G7 Meeting on Resource EfficiencyStakeholder Session

Co-organised by Italy’s Presidency of the G7 and the European Commission

8 February 2017 - Brussels, Belgium

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G7 Meeting on Resource Efficiency

Co-organised by Italy's Presidency of the G7 and the European Commission

8-9 February 2017 Warwick Hotel, Brussels, Belgium

Report of the Stakeholder Session, 8 February

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Table of Contents

Final Agenda ............................................................................................................................................ 3

1. Background .......................................................................................................................................... 4

2. Structure and Objectives ..................................................................................................................... 4

3. Welcome and Introduction ................................................................................................................. 5

4. Presentations ....................................................................................................................................... 6

Some uncomfortable truths: living well while using less .................................................................... 6

Key recommendations from the report of the International Resource Panel (IRP) on Resource

Efficiency: Potential and Economic Implications ................................................................................. 8

Key recommendations from the report of the Organisation for Economic Co-operation and

Development on Policy Guidance on Resource Efficiency ................................................................. 10

5. Stakeholder Panel Debate ................................................................................................................. 11

6. Conclusions ........................................................................................................................................ 13

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Final Agenda

14:00-14:30

Registration and refreshments

14:30-14:50

Welcome and Introduction Astrid Schomaker, Director Global Sustainable Development, Environment Directorate-General, European Commission Federica Fricano, Director for EU Affairs and International Climate Negotiation, Ministry of Environment, Land and Sea, Italy Pier Carlo Sandei, G7 Presidency Co-ordinator, Ministry of Environment, Land and Sea, Italy

14:50-15:15

Some uncomfortable truths: living well while using less Julian M. Allwood, Professor of Engineering and the Environment, University of Cambridge, United Kingdom

15:15-15:45

Key recommendations from the report of the International Resource Panel (IRP) on Resource Efficiency: Potential and Economic Implications Paul Ekins, Member of the IRP Key recommendations from the report of the Organisation for Economic Co-operation and Development (OECD) on Policy Guidance on Resource Efficiency Peter Börkey, Environment Directorate, OECD

15:45-16:15

Questions and answers

16:15-16:45

Refreshments

16:45-19:15

Towards a Roadmap for the G7 Alliance on Resource Efficiency – the viewpoint of stakeholders Chair: Janez Potočnik, Co-Chair, IRP Panellists: - Barbara Mariani, Senior Advisor, Confindustria, on behalf of B7 - Mike Mullin, Senior Director, Global Government and Public Affairs,

CHEP/BRAMBLES, USA - Mitsutaka Matsumoto, Senior Researcher, National Institute of Advanced Industrial

Science and Technology (AIST), Japan - Emmanuel Katrakis, Secretary General, European Recycling Industries’

Confederation (EuRIC) - Benjamin Denis, European Trade Union Confederation (ETUC) - Pieter de Pous, EU Policy Director, European Environment Bureau (EEB) - Francesco Rizzi, Center for Research on Energy and Environmental Economics and

Policy (IEFE), University Luigi Bocconi, Italy

19:15-19:30

Conclusions Janez Potočnik, Co-Chair, IRP and Peter Börkey, Environment Directorate, OECD

19:30-21:00

Cocktail reception offered by Italy’s Presidency of the G7

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Report of the Stakeholder Session of the G7 Meeting on Resource Efficiency co-organised

by Italy's Presidency of the G7 and the European Commission

Brussels, 8 February 2017

1. Background

At the 2015 G7 Summit in Elmau (Germany), G7 Leaders committed to continue taking ambitious

action to improve resource efficiency as part of broader strategies to promote sustainable materials

management and material-cycle societies, building on the Kobe 3R Action Plan and other existing

initiatives. They launched the G7 Alliance on Resource Efficiency ('the G7 Alliance') to promote an

exchange of concepts on how to address the challenges of resource efficiency, to share best practices

and experience, and to create information networks. The G7 also tasked the International Resource

Panel (‘IRP’) to produce a report1 on the most promising potentials and solutions for resource

efficiency for all countries – developed, newly industrialised and developing – and the Organisation

for Economic Co-operation and Development ('OECD') to produce a complementary report2 to

develop policy guidance.

At the 2016 G7 Summit in Ise-Shima

(Japan), G7 Leaders endorsed the

Toyama Framework on Material

Cycles and acknowledged the link

between resource efficiency and the

2030 Agenda for Sustainable

Development, as there are several

goals and targets in the 2030

Agenda of direct relevance to

resource efficiency. G7 members

also agreed to review the IRP and

OECD reports and to draw

conclusions under Italy’s Presidency

in 2017, and to develop a Roadmap,

in consultation with stakeholders

and relevant international organizations, to prioritize actions that advance life-cycle based materials

management, resource efficiency, and the 3Rs, including in the supply chain.

2. Structure and Objectives

In Brussels, on 8-9 February 2017, Italy’s Ministry of Environment, Land and Sea and the European

Commission’s Environment Directorate-General hosted a G7 meeting over one and a half days to

follow up on what was agreed by the G7 the year before, build on the outcomes of earlier workshops

under the G7 Alliance, and develop a roadmap on further steps on resource efficiency.

The opening session held on the afternoon of 8 February included stakeholder participation and

aimed at providing G7 members with stakeholders' views on the next steps that the G7 Alliance

should pursue. It also facilitated a discussion among G7 members and stakeholders on the key

findings of the IRP and OECD reports requested at Elmau. This report concerns this session.

1 http://www.resourcepanel.org/reports/resource-efficiency.

2 http://www.oecd.org/env/policy-guidance-on-resource-efficiency-9789264257344-en.htm.

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3. Welcome and Introduction

Astrid Schomaker, Director Global Sustainable Development, Environment Directorate-General,

European Commission

Astrid Schomaker welcomed participants to the stakeholder session on behalf of the European

Commission. The European Commission remains keen to support the G7’s work on resource

efficiency and was grateful to have been able to join Italy’s G7 Presidency in hosting the meeting. The

European Union plans to be very active in implementing the 2030 Agenda on Sustainable

Development. (The Commission’s plans – including governance reform and integrated policy making

– can be found in a Communication from November 20163.) It is clear that the European Union

cannot achieve its goals alone.

Achievement of sustainable development will require a massive shift in our economies – a transition

– that can only be undertaken jointly with stakeholders. Multiple past G7 summits have made calls

for positive engagement of stakeholders and the workshops of the G7 Alliance are one way to build

that engagement.

The G7 remained in need of advice. The Commission was grateful to the OECD and IRP who provided

input for the G7. A preceding day and a half of discussions in a workshop on 'Remanufacture,

refurbishment, repair and direct reuse'4 had already produced clear pointers on the importance and

conditions for the lifetime extension of products.

One of the key constituents of resource efficiency is a transition from a linear economy to a circular

economy. In 2014, the EU chose the transition to a Circular Economy as a central part of its route to

sustainable economic growth for the EU. Achieving the 2030 Agenda will, in the European

Commission's view, be very closely tied to achieving a circular economy.

So the EU is engaged in supporting many strands of international work on resource efficiency – for

instance, ‘the 10 Year Framework Programme on Sustainable Consumption and Production’

(‘10YFP’), the ‘Partnership for Action on Green Economy’ (‘PAGE’) and the ‘SWITCH to Green’

programmes in many regions of the world. The G7 and G20 are a key part of this – they provide a

broad framework for discussion of ways to achieve the 2030 Agenda, including through resource

efficiency and circular economy.

Federica Fricano, Director for EU Affairs and International Climate Negotiation, Ministry of

Environment, Land and Sea, Italy

Federica Fricano, on behalf of Italy’s G7 Presidency, thanked those present for their participation and

the European Commission for co-hosting the meeting.

She explained that resource efficiency was currently an important topic for Italy’s G7 Presidency,

where they were continuing the work started by Germany and Japan. Resource efficiency would be

on the agenda of the G7 Environment Ministers’ Meeting in Bologna on 11-12 June 2017, following

up issues from the G7 Leaders’ Summit on 26-27 May, in Taormina.

The meeting was an opportunity to discuss future work on resource efficiency and a possible G7

Alliance Roadmap with next steps. The Stakeholder Session was to jointly discuss findings from IRP

and OECD reports, with further discussions on appropriate next steps on the following day, in the

meeting with G7 members.

3 http://europa.eu/rapid/press-release_IP-16-3883_en.htm.

4 http://ec.europa.eu/environment/international_issues/relations_g20_events_en.htm.

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Pier Carlo Sandei, G7 Presidency Co-ordinator, Ministry of Environment, Land and Sea, Italy

Pier Carlo Sandei explained that the overarching idea behind Italy’s G7 Presidency’s agenda is

sustainable growth as a way to exit the ongoing economy crisis. It is an economic and social as much

as an environmental issue. Italy’s Presidency’s starting points are the Paris Agreement and

Sustainable Development Goals.

The issues which the Presidency is prioritising to take sustainability forward are green finance,

resource efficiency/3Rs/circular economy/sustainable resource management, fiscal and subsidy

reform, tackling marine litter, the G7 Environment and Climate Centre for Africa, and the support of

the Multilateral Development Banks for the Paris Agreement and the 2030 Agenda.

Therefore, Italy’s Presidency will be hosting a series of workshops on each topic, all the way to the

Bologna ministers’ meeting in June 2017, partnering with the IRP, OECD, UNEP Inquiry into

Sustainable Finance and the UN Environment Regional Seas Convention/Barcelona Convention. The

8-9 February meeting was one part of this series, which will also see continuous collaboration with

the German Presidency of the G20.

4. Presentations

Some uncomfortable truths: living well while using less

Julian M. Allwood, Professor of Engineering and the Environment, University of Cambridge, United Kingdom

Professor Allwood quipped that he would be talking about truths tout court – 'uncomfortable' should

be ditched from the title. Indeed, worries about climate change seem to be merely a conversation

topic for the middle classes, rather than a driver for sufficient action. The problem is getting worse

and the rate at which is getting worse is getting even worse.

The global emissions attributable to the UK’s consumption have actually risen, despite the closing of

the UK’s coal industry. Current transition plans for global energy production seem unrealistic – they

include a global move away from nuclear power, yet renewables are difficult to deploy at sufficient

scale. Carbon Capture and Storage features in most scenarios as essential for achievement of climate

goals, but it is currently only really a research topic. Mapping the change in the global energy mix

over the past 50 years shows that the growth of new renewables is vanishingly small, yet their share

is supposed to become more than 50% in the next 37 years.

Is increased energy efficiency the answer? No: electric motor efficiency is already pretty good;

heating boilers are already almost perfectly efficient; the efficiency of steel blast furnaces is already

high and the inefficiency of cars is not due to technological problems but the desire of male buyers to

have unnecessarily high performance.

If we want to mitigate emissions, we need to tackle demand, and use less resources. More than half

of industrial carbon emissions come from material demand. The Mini car illustrates how demand is

the problem: today’s Mini, after 55 years of technological development, has the same fuel efficiency

as a Mini from 1961 – because the demand for heavier, higher performing cars has offset all the fuel

efficiency benefits that car developers have been able to come up with.

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We can save at least 30 % material through design,

although it will cost more. It is currently cheaper to use

double the material required because it is cheaper than

designing a product in a more resource-light way. So

buildings currently have twice the material they need to

meet our rigorous safety standards. A positive example -

the Velodrome built for the London Olympics was required

to be a lightweight building and used one half of the

embedded energy per seat compared to the Olympic

swimming pool built at the same time.

Either we use less material and less energy, or we do not achieve the climate goals. Talking about

using less is countercultural but there is no other option. Creating loops in the Circular Economy is

insufficient, and problematic. Most recycling is downcycling – even for steel. The main attraction of

plastics is their variety – but they can only be recycled if they have less variety, through less additives.

To reduce demand we need to understand its drivers. These drivers are misaligned with what society

wants from its economy, because mass-production has fundamentally changed our economies,

without the underlying economic model having adjusted in response:

1) What were luxury items 100 years ago are commodity products today. In order to continue to sell ever more, manufacturers have invented products that bring little real added value, and created demand for them through marketing. One example - electric motors have been added to everything, including bicycles, which have previously been perfectly well used without them.

2) Economies of scale have created products without individual craft, deskilling workers and shifting power to capital owners, creating increasing inequalities which are at odds with most people’s view of economic progress. In the UK and the USA the share of GDP appropriated by the richest 1% of the population has increased from 5% to 8% in 1980 to 15% to 18% today.

3) This implies that we should be addressing inequality in resource use not GDP growth to make economic progress.

The discipline of economics – including the economics used to assess decarbonisation paths - is not

fit for the task of guiding long-term change: it deals with marginal changes, whilst the economy

needs a deep transition. If alternative solutions for decarbonisation are looked at in terms of

potential over time, demand reduction, rather than more wind-power, is the better option. Reducing

vehicle weight is much more efficient than electric drive-trains for vehicles.

There are some pointers for the policy steps which would need to be taken:

In setting public policy goals, use a better understanding of drivers of human action than

those found in economics. Public health policy is helpfully based on an appreciation that

individuals have ‘reflexive’ and ‘impulsive’ drives behind their decisions; and that people’s

behaviours are much more open to influences through their impulsive drives (for example

through marketing) than they are perfect models of reflexive deciders based on information.

This understanding is crucial for demand reduction policy.

Transition needs action to bring about systemic innovation, to break out of locked-in

patterns of economic activity. Innovative ways of living will require progressively greater

social acceptance. Policy makers could be guided in their actions by a ‘Societal Readiness

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Scale’ similar to the ‘Motorola Technology Readiness Scale’ used in innovation to guide

decision makers through the several steps to widespread uptake of innovation.

On taxation, there is a need to raise the tax on air fuel and remove tax perversities that

promote resource use. And to explore some border adjustment mechanisms to support

domestic innovation in resource efficiency.

Key recommendations from the report of the International Resource Panel (IRP) on Resource

Efficiency: Potential and Economic Implications

Paul Ekins, Member of the IRP We can be much more resource efficient if we really want to be, but at the moment our policy framework indicates that we do not. Yet there are several strong rationales for becoming more resource efficient:

• To assure the availability of resources for the future, in a context of growth of the human

population and global economy.

• To mitigate the impact of increased volatility of resource and commodity prices.

• To improve national resource security in the context of increasing competition for resources

that may become geopolitically scarce.

• To reduce the environmental impacts of resource extraction and use, including greenhouse

gas emissions and other pollution, the depletion of renewable resource stocks, and land

degradation and the loss of biodiversity.

• To deliver economic benefits. There are

considerable opportunities for resource efficiency to

be increased with negative net costs, i.e. with overall

economic benefits (depending on the prices of the

resources concerned and the ease with which resource

efficiency can be increased).

The IRP report explains these rationales with analysis. It is supported by four scenarios based on

modelling, and draws on the body of existing analysis, including the McKinsey Resource Revolution

report5. They key messages are:

1. Substantial increases in resource efficiency are essential to meet the Sustainable

Development Goals – enabling development while protecting the environment

Rich countries in particular will have to use fewer resources in absolute terms. Currently, the

world uses 80 billion tonnes of material a year, which is already environmentally

unsustainable and on current trends this would reach 180 billion tonnes by 2050. Resource

efficiency offers the route to decouple well-being from resource use and environmental

impact.

5 Resource Revolution: Meeting the world’s energy, material, food, and water needs. McKinsey & Co, 2011.

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2. Improving resource efficiency is indispensable for meeting climate change targets cost

effectively

Modelling for the report suggests that achieving climate objectives without resource

efficiency will have economic costs. Yet, scenarios suggest it is possible to achieve a 60%

reduction in greenhouse gases with a 1% increase in economic growth if part of the transition

is a 20% reduction in material consumption (vs current trends).

3. Resource efficiency can contribute to economic growth and job creation

Recent modelling results differ in size, but all of them show that increasing resource

efficiency can lead to higher economic growth and employment, often even when

environmental benefits are not accounted for. Chapter 5 of the IRP report describes why

these models produce positive outcomes from resource efficiency.

4. There are substantial areas of practically attainable opportunities for greater resource

efficiency

These have been identified by several analyses, including the McKinsey Resource Revolution

report, whose 15 high-impact categories included food waste, steel end-use efficiency, and

municipal water leakage.

Markets already achieve much resource

efficiency, but left as they are, they will not

achieve what is needed in the future. Policy

makers have a crucial role in facilitating

markets to do their job in promoting

resource efficiency. For instance, too

frequently, the resource efficient option is

the economically inefficient option and vice

versa.

The EU’s Circular Economy Package and G7

Alliance are steps in the right direction, but

they should be scaled up and intensified. The

EU Circular Economy Action Plan needs to be

made more specific, with targets and

timescales.

The IRP’s report’s findings have been

condensed into 10 policy briefs covering

different angles of the policy challenge, such

as: Integrated modelling of resource

efficiency and climate policy, Coordinating,

Resource efficient electricity systems and

Managing the transition by dealing with

possible “losers”.

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Policy steps for a resource efficient economy include:

• Creating a clear direction of future travel (recycling, efficiency and resource productivity targets).

• Making labour cheaper and resource use and pollution more expensive through environmental tax reform.

• Focussing on products designed for resource efficient life-cycles.

• Waste and resource management.

• Focussing on consumer behavioural change.

Key recommendations from the report of the Organisation for Economic Co-operation and

Development on Policy Guidance on Resource Efficiency

Peter Börkey, Environment Directorate, OECD Recent decades have seen a growth of policy instruments for resource efficiency. These have been

more downstream (i.e. at end of life) than upstream, for example increased use of economic

instruments – like landfill taxes. In general, these have promoted recycling.

Looking more broadly, the policy landscape is extremely fragmented – many policies are not well

aligned with each other, and this is weakening policy impact. To improve impact, policy makers

should:

Apply mixes of policy instruments and make

use of the entire tool box of policy

instruments ranging from economic to

regulatory to information instruments as

well as voluntary approaches.

Implement policies that promote resource

efficiency across the lifecycle of products in

order to ensure that overall use of resources

is optimised. Existing approaches include

extended producer responsibility, green

public procurement and partnerships with

business to address value chains.

Treat resource efficiency as an economic policy challenge and integrate it into sectoral and

cross-cutting policies – agriculture, transport, energy, but also investment, as well as

innovation and education.

Strengthen monitoring, policy evaluation and reliable data availability. In particular,

additional work is needed to assess the macro-economic consequences of the transition

towards resource efficiency, as existing efforts have significant limitations.

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There are existing good examples: Finland and the Netherlands have developed national Circular

Economy Roadmaps. There is also a need for increased international co-operation, as economic

activity is global. Specifically, at the level of the G7 this could:

Support business supply chain greening – e.g. through instruments such as the OECD

Guidelines for Multinational Enterprises.

Remove obstacles to trade and investment (e.g. barriers to remanufacturing loops and to

trade of secondary materials). OECD is planning to expand an inventory of trade restrictions

on industrial raw materials that already exists.

Increase official development assistance (‘ODA’) for resource efficiency (including waste

management). Currently ODA for solid waste management represents only about 0.3% of

total aid.

Co-ordinate environmental labels and information schemes through harmonisation and

mutual recognition, to reduce their number and make each more effective.

Improve data and economic analysis on resource efficiency.

5. Stakeholder Panel Debate

Panellists were asked to identify priorities for the G7 Roadmap on resource efficiency and priority sectors or actions for G7 work, by providing answers the three questions below. For each question their aggregated answers are summarised: 1) Which barriers to improved resource efficiency in G7 members do you see from your viewpoint?

Consumer behaviour: there are great

challenges to influence behaviour for

resource efficiency in consumers. In

particular, they are prone to advertising.

In Japan, 80% of consumers have never

heard about remanufactured products

(and companies still think of such

products as threats rather than

opportunities.)

Resistance to policy change: we need

strong policies, but corporate lobbyists

do not understand the potential positive

importance of resource efficiency policy

frameworks to their business, so there

was opposition by certain backward

industry quarters to the first EU Circular

Economy Package, because firms who would benefit were sitting on the fence. Environmental

regulation is like a good referee in a football match - it is needed for a successful game, but hated for

each specific decision, i.e. for each specific piece of legislation.

Politics: political discontinuity is the greatest threat to the agenda. Clear success metrics and

evaluation are needed. We need to bring bold political action to match the need for urgency, but

there is a lack of awareness and knowledge of what the resource efficiency agenda is about. Existing

From left to right: Mitsutaka Matsumoto, Emmanuel Katrakis, Francesco Rizzi, Mike Mullin. Standing: Janez Potočnik.

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unemployment and social inequality must be addressed as part of the transition, with frictions and

employment displacement anticipated and managed.

Instrument types: there is a need for promotion of performance-based solutions rather than

mandatory ones; economic instruments are needed to price in the environmental benefits that good

practices bring; taxes need to shift from labour to resources; promotion of green finance is needed.

Corporate action: barriers arise from a lack of harmonisation in regulation with a resulting lack of a

level playing field and trade issues due to regulatory asymmetries; changes to the corporate culture

will need a change to the incentive schemes of CEOs; there are difficulties for SMEs to operate in a

resource efficient way, due to significant gaps in skills and capabilities.

2) Which resource efficiency sectors/activities – if any – should be tackled by the G7 Alliance as a matter of priority? The panel identified the following sectors or activities to be tackled by the G7:

Making public procurement in G7 (and G20) states more resource-efficient and develop

standards for recyclability of

products.

Supporting innovation in man-

ufacturing – including eco-

design and extended producer

responsibility (EPR) rules for

recyclability, and exclusion of

toxins in recyclable material.

Co-operation in global supply

chains, bringing in the G20 as a

crucial actor.

Cross-over of the resource effi-

ciency agenda into economic

and finance ministries or na-

tional leaderships.

Remanufacturing, refurbishment, repair and direct reuse, taking into account differences

between developed and developing countries.

The agriculture and land-use value chain, including food losses and textile production.

Changing taxation of capital, not only shifting tax from labour and pollution.

Changing consumers’ purchasing and use patterns.

3) How do you see the role of your organisation in contributing to resource efficiency / circular

economy developments in the G7?

The panel identified the benefits of collaboration with a wide range of stakeholders - in industry,

social partners, NGOs and academic experts to:

Identify the complexities, barriers and global perspectives that businesses face in

implementing resource efficiency and circular economy.

From left to right: Benjamin Denis, Pieter de Pous, Barbara Mariani.

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Develop “bipartisan” political ownership of the resource agenda, building alliances and

overcoming the many challenges to acceptance of a novel transition agenda by, for example,

identifying the roles that social partners can play in the transition, like supporting reskilling.

Demonstrating real, successful case-studies in resource efficiency to change practices, rather

than holding meetings.

Using networks, in many different countries, to mainstream the agenda and build know-how.

Some panellists also made more general comments, pointing out that the over-consumption of

resources is the biggest global challenge (together with climate change and the loss of biodiversity)

but this has not yet been fully realised by policy makers. There is a gap and sad discrepancy between

what scientists have been saying for decades (e.g. a quickly changing climate, overshooting of planet

boundaries etc.) and corrective actions – we are running fast against a wall and we need to act with

urgency, being bold with our messages. The need to keep a solid and competitive manufacturing

industry in Europe was underlined, as re-shoring delocalised production would profit resource

efficiency globally.

6. Conclusions

Janez Potočnik and Peter Börkey concluded the Stakeholder Session by summarising the outcome of

the discussions and by inviting Italy’s G7 Presidency and G7 members to pay due attention to the

stakeholders' recommendations in their deliberations the following day – and beyond. They also

drew the G7’s attention to possible areas of further work by the G7 Alliance, including indicators, and

resource efficiency as a key enabler to address climate change.

KH-01-17-327-EN

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doi: 10.2779/181003