Rossetti academy of sciences-2013

Europe:Vers une transition socio-écologique ?

Académie royale des Sciences, des Lettres et des Beaux-Arts

Bruxelles, 19 novembre 2013

Domenico ROSSETTICommission européenne, DG RTD*

[email protected]

* S’exprimant à titre personnel

L'avenir ne se prévoit pas, il se prépare

Maurice Blondel

2

Table of contents

A rapidly changing, troubling & unsustainable worldWorld grand challenges Europe's problems Creativity, research and innovation(s)Intangible assets and green economyNew values and strengths of Europeans

3

A rapidly changing, troubling and

unsustainable world

4

Economics and GeopoliticsNorth-South? East-West? Developed-developing, emerging-emerged countries?Emerging economies as rich countries with many poor people, or poor countries with many rich people?Multipolar world, G2 or even "The end of the West"?Neo-Keynesian and neo-liberal or State capitalism?Markets, regulation, deregulation?Mega-regional agreements as a basis for world governance or as a tool fragmenting the world economy?

Source: D. Rossetti5

Population (Million)

Source: UN, World Population Prospects

1950 2011 2050 Factor

India 372 1 241 1 692 ~X 4 / 5

Brazil 54 197 223 ~X 4

USA 158 313 403 ~X 2 / 3

China 551 1 347 1 296 ~X 2 /3

EU 28 381 510 520 ~X 1 / 1.56

The EU GDP in % of global output

37% in 197028% in 201020% in 203017% in 2050

Source: UNCTAD, EC – Global Europe 20507

The fast changes in Energy

The need for electricity in emerging economies drives a 70% increase in worldwide demand

The surge of unconventional oil and gas (cf. shale gas), especially in North America that emerge as a net exporter by 2035

By 2035, ~ 90% of Middle Eastern oil exports go to Asia

1400 coal power plants are running in China

Source: IEA, WEO 20128

CO2 emissions – Old and new actors

2000 2050USA & Canada 23% 12%Enlarged EU 14% 8%Russia & CIS 8% 5%Japan 4% 2%

S-E Asia - China 20% 27%South Asia - India 7% 13%Africa 7% 15%Latin America 7% 9%Others 10% 9%

49%

51%

27%

73%

Source: EC, DG ENV/CLIMA

9

Unsustainable trendsObesity is a leading cause of premature deathWorld transport will be multiplied by three between 2000 and 2050 (passenger/km and ton/km)Car ownership in the EU increased by ~40% between 1990 and 2010 – A car is parked 92% of its life cycleThe average speed of an international freight train in the EU is 18km/h40,000 people die each year in road traffic in the EUMore than 40% of the world electricity is generated from coal with its CC impacts (1400 coal power plants in China)

Source: D. Rossetti selection from European Commission Communications10

Les grandes batailles de l'énergie Jean-Marie Chevalier

Source: IEA, 201111

Russian natural gas prices

World grand challenges

12

Global resource extraction

Source: OECD; Behrens; WMM, Global Insight, Ellen Mac Arthur Foundation – Circular economy team

Today: almost 70 billion tonnes extracted

13

Availability of natural resources

Source: European Commission, DG RTD, The World in 2025 and Global Europe 2050

Water (4 billion people missing water by 2050)

Food (70% increase by 2050)

Land (war on lands)

Materials (lithium, gallium, scandium,…)

Energy (availability, prices, conflicts,…)

14

Wealth and poverty27,000 people world-wide with more than $ 500 M

5 billion people with less than 10$ a day

Source: WSJ report on Crédit Suisse statisticsUN 2011 Report and UN-Habitat

~80 M€

~ 60% of urban population in Africa and ~ 40% Southern Asia

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Close but… different neighbourhood

Source: São Paulo, picture from D. Bounds blog

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Potential "future global shocks"

Social unrest

Pandemics

Systemic financial risk

Cybersecurity risk

Source: OECD, Future Global Shocks, 201117

High prices cause food riots

Source: New England Complex Systems institute, USA18

N° of food riot deaths in parenthesis

Climate Change Adaptation

Source: Hertzberger19

Global flowsGlobal trade multiplied by more than 10 between 1960 and 2010Maritime container trade expanded at an average 8.2% between 1990 and 2010Air traffics have doubled approximately every 15 years, and are expected to keep growing an average 4.7% yearly up to 2030Tourism went from 700 million tourist arrivals worldwide in 2004 to 1 billion in 2011 and is expected to grow 75% up to 2030

Source: EC, RTD, FLAGSHIP (WB, UNCTAD, Airbus, UNWTO)20

Concentration in Megacities

Source: UN-Habitat

Tokyo 34 M inh.

Seoul 25 M inh.

New Delhi 23 M inh.

Sao Paolo 21 M inh.

21

Environmental crisis is more than Climate Change

Source: EC, WWWforEurope (C.L. Spash)

Biodiversity

Soil erosion and Deforestation

Water acidification and salinisation

Insecticides and pesticides

Particulates in the air

Toxic chemical waste, Heavy metals,…22

Europe's problems

23

Youth unemployment in the EU (in %)

Source: Eurostat, Statista, 2013

24

Ageing EU population (000 people)

Source: EC, DG ECFIN, Ageing Report (Bogaert)

The number of people over 65 will double in 50 years (up to 150 M in 2060)

The "oldest old" (85 and over) will almost triple

The share of health expenditures in the EU is expected to increase from 8% of GDP today to 13% in 2060

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Poverty in the EU (~ 20% at risk)

Source: EU-SILC

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Public but also firm and private debts

Source: La Libre Belgique, 7/3/13

27

The EU labour market dificulties

In 2011, Europeans worked on average 1,746 hours per year (2,000 hours in 1980) and the average retirement age is 61.2 years

The average duration of unemployment is 11 years in the EU (against 6 years in the US)

Between 1998-2011, productivity per capita grew by:0.5% in the euro zone2.5% in USA

Source:OECD and EC, RTD, FLAGSHIP (Ricci and Sessa)28

Education & qualification challengesLabour force (15+) for EU-27

Source: CEDEFOP, 2010 29

Competitiveness – Energy price

Source: IEA, WEO 2012

Average household electricity prices by 2035 ($ cents/kWh)

China 7USA 12EU 20

Divergence in natural gas prices by 2035 Europe: prices 5 times US levels

Asia: prices 8 times US levels30

Source: EC, JRC-IPTS, Transtools,

RURAL63% RURAL

53%

European road & congested links (2030)

Morning peak hours: 7-9

31

Creativity, Research and Innovation(ss)

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Right policy messages but wrong anticipation of technological progress

Malthus "Essay on the principle of population"Meadows Report "The Limits to Growth"Association for the Study of Peak Oil and Gas

33Source: D. Rossetti

1970: 300 m

2010: 3000 m

Deep sea drilling

Source: IFP

EU R&D since its origin

European Coal and Steel Community (1951) covered the coal researchEuropean Atomic Energy Community (EURATOM) in 1957 covered the nuclear research and created the European Joint Research CentreInitial non sectorial research were launched in 1974 (Council resolutions)RTD « Framework Programmes » (since 1984 to 2013) and HORIZON 2020 (2014-2020)


Turning the eyes

Most of the efforts these last 50 years in R&D were directly linked to industrial policies. In Europe:

In the eighties, the eyes were turned towards Japanand “technology push”

In 2000 (Lisbon), the eyes were turned towards USA: Competitiveness, innovation and flexibility

Today: Europe 2020 strategy – Smart, sustainable and inclusive growth


Role of research and innovation(“3% GDP target”)

Source: P. Zagamé

Evolution of GDP (Billion € 2000)

9000

10000

11000

12000

13000

14000

15000

16000

17000

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

Forecast before Crise New forecast Counter-cyclical scenario

(1)

(2)

(3)

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Product innovation

“A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses”

Ex: iPad

Source: OECD, Oslo manual Source: Apple

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Process innovation

Source: OECD, Oslo manual

• “ A process innovation is the implementation of a new or significantly improved production or delivery method. This includes changes in techniques, equipment and/or software”

Ex: Bar code

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Marketing innovation


• “A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing”

Ex: Packaging

Source: Ferrero40

Organisational innovation


• “An organisational innovation is the implementation of a new organisational method in the firm’s business practices, workplace organisation or external relations”

Ex: Assembly line

Source: Volkswagen 41

Social innovation

Source: European Commission

• Social innovation can be defined as a new product, service or model that simultaneously meets social and environmental needs (more effectively than alternatives) and / or creates new social collaborations

Ex: Transport, ethical banking, social networks,…

Source: Villo 42

C'est le dynamisme – le désir et la capacité d'innover – qui est la source de l'innovation

Edmund PhelpsNobel Price 2006

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Innovation and (exit of) the crisis

Source: EC, State of the Innovation Union, 2011

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Intangible assets and green economy

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Using the time – Towards "intangible"Food and information (2000-2100)

Source: EC, DG RTD, WETO-T (Chateau and Rossetti)

Hours/day/pers

Information index46

Breakdown of intangible assets

Source: EC, DG RTD, COINVEST and WIOD(Corrado, Hulten, Sichel)

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Tangible & Intangible % of GDP (2008)

Source: EC, DG RTD, COINVEST and WIOD(Corrado, Hulten, Sichel)

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Economics tries to incorporate environmental issues

External costs that should be internalizedGNP as indicator is corrected for environmental damages or substituted indicator(s) for wellbeingTaxes or ETS should reduce emissions

ButTotal world energy consumption is still increasing-nearly parallel to production (energy elasticity near 1) Better for industrialized countries (elasticity: 0.5-1) as higher energy efficiency, higher share of services in GDP and some relocation of production less DC

Source: EC, WWWforEurope (K. Aiginger)49

Low-carbon innovation

Source: EC, DG RTD, SIMPATIC (A. Dechezleprêtre)

50

From theory to practice

Source: V. Druzhinin

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Acting on lifestyles

Source: Google images 52

Right pricing

Source: Google images

53

Valuing the time

2 hours

Source: Google image

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Source: Newman and Kenworthy

Building sustainable citiesEloge de la densité

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Incentivizing cultural and creative industries

• The cultural and creative sectors need multi-disciplinary environments where they can meet with businesses from other industries. Any public intervention aiming to further develop them calls for cross-sectoral fertilisation

• European Commission, COM(2012)537, Promoting cultural and creative sectors for growth and jobs in the EU

56

New values and strengths of Europeans

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From Proprietas to Usus

New economy and younger generation:

Less ownership (purchasing)More access (renting & sharing)

58

A 21st century pact between Science & Society

Man – NatureRespect – Exploitation

Humanities – EngineeringDesign of a car - Efficiency of the combustion engine

Social habits - Technological developmentsAirplane service on board - Online reservation

Precaution - InnovationDNA, GMO, nuclear Source: D. Rossetti

59

The potential of EU cultural heritage

Source: Google images

Tradition is not leaving ashes, its is passing the flame

Thomas More

61

Reason and openness on migrations

Per year, 1 million of third countries people are entering the EU20% of the EU population will be Muslim by 2050

Source: European Commission, Global Europe 2050 62

Sobriety vs. ExcessLagom

Frugalité

NegawattGenuine Progress Indicator (GPI)Against planned or wished obsolescence

European way of life 63

SSS – Smart, Small and Sustainable

High level of R&I, good commercial practices, attractive design – beyond technological innovation

Big is powerful but small is beautiful and flexible (quality, customer-oriented, …)

Modern infrastructures and new approaches to sustainable living and mobility options (eco-towns, public transport, shared consumption)

Democratic systems, rule of law, gender balance64

Source: D. Rossetti

Source: Letter Duo Sunt

RURAL63%

RBAN37%

RURAL53%

State and ReligionPope St Gelasius (492-496) - from Berber origin - wrote

on Church-State relations: Distinction between two powers:

The holy authority of bishops (auctoritas sacrata pontificum)The royal power (regalis potestas)

"En politique les Prêtres doivent se plier aux lois de l’Empereur, et en matière de religion l’Empereur doit écouter le Prêtre"

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Conclusions

Change of paradigm:From a consumption-waste society to a circular economy (cf. sobriety and preservation of resources)From consumers to "innosumers"Beyond tangibles & Beyond GDP (society & economy)

The socio-ecological transition is a great opportunity (cf. globalisation and decreasing inequality across the world population, healthy ageing, territorial dynamics, new energy)

Source: D. Rossetti

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Conclusions

Ever-expanding human activity and a finite world (Limits to growth - 1972; SD-1986; Rio-1992; Rio+20)

New economic and social development: increasing growth while reducing both unemployment and GHG emissions; decoupling economic growth and environmental impact; reducing externalities

Health, safety and security risk (cf. food, energy) as well as CC, world finance and international trade require new forms of global governance and representation


Representation – G8

G8, Northern Ireland, 17 June 2013

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Veut-on les Nations Unies de l'Europe ou les Etats-Unis d'Europe

Guy Verhofstadt

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