Experimental Estimates of UK Resource Use using Raw Material Equivalents

Transcription

1 Experimental Estimates of UK Resource Use using Raw Material Equivalents Author: Louise Rawlings, Department for Environment, Food and Rural Affairs Acknowledgements: Thanks to Eurostat for kindly providing the raw material equivalent coefficients used for this study. Abstract This article has been produced by statisticians at the Department for Environment, Food and Rural Affairs who are developing a measure of UK resource use based on raw material consumption. In the UK and internationally, Domestic Material Consumption is the key indicator for measuring resource use but it has always been recognised that it does not present the complete picture as this measure does not account for the raw materials used to produce imports, only including the final mass of the imported product. The UK, and other European countries, are therefore working to develop a measure based on raw material equivalents, which when sufficiently developed, will be published regularly by ONS as part of the UK Environmental Accounts. The article outlines the drivers for this work, presents initial results and the methodology behind them, and describes next steps. Introduction Domestic Material Consumption has been used in the UK and internationally as a key sustainable development indicator 1 for many years. Domestic Material Consumption (DMC) represents the mass of material extracted from the UK environment, plus the mass of imports less the mass of exports. By examining consumption in connection with economic output, we aim to develop an understanding of whether economic growth is decoupling from material use, which would indicate sustainable growth. DMC is published as a key indicator within the UK Environmental Accounts and forms part of new regulatory requirements for Europe, to be published annually under the European Regulation on Environmental Economic Accounts. This makes it an important indicator as it allows for international comparisons of statistics based on common concepts and methodology. DMC will therefore continue to be published as part of the UK Environmental Accounts. However, it is recognised that this indicator falls short in understanding the total mass of raw materials consumed by a country as it only accounts for the mass of the final goods imported, not the raw material used to produce them. The aim of this article is to present work to develop a measure of raw material consumption (RMC) to complement DMC. This new approach builds on DMC but the total mass of resources needed to produce the imported good or service is taken into account in the calculation. The article outlines the drivers for this work, presents initial results and the methodology behind them, and describes next steps towards producing a regular measure which will be included in the UK Environmental Accounts and will potentially replace DMC as a Sustainable Development Indicator. 1

2 Summary of first results Initial results suggest that DMC has overstated the decrease in raw material use associated with UK consumption (excluding fossil fuels). There was an overall 9 decrease in DMC between 2000 and 2008, whilst RMC remained relatively constant over the same period. Early indications are of no decoupling of non-construction RMC and economic growth in terms of gross domestic product. Policy context Resource efficiency is a central theme of the Government s long-term approach to achieving reductions in greenhouse gas emissions and other environmental impacts. The efficient use of natural resources is important for both the environment (e.g. reducing the emissions associated with extraction) and increasing the competitiveness of UK businesses. The waste and climate change policy frameworks are important drivers of greater resource efficiency. Research for Defra 1 estimates that UK businesses could save around 23 billion per year by making simple changes to use resources more efficiently and help protect the environment and natural environment. Similarly, in Europe the Roadmap to a resource-efficient Europe, an initiative the European Commission launched as part of the Europe 2020 strategy, aims at decoupling economic growth from the use of resources. Hence it is important to establish robust measures of the amounts of raw material that are associated with the consumption of UK (and EU) residents. Domestic Material Consumption For many years the main measure of resource use in the UK has been the indicator known as Domestic Material Consumption (DMC). The latest ONS results for 2009 are published in the UK Environmental Accounts and in the Sustainable Development Indicators. It is defined as the total mass of materials directly consumed by the economy, and is calculated as: + domestic extraction used (DE) + imports (mass) exports (mass) = domestic material consumption (DMC) Domestic material consumption takes into account the total amount of resources which are taken from the UK environment, including amounts that end up as waste during the production process. However, traded goods are treated differently, with only the mass of materials at the point of import or export. Hence DMC as an indicator has therefore always been qualified by the fact that it is based on estimates which tend to understate the amount of resources associated with the consumption of traded goods. Raw Material Consumption The limitation described in DMC can be addressed by converting traded goods into Raw Material Equivalents (RMEs). The RME of a product indicates how much extraction of material was necessary over the whole production chain for manufacturing that specific 1 2

3 product. Using newly estimated coefficients supplied by Eurostat and data on the trade in goods and services, the raw material equivalents of imports and exports can be calculated. For example, every kilogram of plastic products imported into the EU is estimated to have needed 4.5 kilograms of upstream resources. Raw material consumption is the term applied to domestic extraction plus the raw material equivalent of imports minus the raw material equivalent of exports: + domestic extraction used (DE) + imports in raw material equivalents (IMP RME ) exports in raw material equivalents (EXP RME ) = raw material consumption (RMC) IMP RME equals imports (in weight, energy or money terms) times the import RME coefficient for a particular product group. EXP RME equals exports (in weight, energy or money terms) times the export RME coefficient for a particular product group. There are different RME coefficients for imports and exports because of the differences in the types of products imported and exported. This is explained further in How the coefficients were calculated. Approach Eurostat have derived coefficients for 166 product groups and 52 raw material categories, for extra-eu trade for 2000 and For 2001 to 2004, the coefficients are interpolated from the 2000 and 2005 values. For 2006 to 2008, the 2005 values are used. The raw material categories have been aggregated to align with the categories of materials used for measuring domestic extraction. The 166 product groups include services (e.g. banking, education, health, communication) and energy supplies. Energy supplies have been excluded from these initial workings, as energy consumption is measured better in terms of calorific value or carbon emissions rather than mass. This leaves just 130 product groups and 46 raw material categories. Using mass of materials as the unit of measurement has the drawback that the more dense construction materials tend to dominate. Also, as noted above, mass is not a relevant metric for energy, which is better presented in terms of the energy equivalent or carbon content. To overcome these limitations, construction materials are presented separately and energy excluded. Data tables are presented at Annex B. The following UK data is used to produce the estimates: Domestic extraction in physical (mass) terms UK imports of goods and UK exports of goods in physical (mass) terms Imports and exports of services in monetary units Pound Sterling to Euro interbank exchange rate Gold, platinum and palladium imports and exports in monetary units, together with average prices Further details of the data sources are at Annex A. 3

4 Results 2000 to 2008 Figure 1 Raw material consumption in the UK 2000 to 2008 (excluding fossil fuels) Million tonnes DMC (ex fossil fuels) Source: ONS, UKtradeInfo and Eurostat RMC (ex fossil fuels) Total RMC for the years 2000 to 2008 shows small variations around an average of approximately 600 million tonnes raw material equivalent (Figure 1). As figures 2 and 3 reveal, individual components of the indicator show different trends. Figure 2 Raw material consumption of biomass, ores, clay and other industrial minerals UK 2000 to 2008 Million tonnes raw material equivalent Other industrial minerals Clay Ores Total biomass Source: ONS, UKtradeInfo and Eurostat Nearly half RMC was accounted for by non-construction materials 2 in 2000 (49 per cent), by 2008 the proportion was 58 per cent. Ores account almost entirely for the increase over the period, with a doubling of values since In contrast, the RMC of the main construction materials decreased by 18 per cent between 2000 and Construction materials accounted for 46 per cent of domestic extraction in 2008 as described in Annex A. 2 This analysis only excludes the main construction materials (sand and gravel, and crushed stone): the amounts of other materials used for construction have been included within the non-construction materials category. 4

5 Figure 3 Raw material consumption of construction materials (crushed stone, sand and gravel) in the UK 2000 to 2008 Million tonnes raw material equivalent Crushed stone Sand and gravel Source: ONS, UKtradeInfo and Eurostat Comparison of resource measure with UK economy Although the measures can be used on their own to assess the changes in the resources associated with UK consumption, they can also be plotted against gross domestic product (GDP) or household final consumption expenditure in order to determine how these resource requirements compare to the level of demand and overall activity within the UK economy. Figure 4 shows the change in gross domestic product 3 between 2000 and 2008 compared with the change in raw material consumption for non-construction materials (excluding fossil fuels) over the same period. Figure 5 shows change in construction gross value added (GVA) against change in raw material consumption for construction materials. Together these charts demonstrate how non-construction RMC appears not to have decoupled from GDP; whereas construction RMC has decoupled from Construction GVA to some extent. Figure 4 Change in GDP and non-construction raw material consumption (excluding fossil fuels) Index 2000 = GDP non-construction RMC 50 Source: ONS Blue Book ABMI, Eurostat 3 in chain linked volume measures 5

6 Figure 5 Change in construction GVA and construction raw material consumption Index 2000 = Construction GVA 60 Construction materials RMC 50 Source: ONS Blue Book L2N8, Eurostat How the coefficients were calculated The import and export coefficients indicate how many tonnes of the resource in question per tonne of product are used over the entire upstream chain. Of the product/material flow coefficients used in the results presented, around half of the total combinations, imports and exports have the same value, or are set to zero. Of the remaining combinations slightly more than half have higher export coefficients than their corresponding import coefficients. For example for Fruit, nuts, beverage and spice crops the import coefficient chemical and fertilizer minerals is 1.9 and the export coefficient is 0.27, reflecting different crops, climatic conditions, and agricultural processes. The RMEs compiled by Eurostat are based on a combination of input-output (IO) analysis and life cycle inventories. The IO part is based on conventional input-output economics known as the Leontief approach which has been modified to incorporate worldwide production processes. In the standard Leontief approach the RMEs of imports are estimated by assuming that the imported products are manufactured with the average domestic production technology of the product group, i.e. the rest of the world has the same technology and infrastructure. Clearly this assumption cannot apply for all the product groups. Some products may not be produced in the European economy at all. Variations in natural conditions may also have a considerable impact in the case of natural products. To compensate, a different approach is used for about 50 of the product groups including: nonanimal agricultural products (e.g. cereals, fruit, vegetables, forestry); metal ores; building materials (e.g. stone, sand and clay). For these products, their RME import coefficients are modelled from life cycle inventory (LCI) information. LCIs have the advantage of being more detailed and more robust for products which are not generally produced in the EU. On the other hand they are less easy to update and can understate the totality of materials used in the supply chain. Accuracy of the estimates These initial estimates are intended to be used as indicative of the total amount of resource use resulting from UK consumption. Further research is being undertaken and the results presented are likely to be subject to further refinement. 6

7 The estimates of non-construction RMC show considerable year on year fluctuations. This is partly associated with imports of metals, where the magnitude of the coefficients means that a relatively small increase in the mass actually imported may lead to a proportionally large increase in the apparent raw material consumption. The RME coefficients for trade in precious materials change significantly between 2000 and For example, in 2000 the import RME coefficient for jewellery products and gold material flow was estimated to be 12,559 and in 2005 it had reduced to 4,351 a reduction of around two thirds. The reason for this change is not clear, and as a consequence the results should be treated with caution. Time lags may distort the results; the import of a commodity in one year may not relate to the use of the commodity in economic production in that year. If the UK economy is rebuilding or running down stocks then there may be large fluctuations in the RMC which do not correspond well with actual consumption. International experience Other EU countries, including Germany Austria and Czech Republic, have published results based on a combination of the Eurostat coefficients and their own estimates. Conclusions and further work Domestic Material Consumption is a widely used indicator of resource use supported by international regulation. It is relatively easy to compile and does not require the level of modelling that a Raw Material Consumption measure does, meaning that international comparisons can be made. However, RMC addresses some of the weaknesses in the existing indicators such as DMC, by treating traded goods and services in the same way as domestic extraction, and by excluding fossil fuels and analysing construction materials separately. Assuming the raw material equivalent coefficients used are assessed to be fit for purpose, RMC offers a better representation of the use of raw materials linked to economic activity and using RMC indicates a lower degree of decoupling that DMC suggests. As the coefficients relate to extra-eu trade, more work is needed to determine whether they are appropriate factors for UK trade, taking into account factors such as differences in efficiency of EU production. As a consequence, these initial results should be treated with caution. The factors used to derive RMC estimates have been kindly provided by Eurostat, who are doing further work to refine the RME coefficients and extend them to 2009 and ONS and Defra will explore the analysis produced by other European countries with a view of ascertaining how their estimates relate to production, whether any decoupling was identified and any conclusions with respect to the selection of coefficients. Before mainstreaming RMC as a headline indicator, ONS and Defra will carry out further work to examine the appropriateness of these factors for the UK and examine the other issues raised when assessing the accuracy of the measure. The aim is to present a further update in the UK Environmental Accounts 2012 publication, as part of a wider review of the Material Flow Accounts. 7

8 References A resource-efficient Europe Flagship initiative of the Europe 2020 Strategy ec.europa.eu/resource-efficient-europe/ Roadmap for a resource-efficient Europe ec.europa.eu/environment/resource_efficiency/index_en.htm Eurostat paper on Economy Wide Material Flow Accounts epp.eurostat.ec.europa.eu/portal/page/portal/product_details/publication?p_product_ code=ks-sf Eurostat publishes domestic material consumption as a sustainable development indicator and OECD has included the measure in their Green Growth indicators. Source data Input Output tables UK trade data Domestic Extraction in the Material Flow Account Gold: monetary figures adjusted with annual gold price from World Gold Council. Selected International measures Germany: Raw material efficiency: reducing the burden of the economy, preserving the environment, 17. November n/specializedpublications/environmenteconomicaccounting/statement2010,property =file.pdf Fridolin Krausmann, Marina Fischer-Kowalski, Anke Schaffartzik, Julia K. Steinberger, Nina Eisenmenger, Ulli Weisz (2011): Trends and Developments of the Use of Natural Resources in the European Union Social Ecology Working Paper 123, Vienna, March

9 Glossary of terms Biomass Organic non-fossil material of biological origin. Includes: production of agricultural crops and plants, timber, firewood, animals and their products, like milk, eggs, wool, honey, fish and other aquatic products DE DMC EXP RME GDP GVA IMP RME IOT LCI MFA RMC RME Domestic extraction. Material inputs from the natural environment to the economy. Domestic Material Consumption (domestic extraction plus imports minus exports) Exports in raw material equivalents Gross domestic product Gross value added Imports in raw material equivalents Input output tables show the amount (in monetary terms) of one product or of a particular sector s output that is used in the production of another product or the output of another sector. Life Cycle Inventory Life Cycle Assessment quantifies processes in terms of a standardized unit of measure for example, Energy embodied in a single product; Green house gasses produced per unit product; Volume of water consumed per mass of product Material Flows Accounting economy-wide material flow accounts and balances show the amounts of physical inputs into an economy, material accumulation in the economy and outputs to other economies or back to nature Raw material consumption. Domestic extraction plus imports RME minus exports RME Raw material equivalent 9

10 Annex A Technical details Domestic extraction Domestic extraction is published 4 as part of the material flow account by the Office for National Statistics in the UK. Direct (used) material inputs are defined as all solid, liquid and gaseous materials that enter the economy for further use in production and consumption processes. Water and air consumption are not included, apart from the water content of materials. To demonstrate the importance of the construction industry and its use of sand, gravel, stone, Figure 6 shows the breakdown of domestic extraction categories in Figure 6 breakdown of domestic extraction in 2008 Animal grazing 8% Agricultural harvest 9% other biomass 2% Ores 0% Clay and other industrial minerals 4% Sand and gravel 17% Total fossil fuels 31% Crushed stone 29% Source: ONS material flow account Figure 6 shows that in 2008, the main materials extracted in UK are biomass (19 per cent) including grazed biomass and crop residues (18 per cent), non-metallic minerals including sand and gravel (17 per cent) and crushed stone (29 per cent), and fossil energy materials /carriers (31 per cent). Trade data Trade data is publically available from Revenue and Customs (HMRC). The Eurostat project includes a correspondence from the trade 8 digit commodity code to the 166 codes used for the product groupings. Data is used for the volume of trade (in weight units) rather than the value in monetary terms. The only exceptions are gold, platinum and palladium. Scrap metals and secondary metal (which is made of recycled metal) are excluded from the calculation by setting the coefficients to zero and estimating the proportion of primary metals that is comprised of secondary material

11 Gold, platinum and palladium prices Measured in RME the imports of gold, platinum and palladium accounts for roughly 27 per cent of all metal ore imports in 2000, whereas measured in product weight they account for less than 0.01 per cent of metal imports. Trade statistics for gold, platinum and palladium in terms of mass appear to be quite erratic and they do not correspond with monetary values. The pound sterling trade values do not vary as much year on year and therefore are considered a more reasonable indicator of the amounts traded. The monetary figures are converted with the annual gold/platinum/palladium price into tonnes of raw material content. Imports and exports of services HMRC trade data does not cover the import and export of services. ONS National Account Supply and Use tables show separately the consumption of: domestically produced, imported and exported, goods and services. The imports and exports are for 123 product/industry groups that can be aligned with the Eurostat 166 group structure. The data is presented in monetary units and the related coefficients are on a currency basis. Table 1 Definition of categories of material consumption Figures 2 and 3 are presented by broad RMC category, table 1 sets out how the 46 material flow categories align with these broad groups and the domestic extraction categorisation. Table 5 above gives the more detailed breakdown of raw material consumption by the domestic extraction category. Broad material flow category Biomass Detailed material flow category Domestic Extraction category Cereals Agricultural harvest Biomass Roots, tubers Agricultural harvest Biomass Sugar crops Agricultural harvest Biomass Pulses Agricultural harvest Biomass Nuts Agricultural harvest Biomass Oil bearing crops Agricultural harvest Biomass Vegetables Agricultural harvest Biomass Fruits Agricultural harvest Biomass Fibres Agricultural harvest Biomass Other crops (Spices Stimulant crops, Agricultural harvest Biomass Tobacco, Rubber and other crops) Straw Animal grazing Biomass Other crop residues (sugar and fodder Agricultural harvest Biomass beet leaves, other) Fodder crops Animal grazing Biomass Biomass harvested from grassland Animal grazing Biomass Grazed biomass Animal grazing Biomass Timber (Industrial roundwood) Timber Biomass Wood fuel and other extraction Timber Biomass Broad RMC category 11

12 Metal ores (gross ores) Non metallic minerals Fish capture, crustaceans, molluscs and Fish Biomass aquatic invertebrates Hunting and gathering Agricultural harvest Biomass Iron ores - gross ore Ores Ores Copper ores - gross ore Ores Ores Nickel ores - gross ore Ores Ores Lead ores - gross ore Ores Ores Zinc ores - gross ore Ores Ores Tin ores - gross ore Ores Ores Gold - gross ore Ores Ores Silver - gross ore Ores Ores Platinum and other precious metal ores - Ores Ores gross ore Bauxite and other aluminium ores - Ores Ores gross ore Uranium and thorium ores - gross ore Ores Ores Tungsten - gross ore Ores Ores Tantalum - gross ore Ores Ores Magnesium ores - gross ore Ores Ores Titanium - gross ore Ores Ores Manganese - gross ore Ores Ores Chromium - gross ore Ores Ores Other metal ores - gross ore Ores Ores Ornamental or building stone Crushed stone Construction Materials Limestone, gypsum, chalk, and dolomite Other industrial minerals Other industrial minerals Slate Crushed stone Construction Materials Gravel and sand Sand and gravel Construction Materials Clays and kaolin Clay Clay Chemical and fertilizer minerals Other industrial minerals Other industrial minerals Salt Other industrial minerals Other industrial minerals Other mining and quarrying products Crushed stone Construction Materials Excavated soil, only if used (e.g. for construction work) Other industrial minerals Other industrial minerals 12

13 Annex B - Result tables Estimates of domestic extraction are taken from the material flow account in the UK Environment Accounts. The coefficients are in early stages of development therefore it is not appropriate to present data at any further level of detail than to the nearest million tonne. This data is presented without adjustment for any time lags that occur, for example between import and use, or extraction and export. Table 2: Imports in raw material equivalents by raw material category Million tonnes raw material equivalents Biomass Minerals Construction Materials Total RME imports Table 3: Exports in raw material equivalents by raw material category Million tonnes raw material equivalents Biomass Minerals Construction Materials Total RME imports Table 4: Domestic extraction excluding fossil fuels Million tonnes Biomass Minerals Construction Materials Total RME imports Table 5: Raw material consumption. Domestic extraction plus imports (RME) minus exports (RME) Million tonnes raw material equivalents Biomass Minerals Construction Materials Total RME imports

14 Table 6: Detailed UK raw material consumption 2000 to 2008 Million tonnes raw material equivalents (RME) Biomass Agricultural harvest Timber Animal grazing Fish Total biomass Minerals Ores Clay Other industrial minerals Total Minerals Construction Materials Sand and gravel Crushed stone Total Construction Materials Total Raw Material Consumption