_ The Zero Emissions Strategy Conference

The Podium, 6 August

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Four organizations recently collaborated in an international scientific endeavor in an attempt to develop a new measure of the natural resource requirements of industrial societies that can help us better understand some of the real world background to the issues before this conference. I would like to report here briefly on the main findings, and at the same time provide you with a track whereby you can gain access to the full report which has just been published by our institute.

The study, performed jointly by the Wuppertal Institute, the World Resources Institute, the Dutch Environment Ministry, and the Japanese National Institute for Environmental Studies, found that natural resource requirements--direct and indirect--are far larger than direct consumption. Our ability to reach a sustainable rate of consumption is thus being challenged right at our doorsteps. In fact the indirect or hidden flows of materials constitute between .5 and .75 of the total, including soil erosion, movements of material for infrastructure, the overburden from mining.

The report prepared by the four country team upon completion of the project under the title Resource Flows: The Material Basis of Industrial Economies, reveals the colossal amount of natural resources that industrial economies use to maintain high living standards. The amounts involved are really quite astonishing and still rising, albeit slowly.

Using material flow accounting to track the physical flows of natural resources that get depleted in the economic production cycle, the report measures resource usage in the four countries with a new index: the Total Material Requirement (TMR). TMR uses a physical accounting process that includes all domestic and imported natural resources that go into the national economy regardless of monetary value. Such a method of looking at the costs and benefits of national economic activity more completely documents the environmental impact of natural resource usage.

The TMR thus supplements monetary measures of the economy such as the Gross National Product (GDP). The TMR/GDP ratio provides an overall measure of the efficiency of a country's economy. National leaders, policy makers and the environmental community can then readily monitor whether a given economy is on a sustainable path or not.

The study reports that Total Materials Requirements (TMR) are about 80 metric tons per capita for the U.S., Germany, and the Netherlands, about 40 tons per capita for Japan. Moreover, these material flows are still rising on a per capita basis, although slowly--dematerialization in an absolute sense has clearly not yet begun.

Let me put some of these findings in more immediately recognizable terms as far as our daily lives and choices are concerned:

• The U. S., German, Japanese and Dutch economies require 45 to 85 metric tons of natural resources per person per year -- the weekly per person equivalent of up to 300 shopping bags of natural resources, over 40 percent of which is the result of energy derived from fossil fuels.
• In the United States, agricultural production causes soil erosion equivalent to 15 metric tons of soil per person per year. Highway and other infrastructure construction accounts for the excavation and removal of another 14 metric tons of soil per person per year.
• The livestock industry in the Netherlands through soil erosion and the import of feedstuff uses up 29 metric tons of materials per person per year with most of the environmental impact falling on the countries that export the feedstuff.
• The manufacture of automobiles and other metal-intensive products in Japan uses up 14 metric tons of mostly imported metal ores and industrial materials per person per year with much of the environmental impact falling on the countries that export such materials.
• The use of coal for energy in Germany requires extracting and removing 29 metric tons of earth per person per year.

The report's findings clearly signal a warning to the high-consuming and high-polluting industrial countries. If such a rate of resource consumption continues, it will spell environmental disaster in coming years because it has been estimated that global economic activity will expand four-to-five fold over the next 50 years.

Zero emissions--a completely closed industrial cycle--is probably not feasible in a strict sense, although it may be possible for restricted sets of (toxic) materials. But reducing natural resource use at the input end of the materials cycle is clearly essential if we are to markedly reduce outputs and emissions. At the same time, it is more and more clear that we can raise living standards while reducing materials flows by doing things we know how to do to improve efficiency.

And that suggests some practical steps.

At the moment, virtually all countries subsidize natural resource extraction and use. A recent study sponsored by the Earth Council estimates these subsidies at about $800 billion a year, and does not cover all sectors. So if these subsidies were gradually removed--or to go further, replaced by gradually escalating consumption taxes, then the economic incentive would exist to develop far more efficient processes: to drive improvements in resource productivity, not just in labor productivity.

The potential for improvements is quite high. The material flow study referred to above also showed that resource intensity is declining in the industrial countries, despite the subsidies and a 20-year trend of declining real prices for most natural resource commodities. Given a phase-out of subsidies and perhaps an ecological tax shift (taxing resource use instead of labor or capital), halving per capita resource use while doubling economic output per capita (over the next 30 years, say)--the Factor Four proposal--begins to seem quite feasible.

Against such a background, something like zero-emissions for toxic materials and significant reductions in greenhouse gas emissions becomes a plausible concept. But the overall structure of fiscal incentives embodied in tax codes and subsidy practices are as important as the details of control schemes or tack-back laws

One powerful motivation for such efforts is the following. If the developing world replicates the industrial model, then worldwide materials flows and the corresponding pressures on the environment will grow as much as five-fold over the next half century. That change must occur first in the industrial countries that have the wealth, the technical capacity, and the moral obligation to lead the way.

One final point of information. The materials flow study is now entering a second phase, documenting the back-end flows into the environment and taking the analysis down to the sector level, in the belief that discussions of zero-emission policies in the public and private sectors will be facilitated by quantitative measures of materials flows.

As we look ahead together to priorities for future research, may I suggest the following for your attention and, I hope, your reactions and further discussion in this interesting open meeting in the month ahead?

• What classes of materials should have the highest priority for "closed" materials cycles, e.g., heavy metals, chlorinated aromatic compounds, etc.?

• And will takeback laws be sufficient to sequester them, or will we also need incentives to discourage their use in industrial processes or products to start with (e.g., differentially higher resource taxes on such materials?

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