Federal Statistical Office

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1 Federal Statistical Office Wiesbaden, 17 November 2010 Joint press conference of the Federal Statistical Office Germany and the Federal Environment Agency Germany Raw material efficiency: reducing the burden of the economy, preserving the environment on 17 November 2010 in Berlin Statement by President Roderich Egeler on the Environmental-Economic Accounting Check against delivery - Dear Sirs and Madams, Raw materials are required for almost all production processes. Raw materials are not only an important cost factor for the economy; their utilisation is also connected to environmental pressures. That is why the efficient use of raw materials is especially significant for sustainable economic activity. The economy is influenced by the imminent depletion of non-renewable resources. The condition of the environment, however, is affected by the use of raw materials, particularly by overstraining renewable resources, damaging landscapes and ecosystems by extracting resources from nature, releasing residues and pollutants into the environment while using and transporting raw materials. In this respect, politics and the economy have a similar interest in raw materials being used as sparingly and efficiently as possible. Sustainable economic activity is also supported by a broad segment of the population.

2 Page In the year 2000, the Federal Government at the time addressed this concern in its national Sustainability Strategy by formulating a target of double the macroeconomic raw material productivity by the year 2020 compared to Increasing the efficiency to this extent is a considerably ambitious goal. The Federal Statistical Office Germany provides data for the sustainability indicator on raw material productivity in the resource accounting as part of the environmental-economic accounting. 1. Raw material productivity has risen by 46.8%, so almost by half, since Currently, the macroeconomic use of raw materials is measured as the sum of the domestic extraction of raw materials and the imports of raw materials, as well as semi-finished and finished products (each in tonnes). In doing so, only the use of so-called abiotic raw materials, i.e. non-renewable resources, is included. The use of raw materials decreased by 19.4% between 1994 and Simultaneously, gross domestic product rose by 18.4%. Thus, the economic performance increased with decreasing use of raw materials. Resource productivity - this is the ratio between GDP and raw material use - rose therefore by 46.8% within this period. Raw material productivity and economic growth 1994 = 100 Diagram Goal: Raw material productivity GDP,price-adjusted Raw material extraction and imports Preliminary results. Federal Statistical Office Germany Whether this development is enough to reach the set target - double the raw material productivity by depends on the assumptions used as a basis for the further development. In the recently published indicator report on Sustainable Development in Germany 2010, we adopted

3 Page a simplified procedure. It is assumed that the trend of the last five years will continue at the same rate until the target year. This would mean that double the raw material productivity would not quite be reached by 2020: the growth would be around 90% compared to This seems, initially, to be a relatively satisfactory diagnosis. However, it is important to remember: It is likely to become more difficult to achieve increases in productivity that remain at the same level when more savings in materials have already been implemented. Which developments have influenced the previously mentioned productivity increase by almost 50% between 1994 and 2009? Our investigations have shown that considerably fewer raw materials were extracted in Germany in 2009 than 15 years ago. Imports of materials have increased at the same time, but to a significantly lower extent than the decrease in the extraction of raw materials. In addition, recycling, or re-using materials, has increased the productivity of raw material use. Increased use of secondary raw materials has, until now, only been indirectly seen in the data on raw material productivity. The increased use of secondary raw materials leads to fewer primary materials being required. Our investigations are only in their early stages, however. 2. Material requirements in Germany are increasingly covered by imports. As mentioned, the macroeconomic use of materials in Germany is decreasing. In the process, there are two opposing tendencies (Diagram 2). On the one hand, the domestic extraction of raw materials fell considerably - mainly due to the reduction in the extraction of construction minerals and hard coal. In 2008, 127 million tonnes less construction minerals were extracted than in the year 2000 (-19%). In the case of hard coal, the decrease was 16 million tonnes (-49%). On the other hand, the imports are increasing. In 2008, they were 84 million tonnes higher than in Of which raw material imports rose by 32 million tonnes; semi-finished and finished product imports rose by 52 million tonnes. In the results, the proportion of imports in the overall material requirements of the German economy increased from 30.2% in 2000 to 35.8% in In 1994 this share was only 26.0%.

4 Page Diagram 2 Changes to raw material extraction in Germany and the imports in 2008 compared to 2000 in millions of tonnes Domestic raw material extraction -123 Raw material imports 32 Semi-finished and finished product imports 52 Total Federal Statistical Office Germany Imports and domestic extractions are entered with their weights in tonnes into the indicator raw material productivity. Thus, an (alleged) productivity progress can also be seen, when raw materials which were previously extracted in Germany or even imported are now replaced by imports of products which have already been further processed. An example: If finished sheet steel is imported instead of manufactured in Germany from imported ore and domestic coal, the use of materials is reduced overall: the finished sheets simply have a lower weight than the raw materials required for manufacturing. This means that the raw material productivity increases - when GDP remains the same. In order to be able to estimate this effect, a research project was conducted at the German Federal Statistical Office in co-operation with the Federal Environment Agency. The project was to estimate the amount of raw materials required which occurs abroad during manufacture of a product destined for Germany. We refer to this variable as indirect imports or - more commonly known - as backpacks of raw materials of our imports.

5 Page If you attribute all raw materials which are required for manufacture abroad to all the imported goods, the result will be about five times the weight of the imports themselves. A central result of this research project is that, per kilogramme of German imported goods, an average of around 5 kilogrammes of raw materials is used abroad in the year If you attribute all raw materials which are required for manufacture abroad (such as ores, energy sources or biotic raw materials like wood) to all the imported goods, the result will be about five times the weight of the imports themselves. If these indirect imports or raw material backpacks are included in the calculations, it shows that in contrast to the last Diagram the increase in imports from 2000 to 2008 significantly overtook the decrease in raw materials extracted in Germany. Diagram 3 Changes to raw material extraction in Germany and the direct and indirect imports in 2008 compared to 2000 in millions of tonnes Domestic raw material extraction -123 Direct imports +84 Indirect imports +173 Total Federal Statistical Office Germany The indirect imports indicate the extent to which production and consumption in Germany affects the use of raw materials and the resulting environmental pressures. These raw material backpacks are of particular interest under the aspect of global responsibility for raw material consumption and environmental pressures. Here, it is important to consider that those materials which are extracted abroad and imported to Germany are not only used to produce goods and services which are used in Germany. They are also used to manufacture exported goods which are used by consumers in other countries. In the sense of global responsibility, the resulting material consumption would also have to be attributed there.

6 Page Imported semi-finished and finished products have especially large ore- backpacks. Direct imports of ores and their products amounted to 134 million tonnes in If the indirect ore imports are added to this, the result is more than 14 times this figure. Imports of ores plus ore- backpacks for all imported goods amount to just under 1,907 million tonnes (Diagram 4). As Germany hardly has ore deposits worth mentioning, and particularly high raw material use is necessary to manufacture metal products, this finding is not surprising. It does, however, clarify that the German demand for ores and metals (such as copper concentrates), for metal products (such as machines) and for other products containing metal (such as mobile phones, computers, catalytic converters) leads to considerable raw material use in other countries. The extent of this use of raw materials is fully visible for the first time when considering the indirect imports. Diagram 4 Use of raw materials by raw material group in 2008 in millions of tonnes Biotic raw materials Industrial minerals 718 Construction minerals 1907 Ores Energy sources Domestic extraction and direct imports Domestic extraction and imports with backpacks Federal Statistical Office Germany

7 Page Productivity progress is considerably less when considering backpacks than from the current procedures of measurement. At the end of my presentation, let us take another look at the raw material indicator of the national Sustainability Strategy. It has often been criticised in the past, that domestic extraction and imports are depicted unequally. In the current indicator, on the one hand the weight of the raw materials (ores, coal, gravel, sand, etc) is recorded from the domestic extraction site (mine, quarry, etc), on the other hand of the imported products (iron concentrates, refrigerators, cars, etc) is incorporated in the calculation with the weight registered when crossing the border. If, for example, domestic extractions (such as of silica sand for glass manufacturing) are replaced with imports (of drinking glasses, for example), this could lead to misinterpretations regarding what the raw material input actually is, and also its productivity. With the procedure of our research project, within which all figures are converted into original raw materials, we can quantify this effect. This would mean that, according to the results of the project, productivity progress would be considerably less than that according to the current method of measurement. If the nonrenewable resources used abroad to manufacture German imported goods are included in the calculation of raw material productivity, the increase in productivity between 2000 and 2008 amounts to 6.9%. In contrast, the current indicator of the sustainability strategy exhibits an increase of 17.1% for the same period. (A comparison to 1994, the base year of the raw material indicator, is not possible as our research project was only conducted for the years as from 2000.) 6. The data supply from the environmental-economic accounting The task of official statistics is to provide suitable information from dialogues with users, which is adequate for the respective question. With our research project we have shown a way of responding to the criticism of the current raw material indicator of the Sustainability Strategy. The results were and will be discussed at different levels with the public, scientists, ministries and the Federal Environment Agency. Finally, it must be decided whether the new calculation procedure should be permanently included in the indicator for raw material use. Whatever the outcome of this decision, supplementing the highly aggregated indicator by additional data remains important for interpreting and developing measures to improve raw material efficiency. This concerns, for example, information on the types of material used, supplier countries or regions, economic sectors that use the material or the potential burden

8 Page resulting from the raw material use. Our environmental-economic accounting is providing various data for this. Aside from press documents, we regularly produce a detailed annual report: Economy and Use of environmental resources (in German only) on all topics of the environmental-economic accounting. This report by the Federal Statistical Office Germany contains comments with diagrams for all relevant environmental-economic parameters, as well as detailed tables. You can find both on our homepage (