Our society is facing a multiple crises and the challenges are known. Our current economic model of Take-Make-Use-Waste is no longer viable since it exceeds the carrying capacity of the earth and generates more inequality. The European Greens have formulated a Green New Deal (GND) as an integrated answer to the crises at the European and national level. At the same time, economic innovation is more and more connected with creative cities and urban regions. Therefore, the economic revival of Europe could partly be found in a network of European cities and urban regions that, as gathering places of knowledge and innovation, become front-runners in the field of an ecological economy. The first case study below gives a good idea of what can be done if two creative cities join expertise and ideas.
To develop this urban GND, a project was set up between the Green European Foundation and the green foundations of Catalonia and Flanders, Nous Horitzons and Oikos. To initiate a debate, Oikos wrote a discussion paper that explores the scenario of an ecological re-industrialisation of European cities. In what follows, the contours of this vision are briefly described.
The transition: a double movement required
The base line for the scenario is that a transition towards a socio-ecological economy requires a double movement: If urban economies worldwide develop in an ecological way into circular economies, the global economy can become smaller and greener. The latter is necessary and desirable: our current global economy consumes too many resources and fossil fuels, a re-localisation of production can generate new employment opportunities. This is especially important for our cities, which are confronted with a structural decline in the number of jobs available for low skilled people. The loss of opportunities for this group can not be seen as separate from other phenomena such as the rise of the extreme right.
A circular economy in itself is neutral towards social goals and the quest for a better life.
This perspective should not be mistaken for a naive argument for ‘everything local’. The smart way is to think in different scales: there will still be global trade, high tech companies developing for instance satellite technology will still work in a global market. In contrast, everything that is heavy and carbon-intensive should, if possible, be produced at the most local level. Finally, everything that is light, especially ideas and knowledge, should be shared globally!
If re-industrialisation is the goal, it is important to understand that the industry of the 21st century will be not the same as the mass production model throwaway economy of the 20th century. The latter is out-dated, and the promise of re-industrialisation lies in customised production as part of a circular economy (including new business models with product-service combinations including leasing and sharing).
The changes to the economic system explored in the paper consist of two building blocks. The first is the development of an urban circular economy. Just as crucial is the second: slow economy. Because a circular economy still can be unsustainable if the circles are run through too fast (e.g. recycling metals is very energy intensive and is polluting). Also, a circular economy in itself is neutral towards social goals and the quest for a better life.
The first building block: the urban closed circle economy
An ecological economy keeps resources within the economic circuit as an answer to resource scarcity and the waste problem. Some things that are presently obvious (e.g. mining for resources, waste incineration) will mostly belong to the past. The closed circle is however only as strong as it weakest part. At least three radical challenges have to be dealt with.
1. Designing closed cycle products: ecodesign
The ecological economy starts with ecodesign, where the impacts are analysed upstream of production as well as downstream. This leads to products that are produced in a sustainable way, last long and with a modular design to easily allow disassembling or replace parts. So instead of throwing your office chair away after first use, there is now a model on the market (Herman Miller) that can be totally disassembled and is 99% recyclable.
2. Cities as the new source of resources: urban mining
Instead of dumping or exporting used products, in a closed cycle the task is to keep all valuable resources that circulate in the city. In this concept of urban mining scarce resources are being reused: from disassembling and reusing to re-melting. As a certain scale is necessary, this can be organised in regional networks of cities that each specialise in specific forms of ‘regeneration’. In Belgium, the company Umicore has reinvented itself from a mining company into the world leader in the field of recycling metals (see case 2 below).
3. New urban production: high tech small scale manufactures
With new technologies and business models coming together, such as 3D-printing, smart software and fabrication laboratories, the future can be one of high tech small scale production in micro factories. This allows mass customisation: e.g. a Belgian company that used to have teeth prostheses produced in China because of the high labour costs, re-shored the production by introducing a 3D-production plant. This new way of production offers incredible possibilities for maintenance and repair, as small parts can be made on demand.
The Internet and open source software also allows peer-to-peer design and production, where experts from all over the world can collaborate on the design of new products (such as a eco-efficient car: the Wikispeed).
The second building block: the slow economy
Building a closed cycle economy is great, but not enough. Economic cycles can have a big impact on the environment and consume large amounts of energy. Recycling can also sometimes result in lower quality outputs. Therefore, a sustainable economy slows down the circles as much as possible. At the same time, this slow economy integrates the quest for a better and more sustainable way of life in a more equal society. Four elements are crucial here.
1. Buy less (or nothing), and share, swap or give
Buying nothing: it sounds like the worst business proposal. But things are changing: companies such as Patagonia encourage their customers not to buy something when they don’t need it! If we buy products, we can share them: collaborative consumption is on the rise, creating more sustainable lifestyles and making the cycle slower and lighter. This illustrates that an ecological economy is not just about other production modes and products, but also about sustainable lifestyles and societies sustaining them. It comes to citizens considering how to have a good life without being a slave of the throw away consumption society. So, by sharing their cars and tools, they can save money and have a good life with less purchasing power. Maybe they will work a day less in the week, and spend their free time volunteering and acquiring high tech knowledge in a fablab. This gives was to what could be described as high tech low budget urbanity.
2. New business models: The Leasing Society
With the leasing-model, a new relationship between producers and consumers is created. As producers stay owner of the products, there are stimulated to make them more resource-efficient, prolong product life, optimise utilisation and enable easier remanufacturing or recycling. Accurate regulations are however necessary to prevent unintended consequences such as the rebound effect of the rebound-effect and a potential negative social impact. As case 3 shows, the company Xerox had remarkable results by leasing instead of selling their photocopiers.
3. An urban repair network
It sounds obvious, but is the opposite of the current situation: repair broken products. So the challenge for a city is to build the capacity to repair all the products used on its territory. This entails the build up of an urban repair network (as can be found in Vienna). This creates new jobs for technical skilled people (or training unskilled people) and leads to a new relationship with goods.
4. Slowing the circle by speeding up technological innovation: intellectual property rights
It is clear that useful developments like urban mining need a lot of technological innovation, e.g. to melt precious metals out of electronic scrap. Intellectual property rights (IP) can protect the investment costs, but are at the same time a burden for new innovation business and prevents the sharing of knowledge. So new ways for sharing knowledge, such as knowledge cooperatives, could be an innovative way forward.
Jobs for everyone
An urban circular economy offers opportunities for employment, although job losses can occur as well. In the sector of raw materials the main opportunity lies in the processing of already-used resources (urban mining, clothes). In the production industry the market for remanufacturing and refurbishing will increase. For the service sector, product-service combinations can provide extra jobs for lower skilled people, just as is the case for the social economy.
Financing the transition
The market and public finance cannot always meet the needs of financing the transition. Therefore other ways have to be considered. First, the cooperative sector is flourishing again. Cooperatives are financed through subscriptions to capital shares and/or regular contributions by citizens. There are co-operative banks, as well as cooperatives in the fields of renewable energy, housing, agriculture and food.
The internet has created means to fund projects via crowd funding. This is mostly meant for small one-off projects that draw in small donations from large numbers of people.
City governments can also mobilise money to finance the transition, by providing cheap loans or creating loan guarantee programs. And big cities could consider issuing their own bonds, so the savings of citizens can be mobilised for building a sustainable economy.
One final possibility is the introduction of a complementary or regional currency, as for instance has happened in Bristol, with the ‘Bristol Pound’.
This illustrates that an ecological economy is not just about other production modes and products, but also about sustainable lifestyles and societies sustaining them.
Policies for the urban ecological economy
Different political levels can take diverse measures to stimulate the transition. At the national level, a fiscal system that shifts taxes from labour to the use of energy and resources is an important driver. Cities can provide grants and loans, act as an intermediary between local initiatives and lending institutions, and offer city-owned land to cooperatives. As important as money, is providing the infrastructure for urban innovation: shared workspaces, community-owned commercial centres and space for emerging businesses. Also an expert centre for setting up cooperatives can be key for steering economic development in the right direction.
Thinking out of the box
Economy is about satisfying our needs, as we learned in the basic course of economy. This shows that the economy is broader than what happens on the market. So-called soft-structures (places of exchange, sharing and solidarity) make sure that a lot of needs in the city are met in a non-classic-economical way. If people from a district start up a ‘library for tools’, they need less purchasing power to have the equipment they sometimes need at their disposal. The best way to comprehend these ways of organising is with the term urban commons. Another example of this, where a lot of needs and skills can be exchanged are systems such as LETS (Local Exchange Trade System). As Wikipedia shows on a global level, open peer-to-peer production may produce unexpected results.
Conclusion: no time to waste
The philosopher Benjamin Barber writes in his recent book If Mayors Ruled the World, that cities are moving into policy fields where nations are sabotaging each other. So while international climate talks result in almost no progress, more and more cities are striving to become climate neutral. They can also take the lead and become the place where an ecological economy is part of the urban renaissance of the 21th century.
Case 1 Almere and Prato: a textile recycling connection
September 2012, a letter of intent was signed by the mayors of Prato and Almere to establish an innovative collaboration. Wasted clothing, mostly post-consumer, is collected in the Netherlands from different sources. Then a local firm has the necessary equipment to sort the garments according to type of fibre and colour. Afterwards, the clothing is cut into pieces and pulled through separate toothed cylinders, non-textile parts are removed. The fibres are then tested for composition and hazardous waste before they are pressed into bales and shipped to the spinners in Prato. During the spinning process, the fibres are mixed with other fibres to increase the product quality. The yarn is used by the weaver to make cloth and is later on sent to the retailer as a garment. As Prato is a hometown of fashion, recycled textiles are introduced in the heart of the clothing industry. One of the innovations included is a quality mark in the form of a washing label, which indicates the amount of recycled fibres. The company that provides this uses a track-and-trace system. In this way, a retail chain can order a guaranteed percentage of recycled fibre.
Case 2: urban mining
In Antwerp the company Umicore has reinvented itself from a century-old mining company into the world leader in the field of recycling metals from cell phones and batteries from electric cars. Cities in this way become the new source for resources (urban mining). Umicore dedicates most of its R&D efforts to clean technologies. They focus on emission control catalysts, materials for rechargeable batteries (to store energy) and photovoltaic’s (to generate clean energy), fuel cells (generating energy using hydrogen), and the recovery of scarce metals from end-of-life products such as batteries. Closing the materials loop is a principal part of their business strategy. “It offers a vital service to many customers and offers us a key competitive advantage.”
Case 3 Leasing: a new way of buying in the city
A smarter use of products is an important step towards a circular economy. Leasing is an example of this. However, the investment can be huge and the existing interest and behaviour of consumers are factors that cannot be ignored. Mud Jeans proves that despite these challenges it is possible for a start up company to be successful. In Amsterdam and Ghent, Mud Jeans started to lease jeans: the customer pays a fixed amount upfront and pays a small amount per month for a jeans made from biological and recycled cotton. Repairs are made for free and after a year you can trade it in again for a new model.
Another example is the product-service system of Xerox, delivering ‘document-management services’. The lease includes full-service maintenance and a customer satisfaction guarantee regarding functioning machines. The customer pays a fixed price per copy. After the lease contract ends, Xerox takes the product back to remanufacture it in respective facilities. Xerox then recovers the products’ materials, to use it again within used, remanufactured and newly manufactured equipment. For this, Xerox established a product design that allows easy disassembling and thus remanufacturing and material recovery. The numbers are impressive: half of their revenue is currently generated by renting and leasing, 94 % non-hazardous solid waste is recycled, more than 2.2 million cartridges and containers are returned and 1.3 million pounds of toner are re-used every year.