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Fix the system - get a global 'circular economy'

Fix the system - get a global 'circular economy'

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Pitch

All climate policy is too limited. Global problems can be solved as a whole, for example with a 'circular economy'.

Description

 

"All climate policy is too limited. Global problems can be solved as a whole, for example with a 'circular economy'."

Please click 'support' on the top right of this page and then use the share icon to the right to ask your friends to visit the CoLab - thanks! A short link for this page is http://bit.ly/qpItP9 Please also support my allied proposal Carbon-negative 'biochar economies', which could undo damage to the atmosphere, soils, forests and local economies. This Fix the System proposal would quickly phase out doing further damage. 

Contents:

   Executive summary

   What?

   Why?

   How?

   Vision?

   References

   Team

  

 

Executive summary - There is no solution just for climate, but we can fix the whole system

 

Emissions, climate disruption and the impacts of climate disruption are all symptoms of underlying systemic errors - bad habits that got stuck and then overlooked. All climate policy and climate solutions are insufficient and ultimately futile unless we also 'fix the system' that's at the source of so many problems. If we act soon enough, climate disruption could be turned around.  

Reshaping the economy is the kind of action that's needed. Compare the massive power of the global economy to the weakness of international agreements to limit the impacts of economic activity. What if that economic power could be quickly and simply harnessed, so markets work to reverse the problems they've been causing, including climate change?! What if the perennial political fear of stalling growth could be used to spur action?

Economic growth is today built up from activities that systematically undermine what's needed to get future growth; natural resources, ecosystem services, climate stability, health, well-being, co-operation, trust, etc. Why not allow the economy to do the reverse, to get economic growth by preserving and expanding the prospects for more growth? Imagine economic activity surging, based on resource flows and emissions drastically shrinking, nature and soil fertility quickly expanding, and employment levels to achieve this massively expanding!

The economy should ensure resource flows follow a cyclical pattern rather than linear. This simple vision was set out by the economist Kenneth Boulding in 1966 and now features in China's national planning for 'circular economy'. This is 'cradle-to-cradle' for all products in the entire global economy, so all used resources are regenerated by nature or industry into new resources. The systematic conversion of nature and mineral resources into accumulating wastes in the land, water and air is optional. 

I offer a mechanism to switch from a linear to a circular economy, based on peer-reviewed research published in 3 papers, including by the NATO Science Programme as a policy initiative for 'global security' (please see references). The proposed mechanism is uncomplicated and is described below in the 'What?' section.  This proposal provides climate policy with a new option beyond continuing the 20 year long pursuit of binding limits to emissions. Protecting the climate can be a design feature of economics, built-in rather than added-on.

This proposal focusses on reshaping the economy since the judges have a lot to read already. Yet this is just one example of the opportunities for rapid whole system change using policies that correct whole system errors. For example, the trend of rising global investment in war-making is derailing all shared goals (even security!) yet it could be quickly and easily reversed. Circular economics is an great start to a policy-based conversation about fixing systems not just symptoms. 

story of stuff

All stuff goes somewhere. It becomes either new resources or junk in the air, water and land. 

 

 

 

 

 

 

 

 

 

 

  

    

 

 
  

 

 
  

 

 

 

 
  

 

 
  

 

 
   

 

 
  

 

 
  

 

 

 

 
  

 

 
  

 

 
 
The global economics of junk hasn't worked. Changing this is not difficult and if we do, we'll wonder why we waited so long. If we don't then we won't enjoy ending up where we're heading. 

Image: http://en.wikipedia.org/wiki/The_Story_of_Stuff 

 

 

What? The economy could prevent rather than cause problems

 

The proposed action is to switch the worldwide economic growth strategy from one that damages prospects for future growth to one that builds those prospects. This can be done by reshaping the economy from a linear (extract, make, dump) pattern to a ‘circular economy’ (cradle to cradle resource flows with expanding natural capital and declining 'problem stockpiles' - such as GHG accumulation). Today’s economies are mostly at the limits of growth with the linear model. Rather than asking them to stop growing (which politicians cannot currently consider) or to impose impossible-to-agree limits to their impacts, this proposal offers to align growth in economic activity with expanding effort to achieve sustainability and shrinking impacts/emissions. 

Circular economics can be implemented by international agreement to correct market externalities with a new market-based tool that I call 'precycling premiums'. Precycling is action to ensure products don't become waste, which shifts the current emphasis on end-of-pipe 'managing' waste to systematic prevention. The actions that comprise precycling are broad so precycling may be considered as 'what to do to implement sustainable development'. I use the word premiums because the tool works as a variation of conventional insurance by accounting for the risk of products becoming waste. It's different than modern insurance since premiums are distributed preventively rather than as compensation for continuing waste accumulation, resource loss and climatic disruption. It's not a tax since the government oversees the scheme rather than handling the money. It doesn't create a new artificial market like carbon-permit trading. It just corrects major market externalities. 

All significant producers of all products (including fuels) would be obliged to pay an insurance-like premium to account for the risk of the resource ending up as waste. Premiums would be redistributed from production of waste-risky products to fund society’s activities that cut the risks of resources (including fuels) becoming wastes (including GHG). Hence some prices would go up and others down. This would 'change the game' and redirect the decisions of all participants to ensure people’s needs are met with globally continually declining requirements for resources and continually declining accumulations of waste (including GHG concentrations). The existing incentive to profit by selling more stuff would be inverted by the premiums so there would be a disincentive to handle more materials (meaning more premiums) or for any materials to create avoidable waste (meaning more premiums). 

Examples

• A recyclable (or biodegradable?) kitchen cupboard is less likely to become waste than an unrecyclable cupboard made of laminated chipboard, so premiums would be less and the selling price more attractive. A cupboard manufacturer seeks lower premiums and starts offering highly durable goods or a take-back service for refurbishment and recycling. Premiums from companies preferring not to change go to create change elsewhere. Junky cupboard makers could survive if customers value the product enough to pay higher prices caused by premiums. Refurbished and durable cupboards would be come cheaper. 

• Fossil, nuclear and refuse-derived fuel products have high waste-risks (up to 100%) so premiums would be high compared to renewable fuels which have low risk of becoming waste. accidents, spills and leaks would raise waste-risk and premiums. Premiums would be spent supporting actions that cut the risk of products becoming waste, such as reducing energy dependence, localising resource distributions and supporting development and infrastructure for renewables. 

• Products that include toxic or persistent synthetic components have high waste risk and would attract high premiums. Manufacturers would quickly phase out such ingredients. Waste incineration would be quickly phased out as people suddenly realise that all waste is optional and turning valuable resources into toxins and GHGs is not a success strategy. 

• Plastic bags and packaging have been a target for campaigners for decades; meanwhile vast amounts of these non-renewable resources have been dumped into the land, air and seas (eg the North Pacific garbage patch). If producers paid a premium according to the risk of their plastic (including heavy metal and hormone-disrupting components) becoming waste then price signals would spark a sudden whole-society collaboration on minimisation, reuse and recycling. 

• Biodegradable products (such as food or cleaning products) require processing space to avoid accumulating as waste (GHG in air, excess nutrients in water-courses etc). Significant producers would have the choice of investing in sufficient capacity or paying a premium that would pay for that capacity anyway. Either way this would fund actions such as composting, reed beds, ecosystem expansions and reforestation). 

FAQs

Why should society choose to pay rather than continue neglecting to pay for externalities? Today the lack of accounting for externailities causes rampant externalities. In a circular economy precycling premiums would account for externalities by paying the price of preventing them (which is a bargain compared to allowing externalities to accumulate out of control and then trying to afford them). Externalised impacts systematically impose costs on the future that are incompatible with ethics and sustainability. However linear economics also imposes massive current costs, for example as flimsy products need regular replacement, garbage needs collection and high-tech burning or burying, fresh resources need to be sought (and fought over) around the world and myriad symptomatic problems are suffered without being solved.  

What level should precycling premiums be set at? Premiums will not generally need to be high to be effective. At any level they provide a signal to all market participants that the economy now has a direction. This should help to align investments, grants and subsidies that would be happening everywhere anyway and might otherwise have enabled faster linear resource losses. Premiums on fossil fuels would be spent in part to support renewables so the premium level would not need to bridge the full gap. The premium on hard-to-recycle packaging should be enough to pay the cost of collecting and recycling it. Premiums on substances that are already accumulating in the biosphere should be higher to support rapid phase out and clean-up. 

How does dealing with waste help with other sustainability issues? Ecosystem waste is tied to all other sustainability issues through linear (one-way) resource flows and the injustices that this causes. This offers an alternative to the conventional approach to externalities of 'predict every impact from everything and allocate future costs back to current activities'. Waste-based price-correction can encompass almost all sustainability issues, not just physical resource issues, since social and economic failures block sustainable resource use if not resolved. The risk of products becoming waste corresponds to a wide range of unsustainable externalities and premiums based on waste-risk can be invested in a wide range of sustainable development activities. (See 4.2 and 4.5 of reference 2 for published info on using ecosystem waste as a proxy for unsustainability.)

Why focus on products rather than emissions or energy? Economies have few points of significant production but a multitude of emitter and energy users so a product-based intervention is efficient. Taking care of material flows is an effective way to take care of emissions and energy since product prices can be a leverage point to guide sustainable choices with materials, emissions and energy. The same economic tool can apply to both fuels and energy equipment. Energy itself need not be included since energy comes either from fuel products or from sources that do not add to waste in the biosphere (geothermal, tidal, solar). Precycling insurance can account for the nuclear power station as well as the fissile fuel, the oil tanker as well as the oil, and all the equipment used for renewable energy. (See also 4.11 of reference 2)

How can markets cut emissions and resource demands? Conventional business profits by selling more stuff. Precycling premiums provide the opposite signal, to profit by selling less stuff that is less likely to become waste. Since this includes fuels the incentive is also to use continually less energy from sources that make less waste of all kinds, so encouraging less materials to be moved less far and less often. Businesses would minimise costs by offering the maximum service with the minimum materials. Washing machines that are 99.5% working would be fixed rather than replaced. New designs would be built for repair and durability. (See also 4.10 of reference 2) 

How can selling less stuff and making less emissions add to economic activity/GDP/economic growth? Economies need not be destructive and need not grow by turning resources into junk ever faster. It's just a silly bad habit that will never again be accepted after it stops. Economic activity is supported by:

  1. Action across the whole economy not just green or 'low-carbon' sectors.
  2. Higher prices for waste-dependent products (adding to GDP figures).
  3. 'Recycling' of premiums into productive and regenerative spending. 
  4. Clarity of economic vision giving confidence to bold investments.
  5. Positive shared images of the future building cooperation and confidence. 
  6. Opportunities to engage in lifestyles, jobs and businesses not in conflict with common values. 
  7. Many sustainable activities being labour-intensive, so more jobs and more widely shared wealth.
  8. Subsidies for compatible activities and products leveraging more spending. 
  9. Positive feedbacks eg more and healthier food growing on regenerated soils. 
  10. The transition process involves new learning, new technologies, etc - all adding to GDP.

 

Please see reference 1 for more FAQs. References 2 and 3 have full information on all aspects. Please see also the Story of Stuff for a simple visual presentation of the switch from linear to circular economics, http://www.storyofstuff.com/ If anything is still unclear please feel free to leave a comment. Thanks!

Circular economy is a national planning goal for China.

"There is an urgent need to accelerate transition of the economy from traditional model to circular one."

Image: International Conference on Environment and Circular Economy, Nankai University, Tianjin, China

  

 

Why? Climate needs more than narrow solutions

 

As a society we frame the climate problem in ways that help us cope with it psychologically - but do little to actually solve it. For many that means denial. For most of the policy-making community that means focussing on incremental changes such as emissions and average temperatures rather than the systemic variables such as GHG concentrations and loss of buffers such as ice and ocean ph (which are much scarier). Consequently, well-intentioned climate policy supports the mass delusion that GHG concentrations can be stabilised at far higher levels  - when the current impacts (for example vanishing polar ice and weather related disasters) from existing levels are already intolerable.

This proposal offers a way for the scale and speed of society's response to match the scale and speed of the problems. The 'machinery' of the solution is the same machinery that caused the problem - but working in the opposite direction. Campaigners and policy-makers appear to have become stuck in a mindset of limits and control, as if the machinery of economic was inherently destructive and the best we can hope for is to attempt to set targets for maximum levels of damaging impacts. These attempts are of course resisted since success with the prevailing linear economics requires ever more conversion of resources into wastes. There is also a deep psychological hurdle to be recognised, that people instinctively resist change presented as a constraint. 

Campaigners and policy-makers have missed the opportunity, over the past 20 years, of moving beyond end-of-pipe and narrow solutions to propose switching the machinery of economics so that every decision by every market participant can be part of the solution. Curiously this market-based solution would also support political and social change. Consumerism for example is part of the package with linear economics. If politicians knew they could achieve economic growth from the economy-wide work done to phase out impacts then more of them would no longer feel obliged to make dumb decisions just to keep linear economics running a bit longer. 

Please see my article about redesigning climate talks and my Op-Ed marking 40 years after the first International Environmental Governance conference in Stockholm. See also this ClimateWorks report, "The document, written by Hal Harvey and Sonia Aggarwal, calculates that stabilizing the gases at a level low enough to avert severe damage to the planet will require that emissions peak by 2020 and then begin falling briskly — and no set of policies in place today is likely to cause that to happen."  

 

How? Governance and financing

 

Governance framework.  The overall global economic and environmental governance framework for the proposal is human society, with all its people, institutions, cultures and capabilities for change. Climate governance with climate policies, climate institutions and climate enthusiasts can contribute usefully but it is not sufficient. Circular economics is a way to engage the whole society in a sufficient change process, since everyone uses products or takes part in decisions in markets. The whole society dialogue that would be inspired by the question of how to effectively spend and assess large funding flows from precycling premiums will also support engagement with climate and related issues. The whole society is also vital for monitoring the effectiveness of producer product plans that will be available on the web. 

Implementing circular economy. With the possible exception of China, governments have been slow to catch on to the opportunity of running their economies without depleting what they need to keep running. In their defence, civil society and international policy-makers have been similarly slow to point out the opportunity. The Climate CoLab is a way for civil society, policy-makers and governments to grasp the opportunity. If this happens then the Rio+20 conference could be an ideal moment to mark a new era in global problem-solving where governments collectively agree to implement circular economics as a radical new growth strategy and as a market-correcting mechanism. (See section 5 'Starting economic renewal' of reference 3)

Governance of precycling insurance. Governments would legislate to set up precycling premiums as a scheme and as an obligation on all significant producers. If this is done simultaneously internationally then the accounting effort of adjustments across borders could be omitted. Producers would retain freedom to design and distribute as they wish but would be expected to know what happens with their products at end of life and to make public plans for this. These product plans would inform a calculation of precycling premiums that would be paid to accredited insurers (including existing insurance businesses and non-profits). Premiums would be spent by insurers, sustainability funding bodies and local bodies. Spending would be transparent to the public and accountable to government. (See 4.7 of reference 2 for 'principles for investing premiums')

Compatibility with other mechanisms. Precycling premiums is a meta-mechanism which is compatible with most or all possible alternative mechanisms for climate and related sustainability issues. This means that other past or future initiatives enacted at any scale and intended for any piece of the problem will in general be mutually supportive. This applies even when another mechanism is made redundant by precycling premiums. For example the plastic bag tax in Wales will reduce the risk that plastic from bags will end up as waste in garbage or in nature, so the waste-risk and premiums on bag producers would be reduced. Similarly a carbon tax or a regulatory/voluntary limit on particular emissions would make a quantifiable difference to waste risk of fuels and cut producer's premiums. Over time the use of other mechanisms and regulations would plummet since very few would be needed. 

Financing.  A commonly expressed obstacle to fast global change is a perceived lack of funds. This perception is worsened by the current worldwide stumble into austerity. The world has no real shortage of funding opportunities but a dire shortage of imagination on funding. The mechanisms below can finance the necessary acceleration of investments in 'global security' including climate security. They also provide a solution to a classic dilemma with price correction, since there is one source for funds (the unsustainable product, eg fossil fuels) and two calls upon those funds (supporting a sustainable alternative and supporting those hit by the higher prices, eg the 'fuel poor'). Bringing in extra funds means that both calls can be supported. 

  1. The whole economy. Premiums from risky products will be redistributed to fund activities and products compatible with sustainability. (This proposal: switch 3. See reference 1 below for outline of the switches.)
  2. The gift economy (volunteering, donating, sharing, exchange of favours). This is stimulated by the shift from fragmented self-interest to shared ambition and determination. (Switch 1). Small amounts of funds from switch 3 can also enable large amounts of effort in the gift economy (eg funding volunteer co-ordinators).
  3. Creative renaissance. A society not stuck in its ways can continually make brilliant innovations rather than expensive mistakes.  
  4. Economic growth based on regeneration rather than exploitation, allowing greater private and public investments. (This proposal: switch 3)
  5. Redistribution of institutional investments (eg subsidies, grants and aid) to match the new economic pattern. (Consequence of switch 3 - subsidies fit the prevailing pattern).
  6. Release of funds previously thought necessary for investment in weapons. (Consequence of switch 4).
  7. Generation of income and reduction of costs from reversing the loss of nature. (Switch 3 and 5)
  8. Sharing of wealth previously accumulated by the super-rich. (Switch 6)
  9. Creation of new money previously (mis-)managed by banks. (Switch 7) 
  10.  

    Computer modelling.  MIT's computer modelling does not yet cover the range of CO2 concentration targets (ie rapid reductions) that are compatible with an opportunity for continuing civilisation. It appears that the scientists working on the models had not even been asked to consider concentration targets below existing levels. Hence the model's message for mitigation costs in the 'actions and impacts' tab, "The actions for this plan are outside the range of acceptable inputs... and it may mean that the modelers deem the plan's actions infeasible." is not fair or reliable as a judgement of feasibility.

    May I suggest that further work should be urgently done on the models to reflect both the climate realities (need for reduced concentrations not just emissions) and the available policy opportunities (eg carbon-negative activities and circular economics). The 'damage cost' graph has a scale that considers only negative effects on GDP from climate initiatives, when any meaningful scale of activity in addressing the issue implies a positive boost to economic activity. So it appears the modellers have not yet been asked to consider scenarios where increased spending on a global transition cause GDP increases, thus creating a 'damage cost' with a positive % change in GDP. A good start would be to show a positive scale on the graph!

    I'm also concerned that the models appear to have omitted the most dangerous aspects of climate change - loss of climate buffers and positive feedbacks. The smooth linear predicted trends of co2 concentrations that are shown on the models for all proposals suggests that the ending of climate buffers (eg polar ice, permafrost, ocean acidity) and the start of runaway feedbacks (methane hydrates, ecosystem dieback, albedo effect). If polar ice is vanishing at an accelerating rate why would this not show up as a surge in temperature change on impacts graphs?

    Compatibility with the allied proposal Carbon-negative 'biochar economies'. The 2 proposals are best implemented together:

    1. The vision of a circular economy makes sense of biochar where biomass is efficiently turned into new resources - biochar and more biomass growth. It also makes nonsense of wasteful practices such as incineration, bonfires and deforestation. 

    2. The economic tool (precycling premiums) would create a potential financial incentive for biochar. Premiums on biomass-based products and fossil fuels could be reduced by producer's investments in biochar and reforestation. Premiums on products that chose not to invest would still be invested in activities (including biochar) that cut the risk of all kinds of products becoming waste. 

     

    Vision? If we act soon enough, the future can be what people choose, not what happens to us!

     

    The outcome of the proposal would be for humanity’s worldview and behaviours to adapt to a new economic pattern of reversing the problems that have previously been caused. Change would be self-organising and systemic (happening everywhere, involving everyone) so both top-down and bottom-up. This type of change is best understood by considering the example of markets, which engage everyone and guide decisions based on prices that currently ignore most externalities. Simply by correcting externalities markets can guide decisions differently, for example from causing loss of resources and worsening of climate disruption to the opposite.  There is no limit to this process so emissions cuts would quickly exceed all current targets and would proceed towards net-negative emissions.

    The ‘Green Economy’ vision of the UN contains many worthwhile goals and ideas however the proposed mechanism for transition (...investing two per cent of global GDP in greening ten central sectors of the economy… See ref.) is indistinguishable from nations’ business as usual and from the UN’s standard approach of ‘top down administrative planning for incremental change’. This approach leaves change at the mercy of change-fearing politicians and offers no evident mechanism for change that is systemic (happening everywhere, involving everyone). The vision also promotes activities which are clearly incompatible with a sustainable future and circular economics, such as the incineration of mixed waste.The proposed actions are compatible with most people's visions of a peaceful sustainable co-operative simpler more fulfilling future on a shared Earth.

    People with compatible ‘creative depictions’ are invited to add them here...

    References

     

    Reference 1. Advanced Research Workshop paper for NATO Science for Peace and Security Programme by James Greyson. Author's link: Seven Policy Switches for Global Security. Publishers link: http://www.springerlink.com/content/g715w8718726x736/

    Abstract: Everyone desires a secure life. Yet the security of more and more regions is undermined by unreliable and unequal availability of basics such as energy, water, food, natural resources, funds, co-operation, trust and hope for the future. Shocks such as the credit crunch, infectious diseases, climate instability and ecological collapses are converging towards a ‘planet crunch’ where security would become a fond memory. Traditional policy-making, that manages problems separately and incrementally, offers only the illusion of protection against impending unaffordable and irreversible shocks affecting all people. Future security anywhere requires all facets of security everywhere. This ‘global security’ ambition can be sought with a new era of policy-making that encompasses the indivisibility, scale and urgency of all planet crunch issues. This paper offers a selection of seven simple ‘policy switches’ (or ‘leverage points’ in complex systems). Each policy switch offers an expanded vision of people’s role on Earth and a whole-system change to implement it. Together the switches define a practical strategy for global security, for a serious attempt at revival of co-operation, ecosystems and prosperity.

    The proposed policy switches are:

    1. The strategy of aiming to reduce problems can be switched to reversing them with ‘positive development’. Less bad is not good enough.

    2. Education can inspire a culture of joined-up thinking and engagement by switching from predetermined to curiosity-led learning. 

    3. Economic growth can be switched from consuming the basis for further growth to building it by correcting markets with ‘precycling premiums’. [This is the subject of this proposal in the CoLab.]

    4. Rapid global disarmament can be launched by switching from Gross Domestic Product to ‘Gross Peaceful Product’, that omits weapons-related transactions.

    5. Exploitive commodification of the Earth’s surface can be switched to guardianship by international treaty that interprets ownership in terms of responsibility to future generations. 

    6. Surplus accumulations of financial wealth, which would be wiped out by the planet crunch, can be switched by the wealthy into investments that secure all forms of wealth.

    7. Global financial stability can be regained by switching money creation from the private sector to central public authorities and local currencies.

    Reference 2. Author's link, Systemic Economic Instruments for Energy, Climate and Global SecurityPublisher's linkNato Science for Peace and Security Programme. Elsevier. May 2008.

     

    Reference 3. Author's link, An economic instrument for zero waste, economic growth and sustainability.Publisher's link. Journal of Cleaner production. Special issue on Zero Emissions. July 2006.

     

    Team

     

    Lead author: James Greyson, head of BlindSpot think tank.

    Other team members:

    Dr Andrea Berardi, lecturer in environmental information systems, chair of Open University Development and Environment Society. andrea-berardi

    Roger Eaton, developer of InterMix Collective Communication Software.

    Jess Reese, jessreese

    Dr. Vladimir Tretyakov, Director, expert at IntelTech.iatp.by 

    ... ?

    Others interested please add yourselves above. Or if you prefer please just click 'support' on the top right of this page and ask your friends to do the same :-)

    Thanks!

    James Greyson (blindspotter on the Climate CoLab)

    My think tank www.blindspot.org.uk  Thought leader and workshop leader on building shared understanding of opportunities for global whole system change. 

    My web think tank Fixing systems not symptoms. Over 500 people -please join us!

    Twitter @blindspotting  Please follow for latest news. 

 

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Fix the system - get a global 'circular economy'
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