Virtual dematerialisation: ebusiness and factor X

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

2. 10 Qualityof life Contribution of ICT/e-commerce? 8 factor 4 Economicgrowth Use of nature The overall challengeDelinking Use of Nature from Creation of Life Quality

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

4. MACRO-Level ICT sector MESO-Level e-business types E- commerce, E- work, E- goverment MICRO-Level Case studies Mobile computing, e-banking, digital music, Telework MIPS The analytical approach

5. Towards a sustainable e-society Small is beautiful? From Atoms to Bits The user tips the balance Develop a better understanding

6. Towards a sustainable e-society 1 Small is beautiful? Scaling down devices doesn’t necessarily contribute to dematerialisation From Atoms to Bits The user tips the balance Develop a better understanding

7. Small is beautiful? HP Case studyLife-cycle of electronic products Raw Materials extraction Component manufacturing Heat shields Display Switches Cables Keyboard Hard Disk Casing Modem PWB and sub-components Batteries Power supply Packaging Transport Use of electricity Product and Stand-by Disposal

8. HP Case studyMaterial intensity of manufacturing * Estimations from 1998 (outside the scope of the HP study) Source: Wuppertal Institute

9. MI S Small is beautiful? Strategies for Increased Resource Efficiency (MIPS)  Reduce Material Input  Increase Service Units

10. HP Case study Scenario for the use of secondary materials Potential savings of abiotic raw materials by shifting from primary to secondary materials * for aluminium, copper and magnesium Source: Wuppertal Institute

11. HP Case studyScenario for the shared use of notebooks Source: Wuppertal Institute

12. 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)

13. Towards a sustainable e-society 2 Small is beautiful? From Atoms to BitsE-commerce: Shifting physical products to e-services contributes to dematerialisation. The user tips the balance Develop a better understanding

14. From Atoms to BitsE-commerce:Three different phases and two actors Communication information marketing negotiation and contract (2) delivery (3) payment Buyer Seller

15. From Atoms to BitsEcommerce: Degree of electronic support Communi- cation Production& Delivery Payment online offline offline Option 1 Options for product based Ecommerce Option 2 online offline online Option 3 offline offline online offline online offline Option 4 Options for information-based Ecommerce offline online online Option 5 online online offline Option 6 online online online Option 7

16. EMI Case studyComparing the 3 scenarios Three “distribution scenarios” Physical RetailCD 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 DeliveryThe consumer downloads the respective song(s) via the Internet, instead of purchasing a physical product (CD).

17. EMI Case studyComparing the scenarios Material intensity to enjoy56 MB of data (music): Material intensity (kg) 1.56 1.31 0,67 Physical Retail Scenario Online Shopping Scenario Digital Delivery Scenario

18. Barclays Bank Case study Overview: Process and service unit Raw Materials &Energy Sources Production & Supply credit slip General process flowchart Filling outcredit slip • Scenarios • traditional banking • online banking Transport/Transmissioncredit slip Intake and processingcredit slip Service unit: Payment of a single bill to a specified receiving account Transport to/storage at Central Clearing House Monthly accountstatement

19. 2.68 kg = ten beverage cans 1.06 kg = four beverage cans Barclays Bank Case studyResults: Online vs. Traditional Scenario Material Intensity per bill payment in kg Traditional = 2.7 kg Online = 1.1 kg Abiotic raw materials for one beverage can: 0.28 kg

20. Barclays Bank Case studyBalancing environmental and social issues 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… • what about users without internet access • lack of trust into the network • …

21. Resource consumption for Human needs

22. From Atoms to BitsRecommendations 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)

23. 3 Towards a sustainable e-society Small is beautiful? From Atoms to Bits The user tips the balanceConsumers play an increasingly decisive role in the life-cycle wide environmental impact. Develop a better understanding

24. EMI Case studyComparing the 3 scenarios Three “distribution scenarios” Physical RetailCD 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 DeliveryThe consumer downloads the respective song(s) via the Internet, instead of purchasing a physical product (CD).

25. Case study on digital music Physical retailing Online shopping Digital distribution 100 100 100 Share on total material intensity (%) 50 50 50 0 0 0 Producer Retailer Consumer Producer Retailer Consumer Producer Retailer Consumer EMI Case studyConclusion: Consumers relevance increases

26. 5,5 56k modem Digital Delivery Scenario EMI Case studyComparing the scenarios Material intensity to enjoy 56 MB of data (music) Material intensity (kg) 1.56 1.31 0,67 Physical Retail Scenario Online Shopping Scenario broadband

27. The User tips the BalanceRecommendations 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)

28. Towards a sustainable e-society 4 Small is beautiful? From Atoms to Bits The user tips the balance Develop a better understandingMonitoring the environmental impacts of ICT is still a major challenge.

29. Monitoring the environmental impacts ICTs share of CO2-emissions – only 0.6% !

30. Develop a better understandingAssessing ICTs decoupling potential • Does ICT affect material consumption on the national level? • Comparison of three European countries Focus: No final evidence, as data availability low!

31. 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)

32. Towards a sustainable e-society Small is beautiful? From Atoms to Bits The user tips the balance Develop a better understanding

33. 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

34. www.digital-eu.org michael.kuhndt@wupperinst.org More information @ your fingerprint