Regional Integration and Sustainable Consumption and Production Peter

Regional Integration and Sustainable Consumption and Production Peter King Senior Policy Advisor, IGES 16 October, 2013

Outline • ASEAN Economic Community and Intended Benefits • The concept of Sustainable Consumption and Production • Situation and trends in Asia • Sustainable consumption in international policy • Decoupling, dematerialization and leapfrogging • Household consumption and environmental impacts • The role of political decisions and policy • Concluding messages

ASEAN ECONOMIC COMMUNITY AND INTENDED BENEFITS OF REGIONAL INTEGRATION

ASEAN ECONOMIC COMMUNITY The ASEAN Economic Community (AEC) will be established in December 2015 and negotiation of the Regional Comprehensive Economic Partnership (RCEP) was launched in May 2013 among ASEAN+6. Some Asian countries are also involved in Trans Pacific Partnership (TPP) negotiations. The AEC is intended to be a single market and production base, a highly competitive and equitable economic region, and fully integrated into the global economy. Environmental issues are included under the ASEAN Socio-cultural Community Blueprint adopted in 2009. The ASEAN Vision 2020 calls for “a clean and green ASEAN with fully established mechanisms for sustainable development to ensure the protection of the region’s environment, the sustainability of its natural resources and the high quality of life of its peoples. ”

Intended Benefits of Regional Integration (RI) RI is intended to accelerate economic growth, capitalize on intra-regional complementarities; reduce poverty; and reduce regional competition. RI has potential to advance economic and social development and could increase the region’s capacity for environmental governance. Integration can facilitate the dissemination and uptake of efficient technologies and good environmental management practices. Stronger economic growth can increase tax incomes and provide more resources for green investments by governments and also strengthen regulatory capacity. Regional cooperation can lead to establishment of stronger environmental standards. However, RI can also be a threat to the environment and yield negative social impacts. Increased trade and foreign investments can result in stronger pressure on natural resources, aggravated pollution and emissions, and also social marginalisation, human rights violations and worsened employment conditions.

PRIORITY ENVIRONMENTAL ISSUES IN ASEAN Global environmental issues Land forest fires and transboundary haze pollution Coastal and marine environment Sustainable forest management Sustainable management of natural parks and protected areas Freshwater resources Public awareness and environmental education Promotion of environmentally sound technologies and cleaner production • Urban environmental management and governance • Sustainable development, monitoring and reporting/ database harmonisation • • • ASEAN Ministers for Environment 2002

ASEAN Statement on SCP 27 September 2013, ASEAN Ministers on Environment, Brunei • COMMIT to strengthen our cooperation within ASEAN and with ASEAN Dialogue Partners, relevant UN Agencies and other international partners on the implementation of Sustainable Consumption and Production (SCP). • ENCOURAGE relevant stakeholders in ASEAN, including private sector and civil society, to enhance their contribution to sustainable development by continuously building its capacities, implementing best practices for SCP, and promoting exemplary regional cooperation of the 10 YFP activities, including through relevant ASEAN Bodies. • INVITE Dialogue Partners to provide necessary funding and technical assistance to the implementation of SCP in ASEAN Member States through all channels including the Bali Strategic Plan for Technology Support and Capacity-building. • CONTINUE exchange of information, experiences, and best practices on SCP. • ACKNOWLEDGE Indonesia’s proposal to explore the possibility of establishing an ASEAN Forum on SCP.

KEY Questions 1. Is ASEAN really ready to implement regional integration (former PM of Malaysia said “no”. )? 2. Is ASEAN really committed to sustainable consumption and production? 3. Area ASEAN institutions well structured to ensure that regional integration does not result in a “race to the bottom”? 4. What evidence exists from existing sub-regional integration efforts (Greater Mekong Sub-region; BIMP-EAGA; IMT-GT) that environmental quality will not be a casuality of regional integration efforts? 5. What additional measures are needed to ensure a more positive outcome from regional integration for the environment?

THE CONCEPT OF SUSTAINABLE CONSUMPTION AND PRODUCTION

Sustainable Consumption and Production • The Johannesburg Plan of Implementation (2002) recognized that fundamental changes in the way societies produce and consume are indispensable for achieving global sustainable development. • UNEP claims that “green economy and sustainable consumption and production represent two sides of the same coin. They both share the same objective of fostering sustainable development…”

A Confusion of Terms

What Governments and Other Powerful Actors Are Saying Grow the Economy Consume Sustainably

Sustainable Production is Easier to Understand than Sustainable Consumption • One definition of sustainable consumption is “the use of services and related products which respond to basic needs and bring a better quality of life while minimizing the use of natural resources and toxic materials as well as the emissions of waste and pollutants over the life-cycle so as not to jeopardize the needs of future generations. ”

Elements of Sustainable Consumption? “Sustainable consumption is an umbrella term that brings together a number of key issues, such as meeting needs, enhancing the quality of life, improving resource efficiency, increasing the use of renewable energy sources, minimising waste, taking a life cycle perspective and taking into account the equity dimension. ” The Oslo Ministerial Roundtable on Sustainable Production and Consumption, 1995.

SCP – Two Separate but Connected Aspects Natural resources Environmental Sustainability Consumption of resources which stays within the carrying capacity of the Earth Production Consumption of products and services which meets at least basic needs of all people Human wellbeing Economic and Social Sustainability

Overconsumption and Underconsumption – Both are Unsustainable

SITUATION AND TRENDS IN ASIA

Consumption of Materials is Soaring: Asia is Leading the Trend - Very rapid increase in material consumption - A-P is now consuming more materials than the rest of the world combined West & Schandl 2012

A doubling of the use of biomass – a six time increase in the use of non-renewable resources Domestic Material Consumption (DMC) in Asia-Pacific, 1970 -2005, million tonnes

Domestic Material Consumption for Asia, 1970 – 2008 Schandl & West 2012

Domestic Material Consumption (DMC) for Indonesia, 1970 – 2005, million tonnes 1250 million tonnes 1000 Metal ores and industrial minerals 750 Fossil Fuels Construction Minerals 500 Biomass 250 0 1975 1980 1985 1990 1995 2000 2005

Uneven Development: Low Average Consumption but Resource-hungry Cities • Ecological footprint (annual hectares per capita) – China average: 1. 6 – World average: 2. 2 – – Beijing: 4 Shanghai: 7 Singapore: 7. 2 EU average: ≈ 7. 2 Zhou & Schroeder 2010

Car ownership Cars per 1000 people OECD: 750 Indonesia 40 China: 150 Thailand 140 India: 30 Malaysia 300 • If China and India reach the OECD level there would be 1. 5 billion cars only in these two countries. Add in ASEAN – 2 billion cars? • In 2010, there were 1 billion cars in the whole world.

“An additional 3 billion Asians could enjoy living standards similar to those in Europe today, … by the middle of this century” Asian Development Bank, 2011

Middle Class Bulge

Poor people suffer more from environmental degradation • Poor households often rely directly on natural resources – direct consumption – Water from rivers and shallow groundwater – Fuel from forests and agricultural waste – Local building materials – Wild plants for food and medicine – Marginal land for livestock grazing • Vulnerable to environmental degradation and pollution (and to population increase) – Low education – Little capital to invest in improved technology – Low capacity to adapt

Sustainable Consumption and Production – The 3 Key Tasks in Developing ASEAN • Enabling the poor to access the resources needed for decent, safe and healthy lives Linkages – Progress by many countries, MDGs etc. between Several poverty and sustainable resource use are remaining challenges still poorly understood and not • Mitigating the environmental impacts of well reflected in policies consumption in all social groups, with special emphasis on the middle-class and the rich – Limited policy attention. Generally weak and uncoordinated response • Safeguarding the sustainable and culturally valued aspects of traditional Asian lifestyles – Little attention so far Main focus of SCP research and policy in developed countries

SUSTAINABLE CONSUMPTION IN INTERNATIONAL POLICY

Pillars of International SCP Policy “the major cause of the continued deterioration of the global environment is the unsustainable pattern of consumption and production. . . ” Agenda 21, Chapter 4 “To achieve sustainable development and a higher quality of life for all people, States should reduce and eliminate unsustainable patterns of production and consumption” Rio Declaration, Principle 8

“A 10 -year Framework of Programmes. . . ” “Governments, working with appropriate organizations, should…develop a domestic policy framework…” Agenda 21, § 4. 17 “Encourage and promote the development of a 10 -year framework of programmes in support of regional and national initiatives to accelerate the shift towards sustainable consumption and production” JPOI, § 15

Rio+20, June 2012 “We recognize that fundamental changes in the way societies consume and produce are indispensable for achieving global sustainable development. ” “We adopt the 10 -year framework of programmes on sustainable consumption and production patterns, …” Rio+20 Outcome document

DECOUPLING, DEMATERIALIZATION AND LEAPFROGGING

Ø These two kinds of decoupling are the most important ones but still not much discussed Ø They don’t even have names! Source: UNEP 2011 b • Decoupling is only a theoretical concept and a political ambition • No one knows whether sufficient decoupling can actually be achieved within the required time-frame Ø The lock-ins of the existing socio-technical systems Ø The drastic reductions needed (e. g. GHG at least -80%) Ø The urgency (a few decades)

No Sign of Decoupling – The Example of Metals Global trends in primary metal extraction, 1990 -2007 After almost 20 years of international policy discussions on sustainability: a negative decoupling for four out of five base metals Rio Conference Agenda 21 Source: Jackson 2009 Johannesburg Plan of Implementation

Source: Hoffman 2011, based on Jackson 2009 Improvements in Carbon Intensity Actual, 1980 -2007 0. 7% per year Needed, 2007 -2050 11% per year (Scenario 4) 6. 8% per year (Scenario 1)

Asia-Pacific is Becoming LESS Resource Efficient: The Opposite of Decoupling Each dollar of GDP requires increasing amounts of natural resources. West & Schandl 2012

What are the Drivers of Material Cons. ? Period Material Consumption Relative Contribution of Three Factors Population Economic Affluence (GDP/capita) Material Intensity (tonnes/GDP) 1970 -1980 +50% 60% -11% 1980 -1990 +58% 41% 56% 3% 1990 -2000 +57% 31% 35% 34% 2000 -2008 +61% 18% 48% 34% Ø Ø Ø Population growth is becoming less important Economic growth is the main driver Other factors play a very significant role, and increasingly so • Production moving from countries with high efficiency to countries with lower efficiency

Development and Environmental Pressure Conventional development GDP Education Life expectancy Source: UNEP 2011 The Sustainability Corner

Drastic reduction of rich countries’ footprints Highly desirable but unlikely ‒ Lock-ins (technical, institutional, social, economic, mental) ‒ Some reductions possible but not to sustainable levels even within several decades Conventional development Would lead to ecological collapse Sustainability Leapfrogging Very challenging but potentially achievable ‒ Avoiding to mimic rich countries ‒ Systems innovation – social, institutional and technological ‒ Combining high-tech and traditional ‒ Emphasis on wellbeing rather than growth

Possible Future Scenarios The REEO scenario modeling suggests that: Ø Material consumption would triple until 2050 under a BAU scenario Ø Even with efficiency improvements of 50% in key sectors, material consumption would still increase drastically Ø Major changes in how we live, eat, work and move around are needed Ø Employment seems to be a critical issue • • Reduction of working hours Jobs in sectors that are less resource intensive

Evolution of GDP and factor productivities for Indonesia, 1970 – 2005, indexed 800 Labour productivity has increased faster than resource productivity 700 Index 1970 = 100 600 500 GDP Labour Productivity Material Productivity Energy Productivity 400 Ø This logic needs to be 300 200 1970 1975 1980 1985 1990 1995 2000 2005 reversed Ø New economic model driven by resource constraints rather than labour shortage Source: CSIRO 2011 • We are getting better at producing more stuff with fewer employees -> risk of unemployment, pressure for econ. growth • We are less successful in producing stuff using fewer resources and less energy -> increasing environmental impact

HOUSEHOLD CONSUMPTION AND ENVIRONMENTAL IMPACTS

Categories of household consumption – contribution to material use Housing, water, electricity, gas Furniture, household equipment, maintenance Transport Food and drinks

What we eat Food and Agriculture

Where/how we live Buildings and Construction

How we travel Transport and Mobility

Some of the things that ASEAN countries should try to avoid • Urban transport systems based on cars • Urban sprawl and low-rise buildings • Centralized electricity generation based on fossil fuels • Buildings with low energy efficiency • Diets with a high share of meat and dairy products • Agriculture with high inputs of mineral fertilizers, chemicals, and fossil fuels

Some of things that ASEAN should do – 6 Re’s

THE ROLE OF POLITICAL DECISIONS AND POLICY

The Standard Approach to Sustainable Consumption Many approaches to SCP focus on the buying decisions made by individual consumers. Such approaches are based on the idea that consumers are “voting with their wallets”, and that enlightened and responsible consumers can drive the market towards sustainability. Policy proposals based on this idea typically emphasize: • Awareness raising and consumer education • Information to consumers on products’ environmental performance, e. g. eco-labeling

Individual Consumers are Weak • Consumers’ choices are limited to what producers want to offer and what retailers decide to put on their shelves • Consumer prices don’t reflect environmental and social impacts caused by products over their life-cycles , so send the wrong signals • Many consumer activities are not based on well-reflected individual decisions but are actually social/cultural practices or habits • Consumers feel strong expectations from society to consume – Self-expression, Group identity, Social status • Clever advertising is creating unnecessary and exaggerated demand • “I will if you will” – a social dilemma where consumers may be willing to make certain sacrifices but only if others make them as well • Consumers are constantly told by politicians and other leaders to consume more in order to keep the economy going and avoid increasing unemployment

Systems Transformations are Needed Technology Knowledge and knowhow Habits Production and Consumption patterns Laws, regulations and standards Infrastructure Social norms and values Ø Production and consumption patterns are supported by complex socio-technical systems Ø Policies must address several system components simultaneously Ø Is ASEAN equipped to handle this challenge?

SCP Requires Political Courage and Strong Policy Action SCP requires more than simply encouraging consumers to make responsible buying decisions Ø Policy measures need to engage producers and consumers, enable better production and consumer choices, and exemplify good practices Ø It requires measures addressing the structures that drive and shape consumption, which in turn drives production Ø Such actions require strong political leadership Ø Nudging consumers Ø Challenging the short-term profit interests of corporations Ø Concerned individuals need to promote SCP outside their role as consumers, working for changes that can enable SCP – Influencing political decisions – Taking action at community level Ø

Sustainability Transitions in Practice: A Few Basic Leads • Need to address whole product life-cycles and whole service provision systems, such as mobility and housing • Encouragement of systems innovation: experiments, pilot projects, broad-based evaluations, public and private investments, replication & up-scaling • Involvement of a wide range of stakeholders – empowerment of stakeholders with limited resources • Coordination and collaboration among all related government ministries • Combination of policy tools: regulations; economic incentives; R&D, education, and training; voluntary agreements • Selective adoption of modern/”western” solutions – inspiration from progressive countries/cities. Where will they go in the next 20 years? • Strengthening of remaining traditional sustainable practices

Role of Government Leadership in Transforming Consumption and Production • Strategies and targets • Voluntary agreements • Eco-labels etc. • International cooperation • Bans and restrictions • Mandatory standards • Taxes and charges • Subsidies Legislator Producer & Consumer Facilitator/ Coordinator Educator • Green public procurement • Guidelines for green procurement • Demand for products not-yet-on-the-market • Infrastructure investments • Schools curricula • Public awareness raising • Research funding

CONCLUDING MESSAGES

Concluding Messages 1 • ASEAN is rapidly transforming from agricultural to industrial economies, with soaring resource use • Stabilised resource use and reduced environmental damage require drastic changes in the way society produces and consumes – the lifestyles and globalised production patterns of industrialised countries are not viable models to follow • The needs for food, housing, water, energy and transportation must be met in much smarter ways than now • This requires structural changes in: Values and mindsets Business models and corporate governance Better balance between paid work and leisure time Political priorities and ways of delivering human wellbeing (for example less emphasis on GDP) – Stronger and more integrated policies addressing whole value chains from a life-cycle perspective – Regional cooperation driven by global interests rather than shortterm national interests – –

Concluding Messages 2 ØASEAN countries need to find their own development pathways, which can bring prosperity and quality of life to all their citizens while keeping within the ecological boundaries of the Earth Ø Urgent need for radical systems innovation (both technical and social innovation) – combining elements of traditional and modern practices Ø Ensuring that environment is not “buried” in the socio-cultural community but is elevated in status and attention (including finance) Ø Governments’ planning and policy evaluation needs to place more emphasis on well-being indicators – and less on GDP – Improved data and indicator systems are likely to be useful for guiding policy development and monitoring

Thank you for your attention

EXTRA SLIDES

A Transition Happening Right Now • Increasing long-distance transportation, deepfreezing, cold-keeping, packaging, air-conditioning, lighting, etc. => Increasing energy consumption and waste generation • Is this unavoidable? Do the benefits outweigh the negative consequences? How are benefits and costs (in a broad sense) shared? Are there alternative ways to modernize?

Material and Energy Cost of Human Development in Indonesia, 1980 - 2005 0, 600 R 2 = 0, 9529 0, 550 0, 500 HDI 0, 550 R 2 = 0, 954 0, 450 0, 400 0, 350 2 000 250 750 DMC [million tonnes] 1250 7 000 TPES [Peta Joule} 12 000 Human development requires increasing amounts of resources and energy. Education and literacy improvements require few resources. , increases in life expectancy more resources, increases in GDP/capita requires large resource inputs