The Norwegian Economy is Only 2.4 Percent Circular
It is almost impossible to get closer to a perfectly linear economy. The world economy is at 8.6 percent. Norway has everything to gain from getting out of the starting block.
“Earth is a closed system where all resources are limited. Nothing lets in. Except for the sunlight.” This is what Thomas Rau, architect, author and author of the Declaration of Material Rights, writes.
The fact that the planet Earth comes in a limited edition is an obvious truth that we must take seriously. Quickly. The earth is now being drained of raw material ores, and Norwegian consumption is helping to increase the pressure on the earth’s virgin natural resources, which is driving both the natural system and the economic system to collapse.
The supply risk of critical raw materials increases. The Global Circularity Gap Report, presented at the World Economic Forum in Davos earlier this year, shows that only 8.6 percent of the world’s resources are used more than once. Simple mathematics tells us that we will thus run out of important raw materials and resources.
The Giants are Waking Up
For businesses, the race is already underway. It is about getting into a circular economy, where all resources remain in a cycle. However, the authorities have dragged their feet for a long time. 2020 is the year when the Norwegian Government is in the process of developing a popular national circular strategy. Here they have a lot to learn from the ICT giants who have run ahead.
Global technology players (such as IBM, Apple, Microsoft and Google) have taken to heart that raw material prices will rise while the battle for scarce resources will intensify. Over the past year, the ICT giants – i.e. companies that have lived well on “sell as much as possible” – have changed from linear to circular business models like pearls on a string.
“The extent of the change required to achieve circularity will affect all sections of society and span the entire global economy.”
Last week, Microsoft also signed up for the circular technology train. The company has studied its competitors closely, but where Apple takes over the market and products, Microsoft begins with a house cleaning linked to all of its 160 headquarters. A clear investment is to establish the so-called Circular Centers. The first has already been announced in the circular capital of Amsterdam.
Welcoming the circular economy is about recognizing the natural system as ideal. A nature-friendly economy recognizes that nature is built for cycles where nothing is lost.
“It is nature that ultimately determines whether we succeed in our circular adjustment strategies.”
The whole gallery of (chemical) elements – including the element of life, carbon – is in an eternal journey through cycles and seasons, adaptations and evolution. The fact that humanity began to build out of the natural systems 200 years ago has cast a veil of oblivion over the fact that it is nature that ultimately determines whether we succeed in our circular adjustment strategies.
Now, however, the giants are waking up and laying down tomorrow’s strategies based on the ideals of the cycle.
Raw materials and material supply are not only critical for companies. It is also of great geopolitical importance, as several countries concerned about vulnerability and independence are discovering. The EU has taken this into account in its preparations for the European Green Deal, which was presented earlier this year. The restructuring package refers to significant climate and environmental effects but will also make EU countries more robust and self-sufficient. Based on extensive preparatory work, arrangements have now been made for a large-scale restructuring of the economic system with associated legislation and guidelines.
It is a demanding project that goes across national borders and established industry and sector structures. However, it is between the old silos that one must move if one wants to find new value creation and future jobs.
“Value creation in the circular economy is about interaction across value chains and sectors.”
The individual countries in the EU are also developing their national strategies for circular economy. At the Nordic level, Finland leads the way. Our Finnish neighbor came up with its first national strategy already in 2015 and has recently launched follow-up version 2.0. In second place is Denmark, they came up with its strategy in 2018 with close collaboration with the business community. Close behind is Sweden, when they launched their circular trail map in the middle of the joint holiday.
Finland is focusing on strengthening cross-sectoral co-operation. The goal is to incorporate a “wiser” economy. Sweden is set to become “the world’s first fossil-free welfare state”, while the Danish strategy was developed in close collaboration with “business leaders” and highlights both design and digitization as important tools for realizing a circular economy.
In 2017, Norway set itself an ambitious goal of becoming a leading / pioneering country in circular economy. Today, three years later, we look forward to a national strategy for the circular economy being presented in December. In the meantime, a co-operation has been established between the Nordic countries, the Nordic Circular Hotspot, supported by the authorities – to engage in interaction between companies and authorities in a larger Nordic circular common market.
In the work of developing the Government’s Norwegian strategy, the consulting company Deloitte has asked traditional existing industries about their circular potential. In Norwegian, the traditional industries agriculture, forestry, aquaculture, process industry, construction and real estate and trade are highlighted.
“A transition to a circular economy is made possible by digitalization and advanced technologies.”
Value creation in the circular economy is about interaction across value chains and sectors. It is something that involves a system change that affects all areas of society. The government’s potential study has asked the classic sectors for input but misses the understanding of the problem when the ICT industry, the most important sector for making the economy circular, is left out.
At the same time, the traditional waste industry has been given the lowest potential for increased circularity within its own industry, and at the same time given a weak role in the Norwegian economy. However, a transition to a circular economy is made possible by digitization and advanced technologies.
Must-See Opportunities Between Sectors
Circular designer, technology expert and founder Anders Waage Nilsen is the author of the book Industry 4.0 and Circular Economy: Towards a Wasteless Future or a Wasteful Planet?. He has pointed out some early challenges in the Norwegian work: «Industry, industry, industry. The danger with adopting changes is that we end up with improvement reports for roughly generalized sectors. Without a better analysis of the life cycle of specific materials, we end up with large blind spots,” he says. As Waage Nilsen points out, the answer lies between sectors, and not just within the current silo structure.
He also calls for attention to the industries we do not yet know. Many new sectors are emerging, but they receive little focus because they are not included in the linear economy’s business statistics. Waage Nilsen is further concerned that we underestimate the power of technological innovation, especially with regard to material and product design. He therefore calls for policy and tools to cultivate enabling infrastructure.
“The Norwegian economy is characterized by being consumption-driven and import-dependent.”
The Norwegian economy is only 2.4 percent circular. It will take time to digest such a demanding starting point in a country where we are proud of how good we are at recycle plastic bottles. The world has a resource problem. The recent Gap study on Norwegian conditions will help to paint a picture of how demanding Norway’s trade pattern is for the planet’s raw material stocks.
The aforementioned Gap study is fact-based and follows the material flows through the value chains and into the market. It shows that the Norwegian economy is characterized by being consumption-driven and import-dependent.
An X-ray of the Norwegian Economy
When leading business actors such as Skift – Climate Leaders in Business, Virke and Circular Norway took the initiative for a fact-based study, conducted by a recognized international professional environment, to uncover how circular Norway is, we got our impression confirmed.
The discussions in recent years also reveal that there is a lack of a framework on how to have a fact-based and measured overview of the Norwegian material consumption. Now that the results are finally clear – we have a X-ray view of the Norwegian economy, which points to where we should close the gap and create new supply chains prepared for a circular society.
“The Norwegian material value analysis will substantiate how important it is to succeed with interaction and train the cooperation muscle to work better across.”
And most importantly – the picture tells us where we stand in relation to other countries. The Norwegian material value analysis will substantiate how important it is to succeed with interaction and train the cooperation muscle to work better across, as Anders Waage Nilsen points out.
In the podcast “On the other hand”, Sintef’s Executive Vice President Alexandra Bech Gjørv points out that Norway is a far distance away from both the Nordic countries, and also the EU, that are leading the way. She believes it can be an advantageous not to be first, but to hang on to those who lead.
A Consumption-Based Castle in the Air
Countries that are at the forefront of the EU have a scarcity of resources as a common denominator. Norway’s starting point is another. Our transition takes place from a state where we are ravaged by success, and neither experience scarcity nor lack of resources to any great extent. This is because we have a strong economy and we can afford to stay in silos where we tinker with the existing system. At the same time, we are very exposed to risk.
This consumption-based castle in the air presupposes that we are still rich and can afford the world’s highest consumption of materials and raw materials by importing ourselves out of the challenges other countries now face. This is not how we can continue.
“Norway has a lot to gain from joining in developing a stronger Nordic common market for the circular economy and ensuring learning from our neighboring countries.”
The time has therefore come to ensure cooperation with those who have already gone up the path. The Nordic region is today the world’s 12 largest economy. Norway has a lot to gain from partaking in development of a stronger Nordic common market for circular economy and learning from our neighboring countries.
Both collaboration, digitization and innovation are important premises for the circular economy. Here, Norway is far ahead, but we must stimulate initiatives that get us out of the silo tank. Instead of asking the industries for advice, we must dare to challenge the current industry focus and use system design to drive technology and innovation that goes across industries.
Norway is a country wealthy in natural resources. This can be a hindrance or the blessing on the path toward a circular future.