Virtual dematerialisation: ebusiness and factor X Presentation by Michael Kuhndt, Wuppertal Institute, Eco-efficiency and Sustainable Enterprise Group

Michael Kuhndt – Wuppertal Institute Use of nature Quality of life Economic growth factor The overall challenge Delinking Use of Nature from Creation of Life Quality Contribution of ICT/ e-commerce?

Michael Kuhndt – Wuppertal Institute The overall challange Linking Micro-Macro analysis MACRO A Specific Goal on National Level: Factor 10 increase in Resource Productivity MICRO Material Production Factor 5 Manufacturing/ Assembly Factor 0.5 Use and Service Factor 2 Waste Management Factor 2 MESO Sector A Factor 10 Sector B Factor 5 Sector C Factor 15 Sector… Factor 10 The Overall Goal: Sustainable Development

Michael Kuhndt – Wuppertal Institute MACRO-Level ICT sectore-business types E- commerce, E- work, E- goverment MESO-Level Case studies Mobile computing, e-banking, digital music, Telework MICRO-Level MIPS The analytical approach

Michael Kuhndt – Wuppertal Institute Towards a sustainable e-society 1.Small is beautiful? 2.From Atoms to Bits 3.The user tips the balance 4.Develop a better understanding

Michael Kuhndt – Wuppertal Institute 1 1.Small is beautiful? Scaling down devices doesn’t necessarily contribute to dematerialisation 2.From Atoms to Bits 3.The user tips the balance 4.Develop a better understanding Towards a sustainable e-society

Michael Kuhndt – Wuppertal Institute Small is beautiful? HP Case study Life-cycle of electronic products Raw Materials extraction Disposal Transport Use of electricity Product and Stand-by Component manufacturing Heat shieldsDisplay SwitchesCables KeyboardHard Disk Casing Modem PWB and sub-components Batteries Power supply Packaging

Michael Kuhndt – Wuppertal Institute Source: Wuppertal Institute Weight, excl. packaging (kg) Abiotic raw materials (kg) Material intensity factor (kg/kg) PC *65 Notebook Handheld Personal organiser (paper-based) * Estimations from 1998 (outside the scope of the HP study ) HP Case study Material intensity of manufacturing

Michael Kuhndt – Wuppertal Institute  Reduce Material Input  Increase Service Units Small is beautiful? Strategies for Increased Resource Efficiency (MIPS) MI S

Michael Kuhndt – Wuppertal Institute Potential savings of abiotic raw materials by shifting from primary to secondary materials Abiotic material consumption for casing and non-elecronics in kg Product 0% recycled metals 80% recycled metals* Savings Notebook64.6 kg12.7 kg51.9 kg Handheld19.5 kg7.0 kg12.5 kg Source: Wuppertal Institute * for aluminium, copper and magnesium HP Case study Scenario for the use of secondary materials

Michael Kuhndt – Wuppertal Institute Source: Wuppertal Institute HP Case study Scenario for the shared use of notebooks

Michael Kuhndt – Wuppertal Institute Small is beautiful? Recommendations Digital Europe research highlighted the importance of the ICT infrastructure as a major factor for resource consumption of e-business and e-government. –the system-wide effects of ICT and its applications should be considered. Often, the early manufacturing stages and the use phase are neglected within evaluations. (business and science) –extending the ICT lifetime, shared use of ICT equipment and extended warranties. (policy and business) –application of design for environment should be promoted, e.g. regarding the use of secondary (recycled) materials. (business)

Michael Kuhndt – Wuppertal Institute 2 Towards a sustainable e-society 1.Small is beautiful? 2.From Atoms to Bits E-commerce: Shifting physical products to e-services contributes to dematerialisation. 3.The user tips the balance 4.Develop a better understanding

Michael Kuhndt – Wuppertal Institute (1)Communication informationmarketing negotiation and contract (2) delivery (3) payment Buyer Seller From Atoms to Bits E-commerce:Three different phases and two actors

Michael Kuhndt – Wuppertal Institute Communi- cation Option 1 Option 2 Option 4 Option 3 Option 5 Option 6 Production& Delivery Payment offline online offline online offline online Option 7 online offline online offline online Options for product based Ecommerce From Atoms to Bits Ecommerce: Degree of electronic support Options for information- based Ecommerce

Michael Kuhndt – Wuppertal Institute Three “distribution scenarios” Physical Retail CD is purchased by the consumer in a local CD store. Online Shopping CD is ordered online at an Internet shop and delivered to the consumer. Digital Delivery The consumer downloads the respective song(s) via the Internet, instead of purchasing a physical product (CD). EMI Case study Comparing the 3 scenarios

Michael Kuhndt – Wuppertal Institute EMI Case study Comparing the scenarios ,67 Physical Retail Scenario Online Shopping Scenario Material intensity (kg) Material intensity to enjoy 56 MB of data (music): Digital Delivery Scenario

Michael Kuhndt – Wuppertal Institute Raw Materials & Energy Sources Monthly account statement Transport to/storage at Central Clearing House Transport/Transmission credit slip Intake and processing credit slip Production & Supply credit slip Filling out credit slip General process flowchart Service unit: Payment of a single bill to a specified receiving account Scenarios - traditional banking - online banking Barclays Bank Case study Overview: Process and service unit

Michael Kuhndt – Wuppertal Institute Material Intensity per bill payment in kg 2.68 kg = ten beverage cans 1.06 kg = four beverage cans Traditional = 2.7 kgOnline = 1.1 kg Abiotic raw materials for one beverage can: 0.28 kg Barclays Bank Case study Results: Online vs. Traditional Scenario

Michael Kuhndt – Wuppertal Institute E-banking is less material intense than traditional banking. The main savings occur at: - reduced need for building infrastructure (branches) - related electricity, energy, water etc. savings - reduction in consumer traffic but… Barclays Bank Case study Balancing environmental and social issues -what about users without internet access -lack of trust into the network -…

Michael Kuhndt – Wuppertal Institute Resource consumption for Human needs

Michael Kuhndt – Wuppertal Institute From Atoms to Bits Recommendations E-commerce can – under specific circumstances – provide significant resource efficiency potentials, especially if physical products are shifted to e-services. –the framework conditions for the uptake of e-service applications need to be enhanced. Fast and affordable Internet connections, trust and an e-society literacy are important pre-conditions. (policy) –public administration/ businesses should offer and request e- services (push & pull -strategy). (policy and business) –scientific assessments on the dematerialisation potential should be carried out in sectors in which the use of ICT can potentially offer significant dematerialisation potentials. (science)

Michael Kuhndt – Wuppertal Institute 3 Towards a sustainable e-society 1.Small is beautiful? 2.From Atoms to Bits 3.The user tips the balance Consumers play an increasingly decisive role in the life- cycle wide environmental impact. 4.Develop a better understanding

Michael Kuhndt – Wuppertal Institute Three “distribution scenarios” Physical Retail CD is purchased by the consumer in a local CD store. Online Shopping CD is ordered online at an Internet shop and delivered to the consumer. Digital Delivery The consumer downloads the respective song(s) via the Internet, instead of purchasing a physical product (CD). EMI Case study Comparing the 3 scenarios

Michael Kuhndt – Wuppertal Institute EMI Case study Conclusion: Consumers relevance increases Share on total material intensity (%) Physical retailing 0 50 ProducerRetailer 100 Consumer Online shopping 0 50 ProducerRetailerConsumer ProducerRetailerConsumer 100 Digital distribution Case study on digital music

Michael Kuhndt – Wuppertal Institute EMI Case study Comparing the scenarios ,67 Physical Retail Scenario Online Shopping Scenario Material intensity (kg) Material intensity to enjoy 56 MB of data (music) broadband 5,5 56k modem Digital Delivery Scenario

Michael Kuhndt – Wuppertal Institute The User tips the Balance Recommendations In an e-society shifting from tangible to intellectual assets, habits and awareness are increasingly decisive for the overall material intensity, otherwise efficiency gains might be offset. –Training and empowerment for a e-society literacy is needed, allowing users to handle digital information without re- materialisation. (policy) –Cross sectoral co-operation and communication strategies, e.g. product service panels, seem to be promising approaches to influencing the environmental effects outside direct control of the sector. (business) –A better understanding of the size and potential impact of rebound effects is urgently needed. (business and policy)

Michael Kuhndt – Wuppertal Institute 4 Towards a sustainable e-society 1.Small is beautiful? 2.From Atoms to Bits 3.The user tips the balance 4.Develop a better understanding Monitoring the environmental impacts of ICT is still a major challenge.

Michael Kuhndt – Wuppertal Institute Monitoring the environmental impacts ICTs share of CO 2 -emissions – only 0.6% !

Michael Kuhndt – Wuppertal Institute Develop a better understanding Assessing ICTs decoupling potential Does ICT affect material consumption on the national level? Comparison of three European countries No final evidence, as data availability low! Growth of ICT-sector Eco-efficiency in ICT sector Eco-efficiency through ICT applications Results: No agreement on ICT sector definition Integrated environmental and economic indicators don’t span longer time periods No sector-specific data on ICT investment available Input-/Output table allow only rough estimations Significant structural change can not be observed Dematerialisation stronger in ‘old’ industry sectors No provable link between ICT application and dematerialisation Focus:

Michael Kuhndt – Wuppertal Institute Develop a better understanding Recommendation Quantifying the environmental effects caused by new technologies is still a major challenge. Knowledge about the environmental effects along the entire product chain is a necessary precondition for the identification of efficient improvement options. –statistical classification systems for ICT infrastructure and applications on the macro-level need to be improved. (policy) –cost accounting systems need to be combined with internal material flow data (material flow accounting) to improve the supply chain communication. (business)

Michael Kuhndt – Wuppertal Institute Towards a sustainable e-society 1.Small is beautiful? 2.From Atoms to Bits 3.The user tips the balance 4.Develop a better understanding

Michael Kuhndt – Wuppertal Institute The way ahead -Data availability -in statistics -along the value chain -Do ICT and e-business improve eco-efficiency in the “old sectors” ? If so, how can this role be enhanced? -Lifetime of products -Obstacles and drivers for a shared use -Lifetime extension through upgradability and exchange of second hand goods -Are policy instruments and concepts such as EPR and IPP appropriate and efficient approaches in an e-society? -Education -Business, policy makers and consumers

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