Circular economy problems and development prospects. The cyclical economy is on the doorstep of Russia
Key Findings
By 2021, Russian industry should work according to the BAT system
This year, 300 of the largest Russian enterprises (oil and gas, metallurgical) are switching to the best and available technologies (BAT). And by 2021 everything Russian enterprises must switch to these technologies. - Ivanov Sergey
Russia has identified priorities in solving the waste problem
We have a pyramid of priorities regarding what to do with waste. In the first place is reducing the consumption of raw materials. The second is reducing waste generation. The third is recycling, and somewhere a secondary resource, which will be involved in circulation. Next comes waste incineration as a type of disposal. As a last resort - burial at landfills. — Evtukhov Viktor, State Secretary - Deputy Minister of Industry and Trade Russian Federation.
The construction of a circular economy is just beginning
Creating a circular economy model is not only about creating industries that collect, separate and transport waste. It's a change in mindset. — Komyshan Sergey
The title of our session is “Russian model”. But we must talk about the future Russian model, because Russia is only now beginning the path to a circular economy. — Schauff Frank
Separate waste collection is a complex process and cannot be accomplished within one or two years. In the Scandinavian countries, it took more than ten years to educate the population and establish a recycling system. — Sergey Ivanov, Special Representative of the President of the Russian Federation on environmental issues, ecology and transport.
Problems
The circular economy goes beyond waste
All large industrial enterprises consume a lot of water. What they then dump is a big question. — Sergey Ivanov, Special Representative of the President of the Russian Federation on environmental issues, ecology and transport.
Funds for waste disposal are not targeted
At the beginning of the decade, the issue of automakers' responsibility for recycling old vehicles was discussed. As a result, a recycling fee appeared. But it is not used to develop the waste recycling industry. — Schauff Frank, General Director, Association of European Businesses (AEB).
To build a circular economy, two components are needed - political will and financial resources. There is such a thing as extended producer responsibility. In Europe, for a number of positions they pay up to 100%, in Russia - 7-10%. We subsidize those who import goods to Russia and do not encourage them to dispose of waste. — Gutenev Vladimir, First Deputy Chairman of the Committee State Duma on economic policy, industry, innovative development and entrepreneurship.
The financial attractiveness of a waste recycling business depends on its volume
To be successful in waste recycling requires large expenditures because there is a lack of scale. If there is a large scale, then it will cease to be a cost item, and perhaps become an income item. The key question is how do we create scale so that all the volumes we collect are recycled and extracted? greatest benefit. — Vafeidis Stefanos
Transition to a closed water supply system
Industrial enterprises will switch to technology when, having once taken water from an external source, they will no longer take it. It will circulate inside, be purified by them and immediately consumed. — Sergey Ivanov, Special Representative of the President of the Russian Federation on environmental issues, ecology and transport.
Financial incentives for the introduction of new technologies
For enterprises that implement BAT, tax incentives have been introduced, fees for negative impacts are reduced, and loan rates are subsidized. — Murad Kerimov, Deputy Minister of Natural Resources and Environment of the Russian Federation.
Creation of a separate waste collection system
Plastic leads in terms of carbon footprint compared to other materials. But in terms of energy consumption during production, plastic vs. aluminum can consumes eight times less energy. CO2 emissions when producing a ton of plastic are 40 times less compared to aluminum. Plastic is used for thermoregulation and insulation, allowing us as consumers to waste less energy. Plastic materials are lighter due to which it is used in the transportation industry, helping to use less fuel. Plastic helps preserve food and reduce waste. Packaging helps extend the life of meat by 5-7 days. Plastic can be recycled almost 100%. The main difficulty is separate collection garbage. — Komyshan Sergey, Member of the Board, SIBUR LLC.
Everything in a closed loop depends on how we collect waste. Russia lacks the necessary infrastructure. Some people want to collect, but this requires incentives. There must be a general legislative framework for regulation. In 2016, we launched the “Share with Us” project. It was aimed at training and educating the consumer. It is necessary to create a new mentality among the population to separate waste. — Vafeidis Stefanos, General Director, Coca-Cola HBC Russia.
Development of waste recycling technologies
For us, the question of how to collect and manage waste is much broader than obtaining recyclable materials. For us it is biogas. We have many boiler houses that run on biogas. — Rathew Artaud, Senior Vice President, Corporate Affairs and Communications, Fortum Corporation.
Duracell's expertise is in battery collection. We started with the most important thing - retail. At retail outlets, we install boxes into which batteries can be thrown away. This year we are setting the bar - at least 500 boxes. This will give us about 1 thousand tons of batteries - this is 5% of what the country consumes. The batteries are running out the only plant in Russia, which processes them. — Yuri Korotaev, General Director, Duracell in Russia.
Involving society, business and scientists in solving the problem
First of all (green economy - Ed.) is sustainable development society. But to ensure more sustainable development, it is necessary to involve representatives of society in solving this problem. Every person should think about this. It is necessary to involve business in solving these problems. — Erntell Pontus, General Director, IKEA in Russia.
Our company has a “Together to Zero” program, which plans to reduce CO2 emissions and water runoff to zero by 2030. But we don't know how to do this yet. For this purpose, we have awarded dissertation grants that will allow us to get a solution and make a breakthrough in technology. — t'Hart Kees, President, Chief Executive Officer, Carlsberg AS.
Closed economy
Librarian's terminological dictionary on socio-economic topics. - St. Petersburg: Russian National Library. 2011 .
See what “Closed Economy” is in other dictionaries:
CLOSED ECONOMY or FOOD SOCIETY- (subsistence economy and subsistence society) a society that produces enough to survive without any economic surplus. A term usually used to describe simple tribal or hunter-gatherer societies... ... Large explanatory sociological dictionary
closed system- feedback system - [Ya.N.Luginsky, M.S.Fezi Zhilinskaya, Yu.S.Kabirov. English-Russian dictionary of electrical engineering and power engineering, Moscow, 1999] closed system closed system System isolated from external environment. Certainly,… … Technical Translator's Guide
See Closed Economy... Librarian's terminological dictionary on socio-economic topics
Post-industrial economy - Post-industrial society This is a society in whose economy, as a result of the scientific and technological revolution and a significant increase in population incomes, priority has moved from the primary production of goods to the production of services. Production... ... Wikipedia
MATHEMATICAL ECONOMICS- mathematical discipline, the subject of which is economic models. objects and processes and methods of their research. However, concepts, results, methods of M. e. it is convenient and customary to present them in close connection with their economics. origin, interpretation and... Mathematical Encyclopedia
Community economy- The community (home) economy is a closed, family-type economy, isolated from other economic entities. The communal economy is characterized by self-production (providing, first of all, one’s own needs) and non-monetary exchange (barter, ... ... Wikipedia
Reproduction (economics)- This article or section contains a list of sources or external links, but the sources of individual statements remain unclear due to the lack of footnotes... Wikipedia Large explanatory dictionary of sociology
Global challenges signal an urgent need to replace the outdated traditional economic model with a new sustainable resource-efficient model - a circular economy - an economy of innovation, both technical and social. This article is devoted to the need for Russia to transition to a circular economy model for the long-term sustainable development of the country.
A wide public outcry in the world is caused by a serious threat to the future of the planet at the current level of production and consumption, as well as the existing attitude towards the environment. According to the 2015 UN report “World Population Prospects”, the population of planet Earth today is 7.4 billion, but by 2030 this number will reach 8.3 billion, and by 2050 - 9.7 billion. The UN Millennium Development Goals up to 2015 have significantly improved the situation with health care, as well as living standards and consumption. New challenges lie in ensuring a decent quality of life for all people in the world with a growing population, consumption and production, but at the same time with limited areas and diminishing reserves of natural resources. According to published data, some non-renewable energy resources - metals, minerals, fossil fuels - will not be able to to ensure demand in the future, even if consumption and production remain at the same level, not to mention growth. Scientists note that some resources will be completely depleted within 50–100 years.
Recognizing this responsibility, on September 25, 2015, UN member states adopted 17 Sustainable Development Goals (SDGs) for 2030 and 169 targets to be achieved by countries around the world by 2030. One of these goals is responsible consumption and production (Goal 12). This goal is aimed at rational use natural resources and reducing environmental pollution. Russia has already begun its movement in this direction and declared 2017 the Year of Ecology in order to draw attention to existing problems in the environmental sphere and improve the country's environmental safety .
Circular Economy for Solution global problems modernity
The adopted SDGs signal an urgent need to change the outdated traditional model, operating on the principle of “get, use, discard,” to a fundamentally new sustainable model – the circular economy, also known as the “circular economy” or “circular economy.” The main principle of implementing this economic model is to ensure maximum efficiency from each process in the life cycle of a product or service, so waste management becomes one of priority areas of this economy. This type of economy is characterized by “3R” – Reduce, Reuse and Recycle: optimization of the production process, reuse or sharing of the product, waste recycling.
The transition to a circular economy will require modernization and innovation in production based on dematerialization, long life cycles of goods and resources from which the product is made, recovery, reconstruction, sharing, recycling and, if possible, modularization. Experts are considering the following options for business models that meet the canons of the circular economy: (i) circular value chains; (ii) recovery and processing; (iii) increase life cycle product; (iv) exchange and joint consumption, and (v) product as a service (servitization). These business models can be used individually or in combination. Let's look at each model:
(i) Circular value chains– a model in which limited resources are replaced by completely renewable sources. Royal DSM has developed cellulosic bioethanol, which contains agricultural waste, namely: corn cobs, husks, leaves and stems are converted into renewable fuel.
(ii) Recovery and recycling– a model that uses technological innovation and opportunities for resource recovery and reuse. Examples include closed-loop recycling, which converts waste into new resources.
(iii) Extending product life cycle– a model that allows, through the restoration, repair, modernization or remarketing of a product, to maintain economic benefits for as long as possible. This model also involves a transition from selling things to selling services for their use.
(iv) Exchange and joint consumption(sharing economy) – a model that is based on the exchange of goods or assets that have a low utilization rate. Examples of sharing platforms are transport – “Blablacar”, housing – “Airbnb” and others.
(v) Product as a service(servitization) – a model in which customers use products by “renting” and paying as they go. Philips, for example, sells lighting as a service. The organization reserves the right to own the equipment, so clients do not pay for installation and equipment breakdown - all this is a service component of the contract.
The circular economy is receiving increasing attention around the world. Many countries, including China, Finland, Germany, Canada, Japan, are actively implementing public policy for the development of a circular economy. The transition to this economic model implies a multidimensional approach: new technologies, financing and forms of doing business, as well as the willingness of society as a whole to change its habits and create new patterns of interaction. The circular economy is the economy of innovation, both technical and social.
Difficulties in Russia's transition to a circular economy
In 2008, Russia began a policy of modernizing the national economy, aimed at technological innovation, export diversification and economic growth. The basis of this policy was the “Concept of long-term socio-economic development of the Russian Federation for the period until 2020”. This was followed by various government programs on the development of Russia, including programs to support certain sectors of the economy. Particularly important for the potential development of a circular economy in the country can be called the “Strategy for Innovative Development of the Russian Federation for the period until 2020”, adopted in 2011, and the “Fundamentals of state policy in the field of environmental development of the Russian Federation for the period until 2030” from 2012. , as well as the “Strategy for Environmental Safety of Russia until 2025”, approved by Decree of the President of the Russian Federation of April 19, 2017 No. 176.
The new “Russian Environmental Security Strategy until 2025” describes in detail the critical environmental situation in the country, provides statistical data on waste, water, air and soil quality, clearly explaining the existence of a real threat to the security of Russia. According to the strategy, “annual economic losses due to environmental degradation and related economic factors, excluding damage to human health, amount to 4–6 percent of GDP.” As noted by S.B. Ivanov, Special Representative of the President of Russia on environmental issues, ecology and transport, “ careful attitude to the environment is not only a requirement of the time, it is not some fashion trend, this is a condition for technological progress and development domestic economy and social sphere."
Statistics show that the most polluting sector in Russia is mining, namely the extraction of fuel and energy minerals. In 2015, they accounted for 3106.6 million tons of waste out of the total mass for 2015, that is, more than half of all garbage. The level of waste recycling in Russia is only 5–7%, and more than 90% of waste is sent to landfills and unauthorized dumps, so the amount of accumulated waste is growing every year. The determining factors in this situation are the high material consumption and low resource efficiency of most industries in almost all industries Russian economy.
Today Russia faces serious barriers to the transition to a circular economy. Firstly, there are classical reasons for the slowdown in the country’s innovative development, such as the current raw materials structure of the Russian economy, high level corruption, resulting difficulties in financing modernization and attracting foreign investment, and other problems. Secondly, additional economic and cultural barriers to the transition to a circular economy can be identified: state support for the extractive sector, the Russian mentality of “mistrust”, low level awareness and understanding of the consequences of poor ecology, as well as the inability to negotiate and work together for the long term.
A serious obstacle to the transition to a circular economy is ineffective government regulation of subsidies and the tax system, including in the energy sector. For example, the current tax burden in manufacturing industries with little environmental impact is higher than in primary manufacturing industries, which does not contribute to the transition to a circular economy and the development of the Russian economy as a whole. Thus, the tax burden for the production of machinery and equipment is 13.7%, and for the production of coke and petroleum products – 4.7%. Government support for oil and gas producers is especially significant.
The basis of the mentality of most Russians is the desire to quickly earn money and invest the received cash mainly into material things (apartments, cars, etc.). According to the results of the 2015 Levada-Center study “Democracy in Russia: attitudes of the population”, the population does not have trust in government agencies and government policy (this, of course, was facilitated by high inflation and other factors). It is also necessary to note the problem of the lack of internal cooperation in Russia and the inability to work in “business connections”, which is so important for the circular economy.
The current situation is, of course, also justified by a number of objective circumstances, but this is not an excuse for reluctance to move forward. To transition to a circular economy, companies will have to make changes relating not only to products and services, production technologies, income models, work with consumers, but also relationships with partners and competitors.
Currently, the majority of the Russian population is not familiar with the concepts of sustainable development and circular economy. This is due to the fact that in Russia there are still very few educational programs on the topic of sustainable business development and in general the topic of ecology is not sufficiently reflected in the educational process (especially outside of Moscow and St. Petersburg). The “Strategy for Environmental Safety of Russia until 2025” specifically emphasizes the low level of environmental education and ecological culture Russians.
Speaking in 2015 at the plenary session of the ENES-2015 forum, the head of Sberbank of Russia German Gref addressed the audience: “I would like to ask the audience: how many of you know what a circular economy is? Here I am Russian Internet I found almost nothing about this, but in Western countries they have long understood the advantages of the circular economy - a way of organizing the life of society aimed at energy saving and environmentally friendly production.” He also emphasized the urgent need for Russia to transition to a circular economy model.
Opportunities and importance of developing a circular economy in Russia
Among the opportunities and advantages of switching to circular processes are: reduced costs due to increased resource efficiency, increased competitiveness, reduced harmful environmental and social impact of business, positive reputation of the company, opportunities for developing new or related businesses, improved position compared to companies dependent on extraction of primary natural resources (due to price instability in the near future with growing demand and decreasing supply of primary resources), etc.
The global trend of transition to a circular economy will certainly have an impact on trade flows in the world in general and in Russia in particular. Due to increasing requirements in the field of ecology, resource efficiency and social responsibility and the capabilities of modern technologies, in the near future it will be quite simple to track the entire path of the value chain from the source material to the final product. This will certainly reduce the competitiveness and development prospects of companies that do not fit into these global trends. The associated reduced demand for non-renewable sources such as oil will hit the Russian economy even more seriously, given its resource budget structure. Sustainable natural resource extraction and its circular elements are another important global trend that will affect global demand for Russian natural resources if Russia does not move in this direction.
It is important to emphasize that the foundations of the circular model had already been laid in the USSR. An instrument of government policy was standardization, which influenced the nature of the product: its long life cycle and stable quality. For example, in the Soviet automobile industry, a wide range of standardized parts and assemblies were used for various car models produced by different factories. In the USSR, waste paper, glass containers and scrap metal were actively collected. Products were wrapped in paper or packaged in returnable glass containers. The leadership of a country with a planned economy did not set the task of transitioning to circular models and the concept of business did not officially exist in the USSR at that time, but some principles that functioned successfully then would be useful to Russia today, but within the framework of a market economic model.
The circular economy strategy is an important direction for Russia, because international trade and investment flows between domestic producers and their foreign partners will depend on it in the future. Such “pressure” from foreign companies is already facilitating the process of transition of the Russian economy to circular alternatives. So, CEO“Unilever” Paul Polman noted at a lecture at the Skolkovo business school on October 20, 2015: “We have achieved zero level waste in all our factories by recycling it and finding innovative solutions to use the circular economy. In Russia we use waste from the production of ice cream and sauces for animal feed, packaging waste is sold to the furniture industry, and general mixed waste is used for heating water and generating energy.”
Another example is the activities of the H&M company, which has extensive experience in the field of sustainable development and contributes to the development of the circular economy in Russia. According to the 2016 corporate sustainability report, H&M has committed to a circular policy of actively using recycled materials in the product chain and using exclusively renewable energy sources. The photo shows the campaign of the H&M company in Samara (Russia) in May 2017 on the circular economy, aimed at the environmentally friendly fashion of the future - “hand over unnecessary clothes for reuse or recycling!
Many factors, including “pressure” from other countries and international organizations, demand and priority for environmentally friendly enterprises and eco-products in the world and in Russia will be prerequisites Russian transition towards a circular economy. It is important to formulate a balanced, clear and effective public policy for the development of a circular economy, while studying the already extensive experience of other countries. In order not to be left “outside” of global development and not to turn into a state dependent on other countries, Russia needs to study this global trend now and create learning programs and train personnel, stimulate innovation, develop technologies in this area, and actively explain the principles of the circular economy and sustainable development at all levels educational process. It must be remembered that The circular economy is the economy of innovation, both technical and social!
Every day people carry out many transactions, turning money into products. The resulting product is the result of exchange. A person acquires a good in as much quantity as he wishes for a certain fee, which is established on a contractual basis. This form of exchange is called a market.
In contact with
What is a market
This is a system of relationships connecting the supplier and consumer of these goods (services). The price is also formed there, which is monetary value product.
Types of markets operating in
Depending on the object of market relations, markets are:
- resource (natural resources, labor, means of labor);
- consumer (food, non-food products, consumer services);
- financial (monetary relations, gold and foreign exchange reserves, insurance, contracts).
The classification by scale is as follows:
- single, which are separate retail outlets;
- local – a large number of individual outlets combined into one retail outlet;
- regional – trading platforms that unite retail outlets of a certain locality;
- national – unification of regional segments;
- international – trading platforms of integrated entities;
- world.
Classification depending on the volume of trade turnover:
- wholesale;
- retail;
- state procurements.
According to the degree of freedom of the buyer and seller, they are distinguished:
- monopoly (one manufacturing company);
- monopolistic (one consumer);
- oligopolistic (small number of manufacturing firms conducting their own collusion activities);
- oligopolistic (a limited number of buyers conducting their activities on the basis of secret collusion);
- model of perfect competition (ideal form competitive market, where there are a large number of consumers and resellers, independent of each other).
Signs of the market
The main feature market economy is freedom of trade, that is:
- the manufacturer himself decides how much of the product to produce;
- the buyer determines for himself what quantity to consume;
- the price is formed based on the laws of supply and demand.
Important! In his work “An Inquiry into the Nature and Causes of the Wealth of Nations,” Adam Smith introduces the concept of the “invisible hand.” In fact, the “hand” is a market mechanism that coordinates the decisions of producers and buyers. The seller, wanting to maximize his own profit, is forced to satisfy the preferences of buyers.
Market laws
Just like other mechanisms, market operates according to its own rules.
It is characterized by: the law of demand, the law, the law equilibrium price, the law of competition.
Law of Demand
When the cost of a good increases without changing other conditions, the demand for the product falls.
In addition to price factors that influence buyer interest, there are also non-price factors, which include:
- increase or decrease in income of the population;
- increase or decrease in prices for other goods;
- changes in population structure;
- changing consumer preferences.
Law of supply
The higher the cost, the higher quantity of product offered taking into account that other conditions remain unchanged.
Non-price factors influencing the quantity of supply include:
- increase or decrease in production costs;
- the emergence of competitors producing substitutes;
- natural disasters, changes in the political situation in the country, etc.
Law of equilibrium price
When a balance is reached between supply and demand, an equilibrium price is established that can satisfy both the consumer and the buyer.
Important! The laws of the market do not apply in a planned economy, and achieving an equilibrium price is impossible. When implementing the plan, the personal preferences of consumers are not taken into account, and a deficit or surplus of various goods appears.
Law of competition
An increase in producers of the same product leads to a revision of costs, an increase in labor productivity, diversification of production, improvement in the quality of products, reduction in costs, acceleration of the pace of scientific and technical progress, an increase in GDP, and structural changes in the economy.
Taking into account all the above positive aspects of competition, the desire of society is explained achieve perfect competition and the desire of monopolists to prevent this process.
Briefly about the functions
The market mechanism is designed to answer three main questions: What to produce? How to produce? For whom to produce? To do this, a number of functions are performed, which are presented in the table.
Functions of the market in economics
Market system
This system itself represents unified system segments for various purposes.
It consists of the following components:
- consumer goods, services;
- labor force (receipt of work and permanent income by the population);
- securities, currency (transactions on the stock exchange);
- intellectual property, achievements of scientific and technological progress;
- means of labor;
- spiritual goods (books, newspapers, magazines, exhibitions, cinemas, tourist trips).
What is this, a market for goods and services?
Otherwise known as consumer, it is an organized structure, where demand from government and households and supply from small, medium and global businesses meet.
Its importance is great since it makes up a large part of the GNP. In addition, its functions include:
- creation, as well as satisfaction of public goods;
- ensuring the profitability of entrepreneurs.
Structurally it looks like this:
- government procurement;
- means of production;
- consumer goods and services.
State procurements
Government orders to meet the needs of a municipal as well as state nature, for which funds are allocated funds from the state budget. Characterized by large volumes and strategic purpose.
Means of production
The subjects of this type of relationship are small and large industrial enterprises engaged in the sale, purchase, and exchange of industrial objects.
Consumer goods and services
Public goods. For this type of goods, enter concept of elasticity, which allows you to assess the degree of need for a good.
Attention! The elasticity of a product shows the degree to which demand or supply changes depending on price. Let's take sugar as an example. Regardless of the price, it will be bought in the same volumes. We can say that this type of product is inelastic, because a change in price will not lead to a change in its consumption.
Manufacturers Market
This is a type of relationship where industrial goods are offered. Under the conditions of this trading platform producers of goods are created in order to satisfy another manufacturer's need through sale, exchange, leasing of equipment.
The main differences of this variety:
- fewer buyers who purchase in much larger volumes;
- in the producer market, demand does not change much as a result of changes in cost;
- geographic concentration of buyers;
- characterized by the consumption of a large mass of manufactured products.
Single product trading platform
A miniature representation of the movement of goods and their sales. When determining such a trading platform, they talk about the places where the highest demand for this type of product is, about its main competitors, about the methods and methods of sales, about the share in general structure commodity circulation.
Based on the laws of supply and demand, the quantity of goods and their value are formed.
However, despite all the positive aspects, there are also negative ones.
With the transition to market relations, such a concept as the “shadow economy” appears. Since tough competition automatically eliminates weak players, they begin to look for illegal ways to maximize their income.
Most prominent representatives of the shadow economy are homeworkers. Of course, there are homeworkers registered as legal entities who regularly pay taxes and openly provide data about their activities. However, a considerable part does not comply with these conditions. The shadow economy is bad because its activities are not included in the taxable one. Tax leakage from the budget is always leads to its deficiency.
What is the market and the market mechanism in economics
Market economy, signs and mechanisms
Conclusion
The market system of relationships is not ideal. However, based on its capabilities, it is in many ways better than a planned economy.
- Translation
I suggest you look into the report of the “world government” yourself, and at the same time help translate the original source.
Today's economy is based on the principle of "quick turnover" - receiving, producing and disposing. The faster we replace our gadgets, the better; and this now applies to most of the items we consume - from cheap clothes to expensive cell phones. The construction sector, which accounts for 30-40% of society's material production, is no exception. Here, as with consumer products, the way we manage the earth's resources is not only woefully inefficient, but also a generator of large volumes of waste. Rapidly increasing levels of pollution, depletion of resources, loss of vital ecosystems and significant loss of economic value with every product deployed are the consequences we must face. Continuing on this path will lead to a catastrophic situation over time. A combination of resource depletion, a changing climate and pollution is holding back growth and ultimately shrinking the economy.
The economic values lost through linear material flows are rarely discussed. In Europe, for example, much of the value of raw materials is lost after one cycle of use, despite valiant recycling efforts (“Growth within”, McKinsey 2015). Even in best systems Not all materials used are reused or recycled, and those that are recycled very often cannot be used again due to poor design, contamination or lack of standards. An example would be electronics. The design is such that most electronic products cannot be removed. Another example is high-quality steel in cars. It becomes so contaminated during the recycling process that it is primarily used as low-value construction steel. The same can be said about many other materials, in particular we're talking about about plastic. It is understood that most recyclable materials are either burned, landfilled, or used only in minor cases.
Moreover, due to the daunting prospect of climate change impacts, the current linear economic model is highly problematic. We know that recycling and reusing materials, at least metals, will save a lot of energy - and therefore prevent pollution. The extraction and production of basic materials such as steel, cement and aluminum account for almost 20% of global greenhouse gas emissions. Such measures would help transition to renewable energy sources and improve the energy efficiency of production processes. However, it is also important to reduce the production of a material through activities such as reuse, recycling, life extension, remanufacturing and product innovation and replacement. With demand for basic materials expected to increase rapidly in the future - half of the urban infrastructure needed in 2050 has not yet been built - a revolution in how we use basic materials and their substitutes is urgently needed.
3.8.1 The economy must be transformed
Natural resources provide the basis for prosperity and well-being. All UN Sustainable Development Goals (SDGs) depend on the sustainable management and use of the Earth's natural resources. This relationship was clearly outlined in the land-based report - Resource Efficiency: Potential and Economic Implications - International Commission on Resources Issues (IRP), launched at the May 2016 G7 meeting in Japan. The IRP report details the risks faced by more or less linear production systems today. IRP advocates radical changes in consciousness, as well as in systems of production and consumption. Unless resources of all kinds are used much more efficiently, sustainable development can only be a dream.But improving resource efficiency is just a step in the right direction. Equally important will be the transition to an economy based on renewable materials, continuous material flows and the use of taxes to balance demand. If all this does not happen, the achieved effect will quickly disappear due to the return effect and economic growth. Unfortunately, most policies in the past have ignored these aspects and thus have not brought the situation to an absolute resolution.
Governments and businesses must work together to develop resource strategies to avoid both resource shortages and increasingly serious waste and pollution problems. The concept of productivity should be expanded to include natural resources. Labor productivity has increased at least 20-fold since the Industrial Revolution, but increases in resource productivity have been modest. It has actually decreased since 2000 when looked at from a global perspective. What we are experiencing today is a “resource reclamation” rather than a “decoupling”, that is, an increase in the demand for resources greater than the rate of economic growth. At a time when labor is highly productive and unemployment has become a worldwide scourge, shifting efforts to the productivity of basic resources such as energy, materials, soil and water will make more sense.
New business logic is needed. Circular business models must replace linear ones. One specific challenge for the future will be to create a breakthrough for the concept of services instead of products for a wide range of consumption - such as computers, Cell phones, household appliances, cars, furniture and textiles. Even in the real estate market, the same principles can apply.
The most important issue will be: how can the principle of "earning income by selling more materials" system in which income increasingly arises from the quality of service of products that are retained?
One of the innovators of the concept, member of the Club of Rome Walter Stael, puts it this way:
“Social wealth and well-being should be measured by assets instead of flows, capital instead of sales. Growth then corresponds to an increase in the quality and quantity of all supplies - natural, cultural, human and industrial. For example, sustainable forest management increases natural capital, deforestation destroys it; extracting phosphorus or metals from waste streams supports natural capital, but dumping it increases pollution; retrofitting buildings reduces energy consumption and improves the quality of building materials.”From this reasoning follows another argument in favor of replacing GDP growth with indicators that provide an idea of quality rather than quantity.
The transition to a new business logic will require decisive political action. The cost structure of the economy is seriously flawed. Financial capital is overvalued, while social capital and natural capital are undervalued. If these shortcomings are not addressed, the circular economy will not be realized.
Fortunately, calls for a new model of production and consumption are becoming more frequent, supported by a number of studies from the Ellen MacArthur Foundation, the EU Commission, the OECD, the World Economic Forum and the Club of Rome. In the EU, the legislative “Circular Economy Proposal” was introduced in December 2015 and is currently being reviewed and debated by member state governments and the European Parliament.
Research from the Ellen Mac Arthur Foundation, the EU Commission and the Club of Rome has highlighted the fact that moving towards a circular economy - using and reusing materials rather than just using them - will bring many benefits. The proposal is that a circular economy, in which products are designed to be easily recycled, reused, disassembled and refurbished - where products and their properties are used much more efficiently, for example through leasing and sharing, should replace the traditional linear "take, make" model and dispose”, which has dominated the economy until now.
Economies that promote the reuse and recycling of materials and the extension of product life are, by definition, more labor intensive than economies based on a disposal philosophy, that is, linear resource flows. Taking care of what has already been produced will create more jobs than mining and manufacturing, which often take place in automated and robotic facilities.
3.8.2 Social benefits of moving towards a circular economy
A Swedish case study conducted in 2015 shows that the transition to a circular economy will significantly contribute to increased economic competitiveness, increased jobs and reduced carbon emissions. Subsequent reports, covering a further seven European countries (Finland, France, the Netherlands, Norway, Poland, Spain and the Czech Republic), will examine the implications of three decoupling strategies that underpin the circular economy - increasing the share of renewable energy and improving energy efficiency, as well as material efficiency. The research uses traditional simulation model I/O and concludes that carbon emissions could be reduced by 60-70% across all countries reviewed by 2030 if a key set of policy measures is implemented. The impact on employment varies across countries studied, but the number of additional jobs is in the range of 1-3% of the labor force.The report examines a range of policy and investment options that will help advance the circular economy and the work and climate benefits it will bring:
- Address inefficiencies in the economy's cost structure by allowing market prices to reflect full costs.
- Review taxation - in favor of a tax shift, reducing taxes on labor and increasing taxes on the use of nature. (Such a tax shift would accelerate the transition to a circular economy, which would also help balance the threat of job losses in an increasingly digitized economy.)
- Strengthen recycling and reuse goals to help reduce and manage waste and product residues. Place restrictions on waste burning.
- Strengthen existing policies to promote the use of renewable energy sources, such as electricity supply tariff and renewable energy certificates.
- Introduce design requirements for new products to facilitate repair and maintenance, disassembly and counteract obsolescence. Introduce also material and product standards in key sectors of the economy.
- Use public procurement to stimulate new business models, as well as the transition from the sale of goods to the sale of services.
- Make material efficiency a core part of climate change mitigation policies. Most climate change mitigation strategies are based on areas of the economy, with a primary focus on energy use. But the Club of Rome study mentioned shows benefits in terms of significantly lower carbon emissions from longer use of products and from increased rates of recycling and reuse.
- Launch investments, primarily in infrastructure, to support the circular economy.
- Support innovation in low carbon solutions.
- Exempt all secondary materials from VAT.
There is an urgent need to take policy measures that will encourage companies to bring to market products that need to be recycled or reused after their end of life. beneficial use. In the EU context, the green design directive, which has so far mainly focused on improving energy efficiency, would be well used to improve material efficiency. Taxation should also be seen as a political tool.
Current tax laws do not reward companies that take a circular approach to the economy. VAT rates can easily be based on a life cycle analysis of the impact on environment regular products or products with high content recycled materials. Last but not least, a tax shift—lowering taxes on labor and increasing taxes on nature use—would go a long way toward bringing about the economic transformation that is urgently needed.
To be continued...
Thanks to Diana Sheremyeva for the translation. If you are interested, I invite you to join the “flash mob” to translate the 220-page report. Write in PM or email [email protected]
