Resource Efficiency: A Global Game Changer

Resource Efficiency: A Global Game Changer

Without shifting up gears and without an explicit international dimension, resource efficiency strategies face an uphill battle against existing distortions and unfair competition. The recent report by the Transatlantic Academy explains why the global dimension is crucial and what action can be taken.

Improving resource efficiency becomes both a macro-economic concern and a strategic business imperative. With imports of more than $465 billion in 2010, the EU is the largest importer of fuels and minerals worldwide. It imports more fuels than China and more minerals than the USA.

No wonder that the majority of European business executives now consider materials costs as the main cost driver for their business. Modelling results reveal that each single percentage point of materials saved will bring roughly €23 million in savings and 100,000 to 200,000 new and additional jobs in the sluggish European economy.

If these untapped opportunities are cashed, the EU could boost economic growth and create up to 2.8 million additional jobs, while the import dependencies would be significantly lower. But it takes more than business action. The EU and its member states should acknowledge the barriers and challenges ahead.

Without an explicit international EU policy, domestic resource efficiency strategies face an uphill battle against existing international distortions and unfair competition. Today, the risks of volatile prices lead to major uncertainties about future returns on investments. The lack of transparency and enforcement of international guidelines supports illicit trade of minerals. This is not in favour of good business in Europe.

A life-cycle approach identifies tangible benefits in key areas such as the resource efficiency of buildings, increasing yields on large-scale farms, reducing food waste, reducing municipal water leakages and higher overall efficiency rates in end-use products such as vehicles. The majority of these opportunities occur in developing countries, especially in China and India. It is estimated that these key areas could create societal benefits of up to $ 3.7 trillion worldwide. International cooperation pays off. Ignoring international distortions becomes painful.

EU energy efficiency deal "worrisome"

Much more stringent efforts to unleash resource efficiency are needed on all relevant markets in Europe, in the transatlantic community and internationally.

The US could potentially save more than four-fifths of its fossil carbon emissions along with savings of $5 trillion against business as usual by the year 2050. Energy efficiency is well-placed at the heart of the Euro-Atlantic Security Initiative put forward by Sam Nunn, Wolfgang Ischinger and Igor Ivanov in February 2012.

In that context it is worrisome that the current Danish EU presidency does not seem to succeed in reaching agreement on binding energy efficiency targets. Though the ambitions were high, the version currently on the table to be finalised in July has been watered down drastically, particularly because member states such as Germany, France, United Kingdom, Spain and the Netherlands fail to accept binding targets. This is despite overwhelming evidence that energy efficiency pays off.

The report of the Transatlantic Academy places a priority on putting our own house in order. This should be achieved by setting the ambitious target of doubling resource efficiency by the year 2030 (based on 2010 levels).

A mid-term perspective is a model of prosperity with millions of new jobs in clean tech, recovering precious resources, and resource-efficient manufacturing.

It should be accompanied by actions such as establishing common standards for key products and processes in industrial sectors to enforce efficiency gains; establishing technology platforms on resource efficiency of buildings, water and food management with strong industry participation and use of social networks to overcome lock-ins; reducing environmentally harmful subsidies on fossil fuels, mining, agriculture, land use; putting prices on carbon and on resource use within the member states of the transatlantic community, even if the new large energy consumers (China, India) do not implement similar incentives immediately.

The EU should also engage the US in those efforts, especially by setting targets for a majority share of renewable energy use both in electricity production and in transportation by 2050 with two side-pillars: creation of a transatlantic carbon emissions trading system to support market development, and undertaking investments in energy infrastructures.

In Europe, the integration of a European market for electricity and natural gas by interconnecting national markets, creating more favourable conditions to invest in infrastructure and streamlining national regulations, is an essential task.

At the heart of an upgraded EU strategy should be a set of new partnerships with key suppliers that align initiatives such as the “Africa Mining Vision” with transparency, reporting and certification as well as with integrated environmental assessments and clean-tech cooperation.

Re-investing in international relations is probably the most important pillar against any upcoming new eurosclerosis. Europeans have prospered and achieved greater security by building regional and global institutions that work to solve problems jointly. In the next 10 years, the 95 resources-dependent countries could potentially turn their endowments into development opportunities for the bottom billion of poor people that exist today, if it is done in a sustainable manner.

Shifting up gears should comprise pioneering action by the EU, engagement of the US and the G20 at the forthcoming 7th meeting in Mexico, and strengthening the global cooperation.

This piece was originally published by EurAvctiv.com on May 22, 2012. The original text may be found here

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