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Transcript: Moving to Circular Economy in Cities and Countries with Anders Wijkman

Transcript: Moving to Circular Economy in Cities and Countries with Anders Wijkman

SEE THE SHOW NOTES AND LISTEN AT: Moving to Circular Economy in Cities and Countries with Anders Wijkman

Katie Whalens [00:00:06] Hey there, Getting In The Loop listeners. Ever wondered what can be done in your industry to help create a more circular economy? To mark the one year anniversary of the Getting in the Loop Podcast, I've put together a short e-book to help you navigate key circular trends in textiles and apparel, ICT and electronics and packaging. And it includes links to related reports as well as relevant Getting in the Loop podcast episodes. It's yours to receive when you join up to our podcast newsletter at CircularSectors.GettingInTheLoopPpodcast.com. So head over to our Web site to get your copy of the Circular Sectors Navigator. That's again CircularSectors.GettingInTheLoopPodcast.com. 

[00:00:52] Hi, I'm Katie Whalen. And join me each week of I talk with experts around the globe about Circular economy. You'll find out what's being done to make it a reality and if it can really solve the problems it promises. It's time for Getting in the Loop. 

[00:01:07] Welcome back to the Getting in the Loop podcast. I'm your host, Katie. This month, Getting in the Loop is partnering with the International Society for the Circular Economy ahead of their inaugural conference, which will be a digital event and will be held on July 6th through 7th of 2020. Throughout June, we've been talking with some of the keynote speakers and people behind the event, including last week's episode with Walter Style, the honorary president of the International Society for the Circular economy. If you haven't listened to that one already. Definitely check it out. As Walter and I chat about the future of Circular economy post Covid19. Today, we're getting in the loop with Anders Wijkman. Anders is honorary president of the Club of Rome and chairman of the Governing Board of Climate Kick. In today's episode, Anders reflects on our progress towards a circular economy and the role that cities play in the transition to a circular society. You will learn about climate kick here, about Anders' experience with environmental policy in the European Parliament and find out more about his upcoming keynote at the International Society for the Circular Economy. I hope our conversation gets you excited for his keynote in July. You can find out more about the International Society for the Circular economy conference and how to register at our website, GettingInTheLoopPodcast.com. Now onto today's show. 

Anders Wijkman [00:02:40] So, I'm Anders Wijkman. Currently, my most important assignment is chairman of Climate Kick. 

Katie Whalens [00:02:52] Yes, very, very important. Is it an organization or how would you kind of call a Climate Kick? Because I know there are funding, many different initiatives and important projects. 

Anders Wijkman [00:03:07] Well, it's-- Well, it's an institution of public private partnership that was launched in 2010, so we have 10 years of experience. We have around 400 partners, cities, both big cities and medium size cities. Sorry. We have universities and scientific institutions and we have startups, medium sized companies and also some big companies, and the idea is to. Promote innovation for low carbon solutions. And you could say it's, of course, an institution because we do receive money from from the European Union to be distributed widely in support of a lot of projects. We have a lot of educational activities, entrepreneurship, support activities. And then we focus on primarily four areas, circularity and circular economy stuff. Transformation of cities and transformation of land use. And we also have a focus on the finance sector and what has happened is that we realized after some six, seven years of activity that vertical interventions and single point solutions. There are good examples, but they don't really lead to the impact that people would like to see. We can't really say that we have had a major impact with our activities on reducing emissions over these years. So, you know, we are no longer in the ball game of cutting percentages here. And there are emissions. We are in the ballgame of really bringing emissions down to almost the level of zero. And that means transformation. We have to do things differently, and that means you have to change the systems. And, you know, it's--

[00:05:44] I mean, let's take mobility as an example. You don't solve the problem by us changing the engines of the cars. Because you have congestion, you have, too much material throughput. So if you really want to do something about transportation, you need to look at how you design cities. And city neighbourhoods, because 80 percent of emissions already night in and around cities. You have to look at public transport. You have to look at walking, biking. And, of course, you have to look at the vehicles. But that's only one of the issues. So so that's why this systemic approach and using. Innovation for system change is very, very interesting. And we have now launched a series of so-called deep demonstration projects. Where the aim is to really demonstrate in practice in real time how this this is happening or could happen. And one of the demonstrators is clean and healthy cities where we have altogether 15 cities in Europe that are part of this. And the idea is that it should be very much demand driven, not supply driven. Because if it's supply driven. You don't you don't get the impact that you should. You need cities to really define their intent, their objectives, and then look at this in a systematic, persistent, systematic way. Nowhere are the entry points. How can innovation help? And it's not only technology, it's organizational issues and governance issues. It's very much a question of how how do different departments or agencies in a city? City agencies. 

Katie Whalens [00:08:17] And in the report that you-- this new paper that you did, it is for climate care, looking at sort of the role of cities and kind of what is already being done, from my understanding. And also what in the paper you argue to move towards more as systems approach. Are there any good examples or some good success stories that you have seen coming out of different cities? 

Anders Wijkman [00:08:45] Well, we are in the beginning. And so it will take some time until we really can demonstrate. And one of the problems is that we we don't have yet performance indicators that can really Damascenes and it's very it's very easy to to measure the impact in terms of performance by by vertical intervention. But how do you when you look at the system? It's much it's much, much more difficult. So so there is a lot of learn by doing. But we are absolutely convinced that this is the only way forward because we can no longer have a have a society where we deal with one issue. And by the way, that's that's one of the reasons we are in this mess. 

Katie Whalens [00:09:48] Which which mess? The environmental mess or the kind of the Covid mess. 

Anders Wijkman [00:09:54] No, no, no. Not the Covid mess.  Well, Covid is part of the picture because. It seems very likely that the origin of the pendant pandemic comes from from the proximity of wild animals and human beings and in particular wet markets in China. So if we had been more careful about nature and natural habitats, this this would probably not have happened. But, no, you know,  over the last hundred years, production growth has been the number one objective in society. And it was understandable, not least when societies were very poor, that almost anything, any kind of economic activity contributed to improvements. But over the years, we have seen that we have an economic system where short term profit maximization. Is really leading to a lot of problems, not only climate change, but overuse of many ecosystems. The erosion of biodiversity, the erosion of top soils, pollution of water, overfishing in the oceans, it's all these these things that happen is because we have we have put. An economic model. On top of nature and thought that somehow it would work. But we never really bothered to understand how nature works. And so it's it's it's very much a question of equal. Economists are poorly trained. They are mainly interested in the relationship between producers and consumers. And nature, they look upon more and less as a constant. And and whenever they talk about pollution or. Ecosystem decline. They talk about externalities. And and that the terminology indicates that it's not very serious. It's an external effect. 

Katie Whalens [00:12:11] You don't have to think about that until, you know, later. It's something that's there, but it's not in the main frame or focus. 

Anders Wijkman [00:12:19] And, of course, they argue in favor of. Market prices should reflect the true costs of production, but they leave it to the political system to introduce taxes and fees and whatever and regulation. So I think we have an economic model that is not fit for purpose. And we have a we have a capitalistic system that that is tremendously short term. Look at the stock exchange. I mean, I think it's a it's a joke, the whole thing. You know, you trade by robots. I mean, it's it's it's so perverse. And and the only thing that matters is short term profits for that system. Then, of course, there are individual companies who will work differently and shareholder value is the top priority, which means that all the other stakeholders have earned it. So no wonder we are in this. 

Katie Whalens [00:13:26]  So I would also argues that we need more of a systems perspective. But then getting to that approach. What what do you see as the way the wave kind of forward? I mean, I know that in 2016, you you conducted a Club of Rome study and you looked at five different countries and circular economy and you argue, no, circular economy is the way forward. So picking on picking up on what you said about, you know, this systems change and this this need for a change. I'm curious kind of what your thought how are we moving in the right direction and if yes, what still needs to be done? 

Anders Wijkman [00:14:09] Well, you know, the Circular economy is one. Important step in the right direction. But of course, it's not a panacea, because when you make. An economic system more efficient in this type, in this this case resource efficient. You free up resources and those resources will be used either to demand more energy and reserve the resources in the area where you where you did some improvements or somewhere else. I mean, the best case is if you move from having a car that is a gas guzzler to a car that is more fuel efficient, you tend to drive longer distances. If you insulate your house and you use less energy or your energy bill goes down, well, you may add another room to your building or whatever. 

[00:15:01] So that that's that's normally happen. So there are rebound effects. And by the way, nothing is 100 percent per circle. That's also that's why I never really liked the term I was I would like I would have used the spiral economies because nothing is a hundred percent circle every loose quality all the time. But but to move from a linear production model to a circular production model is a huge step in the right direction. And by the way, it's a metaphor. And there is no good definition of what the circular economy. It's everything from what many people think it's about recycling. Recycling, I would say, is one of the least effective ways, the most effective ways, of course, to to extend product life or products. So you don't build in bobsleds. You can use them much longer. Secondly is to reuse products or reuse components that you don't have to to recycle in the way that that that you have to turn them into something new again, rather just, you know, use components again or recondition the product and use it again. Remanufacturing is another, you know, caterpillar taking back big engines and redo them and offer them again. And there are many examples of that. Then comes recycling and recycling today is. Quite ineffective. I was chairing the Swedish recycling industry for a number of years and we did a study where we looked at the value of recycling. And the question we asked was if we put into the market, let's say. Thousand euros of plastic or of steel? Or of cement or aluminium. Off the first use. How much is still captured off that value? And we came to the conclusion India in on average it was only 25 percent. And for plastics, it was only eight percent. Same simply because the design is such that you cannot do much of what you collect. Stealer's is an exception because there they're more than 50 percent is reused. Aluminium, about 35 percent is huge. I thought that aluminium would be much more going around, include Sloops more or less, because it's so expensive. But yes, beer cans and Coca-Cola cans, they are being recycled quite effectively. But aluminium in so many other contexts. They are present in the form of alloys, in the form of composite materials. So it's very difficult to do anything about it because it's not designed for reuse. Plastics. I mean, that's a nightmare. 

Katie Whalens [00:18:27] So many types, so many colors. 

Anders Wijkman [00:18:32] Yeah. And then you have electronics. Most of it is not recycled and reused because it's too expensive. And if you take a mobile phone, for instance, there are a lot of rarer metals in this one, but only in small quantities. So it doesn't really pay to to collect them and to retrieve them. And then the design is such that it's very, very difficult to do it. So basically, what is what is retrieved? This is copper and gold. That's a. And this is a colossal waste. You really threw a lot of threw away a lot of money, and then, of course, parallel to that, you have all the pollution and all the carbon emissions. So I would say recycling, we can improve it a lot, but then we have to improve design. And I think we have to have a requirement on new products that they should include a certain percentage of reused materials. Then there is, of course, another aspect of circularity, and that is the sharing economy. And yet another one, which is very important, is to move from to change the business models to moving from selling stuff to offering high quality services. Why the hell do I have to own this one? This means that when when when it's being sold. Apple in this case has no more responsibility.  They leave the end of the product to somebody else. 

[00:20:24] If instead I was renting or leasing this, it would be their responsibility to care for the materials till the bitter end. And they they would then be interested in making sure that once it comes to an end, they can retrieve the quality that is still there. So, I mean, there are so many. And we we have. I I've done a lot of studies into it. And the one we did in 2016, 2017, we also we we we had five. Best European countries to start with, and then we added Poland and the Czech Republic. So there is a study for them as well. And we came to more or less the same conclusions. Basically, if you move in the direction of enhanced energy efficiency and material efficiency, including changing business models in the right direction, I said offering more services over a 15 year period. We looked at, you know, the period from 2015 to 2030 with the assumptions we had. We came to the conclusion that you would cut carbon emissions by roughly two thirds and that you would add something in the range of two to three or maybe even four percent of the labor force in terms of new employment. And that's quite significant. 

[00:21:50] Poland was a little bit different because of their quite old fashioned agriculture sector. So the study there came out a little bit different. But for all the other countries, the picture was more or less to say. So that means that there are a number of co-benefits when you move in this direction. 

Katie Whalens [00:22:11] So co-benefits in terms of environmental and also societal like job creation, things like things like that. 

Anders Wijkman [00:22:20] And then and then this study we did for the for the recycling industry, that was in 2018. I could send you in summary in English. Then we also added that you would save a lot of money. But the the the new paper did for always see, it was not the paper for climate kick, but I brought to the fore a lot of the experience of climate.  The idea was really to, on the one hand, take stock of the role of cities in moving towards this more circular model to also try to understand what's going on. And there is a lot going on. And then finally draw some conclusions. And one of the main conclusions is that that we need a more systemic approach. Otherwise, this will not really be what we expect. And then, of course, I address a number of other issues like how can we use digital technologies, artificial intelligence, et cetera. How can we merge these agendas? Because there are many opportunities and other aspects, of course, public procurement. And how public procurement can help promote this development. 

Katie Whalens [00:23:53] I'm curious to hear your thoughts from sort of what you see with Circular economy and and your kind of vision for the future there. Do you think that. I know it's difficult to say which one is more important, but and then probably your answer will be some sort of of the combined two, but like business and policy, who has a role to play, an important role to play in sort of leading this this change? Is it. Yeah. Do we need more sort of policies like procurement initiatives and things like that actually kind of spur business in the correct direction, or will they also undertake it themselves? If, you know the study that you had with 2018, with that, there is a certain economic incentive for it as well. So I'm just curious if you can say a little bit about the. 

Anders Wijkman [00:24:47] Well, I mean, the first answer is that the incentive structure of the economy. Is flawed because we don't pay for the external finalities. We will always question. We will always discuss and dispute how large these costs are because experts will not totally agree. But we know that they are not zero in most cases, so it is too cheap to to use nature. And unless you correct that. And I know again that from my own experience in the recycling industry, that you would imagine in this situation where everybody talks about the circular economy, that recycling companies would would earn quite a lot of revenue. In fact, they don't because the secondary materials market doesn't really work very well in some areas. It does. But but in most areas it does not. And that's because of the design. And that's because Verdin Materials are most often less expensive. And as long as that is the case, this will not take off. I mean, everyone is said all circuit circularity. That's good. Let's move against. But it doesn't happen by itself. If the market would lead to this situation, it would have happened already. But doesn't it's a big market failure. 

[00:26:21] So you have to you have to look at the cost structure of the economy. And the most logical thing would be to change the bloody tax system. I mean, in my country, 60 percent of tax revenue comes from taxing labor. Twenty five percent is VAT, nine between nine and 10 percent is capital taxes, taxes on companies, etc. Corporate taxes and so on. A little bit more than five percent to taxes on energy, resource use and pollution. Give me a break. 

Katie Whalens [00:26:56] We had Walter Stahel on the podcast talking about taxing digital and digital transactions instead of labor that was something that he had that he had discussed. I don't know if you had thought about that before. 

Anders Wijkman [00:27:12] Well, that's a way of, yeah, that's a way of sharing the benefits of the digital revolution, of course. Because now, as we know, you can become a billionaire in a few years. Bye bye. Yes. By just issuing a smart app, it's innovative, it's  quite ridiculous how how easy for some of the smart minds it is to to create fortunes. If you compare to industrial society where it took decades to build build the same wealth. So as I and I think that that the wealth generated by a few individuals in that part of the economy should, of course, somehow be shared in a way. So that's why I think that that type of taxation is interesting. But that will not automatically lead to a circular economy. You need to make it more expensive to use nature. It's as simple as that. We know when we when we put a tax on energy that that people get an incentive to. To to be more efficient energy efficiency, investments, pay, et cetera, et cetera. And it's the same with materials, of course. And it will it will encourage innovation. So I think the cost structure and the tax reform and then design requirements. I don't think you should be able to put products on the market. In the normal case, there are, of course, exceptions, but in a normal case, what you put on the market should be easy to the ingoing materials and components should be easy to reuse. That should be a mandatory provision. And I think the European Commission is moving in that direction. Because if you look at the green deal, that's part of it. 

Anders Wijkman [00:29:18] It's ironic because 50 years ago, when I was a member of the European Parliament, there was a proposal by the European Commission called the Integrated Product Policy. It for something similar to the circular economy package that they launched 10 years later, and it it rediscuss exactly these issues at that time. And I was the rapporteur as I wrote the long report. And one of my proposals was that. 

[00:29:49] There is something called the Ecodesign Directive in the European Union, which mainly focuses on energy efficiency. So it has been used to make computers and car engines, electric motors, refrigerators, washing machines. It's a more energy efficient than everybody thinks. It's a good thing. I don't think anyone. And, you know, lighting was also part of that. The change from the traditional lamp--

Katie Whalens [00:30:24] To LED, yeah. 

Anders Wijkman [00:30:26] LED, et cetera. There was some opposition, but but in general, it was it was good. People saved a lot of money. We became more energy efficient. And I introduced at that time the the idea that this directive should be used to to regulate material use as well and you can't imagine, but the commissioner was responsible at that time. He was quite powerful Social Democrat from Germany, Mr. Forholligan. He was minister for industry and enterprise, and he looked at me when we were debating this in the European Parliament. And he said about how big does a stock common? 

[00:31:16] So that's that just shows how sensitive the issue has been, because industry to start with, didn't like the idea that anyone had any views on how they source materials. That was part of their freedom. Now, 50 years later, I think almost everybody agrees that this is very much needed. Otherwise, we will plunder the Earth. 

Katie Whalens [00:31:43] There's also there have been some other additional design guidelines that have started to coast like creep into a two with like minimum lifetimes of certain products and things like that. So it seems to be moving in the right direction. But it's it's a slow, as you kind of illustrate with the fact that you're talking about these things 15 years ago. Yeah. So I know we're almost out of out of time. And you're a very busy man. So I would like to, of course, let you get on with your your your day. But I wanted to ask you a little bit about the upcoming International Circular International Society for Circular economy conference, because you're going to be taking the virtual stage as one of the keynote speakers. Can you give us a little bit of insight into what you plan to be talking about? My guess is it's something related to what we've been talking about already today. 

Anders Wijkman [00:32:45] Yeah, I think the concepts are poorly understood. So that's why it's very, very important. And if you read my paper, my always a D paper, the first 15 pages gives a backdrop to this discussion, which is not new. It has been ongoing since the 1960s and 70s. And the Club of Rome, where I was the chair from seven years, we was one of the main issues in the Limits to growth report. That society would run into problems either because of. Scarcity or resource depletion in some areas. And or pollution or a combination of the both. And we are moving there very rapidly. 

[00:33:46] In many areas, maybe alone. You cannot talk about absolute scarcity. You can talk about a lot of pollution and the way we we use all this has all these matters has a profound effect on biodiversity and on ecosystems. I'm a member of the natural resource panel, we did a study and we came to the conclusion that resource extraction and production in total amounts to 50 percent of the carbon emissions and more than 80 percent of biodiversity loss. So, so so we have to stop this. We have to do it in a much more intelligent way. So I will I will give you that. I think I will go give a background to that and then put it into a wider perspective. And then so be in on the experience we have within climate, doing systems, innovation and really advocate. This is more systemic. And I think that's where I can make a difference. 

Katie Whalens [00:34:51] Yeah. Well, I look forward to tuning in to that keynote. I, of course, will be attending the conference. And I'm sure that some of the listeners will or if they aren't planning, then maybe there'll be front that maybe they'll be planning to to attend now. So I'll make sure that there's a link to the conference page on the website for this podcast so they can find out more about that. And before we we end our discussion today, Anders, I just had to ask you two things. The first is I was just a little curious about your thoughts on Circular economy fitting into the post Covid, Coronavirus world, because that's kind of everything that everyone has been talking about for the last month or so. So do you have any thoughts that you'd like to share? 

Anders Wijkman [00:35:39] Well, I'm sort of perplexed by the fact that so far very few governments. Have given seemed given any reflection or thought. About the long term effects of their recovery plans. And I think that's very much needed. And I don't think we should aim at going back to what was before the crisis. You should take the opportunity, because then we would just be back in in in a society where an increasing number of people were concerned about the threat of a climate crisis. So we should really, since we are spending so much money. No. On trying to save the economy and give it a kick start, you should, of course, do it in a way that that we we promote the right kind of things. And that's why I think just to pour money into airlines, car manufacturers, oil and gas companies is utterly stupid. We should at least put some requirements on them. 

[00:37:00] In terms of cutting emissions and promoting innovation, etc., so so the circular economy is, of course, very much at the heart of this. Secularity is. And whether we talk about the technical system or technical part of society or retire, talk about the biological or part of biosphere, the principles are should be the same. So then as a matter of fact, we had we had it. I was part of a discussion with Vice-President Timmermans the other day, focusing exactly on this, how can we make sure that the recovery includes components and ingredients that really helps transform society? But it has to be done, of course, in an intelligent way, because otherwise people may react. There are so many unwanted consequences of this crisis, that have to have priority. 

Katie Whalens [00:38:15] Yeah, it's a very uncertain time for many people, so. 

Anders Wijkman [00:38:21] But, you know, it's ironic that we are now pouring billions and billions and billions of euros and dollars on the economy and if somebody asked before the crisis for a few billions to do green investments, they were told. We don't we cannot afford this. So, I mean, it's like living in different worlds. So this just shows that once the crisis hits us very hard now almost anything is possible. But more long term problems or problems around the corner, we don't seem capable of addressing that. So it's not only that the economy is very short term, that's part of the problem, but we as individuals allege. This is only about 10,000 years since we were hunters and gatherers, and then it was the immediate that was important. Tomorrow was not so important. 

Katie Whalens [00:39:27] So maybe then how to delay our gratitude or satisfaction to write like the it's more easy to check your phone immediately because you get a response rather than wait for a little bit. 

Anders Wijkman [00:39:43] We live in and live a in an era of instant gratification. And that's part of the problem. 

Katie Whalens [00:39:50] Well, before you go, Anders, I just want to ask you the question that I ask all of the guests that come on the Getting in the Loop Podcast, which is about a serious game that I created about materials and critical materials. And in the game, you're products producing company and you have to collect the materials to make your products. So there's actually a smartphone in the game and you have to collect the antimony and indium and those types of materials that are in the smartphone to make your products. And you're trying to collect these materials and produce your products. But then there's different events that happen in the game and they can hinder you from actually collecting your products or actually enable you to collect your materials better. So what I ask the guests is if you could create sort of an event that would happen in the game. What kind of event would you focus on? And often guests link their event to some sort of real world happening that they see that affects kind of materials and products or vision that they have for the future. So is do you have something that comes to mind? I can give you an example of an existing kind of event in the game. So one of the events is that there's an extended producer responsibility. So if players are producing a smartphone and then they actually produce, they get all the materials for their smartphone and they produce it, then if they send it to the landfill, they have to pay a fine. So it's about getting people to kind of think a little bit more about how we use materials in our in our daily lives and where materials are coming from. So I don't know if there's a some sort of event that you think--

Anders Wijkman [00:41:44] What do you mean event? Some of policy measure or whatever? 

Katie Whalens [00:41:48] Yes. Some kind of policy measure or technological disruption or geopolitical disruption. Those are all types of kind of event themes that happen in the game. 

Anders Wijkman [00:42:02] Well, I think the best thing that could happen or one good thing that would change this would be a tax reform of the type. So lower taxes on the income or labor and increase taxes on the use of nature. An important part of the package would also be to remove the I.T. on reuse materials because that would directly give a boost to the secondary materials. 

Katie Whalens [00:42:38] Right. Exactly. We've seen some some different policies in Sweden, at least, where they've tried to reduce VAT for repairs. 

Anders Wijkman [00:42:49] And that's a small but a good step in the right direction. But that is not sufficient. 

Katie Whalens [00:42:56] Yeah. So you're saying extend it to them to materials as well? 

Anders Wijkman [00:43:00] Yeah. 

Katie Whalens [00:43:00] Yeah. Brilliant. Well, thank you so much for coming on the podcast. And I'll be sure to link the reports and the items that we discussed in the podcast on our show notes. But where can listeners go to learn more about you and the topics that we discussed? Do you have a Twitter that you'd like to share or website? 

Anders Wijkman [00:43:20] I'll send it to you. And I have a website where I have some of my stuff. And I'll also send you the  study, the English summary of the material value study. 

Katie Whalens [00:43:33] Thank you for listening. I hope you enjoyed this episode for show notes and links, go to our website at GettingInTheLoopPodcast.com. And while you're there, subscribe to our mailing list to have new episodes delivered to your inbox every Monday. See you next week. 

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About the Show

Getting In the Loop is a weekly podcast dedicated to exploring how to transform to a more circular society. Join host Katie Whalen as she examines the challenges facing our current resource use and discovers alternatives to the ‘take, make, dispose’ way of doing things. Each week she interviews circular economy experts about what they’re doing and learning. Together we'll uncover what circular economy means in practice and find out what's being done to keep our resources in a loop rather than sent to waste.

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