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MinFuture Roadmap - A roadmap towards monitoring the physical economy

MinFuture Roadmap - A roadmap towards monitoring the physical economy

Executive summary

Raw materials are the backbone of all industrial supply chains. They play a prominent role in global socio-economic development and their production and use shape the pathways towards the low-carbon and circular economy. Global material production and consumption have increased substantially in recent years. Complex supply chains have been developed to satisfy our material needs and to underpin economic growth. In order to tackle the problems associated with past unsustainable practices and to improve our capacity for forecasting and scenario development, it has now become imperative to monitor the physical economy. Existing monitoring practices focus primarily on the monetary dimension and do not address the physical dimension of supply chains. Current monitoring is characterised by datasets describing isolated flows (e.g. mine production) rather than whole systems (e.g. material cycles). There are considerable uncertainties in existing data. In addition, there are substantial data gaps that are not always explicit. There is serious fragmentation and discrepancies in data reported by different countries, different economic activities and different supply chain dimensions (e.g. production and trade). Existing data commonly lack a system context, which often leads to false assumptions, misinterpretations and wrong decisions. Furthermore, there are few incentives to share data, while confidentiality rules reduce transparency and result in fragmentation. Thus, the existing monitoring practice is inefficient and not suited to inform robust policies and strategies for addressing some of the most relevant societal challenges.

Due to these shortcomings, existing monitoring practices fail to provide the evidence base needed for assessing impacts on climate change, for monitoring progress towards implementing the circular economy, achieving the sustainable development goals and securing long-term supply of raw materials. Monitoring the physical economy can enhance our perception of society’s metabolism, improve our understanding of the interactions between economic activities and the environment and facilitate the identification of those intervention points in the supply chains that can lead to better outcomes. This roadmap provides a series of ‘strategic’ recommendations for moving towards the monitoring of the physical economy. The overarching goal is to move away from monitoring individual, isolated flows to monitoring systems at company, national, regional (e.g. EU) and global levels. For this to happen the development of systems and data that accurately reflect the supply chains for a wide range of commodities is required. The lack of systems and data is a serious barrier at present and it will require substantial coordinated efforts and collaboration across different communities, including academics, government and industry, to enable their further development. The recommendations in this document are designed specifically to assist in overcoming this barrier.

1. Establish a data infrastructure for material and energy stocks and flows thatwill enable the monitoring of the physical economy

The establishment of a data infrastructure requires the development of legal conditions, technical procedures and institutional changes to support the initiation stage and the long-term use and maintenance phases.

  • Legal interventions should evaluate the options available for the development of a data infrastructure for physical accounting. In Europe, legal options to be considered include the possibility of either amending the existing INSPIRE Directive or preparing a new Directive for monitoring the physical economy. The INSPIRE Directive sets a common framework and implements rules to ensure compatible spatial data across all Member States. It is important, therefore, to investigate if an extension to INSPIRE would be suitable to accommodate material stocks and flows data (which includes both, spatial and non-spatial data), or whether a new Directive would be more suitable. An expansion of the INSPIRE Directive with data on the physical economy may have the advantage that it links existing INSPIRE Themes (e.g. buildings, production and industrial facilities, mineral resources). Setting out clear legal conditions is important as they provide the right motivation to national governments to move in this direction. The establishment of legal conditions for a data infrastructure on the physical economy should ensure that national data and data infrastructures on physical material stocks and flows are compatible and usable across national boundaries. The need for common implementing rules, for example in data specifications, metadata, data services and data interoperability, should be an integral component of legal interventions.
  • Technical procedures should develop common implementing rules, as specified in a predefined legal framework that ensure the reporting of data in a system context. The MinFuture project recommends the establishment of a technical expert group that will analyse existing Themes  of the INSPIRE Directive to determine the relevance of existing data specifications to the monitoring of the physical economy. The group will also assess the requirement to expand or create additional Implementing rules and technical guidelines (data specifications) that can  accommodate physical accounting and coordinate efforts at the national level and from different data providers. The technical expert group should provide feedback to the EC and inform the development of legal interventions.
  • Institutional interventions will be essential for establishing a data infrastructure for the physical economy. There is a need for institutions with a mandate and the necessary resources to coordinate efforts and integrate data at the national, EU and global levels. The MinFuture projects calls for the establishment of a highlevel working group which will evaluate institutional options to coordinate the monitoring of the global physical economy. These may include the establishment of new institutions or redefining the role of existing institutions. Organisations such as
  • the IRP, IEA, OECD, UNSD, IGF and UNECE could play an important role in establishing such a group. The high-level working group should produce specific recommendations that will assist institutions at national, EU and global levels to consider, implement and, therefore facilitate physical accounting. The implementation bodies, namely institutions, such as statistic offices and public authorities, should be granted a mandate and provided with adequate resources to support implementation and coordination activities.

 

2. Address key knowledge gaps that inhibit the monitoring of the physicalv economy

Fragmented physical datasets are available, but they do not cover all the stages of material cycles. The MinFuture project has identified four areas with important knowledge gaps that the scientific community, but also governments and industry, should address to enable physical accounting.

  • Physical accounting of geological stocks with comprehensive coverage does not currently exist Given that global demand for raw materials is very likely to continue to increase such knowledge is important to ensure that adequate and sustainable supplies can be secured. Related questions concerning resource depletion, potential conflicts of mining with other land uses and increasing energy use due to declining ore grades also depend on the availability of such data. Current geological information is not suitable to address these questions in a consistent and satisfactory way. The MinFuture project calls for the development of:

o a framework for reporting mass-balance-consistent figures of geological stocks over time and space, including system definition, terminology and robust assessment methodology;
o Further developments and improvements in 3D geological models that provide important underpinning knowledge about geological stocks.

  • Physical accounting of anthropogenic stocks is considered to be in its infancy and there are several challenges related to the resolution of current accounting methods, the availability of data and the integration of existing calculation approaches. Our recommendations include the development of a standardised methodology and framework for physical accounting of anthropogenic stocks, which will provide consistent terminology, calculation methods and enable the integration of existing accounting approaches. In addition, the production of data on anthropogenic stocks is deemed crucial and this recommendation calls for the development of city-level datasets and the use of techniques and tools, such as remote sensing, GIS, 3D city models and others, describing the built environment.
  • Physical accounting of supply chains depends on a consistent integration of production and trade statistics. Currently, there is no action at the global level that investigates inconsistencies between trade and production statistics. This is crucial for monitoring the physical economy and improving our understanding of supply chains. We recommend the establishment of an international expert group working on a long-term goal to monitor global supply chains by harmonising production and trade statistics. This recommendation has already been discussed with key stakeholders, such as UNSD, who endorse it and would be willing to find ways to move it forward.
  • Physical accounting within companies is currently taking place only to a very limited extent. However, the potential benefits to companies and to society as a whole are expected to be very high. For example, physical accounting can lead to resource efficiency gains, which at the company level can translate to cost savings. Also, the implementation of the system approach can assist companies to improve their reporting procedures, whether these are for national governments or for corporate reasons (e.g. annual reports, strategy development). Ultimately, the monitoring of physical economy relies on interactions between the industry and governments and the sharing of data and knowledge, as industry plays a pivotal role on how raw materials are produced and transformed into products and services globally. We recommend the use of bottom-up real-time data from process control systems to build a resource flow picture for industrial plants, to optimise plant performance and benchmark processes across similar operations. It is important therefore that future industry-based projects are developed to promote physical accounting in companies and to ensure that the benefits of so doing are widely disseminated.

Our recommendations have been discussed with different stakeholder groups, including policy makers, industry, public authorities and international institutions. Discussion have continued throughout the project life, which endorse the interest of the community in this subject, but also the need to move forward. It is suggested that the MinFuture roadmap is read together with the MinFuture Framework report, which sets the principles and system approach advocated for the monitoring of the physical economy.

 

Publishing Date
December, 2018
Language
English
Citation

Petavratzi, E.; Müller, D.B., Lundhaug, M; Liu, G.; Cullen, J.; Simoni, M.; Dittrich, M.; Murguia, D.; Cao, Z.; Ewers, B.; Hirschnitz-Garbers, M.; Gunn, G.; Hamadova, B.; Tiess, G. (2018). MinFuture Roadmap. A roadmap towards monitoring the physical economy. MinFuture Deliverable D5.3. BGS: Nottingham, UK.

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