various regions. Mexico, New Zealandand theUS.“RoW” countries Canada, intheOECD,i.e.Australia, Note: with expenditures. here, carbon emissions relentlessly rise overconsumption ofresources. Buteven which are often quoted as thewayoutof

OECD NWstandsfor the“New World” 71 technologies, opportunities decoupling 2 and policy options 72 technologies, opportunities © Shutterstock.com decoupling 2 and policy options A 39 below explain why from resource scarcity. Theparagraphs structures are reducing theirfuture risk This doesnotmeanthattheireconomic policies promoting resource productivity. as they grow economically, even without Many countries show relative decoupling deeper understanding. may bethecase, ifusedwithoutsome exposure to resource constraints than in acountry to give abetter picture of for statistics ontherate ofdecoupling

They areissuesbecausedecoupling canbemeasuredindifferentways, Decoupling report(UNEP, 2011a). ResourcePanel’s XoftheInternational of measurementseeChapter first somethingdifferent.and eachwayshows For onforms moreinformation 5

over three issues. Itispossible their economy needsto take care in theresource productivity of decision-maker judgingprogress aboutthenature ofdecoupling Deepening understanding 39 . decoupling can besignificant, because The effect ofthistrade onmeasures of share hadrisenclose to 29percent. was metbymaterial imports,by2008this 20 percent ofconsumption inG8countries sources around the world. In 1996 less than products increasingly coming from diverse increases, withmaterials thatmake up As globalisation oftrade proceeds, this higher share ofservices. based economy towards aneconomy witha shift from anextraction andproduction shifting, andoften appears ascountries resources. Thisisoften labelled asburden its economy isnotchangingitsreliance on elsewhere intheworld, through imports, resource withextraction andproduction domestic extraction andproduction ofa even whenitisnot.Ifreplacing its A country can appearto bedecoupling, 5.1 ‘decoupling through trade’ Burden shifting–or 73 technologies, opportunities decoupling 2 and policy options natural resources. For example: changing relationship withdependence on This can give thefalse impression ofthe it reduces domestic resource use. product, rather thantheresources to make up inthefinalproduct. Soimportinga production process thaneventually ends resource to beusedasinputinthe it iscommon for 10timesmore material There isasimilareffect for manyproducts: significant. from offshoringgoldextraction would be used, theapparent change indecoupling are includedinthemetrics ofresource (Schmidt-Bleek, 1994),sowhentheseores 1 milliontons ofgoldores are mined to produce oneton ofgold,typically the statistical effect maybevery great: processed material imported instead, moves from thedomestic economy, with resource usebymass. Ifextraction ofore these frequently look atdomestic freshwater abstraction, fishandbiofuels: This isillustrated by three examples: productivity increase is smaller. extraction upwards) itsdegree ofresource is produced (e.g.from primaryresource value chainsby whichitsconsumption its economy isviewed to includeallthe contributing to anyfuture scarcity. When or supply for theresources, andisstill vulnerable to changesinthemarket resources. Theimportingcountry isstill or depletion ofexisting sources of This burden-shifting can hidedependence including unuseddomestic extraction and the economy expanded by96%.When consumption decreased byover 20%while “Between 1980and2008,Japanesematerial this progress inhalf.” (OECD,2009). unused extraction andindirect flows cuts between 1996and2008,butaccounting for consumption decreased byover 10% 2008. [And]inGermanydomestic material more modest -1%between 1980and decrease inmaterial consumption appears estimated indirect flows from trade, the that are resource-intensive. Once these are infrastructure: suchasbuildingsandroads accompanied bythe construction ofanew and consumption growth tend to be changes. Early industrialisation because theirdemandfor resources productivity naturally asthey develop Countries tend to changetheirresource 5.2 not give atruepicture ofthedepletion countries’ domestic fishstocks does that measures ofthehealthmany domestic to global resource stocks, so a shiftofresource depletion from Trade infishhasalsoresulted in production oftraded products. in “virtualwater”: water usedinthe C alsoillustrates thescale oftrade is actually significantly lower. Annex the decoupling illustrated byFigure 2.3 shown inFigure 1.9–suggesting that produced withothercountries’ water – with thesizeofimportsgoods their domestic water usesuggests, adequate freshwater supplies than countries remain more reliant on There isevidence thatmanyOECD in waysthatare notsustainable. nations onto poorer developing nations environmental burdens from OECD transport biofuelspolicyisshifting 2009) showed someOECDnation’s report “Assessing Biofuels”(UNEP, (Directive 2009/30/EC,Art.7b).Our and biofuelsbytheEuropean Union comes from therising useofbiodiesel An emerging area ofburden-shifting (UN, 2006). products andthusfishconsumption 81 percent ofimportsfish-based Yet developed countries account for oceans andfrom developing countries. worldwide issuppliedfrom open About 77percent offishconsumed of thefishstocks onwhichthey rely. behind decoupling Understanding thedrivers 74 technologies, opportunities decoupling 2 and policy options perception ofriskin theirsupply. the importance ofthosematerials andthe their economic policy,usually basedon drawn uplists ofprioritymaterials for supply thanothers: several countries have greater imbalances between demandand others. Someresources are likely to have economy’s stability andsuccess than Some resources matter more to one vulnerable to resource supply shocks. wasteful, ornecessarily thatitisless country’s economy isbecoming anyless productivity, itdoesnot indicate thatthe driver for apparently increased resource Where thiseconomic “maturation” isthe resource-productive. it willcontinue to become more andmore that itseconomy isstructured inawaythat resource-intensive, butitdoesnotindicate country’s ongoingdevelopment willbeless This doesshow thatthenext stage ofthis up asaresource productivity increase. activity naturally reduces, whichshows built theresource intensity ofeconomic the amountofenergy thatwould beused energy efficiencyofaneconomy, dueto processes isalmost certain to improve the productivity for metal inaproduction For example, improving resource productivity intheuseofotherresources. and theeffect ontheeconomy’s increase inproductivity ofoneresource considering thelinkagesbetween the Decision-making isalsohelpedby resources. growth from someparticularly important possibilities for decoupling economic the most available –maynotreflect the resource use–whichare frequently most to them.Aggregate figures for changes intheresources whichmatter as closely asthey can attheproductivity productivity, decision-makers needto look When considering changesinresource 5.3 Decoupling whatmatters 2010a) looks attheinter-relation between priority products andmaterials (UNEP, those negative impacts.Ourreport on productivity can alsobeawayto reduce and healthyair–increasing resource “environmental resources” like soilfertility including fossil fueluse,freshwater, or indirect impactsonother resources – inputs). Where theuseof resources has from growth byreduction ofmetal and related emissions can bedecoupled use. (Intheexample above, energy use they could decouple growth from resource decision makers more optionsonhow Knowing abouttheselinkagesgives process itself. well asintheefficiencyofproduction in theproduction ofthesaved metal, as and theenvironment. specific toxic orharmfuleffects onhealth relevant where someactivitieshave called impactdecoupling. Itisparticularly As illustrated in Figure 5.1,itcan be these negative environmental impacts. decoupling ofeconomic growth from environment policy,andcan lead to chemicals. Thisistheusualrealm of dangerous chemicals withless harmful reducing toxic emissions orsubstituting This can bedoneinmanyways,including decreasing thelevel ofresources used. environmental resources even without to reduce theimpactofresource useon At thesametime,actioncan betaken developing countries. pollution) from newly industrialising or gas andotherindustrial emissions, water pressure ontheenvironment (greenhouse goods whoseproduction places intensive countries, whichare increasingly importing This could particularly berelevant for EU resource useandenvironmental impacts. 75 technologies, opportunities decoupling 2 and policy options countries. particularly important for lower-income This kindof“impactdecoupling” can be graph (UNEP,2011b,Figure 1pagexiiii) of resource decoupling andimpactdecoupling Figure 5.1 of GDPinEgypt(World Bank,2010a). cent ofMorocco’s GDPand5percent Tunisia 2.1percent ofitsGDP,3.7per environmental degradation costs and publichealthimpactsfrom economic damage,productivity losses The World Bankhasestimated that farming (Sukhdev etal.,2008). relying onactivitieslike subsistence those livingbelow thepoverty lineand the effective householdincome of that they account for 57percent of per cent ofIndia’s overall GDP,but fuel wood provision) account for 7.3 provided byforests (for example for It hasbeenestimated thatservices or biomass-based energy sources. whether itbefertile soils,clean water, environmental ecosystem services – people are directly dependentonlocal livelihoods ofmanythepoorest In “low-income” economies, the natural disasters show thatsuch biodiversity loss, climate changeand related to water andairpollution, OECD studies ofthecosts ofinaction decoupling isnotachieved quickly. impacts willcontinue to mountif of inaction”to reduce environmental growth (Brown, 2008).Such“costs impacts oneconomies andeconomic are havingbothdirect and indirect such negative environmental impacts A range ofstudies now shows that Conceptual andstylised representation Environmental impact Resource use Economic activity(GDP) Human well-being Impact decoupling Resource decoupling Time mattered most: been environmental resources thathave Historically, ithas–for obviousreasons – 41 40 in OECDcountries inrecent years to GDP,have alsobecome more common metrics ofeconomic progress, inaddition while decisions to adoptcomplementary Jackson (Jackson,2009),amongothers, have beenanalysed andproposed byTim to decouple wellbeing from resource use “buen vivir”(goodliving). in LatinAmerica, where thekey word is also inothercountries suchasBhutan and debates inprospering OECDcountries, but This isasignificant feature ofsustainability achieving significant decoupling. GDP findthatthey have more optionsfor wellbeing oftheircitizensrather than priced.) Policymakers aimingatincreasing wellbeing, muchofwhichisnottraded or subset oftheactivitywhichcontributes to constructed metricthatmeasures only a which are measured byGDP. (GDPisa only determined bythegoodsandservices GDP andrecognises thatwellbeing isnot wellbeing can berelatively decoupled from Figure 5.1alsoillustrates thathuman

SeeforexampletheEUBeyondGDPInitiative: http://www.beyond-gdp.eu/ The conceptof ‘Buenvivir’ hasbeenincluded intheConstitutionsofEcuador guidance/well-being/index.html Statistics:Office forNational http://www.ons.gov.uk/ons/guide-method/user- and SocialProgress: http://www.stiglitz-sen-fitoussi.fr/en/index.htm, orthe index.html, theCommissionon theMeasurementofEconomicPerformance and Bolivia. SeealsotheDeclaration ofCochabamba(WPCCC, 2010). tracts of theEarth’stracts surface. and wipingouthumanexistence from large bringing aboutthedownfall of civilisations forcesof destructive themostpowerfully in destruction andsoildepletion hasbeenone forest destruction.Erosion following forest floods let anddeserts loose inthewake of and PersiaCarthage were destroyed by The great Empires of Assyria, Babylon, Richard ST. BarbeBaker, ‘IPlanted Trees’, 1944(St. (OECD, 2008a). and are setto risesharply by2030 costs are significant (OECD,2008b), 40 Thepossibilities Barbe Baker, 1994) 41 .

76 technologies, opportunities decoupling 2 and policy options Source: Fischer-Kowalski, M. (2007) M. Fischer-Kowalski, Source: Figure 5.2 for countries atdifferent stages of use can helpshow thepossibilities other measure ofprogress andresource Yet looking atthecomparison between one the focus thisreport. Neither oftheseimportant discussions is Comparison ofpercapita domestic material useandtheHumanDevelopment Index 1980 to 2000. (HDI, onthevertical axis)bycountry from axis), andtheHumanDeveloping Index use (DMC)(intons/capita, onthehorizontal relation ofpercapita domestic material development. Figure 5.2shows theinter- 77 technologies, opportunities decoupling 2 and policy options the greater partoftheirpopulationslive demand for goodsandservices, because of theglobal populationand have ahuge These countries account for 12percent immediately translated into higherHDI. which anyincrements in consumption are in Africa, AsiaandLatinAmerica) for group of40low-income countries (basically At theotherendofscale, there isa OECD andnon-OECD31). 69 countries classed ashigh-income (38 (at least asexpressed bytheHDI)infor the into proportionate increases inlife quality material consumption nolonger translate 2010) claimingthatadditionalincreases in 2005; WWF,2008,Steimberg &Roberts, There isagrowing research body(Farley, economies. their HDI,aswell asimproving their resource productivity gainsto increase do seemto have thepossibility to use of theworld population.Thesecountries medium-income) representing 70percent low to medium-income and48highto group of105emergent countries (57 In theintermediate level, there isathird essential environmental resources. particularly important to avoid waste of growth, while impactdecoupling maybe can directly contribute to economic Improvements inresource productivity that itwould befor high-income countries. countries would notbepossible intheway of growth from resource use inthese below thepoverty line.Absolute decoupling 78 technologies, opportunities © Shutterstock decoupling 2 and policy options T Recycling’s global annual turnover exceeds developing countries (Medina, 2008). for theirlivelihood in million people are engagedininformal and anestimate suggests thatupto 15 globally employ formally 1.5millionpeople is oneexample. Recycling industries economic structures. Therecycling sector how easily decoupling fitswithinexisting existing economy thatthey demonstrate in decoupling are somuchpartofthe Some oftheinvestments already made that helpfacilitate decoupling. wealth ofexperience withthemeasures strategies to domore. There isnow a Several have reoriented theireconomic degree ofresource andimpactdecoupling. 6.1 investments thatbringsome Most countries have already made that decoupling can beachieved. here isenoughevidence to suggest 6 Decoupling can happen Removing barriers to decoupling Facilitating Transition: states have frequently played in stimulating of decoupling andthe crucialrole that There are parallels between achievement change. in whichdecision-makers can facilitate decoupling, to illustrate thevariety ofways actions already taken across theworld on required. Thischapter looks atexamples of from policymakers andothers would be environmental qualityadditionalleadership required for economic success andstable To achieve thepace ofdecoupling necessarily take place. investments for future conditions donot presence meansthat themost productive greater resource productivity. Their way ofaneconomy’s transition towards mentioned inChapter 4stand inthe However, thebiasesandbarriers annually (Oliver, 2008;BIR,n.d.). than 600milliontonnes ofcommodities US$160 billiondollars andprocesses more 79 technologies, opportunities decoupling 2 and policy options decoupling. case studies below illustrate aspectsof has overcome barriers to change.The decoupling where public sector leadership there are manyexamples ofsuccessful More specifically related to resources, Swilling andAnnecke, 2012,chapter 4). African countries (for anoverview see nations andsomeSouthAmerican and in otherAsian(e.g.China,Singapore) “developmental states” seenmore recently past inJapan(Johnson,1982)andthe industrialisation ofnations,asseeninthe government authoritieshave driven the (Mazzucato, 2013).Inseveral cases, the technologies thatled to theiPhone not setupto invest in.(Thishasincluded innovations whichtheprivate sector is often take risksfinancingbreakthrough financing ofinnovation, developed states have noted thatto tackle thebarriers to is often acknowledged. Commentators facilitating andsteering innovation than sector already playsagreater role in innovation inotherareas. Thepublic for river ecosystems andwetlands. available for restoring environmental flows and citiesenables more water to become more efficientuseofwater for agriculture the world dueto climate change.Also the reduced water availability inmanypartsof adapt to thelikelihood ofnear-future rural, urbanand coastal communities water productivity improvements alsohelp to allpeople andtheenvironment. Greater ensure access ofunpolluted clean water important to improve water qualityand expensive water infrastructure. Itis costs anddelayed needfor new and including lower business andhousehold resource productivity improvements, There are multiple benefitsfrom water 6.2 6.2.1 Case studies ofdecoupling from freshwater extraction Decoupling economic growth These situationshave increased therates of per cent increase inthelast five years. worldwide, representing amore than100 A study hasrecorded 405deadzones supported dueto depleted oxygen levels. the world, where marine life cannot be around manyofthemajor river deltas of river basins.Many“deadzones”now exist growth andotherwater services inmany water resources for sustainable economic and industries) are already limitingavailable water usesectors (domestic, agriculture of pollutionloads caused bythemajor overused inmanyregions. Increasing rates while groundwater resources are already drying upandoften fail to reach theocean, freshwater lakes are shrinking;rivers are are already undersignificant stress: Readily available sources offreshwater in highervalue sectors, like industry and This hasallowed the useofscarce water management. in water efficiency anddemand through highly cost-effective investments as most ofthe reduction wasachieved from 2005-10.Thiscame atnegligible cost capita reduction inpotable water usage Brisbane hasachieved a50percent per Gigalitres (GL)from 2004-05to 2008-09. agriculture decreased from 12,200to 7,000 per cent, asFigure 6.1shows. Usagein while GDP hasgrown bymore than30 water consumption byaround 40percent, From 2001to 2009,Australia hasreduced decades. rate atwhichitexpanded over thepast two years would have to bealmost triple the pace for supply additionsover thenext 20 expected growth indemand,theannual flows –by40percent by2030.To meet reliable water resources –includingreturn water would outstrip currently accessible, assumed, global demandto withdraw scenario andifnoefficiencygainsare Under anaverage economic growth physical water scarcity inmanyriver basins. 6.2.2 Decoupling inAustralia 80 technologies, opportunities decoupling 2 and policy options Singapore hasachieved economic growth [100 =2001levels] Economic Growth from Freshwater Abstraction Figure 6.1 use oftreated recycled water. scheduling techniques aswell ashigher uptake ofdripirrigationand irrigation improve water productivity through greater There isstill significant potential to million to AU$95millionperGLofwater. increase ofeconomic return from AU$50 improvements inwater productivity –an manufacturing, resulting insignificant cent andto commit to endingthoseimports imports ofwater from Malaysiaby60per This hasallowed Singapore to cutits 60 percent for otherAsianurbancentres. cent by2002compared to 40 percent and has beenreduced (Khoo,2005)to 5 per sources offreshwater supply. Wasted water cutting waste andexpanding alternative demand for water byimproving efficiency, water utilityfocused onreducing the home ofcomparable income. Singapore’s now usesfour timesless water thanaUS (Figure 6.2).Theaverage Singapore home This represents afactor five decoupling five-fold, oratwo-fold percapita increase. people. Yet water usehasonly increased by afactor of2.5inthatperiodto 4.4million country inhistory. Itspopulationhasgrown from “developing” to a“leading first world” 25-fold inoneofthefastest transitions last 40years withtheeconomy growing rates ofinexcess of10percent over the 6.2.3 Australia -Absolute Decoupling of Decoupling inSingapore

1997). 1997). demand over thelast two decades (Postel, achieved significant reductions inwater Austin, MelbourneandSydney have all Jerusalem, LosAngeles andSanDiego, growth from freshwater extraction. focus onabsolutely decoupling economic demonstrated theeconomic benefitsofa successes, thoughothercitieshave also Singapore isoneofthemost striking management options(PUB,2009). management andalternative water supply entirely by2060through additionaldemand distortions inthewater markets, capital productivity are largely attributable to Low levels ofwater efficiencyand sectors. productivity alsovaries bycountries andby water withdrawals. Therecord onwater 15 percent to more than70percent of water proportions range from aslow as and dysfunctionalmeters. Non-revenue private water sources, illegal connections year worldwide, mainly dueto leakage, is considered asnon-revenue water per cent. More than$18billionworth ofwater of leakages ranging between 20-80per supply infrastructure, withhighlevels Most countries have dysfunctionalwater records inwater efficiencyandproductivity. However, ingeneral, countries have mixed 2008) C., T, Khoo, (Source: water consumption growth (1965-2007)[1965=1] Figure 6.2 Singapore GDP,populationandtotal 81 technologies, opportunities decoupling 2 and policy options with theadoptionofdripirrigation. value ofproduction hascontinued to climb, has halved inIsrael since 1984,while the example, theuseoffreshwater onfarms of water efficiencyandproductivity. For innovations were amongthekey drivers investments inimproved technologies and water-intensive economies. Inallcases, technological transformations toward low environmental policiesandstructural and existence ofintegrated water and/or Key success factors appeared to be: in developed anddeveloping countries. efficient water useswere found inboth The successful transitions towards more billion supported water prices globally. direct subsidiesofbetween US$200-300 been passed onto endusers. In2011, increasing costs ofabstraction have not largely static inreal terms because the (particularly for agricultural use)hasbeen the price ofbulkor“upstream” water environmental costs. Inmanycountries, do notfully reflect resource scarcity or challenges. Current water prices often as technological andinfrastructure-related availability andregulatory issues, aswell been greatly reduced. monoxide andotherpollutants alsohave cancer –have beencut70percent. Carbon lungs andcause asthma, emphysema or of dust, sootorchemicals thatlodge in cent andsuspendedparticles –pieces lead inthe airhasdropped by90per 35,000 hospitalisations ayear. Since then, levels thoughtto cause 1,000deathsand most polluted cityontheplanetwithozone pollution ofclean air. In1992,itwasthe the possibility to decouple growth from At aregional level, Mexico Cityhasshown developing anddeveloped economies. pollution from economic growth, in successful absolute decoupling ofair Across theworld, we findstories of 6.2.4 from airpollution Decoupling economic growth absolute decoupling ofeconomic growth the majorityofOECDcountries achieved Over thethree decades from 1970to 2000, by 30percent (UNEPandMercosur, 2011). period (2008-10),anditreduced emissions equipment duringitsimplementation to exchange atleast 12,000pieces of 1995. Theprogramme’s objective was Decontamination Planapproved in under theframework oftheAtmospheric equipment bygreener technologies for exchange ofthewood combustion government, whichdeployed aprogramme homes. Thisproblem wasaddressed bythe use offirewood asanenergy source in of emissions generated bythemassive quality incitiesdeteriorated asaresult In central andsouthernChile, theair economic performance (Figure 6.3). had negligible netimpactonshort-term taken into account, thisphase-out has and theenvironment are monetisedand 1997). Whenthecosts ofsulphurto health anticipated $1,000-1,500perton (Hodges, anticipated, $90perton rather thanthe attainable for significantly less cost than the cost situationsuchthatthegoalwas range ofsupporting technologies altered of cost effective low-sulphur fueland a it would beincredibly costly, butthearrival or 80percent. Initialperceptions were that required wasoftheorder ofafactor offive, sustainability. Theemission reduction – isafundamental principle ofecological the critical loads ofreceiving ecosystems bring sulphurdepositionsinEurope within objective oftheprotocol –eventually to 2010 (UNECE,1994).Theenvironmental per cent by2005,and80percent by cent reductions bythe year 2000,70 committed nationsto targets of50per in 1994.TheSecond Sulphurprotocol and theUNECESecond Sulphurprotocol through first the1983“Helsinkiprotocol” growth from sulphurdioxide pollution regional efforts to decouple economic example ofthishasbeenglobal and from allmajorairpollutants. Aleading 82 technologies, opportunities decoupling 2 and policy options increase. of environmental damageasincomes decoupling” –meaninganetreduction Here we have consistently seen“absolute economic growth from local pollution. experienced very strong decoupling of Most industrialised countries have economy keeps growing (OECD,2008c,p.16) Figure 6.3 driven byenvironmental policies, mainly on alocal scale withburden-shifting) was (sometimes absolutely, andsometimes environmental harmfrom resource use Successful decoupling ofsome the successes andfailures ofpast attempts. economic growth mayneedto learn from decoupling ofresource consumption from This suggests thatfuture efforts to facilitate is considered. products consumed inanimportingcountry if theresource useembodiedintraded still increased. Thisisparticularly thecase use ofresources intheireconomies has production hasdecreased, buttheoverall resource consumption perunitofeconomic “relative decoupling”, meaningthat consumption, we have mostly seenonly On theotherhand,for resource 6.3 6.3.1 across awhole economy Decoupling resource use OECD:Airpollutants recede while the The challenges for decoupling extent ofthenetwork ofcontributors to the defined bynationalboundaries–butthe boundaries of“theeconomy” are nolonger services are traded across borders, the economic benefits.Where goodsand our economies thathasbrought somany from theextent oftheglobalisation of challenges. Oneofthosechallenges comes resource usegenerally hasmore additional Decoupling economic growth from technologies emittingpollution. capacity ofgovernments to control the polluting technologies andsufficient change, sufficientalternatives to highly political constituency to drive regulatory this to happenwere: asufficiently strong countries. Thekey features whichallowed from the1970sonwards, starting withOECD resources, whichcan includefreshwater. challenging. Thiscontrasts withmore local applications) –thismakes decoupling (though notthoseusedinvery specialist resources, fossil fuelsandmanyminerals consumed very widely –like manybiotic traded andcan beusedinproduction or Where theresources inquestion are globally powers to their own borders. geographic limitation oftheirregulatory limited (althoughnoteliminated) bythe action to reduce rebound effects significantly in anysingle country have thescope oftheir of international agreements, governments same resources inothers. Intheabsence some degree ofincrease inuseofthose in resources inonecountry maylead to interconnected resource markets, savings appears likely to occur onaglobal scale. In rebound effect describedinsection2.2.3 This impliesthatfor manyresources, the many countries. supply andconsumption networks can span of economies, are usually widely traded, and Physical goods,theresource intensive parts the waste products attheendoftheirlife. services, andeven thepeople whoreceive supply chain,theconsumers ofthegoodsor 83 technologies, opportunities decoupling 2 and policy options small, andnotpolitically active. more resource-efficient economy are still would stand to gainmost from ashiftto a push for change.Manyofthe firmsthat sufficiently motivated to group together to minds, reducing thechances thatthey are resource efficiencygainsatthefront oftheir economy, most ofthemdonothave being inamore resource-productive individuals andfirmswould benefitfrom environmental impacts.Althoughmany to someofthesuccesses withdecoupling environment. Thisalsostands incontrast to humanhealthortheneighbourhood away, geographically) thandirect damage greenhouse gasemissions] orare further they are indirect, come later [aswith of resource scarcity are less visible (because productivity: manyofthe negative impacts coalitions arguing infavour ofresource be dueto theabsence ofstrong political resource productivity. Thisseemslikely to a biasagainst policyreform infavour of section 4.8,appears particularly strong as mentioned asabarrierto innovation in economic system andthe political system, Secondly, theinteraction seenbetween the industrial revolution) andcan provide some and societal transitions (for example, the This isbasedonanalysis ofpast economic and innovate towards aparticulargoal. structural changesandchooseto develop biases against innovation can make literature exploring how economies with There isagrowing level ofacademic behavioural change ofindividuals. It would needinnovation inmanyfirmsand innovative sectors ofsuccessful economies. at arate currently only seeninthemost productivity. Innovation would beneeded technological innovation inresource trends, economies would require dynamic to meetthechallenge ofglobal resource resource productivity thatwould beneeded Yet for thelevel ofimprovements in 6.3.2 on transition Multi-level perspective most countries, external political influence realistic reflection ofthewayinwhich, from firmsandcitizens.Thisisamore commanding achangeinbehaviours transition comes aboutbyastrong state of society. Soitgoesbeyond ideasthat ecological andtechnological aspects inter-related withpolitical, cultural, innovation aspartofacomplex system, in Chapter 4.Itviews theeconomy and barriers andbiaseslike those described analysing structural andinstitutional Much oftheliterature draws onthework productive to besustainable. economy thatissufficiently resource- is seenasaprocess oftransition to an decoupling. Inthiscontext, decoupling useful waysto thinkabouthow to facilitate 42 are: Fugure 6.4.Thekey aspectsofthisthinking facilitate orprevent decoupling, shown in different levels ofsocietythatinteract to Perspective One approach, called theMulti-Level transition processes Figure 6.4 societal behaviours. policy choices determine economic and determines policychoice, asmuch

For amoredetailed descriptionoftheMulti-LevelPerspective seeGrinetal. (2010) The Multi-Level Perspective of 42 , conceptualises three 84 technologies, opportunities decoupling 2 and policy options Innovations can evolve onasmallscale part ofthepolitical-economic setup, unlikely to beable to bemadeinone institutions, significant changeis in theseexisting structures and Due to thebiasagainst change provided bythosesocietal institutions. have to actdependsontheconditions or structures. How much room they within broader societal institutions or coalitions ofpeople whoare acting by innovative individuals,organisations Transition comes aboutdueto action from aninnovation, oranew policy. degree ofchangewhichwillresult to make ithard to predict exactly the different levels are sufficiently complex The interactions between these climate change. “megatrends”, suchasincreasing the time–sometimesreferred to as cultural fundamentals current at ecological andtechnological and shaped bythe“landscape” ofphysical, This socio-technical regime isitself other forms ofsocialorganisation. models, consumption patterns and of technologies, policies,business technical regime”, whichistheset created bythemainstream “socio- partly dependentontheopportunities manage to become widespread is Whether thesenicheinnovations conditions for innovation. in niches,where there are favourable stage, thesemayreach atipping an extended period oftime.Atsome taking place atdifferent levels over a very large numberofchanges, Transition willonly come aboutby areas. cultural, technological andecological a couple oftheeconomic, political, occurring simultaneously inatleast process ofco-evolution: withchanges place elsewhere. Sotransition isa without someotherchangetaking unlock greater resource productivity gains: would beneededbydecisionmakers to framework for considering whichactions productive technologies. Itgives one and thewidespread uptake ofresource- This hasimplications for decoupling, promote transition: transition identify somefactors thatwould at political economy, behaviours and Strands ofacademic research looking the transition (Heifetz, 1994). this asthe“core adaptive leadership” of or onnicheinnovation. Somerefer to their partofthesocioeconomic regime, organised to have sufficientinfluence on or identifiable groups ofpeople (although notcontrolled) byindividuals occur, butisshapedordirected A transition isvery unlikely to naturally becomes irreversible. point, atwhichchangeescalates and shared goal. so thatmanyactionscontribute to a or changeagents,supporting change, transition, agreed bysufficientpeople, The needfor aclear goalfor the the literature. are referred to as“changeagents”in governance institutions. Suchpeople business modelsorpolitical and innovation, consumption patterns, and outsidegovernment, whether in sphere ofinfluence: people inside to bringaboutchangewithintheir This pointsto arole for manyindividuals transition to resource productivity. support manysmaller changesinthe of conditions intheeconomy whichthen decoupling would first needthecreation Perspective suggests thatfacilitating simultaneous changes,theMulti-Level to effect radical changewithoutother system willhave theindependentpower maker withinthepolitical oreconomic Because itisrare thatanydecision- 85 technologies, opportunities decoupling 2 and policy options 43 effect ofmanysmallchangesaffecting be madeincrementally: thecumulative The creation offavourable conditions can capacity andstrength ofpolitical support. is related to theirresources, technical much policymakers can doinpractice return to acountry’s economic goals.How innovations thatbringthegreatest future that investments are madeintheareas and improve thefunctioningofeconomies, so resource productive investments. Thiscan to innovation andreduce biasesagainst innovation capacity, remove hindrances policymakers can take steps to increase investments inresource productivity, To create theconditions for widespread

6.4 foreconomicdevelopment isbasedontheunlimited The prevailingnarrative 1 billionandtheindustrialrevolutionwasjustabout tobegin. the timeof Adam Smith, atimewhentheworld’s at waslessthan population resources.use offossilfuelsandmaterial least fromat dates This narrative The needfor awidely accepted ministries. thinking economics andenvironmental been addedto thestrategies of forward- additional, broader goalfor policyhas in manyrespects. Itmeansthatan less crucial–ithasremained essential prevent environmental harmisany This doesnotmeanthatpolicyto investment inresource productivity. creating theconditions thatencourage main focus from preventing harmto broaden theirgoals:expanding their and environmental limitsneedto policymakers concerned withresource through resource productivity gains, For thepromotion ofdecoupling mentions someissues inthisrespect. to thesuccess ofdecoupling. Annex A and itsconstraints, maybe essential in thelightofchangesresource use the mainstream economic narrative (Ostrom andWalker, 2003).Updating reasons androutes for transition narrative ofthefuture, givingthe for decoupling Creating theconditions 43 , Morgenstern, 2004). emissions reductions (Harrington and in achieving resource efficiencyand and permittingmaximumflexibility consumption, promoting new technology, a continual incentive to reduce resource as measures doingthistend to provide dynamic waysofreducing future costs, in resource productivity. Thisprovides market incentives thatreward innovation is theenhancement orcreation ofthe favourable conditions for decoupling A central aspectofestablishing often ofalong-term nature. right conditions invites systemic changes, decoupling would becreated. Creating the most likely wayinwhichthe conditions for conditions for investment appears the sometimes beenseen.(Figure 6.5). and astrong upswingininnovation can in place, thelinkbetween onepolicy other conditions for innovation are already at eachlevel ofthatvalue chain.Where need for interventions bypolicymakers behaviour across value chainswithoutthe in technology, products, andindividual Market signalscan bringaboutchanges and make policydecisionsonthatbasis. knowledge ontechnical possibilities attempt to gathersimilarlevels of requiring policymakers to periodically continually savingresources, rather than of better returns oninvestments by complex systems design,inpursuit think ofinnovative strategies, including engineers, managers, andinvestors to They have thepotential to encourage 86 technologies, opportunities decoupling 2 and policy options alternatives ofreaching thesamedesired helping themconsider less wasteful for influencingfirmsandindividuals and Prices tend to bethestrongest language prompted inpartbythefeed-in-tariffs lawinGermany(seechapter 7.6.1) technologies. 3-year moving average, indexed on1978=1.0) Figure 6.5 include actions: they have influence. Itwould needto economic forces to shapepolicieswhere a key role for influentialpolitical and different policyareas. Italsoindicates to forward-thinking policymakers across changes. Thispresents anopportunity in decoupling would needmany policy often connected to eachother–success resource productivity are widespread –and goals. Yet as thebarriers to innovation in 6.4.1 coordination. political leadership to helppolicy the attention ofthe top ranks ofour resource policiesunavoidably require resource productivity. Thismeansthat and education. These are central to infrastructure, science andtechnology, transport, trade, planningand and development, fiscal affairs, In theareas ofeconomic affairs Growth rates of patents relating to renewable energy technologies compared with other energy a crucialrole Many policymakers have 44 measures to beused: giving anoverview oftherange ofpolicy Development hasoffered atabulation World Business Councilfor Sustainable sustainable energy transformation, the For example, inthespecificfieldof

For Europe(including Turkey), fromEEA(2011); thereisagoodoverview Another usefulsource: GTZ, CSCPand Wuppertal Institute(2006).

(Haš relating to disposal. during manufacturing, during useor phases ofaproduct life cycle, e.g. environmental issues atdifferent That address resource and procurement andeducation. building, market development, public development, fiscal change,institution agreements, labelling,research and of measures, suchasvoluntary That take manydifferent forms č i č etal.,2010,p.12).Thejumpwas 44

87 technologies, opportunities decoupling 2 and policy options economy towards sustainable energy use(WBCSD, Figure 6.6: and policiesisthemost effective strategy a variety ofgovernment mechanisms that aportfolio policyapproach utilising on manyyears ofexperience, hasfound The OECD’s research inthisarea, based difference to theoutcome. in combination can make asignificant which thesetofpolicymeasures are used to make significant progress. Thewayin barriers to innovation are likely to beneeded simultaneous changes to different, related As suggested bytheMulti-level Perspective, productive investments. used to create theconditions for resource of thepolicymeasures thathave been Chapter 7provides examples ofsometypes 2011) 6.4.2 Anoverview ofinstruments driving the Creation ofpolicymixes transition. They write that: existing businesses’ competitiveness from and ensure minimalnegative effects to growth andenvironmental pressures to underpindecoupling ofeconomic Significant environmental improvement mixes needto be carefully constructed and information failures. Instrument the environment, andthemanymarket variety ofsources exerting pressure on challenges, theoften large numberand connected nature ofmanyenvironmental given theoften complex andinter- an instrument mix maybeneeded for asingle environmental problem, both available andaffordable. (…)Even key environmental challenges are technological solutionsto tackle the is used.Thenecessary policiesand social impactiftherightmixofpolicies to theeconomy andwithlittle negative can beachieved atrelatively low cost 88 technologies, opportunities decoupling 2 and policy options biases indecision-makingagainst One ofthebarriers thatseemsto create they are seeking: their goals,andthescope oftheimpact about theappropriate timeframes guiding policymakers are likely to needto think instruments to includeinapolicy mix, ways ofthinking.Whenconsidering the in absolute decoupling mayrequire new pace ofproductivity gains whichresult Creating conditions thatdeliver the direction oftruly sustainable development recipe for stimulating innovation inthe and ofincremental signalscould bethe profitable. Apolicyofalong-term vision use ofnatural resources continuously make ever more intelligent andefficient term targets andwithincentives thatwill Countries are likely to fare best withlong- ways ofthinkingwould beimportant. their countries orfirms,adoptingwider leadership, andlonger-term success for decision-makers looking to provide short-term, direct impacts.Yet, for those by political success) onthebasisof maker willberewarded (financially or this isvery often because thedecision- Whether infinance, business orpolitics, term impacts. pervasiveness ofdecisionsbased onshort- more productive investments isthe 6.4.3 conflicting. (OECD,2008a,p.432). reinforcing, rather thanduplicative or in amixshouldbecomplementary and decisions. Thepolicyinstruments used to supportappropriate investment short- andlong-term policysignals Instrument mixes shouldprovide clear, equity impactsshouldbeaddressed. so asto enable innovation. Socialor flexibility inhow they meetthetargets, providing consumers andproducers with economically efficientmanner,while environmental goalinaneffective and to ensure thatthey achieve agiven Long-term thinking

% of primary goods in local exports of production andresource efficiency. countries move towards highervalue levels take sometimeuntilresource-exporting is neithersustainable norefficient.Itmay cent. Theuseofresources inLatinAmerica still growing andhaseven exceeded 50per goods amongLatinAmerica’s exports is Figure 6.7shows thattheshare ofprimary opportunities for thefuture. For example, but whichpresent serious challenges or incremental differences year-on-year, in theidentification oftrends thatmake Taking along-term perspective can help political resistance to policychange. unpredicted obsolescence andassociated and avoiding capital destruction from attempting to influence separate stages This isvaluable for designing policy approach (seeStasinopoulos etal.,2009). there isaneedfor awhole systems When considering thescope ofaction, consumption ofaparticularproduct. or thefirmsinvolved intheproduction and policy mixcould target aparticular locality, which they want to target. For example, a individuals orinstitutional arrangements choices over thebreadth ofthefirms, for aparticulargoal,policymakers have When selecting amixofpolicyinstruments according to UNEP(UNEPandMercosur, 2011) the continent maynotbeonasustainable path, American exports isstill growing, indicating that Figure 6.7 60 10 20 30 40 50 0 6.4.4 1998 1999 Theshare ofprimarygoodsinLatin Selecting thescope 2000 2001 2002 2003 2004 2005 2006 2007 2008 89 technologies, opportunities decoupling 2 and policy options considerations, relevant to scope are: and environmental benefits.Other introduce policiesthatcan bringeconomic reinforcing policiesandnew waysto take thisinto account can findmutually on transportation. Policy changesthat of energy andotherresources spent human settlements influence theamount of logistics, andtheshapespread of transport infrastructure, thephilosophy part ofthewidersystem. Theentire to bemore energy efficient,thisisonly ensure thatautomobiles are designed For example, althoughitisimportant to economic andenvironmental systems. of theuseresources insidecomplex usually muchmore closely related than that ismanufactured inanotherare country supplying partsfor aproduct Firms inasupply chainbased inone exchange between people offirms. factors isthestrength ofeconomic outcome. Oneofthemost important to beinfluenced isimportant to the boundaries, oftheparteconomy Wisely choosingthescope, or geographic orurbanlocations. which can serve asniches,orincertain acting together oncertain value chains, businesses, citizensandpolicymakers this maysuggest leadership by spreads to themainstream. Practically, conditions can becreated, before it be promoted inniches,where favourable The evolution ofinnovations mayneedto Our report onCity-Level Decoupling the location for most economic activity. often thecase for cities,whichare also to draw boundariesofaction. Thisis structures may bethemost helpfulway common services andgovernance people and firmssharinginfrastructure, point for policydecisions.Inothercases, activity mayoften beagoodstarting considering value chainsofeconomic different goods.Thisimpliesthat involved intheproduction ofentirely firms inthesamegeographic area (LCA) (ISO14040:2006)iscurrently widely methodologies, Life Cycle Assessment Among thedifferent life cycle based most cost-effective. these savingswhere theopportunitiesare resource productivity, andsostimulate consistent incentives for innovation in be shapedandcoordinated to provide methodologies can allow policiesto through to consumption. Usingthese all along thesupply chainfrom production policymakers consider theseinfluences Methodologies already exist to help waste disposalattheendof life. environmental harmfrom extraction, upto cycle stages: from useofresources or a changeonresources ateachofthelife consideration oftheindirect impactsof decision onapolicymixwillprobably involve and whichare less. Gettingto theright investments are more resource-productive be basedonclear identification ofwhich resource-productive investments have to Measures to remove disadvantages against 6.5 much burden-shifting around the and managementcan helpavoid too ”the endofthepipe”.Life cycle-thinking tended to focus onreducing pollutionat while earlierenvironmental policies the production andconsumption chain, the impactsandinfluences upstream in Resource-saving policiesmust consider resources. to consume less non-renewable habits, homes,vehicles and nutrition them to consider arranging theirdaily are alsoaddressing consumers, inviting the service industry, resource policies mostly addressing manufacturers and While pollutionprevention hasbeen policies incities(UNEP,2013c). examines thecrucialrole ofdecoupling productivity throughout thesystem. globe andencourage greater resource Life -cycle thinking 90 technologies, opportunities decoupling 2 and policy options indicates thefundamental phasesofLCA. make amore informed decision.Figure 6.8 releases andinterpreting theresults to help associated withidentifiedinputsand releases, evaluating thepotential impacts and material inputsandenvironmental compiling aninventory of relevant energy outlook onenvironmental concerns by life cycle. LCA can helpavoid anarrow and inefficienciesthroughout theentire or recycling). Itaimsto avoid impacts use, repair andmaintenance, anddisposal processing, manufacture, distribution, material extraction through to materials life from cradle-to-grave (i.e.from raw associated withallthestages ofaproduct’s adopted 45 international level towards harmonisation Significant efforts are ongoing at design begins(Stasinopolous etal.,2009). along theproduct life cycle, well before is identifyingtherightproblems to solve The key to thewhole systems approach adopting the“whole systems approach“. eco-design ofaproduct andprocess and processes andproducts, enhancingthe the basisfor designingresource efficient Due to itscomprehensiveness, LCA is Figure 6.8

OtherLifecycle basedmethodologiesaree.gSLCA(socialLifecycle Assessment). assessment), LCC(lifecycle costing)andLCSA(LifeCycle Sustainability 45 ThePhasesofLife Cycle Assessment

to assess environmental impacts to comprehensively assess impactsover with environmental managementsystems and thewaythey designproducts, joining integrated into investments firmsmake, Life cycle thinkinghasbeenmore andmore overcoming barriers to implementation. adoption oflife cycle thinkingand Initiative associations orcompanies, aLife Cycle a numberofgovernments andindustry (SETAC) have launched,together with Environmental Toxicology andChemistry Since 2002,UNEPandtheSocietyfor Product Environmental Footprint Commission andthemethodology for (e.g. theILCD HandbookoftheEuropean to ensure robustness andcomparability of life cycle assessment methodsinorder 47 46 policy for decoupling. energy (EEA,2008)andcan beusedfor 6.9), water (Kristensen etal.,2004),and formation for managingpollutants (Figure has beensuccessfully usedfor policy states andimpacts.TheDPSIRframework responses addressing drivers, pressures, scarcities, itcan helpinidentifyingpolicy and theforeseeable impactsofresource between drivers ofresource pressures 6.9. Byclarifyingthecause-effect chain Impacts, Responses),symbolisedinFigure method (DrivingForces, Pressures, States, used analysis framework called theDPSIR for thispartoftheanalysis is awidely stimulus, orinvestments). Often, thebasis of theresults from changes(to policy The life cycle analysis includesassessment product life cycles (Salaetal.,2012).

http://www.lifecycleinitiative.org/ ReferenceLifeCycle International System(ILCD) Handbook, Data from: http://ec.europa.eu/environment/eussd/smgp/product_footprint.htm. handle/111111111/25589; Productenvironmental footprint(PEF), available from:available http://publications.jrc.ec.europa.eu/repository/ 47 aimedatpromoting wider 46 ). ). 91 technologies, opportunities decoupling 2 and policy options

and Transport e.g. Industry Industry Emissions e.g. Figure 6.9 European Environment Agency(EEA,1997,Fig.1) Pollution Pollution Drivers Pressures TheDPSIRFramework, depicted here from apublication onairpollutioncontrol ofthe Soil Quality e.g. Air,Water, State Impact Responses information, etc. Regulations, Taxes Public Transport, e.g. Economic Damage Biodiversity Loss, e.g. Clean Production Ill Health, Ill Health, 92 technologies, opportunities © Shutterstock.com decoupling 2 and policy options T productive economies: back transition to more resource- range ofthebarriers andbiases holding examples thatcontribute to tackling a productivity. Between them,they give and political lock-in, andchanging Reducing investment uncertainty Restricting harmfulactivitiesor Section 7.6 Creating new market structures: 7.4 and7.5 prices withdecoupling: Section7.3, instruments to alignmarket resource Adjusting government pricing 7.2 Increasing innovation capacity: Section structures: Section7.1onStrategies unhelpful publicdecisionmaking to facilitate greater resource measures thathave beenused of somethetypespolicy his chapter provides anoverview 7 have promoted decoupling An overview ofpoliciesthat uncertainty around investments in direction for change,they can reduce policymakers can provide acredible the future willlook are crucial.When of tomorrow, clear signalsabouttheway For people to adapttoday to thechallenges functions to reduce barriers to decoupling: policies. They can perform several only packaging,bundlingtogether other instruments in themselves, andnot Strategies can beseenaspolicy 7.1 7.1.1 social norms:Section7.9 Overcoming behavioural lock-in and measures increasing demand and Requirements, andSection7.8on for innovation: Section7.7onBans products, andstrengthening markets Strategies and providing direction Reducing uncertainty 93 technologies, opportunities decoupling 2 and policy options expectations aboutthefuture. a policyinstrument, onethatchanges this role, theformation ofastrategy is credible mechanismsandmeasures. In routes to achieve thosegoalsthrough goals for thefuture andprovide clear are frequently usedto create visionsand the central roles ofstrategies. Strategies The reduction ofthisuncertainty isoneof against decoupling. resource productivity andsoremove abias (People’s RepublicofChina,2011). cent until2020,basedon2005levels) reducing carbon intensity by40-45per increase, consistent withthegoalof (and 17percent “carbon efficiency” 16 percent energy efficiency increase Plan adopted early 2011 addedanother it wasachieved. Thetwelfth Five-Year commitment for afive-year period,and by 20percent, whichisastunning increasing nationalenergy productivity plan in2006madeacommitment of such targets. For instance, theeleventh Year Plansproduced byChinacontain in drivingchange.Theregular Five- Clear, achievable goals are onefactor (Republic ofSouthKorea, 2010). for future risksinresource markets reduce energy dependencyandprepare and industries, to create new green jobs, measures to foster green technology Growth, whichintroduces goalsand Framework Actfor Low Carbon Green One example istheRepublicofKorea’s recycling ofsolid waste. Besidesthis sustainable procurement andincreased administration, retail andconsumption, environmental agendainpublic consumption, sustainable construction, prioritises education for sustainable Brazil launched itsSCPplan,which production (SCP).InNovember 2011, to sustainable consumption and have adopted polices specially oriented Guyana (RepublicofGuyana, 2010) In LatinAmerica, countries suchas means thattheprocess bywhichthe of political supportbehindit.Thisoften credibility andclarity,thedegree predictability dependsonitsdegree of The effectiveness ofastrategy indelivering innovation inresource productivity. which are often strong biasesagainst and regulatory policyoninvestments, some existing policies,particularly taxation mitigate theconflicting indirect effects of complementarity between polices. Itcan reduces costs andincrease benefitsfrom problems ofcoherence. Coordination different policyareas –and thiscreates the entire arsenal ofinstruments from making parliamentswould have to utilise decoupling, governments andlaw- To create theconditions for resource structures. justifying thecreation ofnew institutional particularly creating policycoherence and Strategies have otherimportant roles, credible andrelevant. the policyframework, ifitis to beseenas industry must bepartofthe formation of cooperation between government and an impactonitssuccess. Sufficient strategy isproduced oragreed can have 7.1.2 from waste. and therecovery ofmineral resources topics, most prominently water, climate thousands ofactionsrelate to specific scarce natural resources. They contain making better andmore efficientuseof all converging into theobjective of international, nationalandcitylevels, Hundreds ofotherplans exist at for Water (2007)(World Bank,2010b). (2010), for Climate Change(2008),and the NationalPlansfor SolidWaste plan, Brazil hasalready implemented on bothrenewable energy andenergy major energy policyreform since 2004 For instance, Portugal implemented Creating policycoherence 94 technologies, opportunities decoupling 2 and policy options reform. Byfindingagreement onashared It can beanopportunity for government necessary capabilities andpowers together. changes to institutions to bring the Implementation of strategies often requires coherence between policies. that helpcreate greater coordination and provide theincentives andtheinteractions responsible for different areas of policy and can bringtogether thedecision-makers The process offormation of strategies 7.1.3 efficiency. Thishasled to Portugal supply. linkages between energy andwater and policycoherence dealingwiththe water demandthrough institutional GDP growth from electricity and California hassignificantly decoupled and refocusing offundinginstruments. legislation, market-based instruments to implement thestrategy include the environment. Policy mechanisms transport, agriculture, fisheriesand research andinnovation, industry, related to energy, climate change, et al.,2005).Itincludespolicies Decision No1600/2002/EC;Giljum 2001a, b,2004a,2005a-c,2008a; pressures (European Commission resource useandenvironmental aiming to decouple growth from one ofawiderange ofEUdocuments EU’s economic strategy for 2020.Itis 2011 a-c)whichforms oneleg ofthe economy (European Commission, transition to amore resource-efficient Resource-Efficient Europe for the The EUadopted aRoadmapto a through energy efficiency. by reductions intotal energy demand share ofrenewable wasmadeeasier 2010 (Eurostat, 2012).The increase in total energy supply to 50percent by (including hydroelectric power) in increasing theshare ofrenewables institutional structures Creation ofnew In 2010,New Zealandfurtherdeveloped a with new boundariesbasedonwatersheds. an innovative system ofregional government policy andmanagementroles. Thisincluded laws to create well-defined environmental government institutions and revamped its New Zealandradically restructured its nation’s natural resources. Accordingly, – thesustainable managementofthe activities onland,air,water andthecoast has a single purpose that applies to all Resource ManagementActof1991, Zealand’s green planning effort, the For example, thecornerstone ofNew that goal. structures thatare neededto move towards facilitate creation ofthenew institutional goal for thefuture, strategies are able to agriculture with a standard in relation to the and industrial water discharges, (from homes waste water discharge, agricultural Charges accrue from water use, private the charge baseandcaps theirrates. consolidated the rules for determining facilities, dams,etc). Alawadopted in2006 infrastructures (waste water treatment and uponcontributions to financingofthe charges andwastewater discharge charges, They alsodecide uponthewater use water resources and reducing pollution. programme geared toward developing deciding uponapluri-annualintervention the basinlevel ina“water parliament”, of water users andoflocal authorities)at together stakeholders (representatives and of the Finance Ministry. They bring the Ministry incharge oftheEnvironment public institutions underthesupervisionof water basinagencies.Theseagenciesare introduced thissystem in1964withsix according to catchment areas. France organisation ofimplementation action good water managementisthespatial Similarly, apolicyfeature important for New Zealand,2010). with resource efficiency(Government of a review ofinternational activitiesdealing framework for resource efficiency,basedon 95 technologies, opportunities decoupling 2 and policy options strategies are sometimesable to work their formation. Theforums forming these or scientificpeople andorganisations in often theparticipationofinfluentialpolitical and analysis ofproblems andsolutions, to take along-term view, useofscience persuasiveness comes from thepossibility economic structures. Theirstrength and in favour ofexisting policymixes or helping overcome institutional biases would needto beputinplace, andso advisory: describingthemeasures that Additionally, strategy documentscan be countries (DeliPriscoli, n.d.). arrangements exist intheUSAandother the watershed management.Similar part. New Zealandhasmore orless copied pollution charges contributing thebiggest the charges wasmore than low water. In2009,thetotal revenue from zones andfor water storage intimesof the system, for theprotection ofaquatic for maintenance andmodernisationof chiefly from pesticides. Revenues are used number ofanimals),anddiffusepollution, decoupling. Examples include: strategies, like thoseassociated with be particularly important for crosscutting solutions thatwillfacilitate change.Thiscan responsibilities) andbydoingso,find (such asthedividebetween ministerial outside nationalinstitutional structures 7.1.4 The 2001OECDEnvironmental escape from thecrisisthrough the of 2008,UNEPconceptualised the After theglobal financial meltdown Initiative”. efficiency incities,called “SlimCities an initiative in 2008 to supportresource International Energy Agency,launched World Economic Forum andthe The World Bank,together withthe early decoupling strategies. 21st Century(OECD, 2001a).Oneofthe Strategy for theFirst Decade of the Advisory strategies € 2 billion,with right knowledge, thenetworks, the they maylackresearchers withthe highly capable inresource productivity: systems, thosesystems maystill notbe In economies withdeveloped innovation There are two kinds,whichare often related: innovation capacity isthestarting point. developing countries, creation ofthegeneric increasing resource productivity. Inmany must necessarily bespecifically aimedat the innovation capacity, northemeasures, economy’s capacity to innovate. Neither instruments thatincrease orfacilitate an greater resource productivity are The second area ofmeasures to facilitate 7.2 7.2.1 Decoupling hasbeenadopted asakey resources reinforces economic growth. on thequalityandquantityofnatural how reducing unsustainable pressures Strategy (OECD,2011a),whichshows The OECD’s 2011Green Growth demand/supply imbalances. path thatfactors infuture resource a resource-efficient, low-carbon in order to shiftdevelopment onto in 10central sectors oftheeconomy advantages andmeansfor investing Green Economy Reportdocumentsthe productivity asacore element. The the strategic increase ofresource Initiative (UNEP,2011c).Bothcontain 2009) andlater theGreen Economy Global Green New Deal(Barbier, the downsides ofinnovation. the spread ofinnovation byreducing Policies which facilitate changeand innovate; Policies which boost thecapacity to Commission for AsiaandthePacific. by theUNEconomic andSocial framework andextensively promoted Innovation enablingpolicies to innovate Policies increasing capacity 96 technologies, opportunities decoupling 2 and policy options jobs andreskilling. supporting redundant workers to findnew acceptance. Theseincludepolicies costs from change,andsoenable political innovation willbeneededto reduce social entrepreneurs changeatthepace of sets. Policies whichhelpworkers and existing economic structures andskill often results ingreater disruptionof implies faster economic changewhich An increase inthepace ofinnovation and Hargroves, 2012). and education curriculumreform (Desha support innovation, andcapacity building experience, infrastructure planningto networks, exchanging international They include:promoting skills,creating blocks to supply, ortake manyotherforms. research, stimulate demand,remove The measures can directly support support innovation inresource productivity. (e.g. long-term funding)whichwould technological capacity andtheinstitutions should beoffered asafree good,ora communities, there isabeliefthatwater cheap. For example, intheworld’s farming that resources should befree, orvery This contrasts withwidespread desires interest are inlinewithsociety’s. purchase decisionsmadeintheirown individuals suchthattheirinvestment and to redefine theagendaoffirmsand goals ofthesociety. Thishasthepotential signals needto alignwiththestrategic direction whichsocietywants,theprice economy to make atransition inthe relative price ofresources. For amarket investments inmarket economies isthe encouraging resource-productive One ofthecentral conditions for 7.3 7.2.2 resource prices Policies directly affecting downsides ofchange Policies reducing the view thatsocialwelfare ismaximised Forestry concurred withtheeconomic African DepartmentofWater Affairs and and Development Framework, theSouth So, for example, initsWater for Growth to accumulation ofnegative impacts. productivity and,asChapter 1shows, leads real costs encourages waste, discourages of provision, havingprices lower thanthe resources, indirect harmto others, orcosts from resource consumption, limitsto respects. However, whenthere are costs This would betheidealsituationinmany or harvest –thenthey shouldbefree. ubiquitous, andcost nothing to extract they would bewere they inexhaustible and resources really were costless –which free publicservice, to allinneedofit.If also consumers. manufacturers andservice providers, but of aproduct, notonly addressing aspects ofproduction andconsumption chain passes through thatbenefitto other distortions atonepointinthe production A policychangethatrectifies price postpone theneedfor new capital outlays. that willenable water system managers to consumption andachieve efficiencygains Hopefully, thiswilleffect changes inits to appreciate thetruevalue ofwater. use pricingasameansfor consumers be excessive andthatitisimportant to are artificially low, consumption tends to pricing”. Itrecognised thatwhenprices concept sometimesreferred to as“fullcost when allcosts are reflected inprices, a 97 technologies, opportunities decoupling 2 and policy options based (tradable permits,auctioneduser taxes, orremoval ofsubsidies)orrights– prices can beprice–based (charges, fees, itself, the policies thatdirectly affect resource Unless thestate hasthepower to setprices (theworld’s• California eighthlargest theoilshock,OECDnations • After through different resource usepatterns. of how economies can successfully develop The 1970soilshocksprovided anexample response to the1970senergy crises Box 2:Example ofprice change: recently, California haspassed legislation gas costs (TheClimate Group, n.d.).More US$56 billioninelectricity andnatural The schemesaved California more than customers paidless onamonthly basis. charge higherkilowatt prices aslong as capital for new plantsandwere allowed to earned thebenefitofsavinginvestment helping theircustomers onefficiency helping customers to save energy. Utilities was economically more favourable than dependent ontheproof thatnew power made licences for new power plants Californian PublicUtilityCommission shows thesuccess story. Since 1978,the capita since thelate 1970s.Figure 7.1 GDP from fossil fuelelectricity useper to continue thesetrends bydecoupling economy) hasshown how feasible itis with 4percent from smaller size. gains came from more efficientdesign, automobiles, 96percent oftheirefficiency and policyreforms. For instance, for US use efficiencytechnological innovations cent peryear. Thiswasenabled byend- a reduction inoilintensity of5.2per yet oilusefell 2percent ayear, achieving 1977-85, USAGDPgrew 3percent ayear, oil importsfell by50percent. Between oil consumption fell by17percent, net cent. IntheUS,GDProse by27percent, 32 percent, butenergy usebyonly 5per belonging to theIEA,GDPgrew bynearly 1973-85. For thesameperiod,incountries of theireconomies by20percent from taken together decreased energy intensity power by2020from renewable energy. committing to source 33percent ofits the the 48 setting upofnew market institutions. rights) oilcrisesandthelow prices ofthe • The - 2000 Capita between theUSAandCalifornia from 1960 Figure 7.1

For ofMBI’s ageneraltreatment see: EuropeanCommission(2007). For addressed inLeGallic, B. (2004). forfisheriesis in fisheriesseeEconomicInstruments.Ttherights approach an analysisofpricevs. toresourceefficiency rightsinstrumentsrelating from sugarcane, seeninthecountry with fuels.Brazil developed biofuels the beginningofanew strategy to deal sugar inthe1970spushedBrazil to cane cutters. troubles suchasmiseryand deathsof Filoso, 2008).They alsomentionsocial from sugarcane burning(Martinelliand of riparianecosystems andairpollution systems, nitrogen pollution,destruction soil erosion, deterioration ofaquatic Martinelli andSolangeFiloso write about environment. Brazilian authors Luiz with downsides, notably regarding the scale programme ofthiskindcomes 2005). Asonewould expect, anylarge- were mixed withgasoline(Soccol etal., anhydrous alcohols (upto 20percent) Brazilian soiland weather condition. The due to itsgreat adaptation to the chosen substrate for ethanolproduction substitute gasoline.Sugarcane wasthe (sugarcane cassava andsorghum) to growth, byproducing ethanolbybiomass imports while maintaining economic The objective wasto slow down fuel energy supply became amainpriority. ProAlcool wassetupin1975when as avery successful programme. The 48 , thelatter ofwhich usually require

Comparison ofElectricity UsagePer

98 technologies, opportunities decoupling 2 and policy options of areliable provision ofclean water. conveying theinformation aboutthevalue is alsoseenasaconservation strategy stating thatwater costing andpricing Conservation Planguidelines(EPA, 1998a), Environmental Protection Agency’s Water resource. Thiswasmadeexplicit intheUS sustainable provision oftherespective consumers thereal price ofthe Cost-covering fees can indicate to provider, publicorprivate. – rather, they endupwiththe service up inthegovernment’s general budget of thefees orcharges do not typically end both) ofproviding aservice. Theproceeds recover thecosts (operating orcapital, or compulsory, andtheirpurposeisto and waste collection charges. They are wastewater charges, pollutioncharges, in thiscontext. Examples are water fees, use ofnatural resources orfor services Fees orcharges are generally paidfor the is, to theperson whopaysit,abadge,not (Smith, 1776,p.704):“Every tax, however, contract. Inthewords ofAdamSmith Taxes are a central symbol ofthesocial appearing asrevenues inthe budget. compulsory paymentsto thegovernment, as revenue-raising instruments. They are In contrast, taxes are primarily defined introduced. annum since thenew pricingstrategy was increases inexcess of20percent per the agriculture sector despite average droughts andexcess usecharges. In higher tariffs duringdryseasonsand increasing block tariffs; seasonalrates, industry asanestablishment incentive; water can include:repeal ofdiscounts to In SouthAfrica, thetypesofcharging for 7.4 7.4.1 7.4.2 and subsidies fees andcharges, taxes Price-based instruments: Fees orcharges Taxes leading to hightax payments.Where atax effect, inducingtaxpayers to reduce habits But taxes can alsohave astrong incentive segments ofsociety. frequently from thewealthier to thepoorer a –usually intended –redistributive effect, one ofwhichisusually debated. They have use hashugely important sideeffects, only instruments, thechoice ofwhichtax to While usually designedasrevenue-raising education. internal security,socialsecurityorbasic administration, external defence and infrastructures, thelegal system, public countries consider necessary, suchas to finance publicgoodsandservices of slavery, butofliberty.” Taxes are needed DTIE, 2008,p.12)onenergy putsit: income support.AsaUNEPreport (UNEP their primarymotive, whichisasatool of productivity. Partly, thiscomes outof inefficient useofresources, notresource Very often, subsidiessupportcontinued agriculture. water supplies for poorfamilies andfor its truecost ofsupply. Acase inpointis reduce themarket price of anitem below basic characteristic ofallsubsidiesisto industries orproducts, orexports. The such asfood production, strategic support anactivityconsidered desirable, provided byagovernment intending to aid (suchasacash grant orsoftloan) tax exemption orrebate) orfinancial A subsidyisafiscal benefit(suchasa inefficiency to theeconomy. incentive effect isdistortionary anditadds example, byincreasing labourcosts), its further awayfrom itstruecost (for takes theprice ofan economic resource 7.4.3 (and) ...suggest thatthemajorityofenergy countries account for thebulkofthem, subsidies are large andthatnon-OECD “... studies demonstrate that, globally, Subsidies US$/m

99 Netherlands 0.5 1.0 1.5 2.0 2.5 3.0 3.5

technologies, opportunities 0

and policy options 3

decoupling 2 Comparison ofagricultural, Industrial andHouseholdwater prices (Late 1990s)

Austria

France remain thesame). low water prices (while thecosts ofsupply countries, subsidiesplayarole increating the extent to which,for someOECD notably inagriculture. Figure 7.2indicates purpose ofholdingwater prices down, Water subsidiesalsohave themain 2012, p.69). $111 billionhigherthanin2010.”(IEA, estimated to have totalled $523billion, consumption subsidiesworldwide are 2012 concluded: “In2011,fossil-fuel The World Energy Outlook oftheIEA The sizeandimpactcan bevery large. are further examples of perverse subsidies. of pesticides, fertilisers andfishing vessels Skotte, 2005,p.102).Subsidiesfor theuse and to theeconomy (Kjellingbro and subsidies” -i.e.harmfulto theenvironment can safely beconsidered “perverse perhaps byUS$250billion,halfofwhich Road transport isheavily subsidised, counter to productivity goals. 2011) because theirdynamiceffects run “perverse subsidies”(KentandMyers, inefficient useofresources are often called Subsidies supportingthecontinued prices for farms (Jones,2003) The NetherlandsandAustria hadrealistic water and householdsin12OECDcountries In2001,only Figure 7.2

Greece consumers, bylowering theprice they pay.” subsidies innon-OECDcountries benefit Agriculture

Spain

Water prices for agriculture, industry, United States Price ofwater

Hungary Industry United kingdom

Australia

Household

Portugal

Turkey

Canada

fossil fuelconsumption) asawayto deliver inefficient fossil fuelsubsidies(soreducing The G20hascommitted to phasingout efficiency. buildings andindustries to boost energy chiefly inOECDcountries, for subsidising energy efficiencyandlists someschemes, 2011 (IEA,2011)hasitsspecialfocus on households. TheWorld Energy Outlook efficient oftechnologies bybusinesses or acquisition investments inresource Financial grants orcredits can facilitate resource-efficient production andservices. Other subsidiespromote investment in institutional capacity. of development, resource endowments, and country level willvary according to thelevel The suitability oftax reform inthiscontext at Görlach, 2005). estimated gain of 250,000 jobs (Knigge and to taxes onenergy –andso leading to an annually from indirect labourcharges steps, eventually shiftingsome reform from 1999-2003infive consecutive in Germanywhichintroduced arelevant tax reduction ofothertaxes. Thiswasthecase can beraised to allow thecorresponding environmental harm,butoften itisthatfunds reform can beto reduce incentives for The mainmotive for thetax orsubsidy Commission, andothers. by UNEP,UNDP,OECD,theEuropean World Bank(World Bank,2005)endorsed for EFRiswell setoutinareport bythe sustainability policymakers. Therationale the issue hasbeenwidely discussed by Environmental Fiscal Reform (EFR)as covers thetopic undertheheadingof of taxation changingresource prices Much oftheliterature discussing reform environmental harm(G20,2009). growth, reduce budgetdeficitsandreduce 7.5 subsidies Reform oftaxes and € 18 billion 100 technologies, opportunities decoupling 2 and policy options Reform can bringseveral netbenefits: Source: World Bank, 2005, p. 18 p. 2005, Bank, World Source: Figure 7.3 • Fundsfor environment agenciesandinvestments • Incentives for curbingpollution(air, water, soil) • Incentives for sustainable natural resources management 7.5.1 management” (Gallagher,1999). place itdeveloped “integrated pesticide million peryear intheprocess. Inits subsidies in1986andsaved US$100 example, Indonesiaremoved pesticide at timesofbudgetary constraint. For (IEEP etal.,2007)yieldsfiscal benefits resources. Reform ofexplicit subsidies sectors oftheeconomy ofbudgetary on publicfinances, deprivingother large andoften growing direct drain Perverse subsidiesalsorepresent a for sustainability. consumption andproduction patterns countries, EFRcan bringaboutthe industrial pollution.For industrialised promote resource efficiencyandcontrol an important role inleapfrogging to industrialising economies, EFRcan play use ofnatural resources. For rapidly with theextraction, processing and internalising external costs associated pricing systems, to contribute to to correct theinadequaciesofcurrent Tax andsubsidyreforms can beused Assumed benefitsfrom anEnvironmental Fiscal Reform (EFR). ENVIRONMENTAL BENEFITS Benefits ofreform • Finances for pre-poor investments (e.g., education) • Improved access to environmental infrastructure • Addressing environmental problems that affect thepoor POVERTY REDUCTION from EFR. Figure 7.3summarisesassumed benefits EFR extraction oftheirnatural resources creating fiscal revenue from the perhaps particularly important is For developing countries, whatis political elites often manage to evade. income taxes, whicheconomic and those ofvalue-added taxes orcertain tend to beconsiderably lower than The administrative costs ofeco-taxes 2011; Jaeger,2011). 2011; OECD,2010b;CourdesComptes, such aslabourtaxes (EkinsandSpeck, used to lower other“distorting taxes”, productivity programmes where not technology development orresource revenues can beusedfor financing other fiscal goals,for example thetax They are usually equally motivated by (UNEP, 2004;UNEPandECLAC, 2003). of deteriorating airandwater quality way ofstopping deleterious trends the taxes can alsobeanappropriate these taxes are linked to pollution, wasteful methodsofextraction. Where to overcome theoften careless and taxes can alsoserve asanincentive by foreign-owned interests. Extraction • Reduced drains onpublicfinances • Reduced distortions • Revenue mobilisation FISCAL BENEFITS

101 technologies, opportunities decoupling 2 and policy options Insightsonpolitical feasibility of • List ofpotentially • [6] [5] [4] [3] [2] [1] subsidy reform subsidies for assessment environmentally harmful Are data available? Are there insummountable What istheeconomic and What isthesectoral policy Does thesubsidylead to a Is there asubsidy? obstacles to reform? subsidy? social relevance ofthe context? impact? significant environmental production orconsumption, while other such asacash paymentperunitof government to producers orconsumers, transparent financialtransfer from Some subsidiesinvolve anexplicit and by thosecurrently receiving them. the political unpopularityofsubsidyreform complexity ofthesubsidylandscape, and for theforeseeable future, dueto the harmful subsidieswillremain achallenge countries, thereform ofenvironmental needs ofthepoorest. However, inmany preferential water andenergy tariffs for the reduction strategies, combining itwith subsidy reform aspartoftheirpoverty countries have embarked ontax and A growing numberoflower-income Figure 7.4 1. Screening 7.5.2

TheEnvironmentally HarmfulSubsidiesreform tool, ordecisiontree (IEEPetal.,2009b,p.7) Challenges for reform

[3] [2] [1] 2. Subsidy removal likely to benefit theenvironment More benignalternatives Policy filter limits Do thesizeandconditionality available oremerging environmental damage? volumes? of thesubsidylead to higher Checklist for assessing Checklist for assessing benefits ofEHSremoval the environment YES NO YES NO YES NO subsidy of size the calculation Recipe bookon benefit environment significant to have not likely removal is Subsidy they proposed in2009(IEEPetal.,2009a) to greater resource productivity. Thetool aspects thatactasbarriers to transition help reform subsidiesbyremoving such partners came upwithadecisiontree to for European Environmental Policy and Development Strategy of2006,theInstitute In thecontext oftheEU’s Sustainable level ofsubsidies. reports, itisnoteasyto determine the the existence ofofficialannual subsidies motives. For thisreason, notwithstanding them “off-budget”)primarily for political governments like to hidesubsidies(keep their effects onpublicfinances. Infact, are significantly different interms of however, explicit andhiddensubsidies subsidies are hidden.By definition, is shown inFigure 7.4. Onlineoftrade offsbetween • Insights • economic impactsofsubsidy environmental, socialand rationale [2] [1] [5] [4] [3] 3. Are are they met? What are thesubsidy objectives? Long term Long term Social economic and Cost effectiveness effectiveness other impacts Broader assesment on validity YES of subsidy

NO

4. [4] [3] [2] [1] Analysis ofreform options List ofcompensatory • Analysis ofimpacts • Onlineofalternative policies • What are thefacilitating What are thepotential factors for success? impacts? economic andsocial What are thecost benefits ofeachoption? What are thepossible reform options? measures alternative process

102 technologies, opportunities decoupling 2 and policy options society thatare notfelt bythosecausing (externalities beingdamagesandcosts to into thecost ofproducts andservices and to integrate negative “externalities” typical market failures inresource prices, this they are designedto correct the of therespective commodities. Through environmental impactscaused bytheuse to the“external” cost ofthesocietal or fixed atan“optimal” rate, corresponding taxes for resources, orpollution,shouldbe Cecil Pigou(Pigou,1920),assumes that levels oftaxation, starting withArthur Almost alloftheliterature onoptimal on otherthings. it through efficiencyand spend thesavings decision whetherto waste energy, orsave support paymentsleaving themwiththe wasting energy, orifthey receive direct induced bylow energy prices to continue whether ithelpsthepoormore ifthey are very poor. There, thequestion remains attention isneededintheimpactson Whenever prices are changed,special 49 a view to maximiserevenues, meaningto view oftaxes onresource extraction with companies, recommends along-term The ICMM,anassociation ofmining of polluters to convenient tax havens). at modest levels (partly to avoid migration raise revenue. Sofar, they are generally set and ICMM,2009),are designedprimarily to raw materials (Commonwealth Secretariat emissions, energy or–rarely –onother majority ofexisting taxes onpolluting Despite theacademic literature, thevast minerals consumption. that raise theprice ofenergy, water and the political debate onlevels oftaxes followers’ considerations currently define determining external cost them). Despite theobviousdifficultiesof

For carbondioxide emissions, assessmentsdifferbyseveralorders damage 2009) of magnitude. And forRussia, externalitiesmightevenlook positive: (Shuster, 7.5.3 level oftaxes Finding anappropriate 49 , Pigouandhis Figure 7.5gives anindication ofthesize economy. at theotherfactors creating biasinthe the effective price oftheresource, and – for example theimpactofsubsidieson taking account theextent ofthosebarriers in overcoming barriers to transition, and so include looking attherole thatprices play than the“optimality”oftaxation. Thiscan account awiderrange offactors, rather taxation willusually needto take into estimation oftheappropriate level of resource-productive investments, the create theconditions thatfacilitate greater When thedecision-maker’s goalisto 2009, p.11). (Commonwealth Secretariat andICMM, maximise resource extraction over time Source: Eurostat, 2011e Eurostat, Source: 2009, (% ofGDPandTotal socialcontributions), 1999- Figure 7.5 EU countries and3percent intheUSA. compared withabout 6percent intypical roughly 10percent offiscal revenues, of resource andenvironmental taxation: the country withoneofthehighest level eco-taxes worldwide. SouthKorea isnow Europe beingthecontinent ofhighest of environmental taxation inEurope, with Total environmental tax revenue, EU-27 103 technologies, opportunities and policy options Figur 1993=100 Indexed decoupling 2 100 110

80 90 Environment Programme,http://geodata.grid.unep.ch. Source: UNEP,2011.TheUNEPGEODataPortal,ascompiledfromCarbonDioxideInformationAnalysisCenter(CDIAC).UnitedNations e 4.8. 1993

Fuel dutyescalator1993–1999 United Kingdom CO 2 emis Existing cautious examples ofagradual effect. anticipation. Thisiscalled thesignalling behaviours, asfirmsandpeople adjust in alone induces more resource-efficient announcement offuture changesintaxes gradually, to give timeto adjust. Often, the Taxes reforms are often introduced remained highandstable, UNEP, 2011b,p.70) Canada, whosepetrol consumption more orless GDP rose atrates similarto thoseoftheUSA and of fuelusefrom GDP(notshown onthegraph) as unification). Oneresult hasbeen notable decoupling from 1992to co-finance the cost ofthecountry’s Tax Reform in1999,addingto aheftylevy onpetrol escalator in1993,andGermanyitsEnvironmental consumption (theUKintroduced thefuelduty Figure 7.6 report shows theevidence. and Canada.Figure 7.6taken from that compared thesituation withthatoftheUSA fuel taxes hadinBritain andGermany of theeffect thestep-wise introduction of Our first decoupling report offered evidence and oncustomer behaviour. had amajoreffect bothonmanufacturers cases, theannouncement offurthersteps the dutyincreased bysmallamounts.Inall were progressive, meaningthatyear-by-year the Germanecological tax reform of1999 on transport fuels,introduced in1993,and was still zero. AlsotheBritish“escalator” tax the announcement periodwhenthecharge had theirstrongest steering effect during years before beingactually collected, they charges thatwere announced in1976.Four approach includetheGerman wastewater sions fr 7.5.4 om f

os CO sil fuelc 1998 Induced changes 2 emissions from fossil fuel onsumption Ecotax 1999–2003 Germany 2003 ● ● ● ●

Germany UK USA Canada 2008 choices. influence prices, andhence investment rights-based market institutions which illustrate thepotential: bothoftheseare society. Thetwo examples inthissection take into account thechallenges facing policymakers create market decisionsthat arrangements have beencreated by many examples where new institutional in themarket. There have now been norms thatshapeeconomic interactions rules, regulatory framework andsocial resource productivity isslow changeinthe One ofthebiasesagainst changetowards 2010; Kreycik etal.,2011). Couture andGagnon,2010;Couture etal., worldwide (World Future Council,2009; investments inrenewable energies and developing world) andhasboosted 60 countries (bothinthedeveloped It hasbeencopied oradapted inroughly 2000 andmodifiedseveral timessince. Renewable Energies Act,adopted in power. Thelegislative instrument isthe scale hydro andbiomass-based gasand FITs, for windenergy, solarpower, small Germany wasthefirst country to offer respective renewable energy. average costs reductions ofproducing the is reduced over time reflecting reducing cost ofgeneration. Often thecompensation produced; 3)purchase prices basedonthe contracts (15-25years) for theelectricity 1) guaranteed gridaccess; 2)long-term FITs typically includethree key provisions: technologies. overcome thebiasestowards existing term contracts to helpnew technologies returns oninvestments through long- energy producers. They provide secured covering compensation to renewable the turnofcentury, offer cost- Feed-in tariffs (FIT), introduced since 7.6 7.6.1 institutions Creating new market Feed- intariffs (FIT) 104 technologies, opportunities decoupling 2 and policy options of whichappearto bestimulated. for technical innovations inthefield,both (Figure 7.7),andalsopatent applications venture capital into renewable energies They have proved very effective atmoving transition countries in2010andearly 2011. were implemented inseveral developing/ the case ofphotovoltaic. New FITpolicies that exceeded expectations, particularly in policies inresponse to strong markets in 2010focused onrevisions to existing IEA (IEA,2008b).Most FIT-related activity a numberofanalyses, includingbythe This conclusion hasbeensupported by electricity” (European Commission, 2008b). schemes for promoting renewable most efficientandeffective support feed-in tariff regimes are generally the Commission concluded that “well-adapted A detailed analysis bythe European control. Asurvey (OECD; 1999)found nine ago withlocal andnationalpollution Emission-trading schemesstarted long are manyincarnations oftradable permits. management ofcarbon emissions, there Now frequently discussed for encouraging markets. be boughtorsoldinartificially created resource depletion orpollutionthatcan Tradable pollutionpermitsare rightsto (Knol, Beta, 2012) adoption in2000ofthefirst feed-in tariffs law efficiency andrenewable energies after the Figure 7.7 7.6.2 Venture capital investments in Tradable permits 1968) inabookpublished1968.Ineffect, Canadian economist JohnDales (Dales, permits wasfirst developed bythe The concept oftradable pollutionemission (e.g. inChesapeake Bay,USA). nutrients causing water eutrophication as salt,volatile organic compounds or and several undesired pollutants such grazing rights(Australia), water supplies, Canada, New ZealandandNorway), Trading System), fishingquotas (e.g. permits (inBritain’s LandfillAllowances For example, they are usedfor landfill and five applications inland-usecontrol applications incontrolling water pollution in managingwater resources, five applications infisheries,three applications applications inairpollutioncontrol, 75 50 choices ofconsumers. goods prices, alsoaffects theconsumption able to pass ontheadditionalcosts to final companies and,to theextent thatthey are may alter theproduction decisionsof emission permitmarket. Thatprice through supply anddemandinthe The price given to pollutionisdetermined reduce emissions. This situationcreates anincentive to and themarket price for pollutionpermits. reducing anadditionalunitofpollution) marginal abatement cost (thecost of is basedonacomparison between the additional permitsonthepermitmarket out measures to reduce pollutionorbuy systems. Thedecisionwhether to carry therefore often called cap andtrade trade). Tradable permitsystems are and sell,orbuy,permitsto match (the their permits,orchangeemissions release thelevel ofpollutants matching owners ofthepermitsmaykeep themand the desired level ofemissions (acap). The limited numberofpermitsconsistent with Usually, thegovernment issues only a free goodinto acostly production factor. tradable permitsturnpollutionfrom a

For atheoretical and practicalessaysee Tietenberg, 2006. 50

105 technologies, opportunities decoupling 2 and policy options polluting emissions: disadvantages oftradable permitsfor There are various advantages and movements upanddown. suffered from massive, andjerky, ETS, mentionedabove, hasadditionally artificial markets, ifallowed to. The Speculation can distort anddisruptthe in permittrading. size ofacompany obligedto participate schemes defineafairly large minimum the state. Infact, most emission trading a needfor administrative capacity for Another ishightransaction costs, and permits ismeasuringthepollutants. One evident challenge ofemission polluters to reduce emissions. and, inpractice, astronger stimulus to considerable revenues for thestate in periodicauctions,leading to governments can alsosell thepermits the intended steering effect. However, to insignificant levels, thusannihilating downturn, led permitprices to collapse allocation, exacerbated byaneconomic greenhouse gasemissions, where over- Trading System (ETS)for CO the case for theEuropean Emissions historical emissions. Thishasbeen charge, too generously, dependingon Often permitsare allocated free of • to offsetlarge partsoftheir allowed participatinginstallations A linkingdirective oftheEU installations. carbon-saving technologies and long-term investments in frustrating allthosewhomade very unpredictable fluctuations, a new breed ofspeculators andto All thisserved as aninvitation to International Emissions Trading. Mechanism (CDM),and the Clean Development protocol, JointImplementation, “flexible mechanisms”oftheKyoto obligations abroad, usingthethree 2 and other andother For manydecades andinmanycountries, 52 51 the standards. met withvarious forms ofactivityto meet some combining different standards to be have different layers ofcomplexity –with example). They can take manyforms, and and emissions limits(into water, orair,for products standards, efficiency standards, of products to beused.They include require different processes, technologies products, orprocesses, or,alternatively This form ofpolicymeasures can limit of buildings particular around theenergy performance requirements to drive energy efficiency,in countries started adoptingmandatory price shocksin1973and1979,several was ignored. For example, after theoil threat oflegal sanctionsiftheregulation by regulation thatlimited behaviourwiththe of environmental harmwere implemented (mainly energy efficiency)andthereduction measures usedfor resource productivity some ofthemost important policy

7.7 For agoodoverview: World Council, Energy 2008. windfallprofitsto incentives creating perverse The authorsdescribevery story canbefound in:story The Economist, (2010). pricesforCO leading toartificiallylow destruction hasoveryearsaccountedforroughly 50%oftheETSmarket, HFC-23,destroy massivelycashinasthey “reduce” global warming. HFC-23 23, 14000timesmoredangerous thanCO potential 1700timeshigherperweightthanCO manufacturers ofchlorodifluoromethane(HCFC-22)withaglobalwarming • mandated requirements Bans, prohibitions and after destruction ofvirgin forests. impacts), orforest monocultures with heaviergreenhouse gas they “replaced” cattle farming developing countries (because offsets for bigpigfarms in (Kaniaru etal.,2007) of ozone-depleting substances cheap destruction ofby-products acceptance undertheCDMof perverse incentives suchasthe namely quite oddandpartly led to anotherkindofdownside, The flexible mechanismshave 52 . 2 permits. A journalistic accountofthe 2 . to Companiesofferingcheaply 2 , anditsbyproductHFC- 51 , orcarbon 106 technologies, opportunities decoupling 2 and policy options norms andstandards (GTZ, CSCPandWuppertal Figure 7.8 relevant typesofstandards Figure 7.8lists anddescribesthemost of changeto bemet. pollution level) astheframing for thelevel goal (suchasanenvironmental ambient Some can specifyanenvironmental 53 to change,theeffectiveness ofwhich be (butisnotalways) astrong motivation 2004). Thethreat oflegal sanctions can are sought(Harrington andMorgenstern, can sendclear signalsonwhatchanges have clarityof purpose andoutcome, and very effective atdrivingchange.They often Direct regulatory requirements can be “command andcontrol” measures. policy measures are sometimescalled sanctions. Partly for this reason, these punishing violationswithformal legal enforce compliance to thesestandards, which theninspect,monitor, and They are adopted bypublicauthorities Institute, 2006,p.I-1) standards Product standards and process Management standards Technology standards Ambient standards Emmission

The term ‘command andcontrol’isactuallymuchnewerthantheoldterm military language.military See: Short, 2007. led tothenewlabelof ‘command andcontrol’, atermstemmingfromtheUS feelingssince1980that of environmentalregulation. Itwasanti-regulatory Type Different typesofenvironmental efficiency characteristics. residues inproducts orenergy characteristics, e.g.onchemical Specify certain product up oftake-back-schemes. maintainance activitiesortheset- activities, e.g.refular monitoring or Specify certain behaviours and technologies. or byreferring to thebest available or forbidding certain technologies, must beused,e.g.byprescribing Specify wwhichkindoftechnology maintained. water orsoilqualitythatmust be Set minimumdesired level ofair, standards). terms (perfomance-based permitted emmission inquantitative Specify themaximumlevel of Description 53

productive technologies: the conditions for investment inresource- of instrument playsakey role increating to directly reach apublicgoal,thistype Although often regarded asprimarily away the impactofpenalty. authorities enforcing theregulation and depends onthecredibility ofthepublic periodically review and reset thestandards. This can bemitigated bymechanisms that no incentives for innovating beyond that. particular goal(like anemission level), but usually provide incentives for reaching a the standards are naturally “static”: they changes. Onedisadvantage can bethat change, skillcapabilities anddemand many factors, includinghow trade patterns The effects ofdirect regulation dependon stimulating changeto alternative that isbeingregulated –instead bring anendto theeconomic activity innovators. Itisvery unusualthatthey productive technologies, andreward for alternative, more resource- technologies, they create new demand existing (poorly performing) When they prohibit someofthe organisational methods. less) innovative technologies, skillsor they alsocreate demandfor (more or standards, behaviours orprocesses, When they mandate particular alternatives. than themore resource-productive less-productive technology ischeaper have created conditions where the essential to overcome biasesthat productive products. Thiscan be opening markets for more resource- market, cuttingcompetition, and products ortechnologies from the (or more environmentally harmful) remove theless resource-productive produce thesameproduct. They function, oralternative methods to products thatdeliver thesame 107 technologies, opportunities decoupling 2 and policy options more attractive, andhelpscounter biases. further investment inresource productivity demand for suchtechnologies makes – e.g.energy efficient)themselves. Greater which are simply more resource productive more resource-productive technologies (or for products thathave beenproduced with measures thatstimulate increased demand productive technologies. Thisincludes ways to stimulate demandfor resource- decoupling isthewiderange ofadditional makers have to create theconditions for Another typeofmeasures thatdecision- (Hamamoto, 2011). the future standard for thewhole industry vehicles andusestheresults to define energy-efficient household appliances and Programme, whichidentifiesthemost example ofthisistheJapaneseTop Runner possible. Themost comprehensive scheme is now economically andtechnologically Usually thisreview takes into account what consumption preferences. environmental issue, and so change their educate consumers abouttheresource or which are not otherwise apparent; andto characteristics of the products (or services) by providing themwithinformation on allow consumers to actontheirpreferences These ‘eco-labels’ have two purposes:to are typically appliedto retail products. and less harmfulto theenvironment. Labels products thatare less resource-intensive have beendeveloped since the 1970s, for Labelling programmes andschemes part ofpolicymixes. instruments mentionedinthischapter as effectively together, orwiththeother instruments, whichhave often beenused There are several distinct groups ofpolicy 7.8 7.8.1 productivity demand for resource Other waysto stimulate Labelling depleting substances. TheGerman products manufactured withozone- Substances labelwarnsconsumers of US EPA’s mandatory OzoneDepleting (Commonwealth ofAustralia, 2011b).The machines, dishwashers andtoilets Scheme covering showerheads, washing mandatory Water EfficiencyLabelling Zealand andAustralia have adopted a They can cover different resources: New awareness”. consumerism andincrease environmental specifically seeksto “promote green Similarly, Singapore’s Green Label environmentally soundproducts”. to encourage consumers to choose environmental aspectsofproducts and to “disseminate information onthe For example, Japan’s Ecomark seeks Wuestenhagen, 2012). have onconsumer choice (Heinzle and the EUlabelweakened theeffects itwould evidence to suggest thata2010redesign of countries around theworld. There issome of labelhassince beenadopted inmany which isseeninFigure 7.9.Thisformat a seven-step labelfor energy efficiency, measure. For example, theEUintroduced the outcome oflabellingasapolicy consumers react to it–andcan influence to bevery important for thewayinwhich The designofthelabelhasbeenfound technical advisers. assistance from technical research staff or credible independentorganisation with labelling criteria are determined bya scheme, product categories andeco- In atypical eco-labelling programme or sources), orwhole life-cycle. whether itisfishedfrom sustainable impacts over itsproduction phase(e.g. it isused(e.g.itsenergy efficiency)orits apply to theproducts’ performance when efficient” or“100%recycled”. They can short explanation onit,such as“energy different products andtypically hasa logo, isawarded to hundreds ofvery “Blue Angel”, incorporating UNEP’s 108 technologies, opportunities decoupling 2 and policy options cards/information labelsprovided by the 3) environmental declarations (e.g.report eco-labels), 2)self-declaration claimsand schemes: 1)environmental labelling(i.e. family covers three typesoflabelling environmental labelling.TheISO14020 a group ofstandards specifically governing Standards Organisation (ISO)hasdrawn up the EUiskept online. America (EPA; 1998b).Alist oflabelsin than 25schemesinAsia,Europe andNorth review in1998bythe USEPA found more Many countries uselabellingschemes.A refrigerator The labelshown above isfor ahighest efficiency with specifiedranges for different appliances. label shows highest efficiency(A)to lowest (G), Figure 7.9 54 move awayfrom past norms. standard practices, whichalsohelppeople They alsocommunicate new norms,or providing abenchmarkfor performance. innovative products orprocesses by Standards reduce uncertainty about resource-productive investments. also helpboost markets, sorewarding Stewardship labellingprogramme, and certification schemes (suchastheForest efficient products. Theseincludeforest help commercial buyers select more resource useofproducts ortechnologies Non-retail schemesdescribingthe producer).

http://ec.europa.eu/ecat/, accessed12th 2014 April 7.8.2 Thepre-2010 EUenergy efficiency standards Indicative normsand 54 TheInternational . models. TheEuropean EMAS(for resource resource productivity withinbusiness of normsthatincludemaximisation standards inthiscontext can helpadoption good practice isbeingfollowed. Theuseof the standard provides assurance that management approach: compliance with to asystematic, strategic andpractical services ortechnologies. They can extend Some standards gobeyond products, control. 14044:2006), mostly focusing onpollution performance (ISO14040:2006;ISO the ISO14000seriesfor environmental purposes. Since 1996,theISOhasused environmental andresources efficiency and safety, are increasingly beingusedfor a long timeto secure quality,compatibility Industrial normsandstandards, usedfor or obligingpublicadministrations to Green procurement involves inciting demand. or where innovators are unsure ofmarket a natural advantage for existing products, the private sector markets where there is technology, whichcan thenalsobreak into investments incommercialisation of presence ofthemarket encourages or services to commercial scale. The who bringtheirresource efficientproducts large nichemarket to reward innovators services. Itworks byproviding asufficiently ever-more resource-efficient products and harnessed to drive markets to produce organisations isconsiderable andcan be The purchasing power ofpublic technology” principle. progress, inlinewiththe“best available let themkeep pace withtechnological updating serves ofthesestandards (ISO 50001:2011)are examples. Frequent 50001 energy managementstandard many industrial operations) and theISO efficiency standards for buildingsand German DINEN15.000series(energy and environmental management),the 7.8.3 Green procurement 109 technologies, opportunities decoupling 2 and policy options where they are designedto bemutually create greater results, more cheaply, is aclear demonstration ofhow policies government procurement andeco-labelling The impactoflinkingtheuse drive markets. or environmental goalshave andcan also committing themselves to theresource public sector. Majorprivate companies Green procurement isnotlimited to the names. and isbeingpromoted underdifferent purchasing hasgainedwide acceptance America, Australia andNew Zealand,green growth (IPGN,2010).InAsia,Europe, programmes to enhance green business 2010 itpublishedareport onpoliciesand Network wascreated in1997Japan.In The International Green Purchasing office equipment,appliances, andvehicles. green publicprocurement are buildings, and/or low pollution.Typical targets for recognised for highresource efficiency purchase goodsandservices thatare 56 55 organisations. these products, butsotoo were private only were government agenciesbuying products grew itbecame evident thatnot equipment offices stock Energy Star-labelled office government mandated thatallfederal equipment programme. Initially, theUS case withtheEnergy Star-labelled office labelling programme. Thishasbeenthe and enhances thecredibility ofthe market presence ofthelabelled products programme, ittypically increases the are usedbyagovernment procurement reinforcing. Where environmental labels

Through ExecutiveOrder12845 - “Requiring Agencies toPurchaseEnergy starterkit,The IGPNhasaninteractivewebandCD-ROMbasedpackage Efficient ComputerEquipment”. Commission, 2004b. public procurementandhasissuedahandbookon thesubject: European http://www.procuraplus.org/ exchangeofexperienceandotherpracticalassistance:a systematic 1000 citiesran ‘Procura+’ aSustainable ProcurementCampaignwith of LocalEnvironmentalInitiatives, withamembershipofmorethan http://www.igpn.org/focus_on/kit/index.html 7.8.4 55 procurement Linking eco-labels and 56 , butasthedemandfor these . The European Unionisstronglysupporting . Council The International mainly byreducing wasteful consumption efficiency oftheeconomy inotherways– patterns can alsoincrease theresource But changeinbehaviours andconsumption innovations. greater spread ofthesetechnological plays animportant partinfacilitating Removal orreduction ofbehavioural biases would beneededfor absolute decoupling. the wide,andinterlinked, changesthat some techniques) asitsentrypointinto spread oftechnological innovation (and can beused.Thisreport hastaken the important area where policyinstruments resource-productive innovations isanother The removal ofbehavioural biasesagainst (McKenzie-Mohr, 2007). (McKenzie-Mohr, 2007). “benefits” (i.e.incentives) for thatbehaviour while at thesametimeenhancing or challenges) to abehaviouroccurring, significant “barriers” (i.e.impediments community level whichfocus onremoving achieved through initiatives delivered atthe that behaviourchangeismost effectively science research whichdemonstrates Mohr, CBSMisbaseduponsocial (CBSM). Developed byDougMcKenzie- is CommunityBasedSocialMarketing community behaviourchangeprogrammes undertaking the designanddelivery of behaviour. Aleading methodology for perceptions related to theparticular community engagementto identify change programmes ismeaningful A key aspectofsuccessful behaviour require innovative policyinstruments. not needtechnical innovation, butmay consumer to reduce waste food often does problem. Changingbehaviourbythefinal that food, aswell ascreating afinalwaste retail steps inthesupply chainthatprovided production, processing, transportation, and and cost. Italsocompounds losses inthe food purchased. Thisisasignificant waste, OECD householdwastes 40per cent ofthe and disposal.For example, theaverage 7.9 behaviours Changing consumption 110 technologies, opportunities decoupling 2 and policy options needed, for example. For instance: in separation ofwaste for recycling isoften decoupling strategies. Behavioural change products orgoodsisakey partofseveral consumption andattheendoflife of behaviours around wastage during Measures to changepeople andfirms’ Box 7.1describessomeofthisprogress. including elements ofbehavioural change. that hasbeenachieved with strategies decoupling growth from waste production This could buildon the existing progress on consumption worldwide. the philosophy ofmanufacturing and concept, ifsuccessful, islikely to transform consumption, thecyclical economy of economic wellbeing from resource towards agreen economy anddecoupling As isthecase for allseriousattempts goes far beyond oldwaste legislation. This new trend ofacyclical economy cent from 2000-05. has reduced itsresource useby14per recycling (Wuppertal Institute, 2007).It become asocietywithgreater resource from athrowaway societyinorder to that represents aconceptual turn Society (Government ofJapan, 2000), Establishing aSoundMaterial-Cycle such astheFundamental Lawfor visions andlawsover manyyears, Japan hasintroduced anumberof levels (Chang,2009). and greater efficiencyatcompany fewer natural resources andenergy change to deliver people’s desires from “big circulation” andincludeslifestyle three levels: attheregional level, itis economy” isbeingimplemented at economy” initstitle. The“circular the world usingtheterm “circular Economy Promotion Law,thefirst in China in2009adopted theCircular 57 or inoperating anindustrial process; 2) in producing anddelivering aproduct reducing theamountofwaste generated involve somecombination of1) directly effectively the amountwaste beinggenerated cost that can helpreduce oreven eliminate policy, product designandprocess design There are several exciting innovations in

For instance, acost-benefitanalysisfortheUnitedKingdomsuggestedthat society overtheperiod2009to2024of£8.2Billion (WRAP, 2010). wouldprovideanetbenefitto (suchasincineration) residual wastetreatment restricting metals, glass, plastics, organics, frombothlandfillandother paper 2001 to 39per cent in2010(EEA,2013). rate more thantripled from 11percent in of theirmunicipalwaste. Britain’s recycling Germany, now recycle 60percent ormore where somecountries, suchasAustria and cent. Asimilartrend can beseeninEurope, rubbish; today therate stands at35per recycled only 9.6 percent ofitsmunicipal treated (OECD,2008d).In1980,America 21 percent beingincinerated orotherwise landfills, 30percent beingrecycled and of municipalwaste beingdisposed ofin (OECD, 2001b).In2005,only 49percent per cent for bothincineration, andrecycling municipal waste wassentto landfills,18 mid-1990s, approximately 64percent of production. InOECDcounties inthe decouple economic growth from waste decades inOECDcountries to relatively Progress hasbeenmadeinthelast two waste production Box 7.1: from theOECD,2008d) (Source: TNEP(Smithet al.,2010a)basedondata 1980-2030 OECD country municipalwaste generation, Figure 7.10 7.10) relatively decoupled from GDP. (SeeFigure slower pace since 2000,hence ithasbeen still increasing inOECDcountries, butata Overall, municipalwaste generation is Decoupling economic growth from 57 . Theseinnovations usually Decoupling ofOECDGDPfrom 111 technologies, opportunities decoupling 2 and policy options than theequivalent primary materials. materials thatare, inmanycases, cheaper and enablingamarket ofsecondary by reducing thecosts ofmaterial inputs decoupling ofwaste from economic growth These five features enable amuchgreater bans oncategories ofwaste to landfill. with recycled content, and5)phasingin easy; 4)increasing markets for products product take-back iscost-effective and 3) designingservice processes sothat and recycling iscost effective andeasy; designing products such thattheirreuse 58 metal recycling (UNEP,2013a). report ontheopportunities andlimitsof products. We have describedtheseinour recycle acertain percentage oftheir by requiring producers to take backand economic arrangements andincentives policies through extended producer responsibility have promoted thereduction ofwaste is One ofthewaysinwhichsomecountries

Including theEU, IndiaandChina(UNEP, 2013a, p.90). 58 . Thesepoliciescreate new 112 technologies, opportunities © Shutterstock.com decoupling 2 and policy options D decoupling. them to thenature ofthebarriers to lessons from past experience, relating chapter describessomebroadly applicable increase thechances ofsuccess. This reform can provide guidance thatmay However, past experience withpolicy decoupling. created theconditions for higherrates of applicable policymeasures that have makes itimpossible to identifygenerally economic andpolitical contexts. This involved andwiththevariety ofspecific countries, withthedifferent resources developing countries andhigher-income easy. Thenature oftheissues differs in in different contexts, andthetask isnot There are different hurdles to overcome the spread oftechnological innovations. 8 to bringaboutpolicychangeand draw onlessons from past efforts steps to promote decoupling can ecision-makers wantingto take Future Policy Considerations for 59 the decision.Thoseseeking change: norms andassumptions whichare shaping their interests, relative power andthe who are able to influence thedecision, this meansbeingaware ofthesetactors is made.Inpractice for changesto policy, framework inwhichthepolitical decision policymakers look attheinstitutional chances ofsuccess appearhigherwhere to unlock thatresistance. Inthistask, the the conditions for decoupling would need to policychange. decoupling isfrequently dueto resistance existence ofbarriers andbiasesagainst is theobservation thatthecontinued At thecore oftheseconsiderations, cultures andconstraints. organisations whichhave institutional attempts atchangewithinotherlarge many mayalsohave somerelevance to phrased for policymakers ingovernment, Although theseconsiderations have been

4. As mentionedinChapter 59 Success increating 113 technologies, opportunities decoupling 2 and policy options “absolute decoupling” hasremained of convenience. Thehistorical fact that side, andconsumers mayfear theloss providing energy willbeonthelosing trading, refining ofminerals, andcompanies popular. Extractive industries, shipping, productivity increase isnotautomatically leadership. Obviously, intentional resource is significant inertiaagainst itwilltake Bringing aboutinnovation where there of thepolicies. facilitate theadoptionandimplementation sufficiently to influentialinterest groups to a setofchangeswhichtogether appeal Using packagesofpoliciescan produce the useofpackagespolicyinstruments. This isoneofthefactors thathasdriven working withinorganisations and institutions to manypeople. Thisincludesindividuals which presents opportunitiesfor leadership Many changescan contribute to decoupling, separating performance. seems likely to have beenoneofthefactors of leadership inresponding to change to respond sufficiently fast. The quality and countries thathave declinedbyfailing conditions ortechnologies, andoffirms rewarded byresponding first to new of economies andfirmsthathave been Economic history isbuiltonexamples productivity happen. make anintentional increase ofresource determined leadership willbeneededto than supporters. Inotherwords, strong and productivity tends to findmore opponents that theintentional increase ofresource the rare exception seemsto indicate 8.1 “... needto become adeptatinstitutional Salmons, 2010,p.132). the more hostile ones.”(Ekinsand more supportive elements andweaken question, andwork to strengthen the supportive, orhostile to, thereform in analysis, identifyingthoseelements Leadership likely where policymakers seekingchange: change Based onpast experience for policy and taxation policy. innovation, fiscal, environment, employment industrial, market regulation, development, decision-makers withinfluence on consumers). Insidegovernment, itincludes economy andcivilsociety(including across most partsofgovernment, the 60

8.2 5inEkinsandSalmons, onChapter This sectiondraws 2010. will bringthem,orenoughof from policychange.Considerwhat Take account ofthepotential losers wrongly) to beself-interested will be unfavourable. Sources seen(rightly or to becontested orrejected where itis very important, asevidence islikely change. Thenature ofthesource is – onthescience orontheimpactsof sufficiently trusted independentadvice Create, orrely on,asource of and supportchange. potential winners to seeopportunities, profit from new conditions. Thisallows models andinvestments inadvance to expense, asfirmsshifttheirbusiness can bechanged,often withoutgreat strategies, future investment patterns creating shared visions andcredible their expectations ofthefuture. By consensus future goal, bychanging focus theirinnovation towards a Help thoseaffected bychangeto capital destruction. existing investment cycles, to reduce align implementation ofchangewith revenues from atax orcharge) or (perhaps from the“recycling” of help theminnovate, compensation transitional financialsupportto to favour change.Potentially use 60 for decisionmaking institutional framework Working withthe , success appears to bemore 114 technologies, opportunities decoupling 2 and policy options specific policydecisionthatis: Create aninstitutional structure for the standing. in industry are frequent andlong- retains ownership ofchemicals used sector where chemical supplier business modelsinthechemical consumer mayseempeculiar–yet that equipmentwhile itisusedbythe ownership ofvaluable materials in (like mobile phones) retaining electronic equipmentmanufacturers convincing. For example, theideaof arrangements work elsewhere can be odd. Demonstrating thatdifferent may seeminitially unfamiliar and behaviours orbusiness modelsthat decoupling willrequire new structures, policy. Manyofthereforms to increase countries, orindifferent realms of policies orpractices usedindifferent Present concrete examples of future economic advantage. which investments willbringgreatest conditions andsoperceptions about for changingexpectations offuture and theirimplications can becrucial about changesoccurring intheworld trusted, reliable andclear information any case beslow to change.Therole of the future state oftheworld, can in Knowledge, andsoperceptions about information formation mayhelp. and consensus buildingaround evidence isvery useful.Transparency much less effective. Objective scientific • opposing views. for the future thatreconciles can helpform acommon vision facilitates information flows, and in thedecision-making.This – are includedfrom thebeginning block decisionsatalater stage particularly thosewhomight powerful interest groups – to bemore successful when for changeappears more likely Participatory –makingdecisions 61

The ‘value chain’ referstothechainofproducersandmanufacturersthat being joined with many others)consumedbythefinalconsumer.being joinedwithmany upuntilitis(after pass aresourcefromwhenitisfirstminedorharvested instruments, asmentionedinsection Use asimultaneous mixofpolicy • • actors inthevalue chain.While or changerelationships between to vertically integrate businesses, value chain the economic actors allalong a For example, bringingtogether create coalitions for change. the productivity gainmay help they could capture someof that allow losers to seehow Finding participatory structures may create winners andlosers. net economic gain,althoughit the economy willnaturally bring Improving resource productivity in decision-making structures. pro-reform coalition withinthe enough people whocan form a Sufficiently broad to contain facilitate change. organisation to decidemay innovative mainstream ofan Finding waysto allow themore “lowest common denominator”). be madeto be decidedbythe (Decision-making issaidto otherwise willingorganisation. and are able to imposethisonan interested inblocking change parts ofthatorganisation are decision-making can meanthat of responsibility andconsensus industry organisations, division corporations orrepresentative government departments,private Within anylarge organisation, in political andeconomic actors. institutional blocks within Working around existing could form partofapolicymix. these complementary policies example to regulatory structures), require complementary policy(for these facilitative changesmay 61 mayidentifyways 115 technologies, opportunities decoupling 2 and policy options 62

of The EffectiveRate bycomparingthevalueadded Assistance isestimated world orreferenceprice.)Itincludes directandindirectassistance. a of anassistedsectorwiththesamevalueadded of anunassistedsector(at 6.4.2. Thiscan helptheactors ina also facilitate reform, indifferent ways: innovative investments. Yet, crisescan and greater availability offinance for less fear ofnegative consequences favourable for introducing change,with Good economic timesare often more political opportunitieswhenthey arise. Be aware ofoptionsfor reform anduse productivity inonestep. large, radical changeinresource a policymaker to bringaboutavery economic conditions exists thatallow it israrely thecase thatpolitical or effect ofseveral smaller steps, as Work to increase thecumulative either to innovate. offered andthere islittle scope for the purchaser buyswhat isbeing seller offers whatisbeingdemanded, which can commonly happenwhena “lock-in” between demandandsupply, This maybenecessary to overcome a recycling) to changeprofitably together. to finalproduct consumption and example, from raw material extraction value chainofeconomic activity(for • • sector. TheEffective Rate of state supportfor theagricultural impetus for athorough reform of provided therationale and deficits (of9percent ofGDP), state runningexcessive budget early 1980s,whichincludedthe situation inNew Zealandinthe An unsustainable economic into new investments with low which can bestimulated to enter when they lead to economic slack reforming economic activity, opportunities for productivity- Crises mayalsoprovide zero inthe1990s. 123 percent in1983to around Assistance to agriculture fell from 62

changing company reporting to include opponents to change(for example by changes theperception ofpotential political weight ofinnovators orfavourably that increases thefuture economic and It could alsomean implementing apolicy Global Institute, 2011). point for furtherdecoupling (McKinsey they operate in,isanimportant starting of decision-makers, andtheorganisations and stagnation. Changingthe“mindsets” parts ofgovernment often leads to deadlock for resource productivity between different frequent fragmentation ofresponsibility of resources to betaken more easily. The promoting thelong-term management or committees), whichallows decisions structures (like themandate ofministers a changeto thedecision-making In government, thiscould meanmaking facilitate future change. to anorganisation orexternal, can indirectly decision-making processes, eitherinternal future policyreform. Makingchangesto steps thatcreate theconditions for further, One aspectofsuccessful reform isto take 8.3 Changing the institutional Changing theinstitutional future policyreform framework to facilitate social supportcosts for thestate. can alsoreduce theburden of sectors ofthefuture, inwaysthat appropriate training, ingrowth labour can bere-employed with conventional areas. Unemployed possibly directing itinto less this unusedinvestment potential, provide certainty thatfrees up 2012). Policy changecan help billion (McKinsey Global Institute, holding excess cash of traded companies inEurope were economic times,publically returns oninvestments indifficult result ofuncertainty onfuture opportunity costs. By2011,asa € 750 116 technologies, opportunities decoupling 2 and policy options short term. Asexamples: the biasofdecision-makingtowards the this isparticularly thecase for overcoming have important beneficialoutcomes, and structures have long beenappreciated to Changes to institutional decision-making account intheirbusiness decisions). companies take resource factors into information onresources thathelps 63

By means of the Climate Change BymeansoftheClimate Act 2008. to provide more favourable decision- reorganised government departments (and otherrelated questions) what thosecarbon budgetsshouldbe recommendations to government on organisation to provide transparent an independent,evidence-based steps to the2050goal,andc)creating year carbon budgets(constraints) as legally committing to aseriesoffive- 2050 greenhouse gastargets; b) by: a)legislating for bindingnational to reduction ofgreenhouse gasses making for thelong-term inrelation structures whichfacilitate decision The UKhasalsoattempted to create from short-term political influence. stability bydistancing thosedecisions was to provide greater economic importance to theeconomy. Theaim set interest rates –apower ofhuge 1998. Thistransferred thepower to to thecentral BankofEngland in was passed from thegovernment 1998, authorityover monetary policy economy. Inpartthisisbecause, in The UKisseenasastrong, liberal to give fullfinancialresults every Within business, Unilever opted not decisions onresource productivity. Plan) can beusedto create drivers for that (asinChina’s twelfth Five-Year countries, andtheseprovide structures long tradition inChina,andsomeother programmes to steer investment isa The useofmulti-year strategic making structures. 63 . Italso of products crossing manycountries, it global, withvalue chainsfor manufacture important. Astrade inresources is change isviewed asinternationally of change,notleast byindicating that act asapersuasive tool against opponents because aninternational commitment can in international markets. Butitisalso reduces fears ofunfavourable distortions concerted actionbetween countries, which domestic action.Inpartthisisbecause agreements have acted asstimulation for many examples where international is external agreement. There have been One factor influencinginternal decisions 64 efficiency ofthecar fleet risesby 1percent successes. For example, iftheaverage steadily increases atthepace ofdecoupling One potential way outisaprice signalthat insignificant. is ahighlikelihood ofeffects remaining signals. Butifprice signalsare weak, there the government imposingpainfulprice emigrate, andconsumers tend to contest are strong, industries mayjust give upor characteristic difficulty:ifprice signals productivity typically runinto one and markets towards higherresource Economic instruments to pushtechnologies sector, publicsector, orboth. needed, whetherformed within theprivate to improve resource efficiencywillbe seems likely thatinternational institutions

8.4 Seee.g.: movestoQuarterlyTradingStatementsinApril2011.aspx 8.4.1 direction oflonger-term planning constant very short-term gaininthe structures for thecompany awayfrom quarter from 2011,changingincentive http://www.unilever.com/mediacentre/pressreleases/2010/Unilever productivity gains price risesto resource practice –linking resource Putting decoupling into mechanisms Options for pricing 64 . 117 technologies, opportunities decoupling 2 and policy options is needed. illustrate thetypeofcombined policywhich to unlock inertiadescribedabove, and often includeseveral oftheconsiderations resource-productivity increases. These create pricingmechanismswould promote There are several forms inwhichpoliciesto type ofcombined policywhichisneeded. described above, andmaycome close to the of theconsiderations to unlock inertia A policyofthiskindcan combine several over along periodoftime. signal can have astrong impactifcontinued to avoid unnecessary trips.Hence asmall reduce petrol consumption perkilometre or well asconsumers –to speedupefforts to induce car manufacturers andtraders –as of thecontinuation ofthisschemewill tolerable. However, thefirmannouncement petrol atthepumpwould seemfair and in oneyear, a1percent price increase of 65

For example, seethesuggestionin Weizsäcker etal., 2009. economy resource productivity insideanation’s documented increases ofenergy or a chosenresource upwards inlinewith subsidy reduction to move theprice of One proposal isto usetaxation or 65 . a resource, theproposed changeswould allowed to focus only ontheprice level of In asimplistic economic debate thatwas qualities oftheseproposals. In thesectionsbelow we look atdifferent 66 nature oftheproposals’ impacts. would notgive anaccurate picture ofthe assumptions thattheeconomy isstatic, dynamic economic system withunderlying focussing onjust oneelement ofacomplex would beharmed.However, thatdebate, arguments thatcompetitiveness orincomes win little support.They would lose outto

For example, proposalsalongtheselineswereconsideredindiscussions resource_efficiency/re_platform/about/meetings/index_en.htm the EuropeanResourceEfficiency Platform 8.4.2 similar resource taxes resources from countries without taxes appliedto products containing This could becoupled with resource (by asmallamountof2-5percent). announced byincrease eachyear of extraction ofimport,andispre- resources, whichisappliedatpoint Another isto apply atax onvirgin Discourse Broadening theEconomic http://ec.europa.eu/environment/ 66 . 118 technologies, opportunities decoupling 2 and policy options could alsomake clear thatproductivity The presentation ofthesecond proposal commercial businesses. losses to individuals, to families andto the proposal could remove most fears of providing adifferent framing for theissue, than just price andfears oflosses. By costs, innovation andinvestment rather the proposal. Itmoves thedebate to net political discourse around theeffects of first policyproposal helpsbroaden the efficiency gains,thestructure ofthe By explicitly linkingprice risesto more outputthanksto theproductivity gain. of energy, aseachunitof energy delivers unit ofenergy, butconsuming fewer units before –payingahigherprice for each same qualityofenergy services astheyear pay thesameamountofmoney for the circumstances, onaverage, onewould on average, notincrease. Inthese competitiveness andlivelihood) would, costs ofresource used(whichinfluence increases led to efficiencygains,the Where theannouncement ofprice resource constraints. Andonaverage, the first mover advantages inaworld of with theproposals would likely beearning Similarly, anycountry going aheadnow than industries incompeting countries. higher addedvalue perunitofenergy high-tech industry thatcreated much it flourished, buildingupafirst-class roughly twice ashighintheUSA.But and 1980shadindustrial energy prices and goods.Japanduringthelate 1970s resource prices thanoninnovative services in mature countries, now hingesless on competitiveness ofindustry, particularly change inthepolitical discourse. The past experiences could alsofacilitate a the economy. Makingcomparisons with the additionaltax revenues could improve economy mightnotincrease, while useof that netcosts ofresources usedinthe increases were theexpected result, and The proposals would notentirely remove labour costs (SeeAnnex B). – andyet iscorrelated withever increasing previously unimaginable standard ofliving now easily 20timeshigher,facilitates a productivity indeveloped countries is since theindustrial revolution. Labour productivity increases over 160years partial analogy withthesuccess oflabour Political discussion could alsoincludea consumption. a very smallrebound effect onresource one could expect continued growth with prices are announced to move broadly defining corridors could apply whether receiving muchattention. Thisideaof price floor (aminimumprice for carbon) carbon prices, with theintroduction of pricing have beendebated inrelation to could reduce thelevy. Suchcorridors of And ifthey touch theupperband,state the lower band,taxes willbringthem back. can therefore beremoved: ifprices touch Uncertainty ofextreme disruptionsinprice allowed to fluctuate insidethecorridors. heating purposes.Market prices would be for vehicle fuels,electric power and this could bedifferentiated corridors slowly upwards. For instance, for energy can definecorridors for prices moving although details would vary. Thestate trajectory, whichisrelatively simple, introduction ofalegally bindingprice of future prices could betackled bythe Worries aboutremaining unpredictability uncertainty aboutthedirection ofprices. be reduced, inparticular long-term remain. However, uncertainty would resource productivity increases would uncertainty aboutfuture energy or as variations inresource prices and in resource productivity withinacountry, uncertainty aboutreturns oninvestments 8.4.3 uncertainty investment byreducing Reducing biasagainst new 119 technologies, opportunities decoupling 2 and policy options If amanifest crisisofoilavailability or discussed inAnnex B). like inthecase oflabourproductivity increase ofresource productivity (rather to along term andultimately dramatic prices andefficiencyincreases willlead that themutualreinforcement between (and sogreater growth). Itseemsplausible would lead to greater resource productivity technologies outlinedinChapter 3that innovation andadoptionofthe typeof commodities collapsing. Thiswould drive fear oflosses dueto prices oftherelevant resource efficiencyinvestors would have no the first timeinhistory, thecommunity of energy andresource productivity asfor investing inradical improvements of could afford to thinkbiginterms of ever-more resource productivity. They laboratories to systematically invest in states, individualcompanies orresearch and predictable incentive to investors, The policieswould serve asastrong each year: bothcould beadjusted. determined percentage increase intax in linewithefficiencygainsorbyapre- on otherpeople orfirmsintheeconomy, for the government to reduce taxation revenue, eachmechanismcreates choices Firstly, byproviding asource ofgovernment introduction. to form acoalition thatsupportstheir the potential to create sufficientwinners The proposals have aspectsthatgive them also bringgreater gains. policy withotherenablingpolicieswould in labourproductivity. Coordination ofthis went handinwithgreater increases just aslarger increases inpast wageprices speedier transition to resource efficiency, somewhat faster, soasto stimulate a can bemadeto move prices upwards climate risksplaguestheworld, decisions 8.4.4 favour ofchange Creating sufficientwinners in Secondly, byincreasing resource tax resource consumed decreases. decline, even asthenumber of units that thetotal potential revenue doesnot increases, orincreasing ityearly, means the magnitudeoftax to productivity steering effect becomes successful. Linking taxes), namely thatthey erode astheir change behaviour(like environmental frequently have withtaxes whichaimto taxes tackles theconcern thatgovernments of gradually increasing resource prices via policy’s success inbecoming law. Theidea whose supportmaybecrucialto the who benefit,orfrom thefinance ministry, support from people outsidegovernment deficits: thismayeitherwinpolitical increase spendingorto reduce fiscal package. instruments aspartofacoherent policy if desired, byapplying a mixofpolicy measures taking account oftheconcerns, real. Butallofthemcould beanswered by natural resources. Alltheseconcerns are face decliningrevenues in countries mining new equipment. Producers of resources families whosimply cannot afford to buy resource prices. There maybepoor abroad working underconditions of lower and now have to fear theircompetitors already exhausted theirefficiency potential There maybebranches ofindustry thathad solutions, orwhomare less productive. losers whohave noaccess to theinnovative By itself,theproposal would result insome positions infavour ofchange. and productive firmsto take political provides reasons for themore innovative on increased resource productivity, but greater incentives for competition based their competitors. Thisnotonly provides gains: thesefirmsreduce costs relative to have above average resource productivity competitive advantage offirmswhich the proposal increases therelative 8.4.5 losers inapolicymix Taking account ofpotential 120 technologies, opportunities decoupling 2 and policy options based onworkers employed. the refund ofrevenue raised could bemade resource taxes for industry. For example, practice, beenadjusted to energy and oxides. Thismodelcan be,andhasin a strong incentive to reduce thenitrous not lose anymoney buteachoperator had produced. Thustheindustry asawhole did based onthekilowatt hours ofpower they many kilograms ofNOxthey produced but of power plants,butnotinrelation to how returned thetax revenues to theoperators the tax together withamechanismthat So thegovernment decidedto apply operators. but thatwould have beenunfair to thebig no obligationbecause ofprohibitive cost – made liable to paythetax. Smallplantshad nitrous oxides. Large power plantswere on NOx,whichisthesumoftwo typesof causes. Thegovernment announced atax oxides were seenasoneofthemain no longer supportinganimallife. Nitrous leading to dyingforests andacidiclakes much ofEurope, wasplaguedbyacidrain Sweden. Intheearly 1990sSweden, like Here themodelfor operation comes from must have access to potable water, asthe the sametime,every person inSouthAfrica per cent economic growth peryear. Butat the country’s ambitiousgrowth plansof6 conservation andwater supply to support private andpublicinvestments inwater involves realistic water prices encouraging with itsintegrated water plan.Theplan South Africa hasset agoodexample price level for poorfamilies. policies thatallow for apreferential low more supplies)hasbeenaccompanied by (encouraging private capital to invest in water prices to realistic market prices generally low andsubsidisedenergy and many countries oftheworld, amove from use) from policy-induced price rises.In limited capacity to improve theirresource vulnerable low-income people (whohave Countries have alsofound waysto protect their economies, includingthoseaffected support particulareconomic sectors in the optiononspendingtax increases to exports. Thesecountries would have of theeconomic value oftheirresource resources slowed asthey captured more increased, even iftheexport oftheirvirgin might findthattheirnettax revenues Countries applying avirgin resource tax resource productivity gains. for increasing resource prices inlinewith be madepartandparcel oftheproposal amounts ofenergy inmany countries, could principle, whichisalsoinplace for small must bereally affordable for thepoor. This Africa, 2009).A“lifeline” amountofwater and Forestry clearly says(RepublicofSouth responsible DepartmentofWater Affairs mechanisms would needto becreated to of resources inproducts, international resource taxes onthebasisofcontent be assessed. For aproposal calculating metrics bywhichefficiency gainswould new institutions would includestandard to documented efficiencygains,these For the proposal linkingprice levels monitoring and tax level calculation. credible mechanismsfor assessment, to themechanism, withindependentand binding pre-commitment ofgovernment countries, butwould belikely to involve would becontext-specific to autonomous binding, institutional arrangements. Those would require new, presumably legally raised prices ofenergy orresources The designofapolicymechanismthat and socialimpactsofresource extraction. productivity, orto reduce theenvironmental fund programmes to improve resource where theproducts came, for instance to raised could berecycled to countries from of theirresource content, therevenues were appliedonproducts onthebasis by therisingtax. Where importtaxes 8.4.6 arrangements Creating new institutional 121 technologies, opportunities decoupling 2 and policy options could tieto institutions linking assessment need simplification through agreement. It components from multiple sources –would which would otherwisehave to dealwith This potentially complex exercise – detailing itscomponents’ characteristics. each product hada“product passport” set for estimation ofthecontent, sothat Standards andmetricswould needto be remove arbitrary decisionsontax levels. revenue have evolved between countries. time, just asagreements over income tax These tax arrangements mightevolve over domestic impositionofresource taxation. imported, creating anincentive for not receive anyadditionaltaxation when with comparable resource taxation did could bethatresources from countries revenue sharing.Part ofthisarrangement and enforcement mechanismswith 122 technologies, opportunities © Shutterstock.com decoupling 2 and policy options T decoupling. Ithighlightshow: become ever more important for growth from resource usewill that thedecoupling ofeconomic and environmental systems imply exhaustion ofnatural resources Trends inglobal consumption and respond to the trends. 3 trillionperyear ininvestments to suggests aneed for more thanUS$ of changeisvery large: oneestimate many economies depend. Thescale the natural resource baseonwhich in resources unsustainably erode some countries, butmanytrends This presents anopportunityfor that make economies competitive. significant to influence thefactors These trends are already sufficiently stable, successful economies. 9 actions whichcan lead to greater by providing information on on ourfirst Decoupling report his report hassoughtto build Conclusions within thepolitical and economic lie inbiasesandbarriers to change These blocks to adjustment appear to blocks to transition. adjust inthisway,butsuffer from many economies do notnaturally productivity). Inpractice, we seethat example, into innovation inresource use inlinewithsociety’s goals(for activity thatbringpatterns ofresource investments into areas ofeconomic in resource availability bydirecting expected to naturally adjust to changes A well-functioning economy mightbe exposure to resource risks. expand theeconomy orreduce its and savingscosts thatcan further fewer resource inputs,reducing waste economic outputto beachieved with developed economies. They allow available andusedindeveloping and increases are already commercially deliver significant resource productivity Many technologies andtechniques that 123 technologies, opportunities decoupling 2 and policy options spheres, andinteractions between the The continued existence ofbarriers growth from resource useispossible. absolute decoupling ofeconomic notable successes. They indicate that use, from economic growth, withsome of resource use,orimpactsofresource intentionally facilitate thedecoupling across theworld inpolicyto There hasbeenawealth ofexperience infrastructure andinstitutions. consumption andproductions patterns, locked-in byresource-intensive because they are notsostrongly relative advantage indecoupling, Developing countries mayhave a widespread. in resource productivity become the conditions inwhichinvestments removing theseobstacles, to create Facilitating decoupling willinvolve categorised asarisingfrom: These obstacles to decoupling can be existing patterns ofresource use. of society’s activity,which”lock-in” economy, politicsandotheraspects to decoupling isfrequently dueto • • resource productivity. biases against innovation in organisational andinstitutional technological, behavioural, was available); and information onresource trends (including thosemadebefore the legacy ofpast policy decisions 67

4. As mentionedinChapter forward decoupling. with policyfor guidance onhow to take sectors can draw onpast experiences Leaders withinthepublicandprivate out ofresistance to policychanges. Leadership willbeneededto break shaping thedecision. norms andassumptions whichare their interests, relative power andthe are able to influence thedecision, being aware oftheset actors who for changesto policy,thismeans political decisionismade.Inpractice institutional framework inwhichthe where thepolicymaker looks atthe chances ofsuccess appearhigher need to unlock thatresistance. The the conditions for decoupling would resistance to policychange. back to theeconomy. imports, withrecycling ofrevenues at source orinrelation to product prices through resource taxation to shiftrevenue-raising onto resource resource productivity. documented increases ofenergy or resource prices upwards inlinewith or subsidyreduction to move needed. Oneproposal usestaxation type ofcombined policywhichis two, whichare illustrative ofthe described above. Thereport mentions several oftheconsiderations to promote decoupling thatcombine There are forms ofpolicyavailable

Anotherlooks 67 Creating 124 technologies, opportunities decoupling 2 and policy options Annex A: Annexes Source: Compiled by Smith, M and Hargroves, K (2013) building on Smith et al (2010c) and Weiszacker et al (2009). (2009). al et 68 Weiszacker and (2010c) al et Smith on building (2013) K Hargroves, and M Smith, by Compiled Source: power stations Fossil fuel manufacturing Industry/ buildings Commercial buildings Residential Agriculture SECTOR

See lecture6.3fromSmithetal., 2010c: EnablingTechnologies to Reduce Freshwater Demand ------Water Recycling Table A1: solar technologies, reduces thewater intensity ofdelivering energy. Transitioning to using more renewable technologies as energy sources, such as wind and (which useseawater directly). systems cooling Water-efficient utility: freshwater water andrecycled water can bothbeused. by supplied water recycled Utilise exchange ion (Zagorodni, 2006),disinfectants (ultraviolet light,chemicals, ozone) (SBR), reactors batch sequential 2006), al., et recycling): (Stephenson filtration), bioreactors (micro/nano/ultramembrane water filtration membrane onsite (DAF), flotation enable air dissolved (to ponds, technologies treatment water Onsite constructed wetlands. Onsite water harvesting technologies: traps andcondensate return systems, water efficientcoolingsteam tower technologies. sensors), (i.e technologies place in clean nozzles/guns, guns spray and nozzles technologies:Water-efficient Rainwater tanks typical consumption ofwater byasmuch75percent. reduce to optimised been have buildings largefor systems cooling air/water dry Hybrid trap liquidto prevent odours. biodegradable lighter-than-urine a and coatings liquid-repellent use Waterlessurinals gardens orsmall-scale urbanagriculture. in evaporationfrom loss waterreduce to mulch plants, tolerantdrought irrigation, Drip Rainwater tanks for rainwater harvesting andreuse. significantly usage compared water with conventional models. reducing of capable are systems dual-flush use that Toilets per cent more efficient thantop loading options. 40-50 are machines washing front-loadingdomestic as such Water-efficientappliances energy costs ofheatingwater byupto 50percent. the reduce also can and cent per 30-50 by flow water faucetreduce aerators Low-flow 75 percent, Various low-flow showerhead designs exist to reduce water consumption by between 50- recharge andrecovery, urbanwater treatment andreuse inperi-urbanagriculture. aquifer managed and harvesting rainwater practices, farming no-tillage crops,tolerate Drip or sprinkler irrigation, sensors and irrigation scheduling, mulching, drought and salt http://www.naturaledgeproject.net/WaterTransformed/TNEP-WaterTransformed-Lecture6.3.pdf EnablingTechnologies to Reduce Demandfor Water andIncrease Waterless conveyor belt lubricants, water-efficient spray water-efficient lubricants, belt Waterlessconveyor hbi coig oes sln wtrcoig towers water-cooling saline towers, cooling hybrid - Rainwater tanks, stormwater harvesting systems,

ul eiuain iig o ensure to piping reticulation dual 68 . . Settling Settling 125 technologies, opportunities decoupling 2 and policy options B.1 Annex B: A better picture ofthenetbenefitscosts to theeconomy comes from looking at As economies grow, new markets andnew technologies make someproducts, processes Broadening thepolitical discourse to look attheimplications ofchangefor the Evidence from political andbehavioural science suggests thatfor widespread decoupling economy are considered. paths. Thisisusually amisrepresentation, whenthefullbenefitsandcosts to the decoupling involves greater costs (i.e.needsfor new investment) thanotherdevelopment any additionalcosts to themas“costs to theeconomy”. Thiscreates anarrative that and losers from every innovation orchange.The losers from change often pointto and organisational structures less productive, orobsolescent. There are usually winners narratives. This Annex briefly gives two examples ofinformation thatcan helpprovide alternative most beneficialsetofpolicymixes andinvestments maybefor theeconomy asawhole. performance oftheeconomy over timecan helpdecisionmakers consider where the This constrains theeconomy withincurrent structures. preventing costs for firmsorindustrial groups dueto changesto thepolicyframework. first needto beadapted. Currently, political arguments often focus ontheimportance of to happenthemainstream political perspective, ornarrative, oneconomic growth would relevant: from new firmsandnew technologies replacing old).Three pointsare particularly alternative development pathsandcomparing theinvestments andcosts (for example

1. 3. 2. Individual firmscausing environmental harmorover-exploiting resources are usually Costs ofnew investments inresponse to change(for example policychange)are Similarly, there maybereductions onfuture incomes from over-exploitation of water) domatter to economic success (for instance thecosts to otherwater users). There, thecosts ofharmto environmental resources (for example pollution of as awhole. From theperspective oftheeconomy asawhole, thepositionisdifferent. not taking into account thecosts ofcausing harmto otherfirms,citizensorsociety this over-estimation come from decoupling economic growth from costly pollution. reduce investment costs, compared to theirinitialestimates. Goodexamples of into account innovation. Innovation in response to aneedto changetends to greatly also frequently overestimated inpolitical discussion, partly because they donottake truth, considering thesecosts allows the economy to reduce costs through efficiency. making (ormarket prices) rather thanignored, itseemsthatcosts have increased. In resources inthepresent. Ifthesecosts are considered, andfactored into decision- increase netbenefitsofadecoupling development path. Factoring thesecosts in,andseeing how they can bereduced bydecoupling can Putting Costs inContext ofTransition Alternative Economic Narratives 126 technologies, opportunities decoupling 2 and policy options Table B1 trend ininnovation withevery tightening timeframes for markets to respond. innovations andgrowth are illustrated inFigure 4.1shows thesefindingsas an increasing growth potential. These“Kondratiev cycles” (Freeman andLouçã,2001)oftechnological growth are periodswhere growth hasslowed asthe oldeconomic structures exhaust their spread ofnew technologies andstructural economic change.Between eachperiod of Economic growth hasbeen observed to come inwaves ofprosperity, eachdriven bythe B.2 (1997). H. Hodges, Source: the actualcosts (in$US) Vinyl Chloride Surface Mining Sulphur Dioxide Landfill Leachate Halons Cotton Dust EPA 1980s Coke Oven Emissions OSHA 1970’s Coke Oven Emissions Conditioners CFCs-Auto Air CFCs Benzene insulation sectors) (for themanufacturingand Asbestos

POLLUTANT have beenobserved inothereconomies (Oosterhuis, 2006). many factors greater thanthefinalcosts. (SeeTable below). Similaroverestimations estimates ofinvestment costs beingconsistently atleast double, andsometimes Estimates ofcosts ofdifferent forms ofpollutionreduction intheUSApointto Industry originalestimates ofthecost ofparticularforms ofenvironmental protection versus Discussion ofanew growth cycle $109 millionperyear $6-$12 perton ofcoal of sulphurdioxide. 1980s: Mid-1980’s: considered possible. 1989: $700 millionperyear $4 billion $200 million–$1billion $650-$1,200 pernew car ‘cheap’ alternatives existed. financial catastrophe asno Early 1980s: $350,000 perplant $150 million Initial Cost Estimate phase out not phaseoutnot $1,000–1,500 per ton $1,000–1,500perton $14.8billion Predicted Leun, 1998). 1997 (Bornmanandvan der Protocol -US$235billionin implementing theMontreal Total cost globally of Approx. $0perplant $75 million $20 millionperyear $0.50-41 perton dioxide. 1 1990: economically feasible. technologically and 1993: $205 millionperyear $250-400 million $160 million $40-$400 pernew car 996: Actual Cost Estimate $5.7billion phaseoutconsidered $90 per ton of sulphur $90 perton ofsulphur Less thatCatastrophe Infinite 100% 445% 500%-2,300% ~750% 159% n/a 241% 900%-1,500% 29%-1,500% 63%-2,900% Percent ofActualCost Overestimation asa 127 technologies, opportunities decoupling 2 and policy options pong”. Theriseinwagesdrove greater productivity, whichinturnlead to more (notless) to speedupfurtherincreases oflabourproductivity. Ineffect, there wasaneternal “ping- could successfully demandhigherwages.And aswageswent up,employers were driven for most ofthetimewithgross wagesperhour ofwork. Asproductivity increased, workers This increase inproductivity hasonestriking feature: labourproductivity went handin unimaginable 160years ago. has allowed manycountries andfamilies to reach levels ofwealth thatwere positively labour productivity inindustrialized countries iseasily twenty timeshigher. Thissuccess Compared withthetypical labourproductivity ofthemiddle ofthe19thcentury, today’s can bedescribedastheincrease oflabourproductivity over 160years. called thebiggest economic success story ofhistory, namely, theIndustrial Revolution. That The potential ofincreasing resource productivity can beconsidered inlightofwhatcan be B.3 advantage’ inthesetechnological andcommercial fieldscan capture growing markets. growing by around 5% per annum (Roland Berger Consultancy, 2010). Gaining ‘first-mover per year: Somestudies evens peakof next wave. Theglobal market for eco-industries islikely to behundreds ofbillionsdollars There are sufficientindications are thatresource productivity could provide thedriver for the more important for thefuture. transition. They inevitably involve makingachoice onwhichareas oftheeconomy would be which influence investments are, attheirheart,discussions abouttheoptimaldirection of As growing economies are always intransition (bydefinition)discussions ofpolicychange improved resource productivity, notably through environmental technology. For some(Perez, 2002),thenext wave oflong-term prosperity willinpartbedriven by Source: US Bureau of Labor of Bureau US Source: from 1947–2007. Figure B.1 and wagesfor onecountry (theUSA)andfor onesegmentoftime60years duration. economic growth. Figure B.1shows theparallel linesofgrowth between labourproductivity 100 150 125 50 25 75 0 1947 Source:

Bureau ofLabourStatistics The Paradigm oftheIndustrial Revolution 1951 Theparallel increase oflabourproductivity andofgross hourly wagesintheUnited States 1955 **Compensation perhourdividedby theimpicitprice deflator for nonfarm business output. *Output perhourofallpersons. Real Compensation perHour** Labour Productivity* 1959 Labour Productivity andReal Compensation perHour 1963 1967 (Nonfarm Business Sector) 1971 € 1975 1.7 trillionperannum(BMU2009),andmaybe 1979 1983 1987 1991 1995 Index 2000=100 1999 2003 75 100 125 150 0 25 50 128 technologies, opportunities decoupling 2 and policy options (Period 1997-2001) Table C1: Annex C: economy. to price risesofresources: thatthey induce productivity andgrowth inadynamic,flexible another production factor –natural resources –thissuccess story suggests anotherside stimulated over time,asgrowth comes mainly from increases inproductivity. Appliedto context) andproductivity andgrowth gives avery different perspective onhow growth is The mutualcausality between factor prices (aseconomists would call wagesinthis success story. countries. Developing countries, beginningwithChinaare well underwayemulatingthe The tandem increase oflabourproductivity andwagescan beobserved inallOECD some ofthesefalls. vulnerable to foreign invasions, internal conflict orsimply declined.Table D1summarises in energy andresource extraction. Weakened bythis, ancientcivilisationsbecame more in different forms. Theseled to food shortages anddiminishingreturns oninvestments These past civilisationssuccumbed to environmental degradation andresource depletion in Africa, andAngkor Wat inCambodia. Norse, thestatue builders ofEaster Island,theNazca civilizationinPeru, Great Zimbabwe Anasazi intheAmerican Southwest, theGaramantian Empire oftheSahara, theGreenland array ofancient civilisations:Sumeriansfrom Mesopotamia, Maya intheYucatán, the Archaeological evidence reveals suchcourses ofdeclineandeventual collapse inadiverse Annex D: Ukraine Ghana India Thailand Ivory Coast Brazil Argentina USA Canada Australia Countries Countries with net with net exports Top-ten ofnetvirtualwater exporters (Gm3/yr)andtop-ten ofnetvirtualwater importers. Balance oftrade inwater embodiedinproducts (virtualwater)

Export foresight Lessons from History onthedangers oflock-in andlack of

229 21 20 43 43 35 68 51 95 73 Import 176 17 15 23 35 4 2 2 6 9 Exports Net Net 17 18 25 28 33 45 45 53 60 64 Rank 10 9 8 7 6 5 4 3 2 1 Saudi Arabia Spain Iran Hong Kong Mexico South Korea Germany United Kingdom Italy Japan Countries with Countries with net imports Import 106 14 45 19 28 50 39 64 89 98

Export 31 21 70 18 38 1 5 1 7 7 Imports Net

13 14 15 27 29 32 35 47 51 92 129 technologies, opportunities decoupling 2 and policy options 69 Table D1: 69

Sumeria (Mesopotamia) Sumeria (Mesopotamia) 1500 AD) Empire, Cambodia(800to Angkor Wat, Khmer America Mayan civilization,Central (Sahara) 500BC–300AD Garamantian Empire http://www.ccrc.unsw.edu.au/news/news/2007-10-05_khmer_kings.html, [accessed12th 2014] April Patterns ofDecline–WhyCivilisationsCollapsed external violence (Diamond,2005). led to acrisisfrom lackofsufficientfood andrisinglevels ofinternal and Loss ofsoilfertility anddrought from andclimate change Overexploitation ofgroundwater resulted initscollapse. network ofunderground irrigationcanals to exploit ancientgroundwater. The Garamantian empire wasmadepossible intheSahara bya3,000-mile (Jacobsen andAdams,1958). leaving behindsalt.Salinisationofagricultural landsresulted incollapse raised thewater table. Asthewater climbedto thesurface, itevaporated, Agricultural irrigationsystems where underground drainage wasweak, ruining thecity’s water supply. and sandwere washeddown to filluptheirextensive canal water system – 80 kilometres to thenorth,led to flooding andhugeamountsofsediment Deforestation to extend theirfarmland upto theslope ofKulen mountain, 69 130 technologies, opportunities decoupling 2 and policy options Barbier, E.B.(2009) sofos/wmr_nov09_p839.pdf Management &Research.[Online]Availablefrom: Bahor, B.(2009) technologies/Smelting/Ausmelt-smelting-and-converting/ [accessed April12th2014]. Green From the Start. the From Green Association ofAmericanRailroadsPolicyandEconomicsDepartment(2009) and Skills. 1998-2010. Anyadike-Danes, M.,Bonner,K.andHart,M.(2011) Cambridge Ltd. Allwood, J.andCullen,(2012) needs. water Main: AllianzGlobalInvestorsKapitalanlagegesellschaftmbH. and food Allianz GlobalInvestors(2010) materials, energy, world’s growth. Figuresfrom:McKinseyGlobalInstitute(2011) Report, AFD -AgenceFrançaisedeDéveloppement(2011) 2002 Year Program: Association. Verification Safety Engineering, AF&PA –AmericanForestandPaperAssociation(2004) Architectural of Journal Abdou, O.A.(1997) Making. Decision Inform 2030 WaterResourcesGroup(2009) References Journal of Industrial Ergonomics, Industrial of Journal people inanofficeenvironment, overviewofvisualandbiologicalresponses. Begemann, S.H.A,vanden Beld,G.J.andTenner,A.D.(1997) investor.bayer.de/en/reports/sustainability-reports/ Bayer (2004) Planet. geplünderte River Junction,VT:ChelseaGreen.TheGermanedition wasalreadypublishedin2013as Bardi, U.(2014) Economics. prepared forUNEP,EconomicsandTradeBranch,Division ofTechnology,Industryand Ausmelt Technologies. greenfromthestartjuly2009_0.pdf [accessed April12th2014]. London: Government of the United-Kingdom. Department of Business Innovation London:GovernmentoftheUnited-Kingdom.DepartmentBusinessInnovation Health, Safety, Environment Report 2004. Report Environment Safety, Health,

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158 technologies, opportunities decoupling 2 and policy options

"Decoupling 2: technologies, opportunities and policy options". The report was produced by the Decoupling Working Group of the International Resource Panel. It explores technological possibilities and opportunities for both developing and developed countries to accelerate decoupling and reap the environmental and economic benefits of increased resource productivity. It also examines several policy options that have proved to be successful in helping different countries to improve resource productivity in various sectors of their economy, avoiding negative impacts on the environment.

It does not seem possible for a global economy based on the current unsustainable patterns of resource use to continue into the future. The economic consequences of these patterns are already apparent in three areas: increases in resource prices, increased price volatility and disruption of environmental systems. The environment impacts of resource use are also leading to potentially irreversible changes to the world’s ecosystems, often with direct effects on people and the economy – for example through damage to health, water shortages, loss of fish stocks or increased storm damage.

But there are alternatives to these scary patterns. Many decoupling technologies and techniques that deliver resource productivity increases as high as 5 to 10-fold are already available, allowing countries to pursue their development strategies while significantly reducing their resource footprint and negative impacts on the environment.

This report shows that much of the policy design “know-how” needed to achieve decoupling is present in terms of legislation, incentive systems, and institutional reform. Many countries have tried these out with tangible results, encouraging others to study and where appropriate replicate and scale up such practices and successes.

For more information, contact International Resource Panel Secretariat UNEP DTIE Sustainable Consumption and Production Branch 15, rue de Milan 75441 Paris CEDEX 09, France Tel: +33 1 4437 1450 Fax: +33 1 4437 1474 Email: [email protected] www.unep.org/resourcepanel