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News

Green Alliance: UK needs industrial strategy that takes resource risk seriously

Green Alliance : 13 July, 2013  (Special Report)
According to the conclusions of the first report from the Circular Economy Task Force, UK businesses can’t tackle resource risks effectively until the government’s industrial strategy takes them seriously. What’s at stake is rebuilding a viable manufacturing economy for the future. Other countries are taking action to secure resources to support their industries. The UK needs to act now or risks falling behind.
Green Alliance: UK needs industrial strategy that takes resource risk seriously

Resource Resilient UK sets out what businesses and government can do right now to manage resource risks, protect UK businesses and benefit from expanding reuse, recycling and remanufacturing. The report identifies major environmental risks that are creating significant commercial uncertainty for manufacturers and businesses in the UK, eg:

  • Copper: This is a staple of the electronics industry, mostly sourced from Chile. The capital cost of new mines has doubled over the past two years largely because of acute water scarcity: extraction costs are going up as ore grades go down (falling from around eight per cent to just 0.7 per cent over the past 150 years). This fosters price volatility and undermines investment in manufacturing infrastructure.
  • Aluminium: If the carbon emissions in aluminium production were priced, the cost of primary aluminium would rise by 70%. In contrast, recycled aluminium would cost only 7% more and reused aluminium less than 1%. Uncertainty over future carbon prices undermines the business case for better reuse and recovery.
  • Oil: Globally, the marginal price of oil has risen 14% each year since 2001 which is driving up prices for manufacturers. Finding new oil reserves won’t stop this trend because extraction is becoming more costly: horizontal fracking uses 4.2 times more steel per well than conventional production and offshore wells are now more than twice as deep as they were in the late 1990s. Remanufacturing and recycling resources uses much less energy than mining, helping offset rising prices.

Author of the report, Dustin Benton, said: “Our analysis shows that companies in the UK want and need to avoid resource security risks. There’s a lot that businesses can do on their own, but the government needs to help. The government’s industrial strategy should quantify resource security risks for different business sectors. It also needs to actively broker co-operation across supply chains to get materials back, and push businesses to redesign their products to make them easier to recover.”
 
Resources are currently lost because products aren’t designed for recovery and business sectors aren’t incentivised to share common approaches. A clearer industrial strategy would de-risk collaboration, set agreed sector-wide goals for recovery and stimulate businesses to adopt new, resource efficient business models. Manufacturers could recover components rather than just raw materials: the recovered components in an iPhone are worth over 200 times the value of the raw materials used to make them. These new supplies would also be less exposed to energy, water, and other material security risks.
 
The task force was set up via the UK’s Resource Security Action Plan sponsored by Defra and BIS, and is composed of leading businesses, including BASF, Boots, Interface, Kyocera Document Solutions, Unilever, Veolia, Viridor, and WRAP. It is convened by Green Alliance.
 
The UK’s global competitors are using co-ordinated strategies to help capture the resources that flow through their economy. For example:
 

  • Japan has made available $1.2 billion for research into rare earth recycling, has developed the first commercial rare earths recycling plant, and requires collection of products containing rare earth metals. Because of its clear resource strategy, Japan’s reuse and recycling economy was worth £163 billion in 2007 (7.6% of GDP) and employed 650,000 people.
  • Similarly, China is investing heavily in research into the ‘circular economy’ as measured by research papers published in 2012, producing more than 12x the research output than its nearest competitor, the US. Despite the UK’s research strength, it doesn’t even appear in the top 10 on circular economy research.

Reactions to the report

Geoff Mackey, Sustainable Development & Communications Director, BASF Europe North: "BASF's sustainability journey is ongoing and the optimum use of resources is one of BASF’s fundamental economic principles. Resource efficiency provides market opportunities and we fully support work like this calling for wider scale consideration of circularity in industry.  BASF continues to invest around one-third of its research and development expenditures on products and technologies for increased energy efficiency, as well as resource conservation."
 
Tracey Rawling Church, Head of CSR, Kyocera Document Solutions: “The circular economy represents a real opportunity for business. Kyocera has been delighted to work with Green Alliance and the other members of the Circular Economy Task Force and fully supports the recommendations made in Resource Resilient UK. While there are many and complex challenges yet to be resolved, we look forward to helping to take the circular economy from theory to reality.”
 
Gareth Stace, Head of Climate and Environment Policy, EEF: “The Circular Economy Task Force’s recommendations are a useful contribution to the current debate on how to stimulate a circular economy.  We now need a clear delivery plan on how we move this forward. This has to be kick-started with a full debate with manufacturers, designers, local authorities and the waste management industry to establish the feasibility of these suggestions and identify any unforeseen impacts. We must then quickly focus on more rigorous analysis of policy options which can incentivise action, encourage collaboration and enhance competitiveness of our manufacturers and contribute to a more balanced and sustainable growth profile.”

 

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