Chertow Lecture #3

China, Resources, and the Circular Economy Center for Industrial Ecology Yale School of Forestry & Environmental Studies 耶鲁大学森林与环境学院产业生态学中心 Prof. Marian Chertow Presentation to: Mandarin China – Yale Educational Travel October 2008

Outline Physical resources and the need to improve overall efficiency Development models leading to the circular economy The Circular Economy Promotion Law and its relationship to industrial ecology Implications for improving resource productivity based on circular economy and industrial ecology

Great resource productivity – land, labor, and capital = the Chinese economic miracle World’s largest population with world’s fastest growing economy: Forty fold increase in international trade between 1978 and 2003. Since 2002, China has overtaken the US to receive the most foreign investment annually of any country.

The endowment of resources in China is small and distributed unevenly China has: 1.8% of the world’s total oil reserves, 0.7% of natural gas, 0.9% of iron ore, 5% of copper ore, and 2% of aluminum

With regard to per capita resources, China has: half the world average in mineral resources, one-third in arable land and grassland, one-fourth in water resources, one-fifth in forest, one-seventh in energy, and only one-tenth in oil Information Office of the China State Council 2006

Example of rising consumption and declining resources Five fold increase in fish consumption/person in the past 25 years according to UN FAO The catch of wild fish in the Yangtze has declined 75%. China is the world’s largest producer of aquaculture grown food with fish production increasing approx. 250% in 18 years China is the only country in which aquaculture provide more fish and aquatic food than wild fisheries. Liu and Diamond – Nature Vol 435 June 2005

Primary energy consumption, 2007 Source: BP Statistical Review, 2008

Oil, coal, natural gas supply and demand Oil Natural gas Coal Production Consumption Source: BP Statistical Review, 2008

National People’s Congress – Environmental Protection & Resources Conservation Committee On the need for modernization: “ China has been facing serious environmental and resources problems with its economic development since the 1980s, mainly due to inefficient use of resources”

“ Industrial ecology is the study of the flows of materials and energy in industrial and consumer activities, of the effects of these flows on the environment, and of the influences of economic, political, regulatory, and social factors on the flow, use, and transformation of resources.” Defining Industrial Ecology Robert White NAE 1994

From a traditional perspective to an -industrial ecology perspective Industrial System Natural System Natural System Economic System

Industry Embedded in Nature Source: R. U. Ayres, 1993 REALM OF THE MARKET water for drinking, washing, cooking & sewage irrigation water respiration, transpiration ozone for combustion (carbon cycle, nitrogen cycle) photosynthesis rain recycling water for flotation minerals, fuels food, fiber nutrient recycling to landfills, oceans ground water, rain photosynthesis soil organisms, pests, etc. algae bacteria fungi worms insects birds etc. surface, ground from public or unowned land from private property cultivation & husbandry on private land hunting, fishing, grazing on common land air for combustion combustion products garbage, refuse, sewage products, services AGRICULTURE & FORESTRY SUN AIR SCENERY, "ENVIRONMENT CONDITIONING” HOUSEHOLDS & "PERSONAL CONSUMPTION” WATER MANUFACTURING, CONSTRUCTION, TRANSPORT DISTRI- BUTION SERVICES WASTE DISPOSAL BIOTA MINING & DRILLING decay organisms industrial wastes process water

Natural System Economic System Economic System Natural System Natural System Economic System

Evolving understanding of the fundamental question of development ‘‘development is of overriding importance’’ ‘‘development is the top priority’’ ‘‘overall, balanced and sustainable development’’ (2003) “harmonious society” gradually giving birth to a scientific philosophy of development specific to China

National People’s Congress 3-08 The Scientific Outlook on Development “takes development as its essence, putting people first as its core, comprehensive, balanced and sustainable development as its basic requirement, and overall consideration as its fundamental approach.” China must pursue more than simple output growth. Development needs to go beyond economics, to include political, social and cultural aspects in order to achieve the aim of the CCP of “building a moderately prosperous society by 2020.”

National People’s Congress March 2008 Hu Jintao: promoting balanced development and promoting a conservation culture by forming an energy- and resource-efficient and environment-friendly structure of industries, pattern of growth and mode of consumption.

China’s Call for a Circular Economy The resources and environment in China are not available to provide a growing population with higher standards in a Western lifestyle of consumption. The challenge for China is to create an alternative to Western development modes which would meet the needs for development while maintaining and even improving the health of ecosystem

A new industrialization model…for reconciling China’s twin goals To increase economic growth and social welfare 2000 2010 2020 2050 To decrease resource consumption and pollution Revised from: Prof. Zhu Dajian

China’s circular economy: a new economic pattern for future development The circular economy organizes economic activities towards a closed loop process of: ‘resource – production – consumption – regenerated resource’. “All materials and energy are used rationally and continuously in sustained economy cycles, and the harmful effects of emissions and pollutants can be reduced to a minimal level.” Qian Yi, November 2007

Three life-cycle phases of Circular Economy closed loop materials Materials extraction Material production Final production distribution Consumer use Waste disposal Material-reuse and recycle The production phase The use phase The end of life phase

Path to Passage for CE Law December 2005 NPC Environmental Protection and Resources Conservation Committee starts to draft law. Collected more than 1,000 suggestions from relevant government departments, colleges, and local people's congresses this year to “perfect the draft.” August 26, 2007, Circular Economy Law Amendment Bill was submitted for the first time to NPC Standing Committee for consideration. It consisted of 7 chapters and 61 entries. Main theme is “Reduce, Reuse and Recycle.” August 29, 2008 Circular Economy Promotion Law received third reading and is passed.

Circular Economy operates at three levels Enterprises with cleaner production Eco-industrial parks/ zones/industrial symbiosis Integration of production and consumption at city/province level Revised from: Prof. Zhu Dajian

Enterprise level flows - A profile Waigaoqiao Power Plant Power Station Industrial Activity: Power generation Footprint/Physical Size: 144 hectares MATERIAL INPUTS 5.9 million tons/year high sulfur coal ENERGY REQUIREMENTS N/A (Energy producer) WATER REQUIREMENTS 14*10 10 L/year saltwater (cooling) Freshwater (purified) for steam PRODUCTS 14.8 Billion kWh per year Electricity NON-PRODUCT OUTPUTS/WASTES CO 2 16 million tons/year SOx 105,000 tons/year NOx 140,000 tons/year Elevated temperature wastewater 14*10 10 L/year Fly Ash & Bottom Ash 570,000 tons year Waste solvents (cleaning) Waste oil

Material Chains: Guitang Group, Guigang City, Guangxi Autonomous Region Source: Q. Zhu and R. C ô t é , 2004

“ In an industrial ecosystem, the consumption of energy and materials is optimized, waste generation is minimized, and the effluents from one process serve as the raw material for another” R.A. Frosch, and N. Gallopoulos, Strategies for manufacturing Scientific American, 260 (3), 144, 1989

Sludge (treated) Liquid Fertilizer Farms Cement; roads Fish farming Water Water Water Fly ash Heat Scrubber Sludge Gas Steam Steam Sulfur A-S Bioteknisk Jordrens Sludge Steam Cooling water Statoil Refinery Lake Tissø Boiler water Yeast slurry Recovered nickel and vanadium The Industrial Ecosystem of Kalundborg, Denmark Energy E2 Power Station Pharmaceutical Municipality of Kalundborg District heating Wall-board Plant Sludge (treated)

Sample Benefits of Industrial Symbiosis to Kalundborg Participants Water savings Oil refinery – 1.2 million cubic meters Power station – total consumption reduced by 60% Input chemicals/products 170,000 tons of gypsum 97,000 cubic meters of solid biomass (NovoGro 30) 280,000 cubic meters of liquid biomass (NovoGro) Wastes avoided through interchanges 50,000-70,000 tons of fly ash from power station 2800 tons of sulfur as hydrogen sulfide in flue gas from oil refinery

Identifying Circular Flows in Tianjin TEDA

Circular Economy Promotion Law as of August 29, 2008 (1) Close monitoring of energy consumption and pollution in heavy consuming and polluting industries (steel and non-ferrous metal production, power generation, oil refining, construction, printing) Gov’t promote recycling and improving energy-saving and waste-reutilization standards; develop policies to divert capital into environment- friendly industries Adoption of renewable products in new buildings Requires enterprises to make comprehensive use of coal mine waste, coal ash, and other waste materials Encourages farmers to recycle straw, livestock waste, and farming by-products to produce methane Source: Xinhua News, 2008

Circular Economy Promotion Law as of August 29, 2008 (2) Central govt will allocate funds and capital to enterprises to encourage innovation in recycling technologies, and provide tax breaks to enterprises introducing and using energy-efficient technologies Companies using prohibited technologies will face fines of 50,000 yuan ($7295.86) to 200,000 yuan Source: Xinhua News, 2008

Final version of law vs. draft to be enacted January 1, 2009 Deleted: Article 26.1: implementation of system of graduated increase of prices and fees for electricity, gas, tap water Article 40: Owners of scrapped motor vehicles shall sell and deliver the vehicles to enterprises engaged in recovering such vehicles Article 14.3: The State Council and local governments above the county level shall report progress of recycling economy. Addition: Article 46: The state adopts a price policy that will encourage conservation of water, electric power, gas, and other resources. Article 29: An environmental impact assessment shall be conducted before any industrial park or zone is built or rebuilt, and measures for ecological protection and pollution control shall be taken. Source: Xinhua News 2008, McElwee, Charlie. (2008) China Environmental Law blog

第二十七条【服务业节约】 Article 27 Saving in Service Industry 餐饮、娱乐、宾馆等服务性企业，应当优先采用节能、节水和环境友好的产品，减少使用或者不使用浪费资源、污染环境的产品。 Catering, entertainment enterprises, hotels and other service enterprises shall adopt energy saving, water saving and environmental friendly products in priority to reduce the use or not to use any products that squander resources and pollute environment.

Compatibility of circular economy and industrial ecology Circular economy as policy and strategy Industrial ecology as providing essential intellectual underpinnings for circular economy

CE Implications: China Iron Cycle 2004 Data Source: Tao Wang, Yale Univ. Design: B. Reck

Per capita iron stocks in industrialized countries provide clues about future iron use Müller et al., PNAS, 44 , 16111-16116, 2006)

E-waste recycling in Guiyu – the nightmare

MFA Taizhou Chiho-Tiande Metals in 2006 250,000 tons scrap electric motors 150,000 tons steel scrap 45,000 tons copper scrap 20,000 tons scrap silicon steel sheets 30,000 tons secondary aluminum 2% solid residues to be disposed of

E-waste recycling in China: not whether but how E-waste recycling is ultimately a labor-intensive business and thus China has a comparative advantage. China needs an ever growing supply of raw materials and secondary materials have both resource scarcity and energy dividends in satisfying the demands. Therefore the question is not whether China will recycle E-wastes from developed countries but how to do it in a sustainable manner. Shi Han April 2008

Program on Industrial Ecology in Developing Countries Received funding for start-up of a new program under Yale’s Center for Industrial Ecology and funding for projects in China Work with international colleagues to adapt industrial ecology theory and practice to the realities faced in rapidly industrializing developing countries related to the co-mingled problems of global warming, energy efficiency, water quality and quantity, material reuse, and waste management . Doing Circular Economy Planning in Tianjin Binhai New Area

Industrial Ecology and the Circular Economy “ 产业生态学试图根据我们对自然生态系统的认识（资源循环利用、食物网等），对产业生态系统进行重建……” —— Erkman and Ramaswamy, 2003 “ The aim of industrial ecology is to restructure the industrial system, inspired by our understanding of biological ecosystems (cyclic use of resources, food webs, etc)…”

物盡其用 Wu (4) Jin (4) Qi (2) Yong (4) 人盡其才 Ren (2) Jin (4) Qi (2) Cai (2)

Chertow Lecture #3

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Chertow Lecture #3