Resource efficiency can be more vital than digitization

Everybody talks about digitization. Some 4 out of 5 start-ups are pure digitizers. Disruptive technologies typically mean replacing physical work by digital operations. At first glance, you can assume that such substitution also saves energy and minerals. But then some surprising news can surface. The famous bitcoins, electronic currencies, eat a huge lot of energy. About 7% of the world’s electricity consumption is taken by our digital ecosystem but this is forecast to rise to 12% by 2020 and is expected to grow annually at about 7% through to 2030[1]. A considerable part of the energy demand results from the need for cooling, so that some data centres are now planned near the Arctic Circle where chilly air reduces the cooling costs.

Of course, digitization is a great mover of progress in the service of prosperity. But some other challenges loom large and deserve equal attention. I propose to move resource productivity into the limelight. Actually, we should say “back into the limelight”. During the early 2000s when oil and mineral prices soared, the media were full of concerns. China and some other emerging countries had entered the mineral commodity markets in a big way and appeared insatiable. So, the forecasts said we would now enter an era of sky-scraping resource prices. Well, the financial crisis of 2008 stopped that trend, and then came the digitization hype shifting attention away from resources.

Resource productivity is the ratio between economic value and resource consumption. For a good vegetarian meal, resource productivity may be twice as high as for a good meat meal, because the production of meat involves all the energy, water and mineral inputs of animal husbandry plus the refrigeration that is more important for meat than for vegetables.

What is more disquieting than the comparison between meat and vegetables is the overall consumption of minerals. Figure 1 shows the trend. Since about 1950, we see a rapid increase of resource. Of course, the lithosphere, the Earth crust is still full of minerals. But the ores tend to get ever thinner and extraction therefore requires a continuously rising amount of energy, water, and space per kilogram of net metals or other minerals gained.[2] In a praise for the quoted book by Ugo Bardi, James Gustave Speth, founding President of the World Resource Institute says “The world economy is now phenomenally large in comparison with the planetary base that is the setting for all economic activity. Natural resources are becoming increasingly scarce, and the planet’s sinks for absorbing waste products are already exhausted in many contexts.”

Figure 1. After 1950, the world has seen an rapid increase of mineral resource extraction, just lightly slower than the increase of world GDP (the solid black line).

Figure 1. After 1950, the world has seen an rapid increase of mineral resource extraction, just lightly slower than the increase of world GDP (the solid black line).[3]

Of course, the trends will continue. Urbanization creates a steadily growing demand for minerals. Even sand has become a scarce resource. And cement and concrete are using up huge amounts of energy, so far mostly fossil energy, implying accelerated global warming. UNEP’s International Resource Panel has assessed the growing “weight of cities” until the year 2050 and fears that for cities alone, a Domestic Material Requirement (DMC) of 80 billion tonnes must be expected[4]. The authors also offer and describe opportunities of dramatically reducing the worldwide DMC by as much as a factor of ten. They assume that the economy will actually gain and not lose from doing it.

It is not only economic cost that should motivate us to increase resource productivity. The present trends of ever more land use and material consumption for human use lead also to major losses of biodiversity and animal population. Figure 2 indicates that that the losses are accelerating at an alarming speed.

Figure 2. Dwindling populations of wild living animals and of biodiversity. Source:

Figure 2. Dwindling populations of wild living animals and of biodiversity. Source:

Such trends must not continue. Essentially, we have three options for reverting the trend: (i) reducing human population; (ii) dramatically reducing consumption per capita, or (iii) systematically increasing resource productivity. Evidently, the first option either means horrendous wars or draconic measures inside countries; the second is clearly a non-starter in the political arena. Surprisingly, however, the third option is truly promising and available. But also the stabilization of world population and the overcoming of wasteful consumption should make progress.

Along the same lines of the Weight of Cities Report, Reinventing Fire[5] and Factor Five[6] are more systematic books describing how a multifold increase of energy and resource productivity can be achieved. Reinventing Fire has a stronger emphasis on business models, while Factor Five is stronger on public polices to promote resource productivity, but both books go into technological details on energy efficiency and on the productivity of using water, minerals and energy.

The main enemy of resource productivity can be called “cheaponomics”, the business model of selling goods and services at minimal prices letting future generations and the environment pay the real bills.[7] By definition, cheaponomics is unsustainable by all realistic standards. But it is encouraged by governments buying popularity by keeping prices at ridiculously low levels. Venezuela is perhaps the most notorious example of literally ruining its economy by selling domestic oil at give away prices.

Digitization, as said at the beginning, can help reduce resource consumption. The transition from big and heavy paper books to Kindle and e-books is a case in point. On the other hand, the world has seen massive “rebound effects” on essentially all technological innovations. The rebound effect, or “Jevons Paradox” means that efficiency gains will reduce resource use per added value but that the gained added value will rise faster or in line with the percentage of efficiency gains, so that the absolute amount of consumed resources is not reduced but rising[8]. Figure 1 has already shown this effect: GDP rose faster than resource use (meaning efficiency gains), but the overall consumption of resources is still rising, – and that rapidly!

What can we do to beat that dragon of the rebound effect? The best way, I suggest is increasing the prices of virgin minerals, energy and water. However, to avoid “yellow vest” insurgence and industry migration, you better do it in small steps, more or less in parallel with documented efficiency increases. For political appeasement you can even introduce low “life line tariffs” as was successfully done in South Africa. And to avoid industry migration offer revenue neutrality for branches that are particularly vulnerable to resource price increases: Return the resource tax revenues to the branch per job or per added value, as was done in Sweden with its brutal NOx tax in the 1990s. No company left the country, and the scheme wored as an incentive for modernization. The rebound effect will not disappear but drastically shrink.

[1] John Naughton. The trouble with bitcoin and big data is the huge energy bill in The Guardian, 26 Nov., 2017

[2] Ugo Bardi. Extracted: How the Quest for Mineral Wealth is Plundering the Planet. Chelsea Green. 2014

[3] Krausmann, F., Gingrich, S., Eisenmenger, N., Erb, K.H., Haberl, H. and Fischer-Kowalski, M. (2009) Growth in global materials use, GDP and population during the 20th century. Ecological Economics, 68(10): 2696-2705.

[4] UNEP (lead authors Mark Swilling and Martin Hajer). The Weight of Cities. Resource requirements of future urbanization. 2018. Nairobi: UN Environment Programme.

[5] Amory Lovins and Rocky Mountain Institute. 2011. Reinventing Fire: Bold Business Solutions for the New Energy Era. White River Junction. Chelsea Green

[6] Ernst U. von Weizsäcker, Karlson Hargroves et al. 2009. Factor Five. Transforming the Global Economy Through 80% Improvements in Resource Productivity. London: Earthscan (Taylor & Francis)

[7] Michael Carolan. Cheaponomics. The High Cost of Cheap Prices. 2014. London: Taylor and Francis.

[8] A simple description of the rebound effect can be found in Peter O’Connor’s blog of November 5, 2015, What is the Rebound Effect? — Energy Efficiency, Part 2