The economics of the circular economy

Economic Fiscal Reform calls for the economic system to align with the twin purposes of preserving and  indeed restoring the environment whilst providing a standard of living for citizens. Up to now, these purposes have not been central to the way economics has been practiced. We are, however, facing a pressing situation: soil degradation, atmospheric warming and mineral depletion are forcing us to rethink. The idea of the circular economy – where biological and mineral material circulate in the economy without being deposited – is gaining ground. Continue reading “The economics of the circular economy”


Community finance: a Permaculture approach

ABOUT COMMUNITY FINANCE:  We are living at the peak of human achievement, but also at the peak of our resources. A change towards sustainability includes handing over to future generations the possibility to create for themselves a standard of living at least equivalent to that we enjoy. This requires fundamentally re-thinking how we use resources, indeed many of the social arrangements we take for granted, including our relationship to money. And we need to start now. The basic values in this article come from Permaculture: People care, Earth care, Fair share. However, you do not need to know Permaculture to understand the article.  We will  explores ways, within the current financial system, to create communities that align to these values. Continue reading “Community finance: a Permaculture approach”

A Marx moment manifests in McDonald’s

My partner and I were driving home and needed a coffee break. It was late Sunday night. Only motorway stops were  on offer. We opted for a McDonald’s.  As I walked over to the store I checked my mail: an update from Marxist economist Michael Roberts to read whilst I waited for our order. I was about to learn something.

Continue reading “A Marx moment manifests in McDonald’s”

Research Accelerating Transition in the Stockholm Region

Stockholm County, home to 2,1 million. Suitable to study as a bio-region?

I got asked yesterday by a friend involved in an EU project about my ideas for accelerating transition in the Stockholm area.

The project is called ARTS (Accelerating and Rescaling Transitions to Sustainability) and  is committed to understanding the role and impact of transition initiatives in cities and examining the conditions that can aid accelerating change towards a sustainable low-carbon society.

I was busy yesterday and today is too late, but as an academic exercise I thought I might give my two-pennies worth. They have already decided direction for the next season.

I think that the research project should build on the experience so far of Transition Network, the organisation started in England to promote grass-roots action to building a resilient society. Top of the list of objectives with resilience is boosting inclusiveness, food security, adapting to de-fossilisation of society and coping with climate change.

EXPERIENCE # 1 Sense of place

A world driven by fossil fuels tends to look same-y. When transitioning and relying on local sources of energy and food, as well as dealing with local climate, solutions tend to look different. For example, highly urbanised areas in cold climates have a challenge of keeping food available all year round affecting diets, storage techniques and transport solutions.

In order to deal with place it is necessary to define the place. This is one thing transition initiatives tend to give some thought to…. what geographical area are they targeting, and how this area relatse to juridical boundaries and bio-regional considerations.

Suggestion #1

Define whether the county of Stockholm is the target or the region of Mälardalen is the target under study. The ARTS Web-site identifies Stockholm County, but the call for input described the Mälardalen valley where Stockholm is situated.

Is the region of Mälardalen one bio-region or does it comprise several others?

Suggestion #2 Inventory and map

The bioregionalist perspective opposes a homogeneous economy and consumer culture with its lack of stewardship towards the environment. Using this perspective researchers could:

  • Match political boundaries with ecological boundaries.
  • Highlight the unique ecology of the bioregion.
  • Identify local foods where possible.
  • Identify which    local materials are available
  • Identify where native  native plants of the region are being cultivated
  • Look into  transition  in harmony with the bioregion.[8]
  • Identify bio-region stewardship stakeholders.

(Information adapted from Wikipedia)

Suggestion #3

Map edges. Edges in this case are where the bio-region is not able to, or close to not being able to, support the people living in it.

Of particular importance is water shed and water shed management. Mälardalen is an area identified as a potential water challenged area.

Another edge might be Phosphorus and Nitrogen flows. How much rock-based phosphorus and fossil fuel-based nitrogen fertilisers are imported to the bio-region. How much exits via the water shed.

A third “edge” to map is the use of fossil fuel in the bio-region. How much is used, and for what. Particularly blue light services and agriculture.

Focussing on a region, understanding its bio-regionality and mapping edges gives a good basis for understanding the potential of smaller initiatives to contribute to whole. For example, what would be the resiliential impact if everyone had urine-separating toilets?

All initiatives should be mapped, and categorised against the edges. These initiatives can be used to address the edges.

Even some edges can be mapped against bio.region resources, for example, housing shortages against local materials available, food security against wild food plants, transition initiatives addressing edges – like community supported agriculture that addresses food security.

EXPERIENCE #2 Action is preceded by awareness to knowledge.

People “do” Transition  as soon as they understand what it is all about and have reached a point within themselves where they have the conviction to move to action. For some, they watch a film like “in Transtion” and immediately commit to growing some of their own food on allotments. Others, see the film and continue to be doubtful as to what they could personally do and how. Some go into research mode and learn and learn and learn until they, to are ready to act.

Suggestion #4

Identify Transitioners, that is to say people in the region who are involved in Transition Initiatives. It would be useful to understand the route

that these people took from information to action. Not that all will follow, but conclusions might be drawn on the kind of information that helps people transition, especially the kinds of information barriers, that once overcome, will lead to active involvement.

This research holds potential for understand how Transition can happen just in the Swedish Culture, even in the city culture and the cultures in the city (various religions and ethnic culture but also youth, hipster, etc) and play a role in understanding how Swedish media and arts and culture can help.

EXPERIENCE # 3 Trash catchers are we all.

Looking at waste says a lot about a society. Several initiatives have focussed on turning waste into something useful.

Suggestion # 5 Useful research would be to understand the waste stream contents and handling in the region. This is to underpin the transition to the circular economy, And to identify those projects that have successfully captured waste streams. This might present opportunities for scaling up. It would also be an opportunity to see which barriers through local practices and regulations prevent waste streams from being sustainably exploited. (For example, Stockholm burns a lot of its waste…. an opportunity or a missed opportunity?)

EXPERIENCE #4 We all have to eat.

Food security must come high up on the list of any transitioner. With the large involvement of fossil fuels in food provision today, food insecurity as a result of defossilisation must be a priority to study.

Suggestion #6: identify all initiatives in the region that have the potential to scale into fossil-free agriculture solutions. Inventory those with the capabilities and skills, even if their production volumes are low. Investigate these initiatives to see what the barriers and opportunities there are to scaling.

Suggestion #7: Do an analysis of the bio-region’s ability to feed itself. This requires mapping where fertile soil is, where market gardens are, where food distribution is taking place etc. And competence. Identify all those who can contribute to showing and teaching other ways. For example, of highest importance in CUBA were the oxen breeders and trainers who were pivotal when tractors stopped working as the supplies of diesel dried up thanks to the crash of the soviet union.

EXPERIENCE #6 New forms of organisation are badly needed

Most people are either workers in organisations or manage organisations. The forms of these organisation are given by law and workers are used to following orders, doing their jobs, and getting paid. It doesn’t work like that in Transition which is individual impetus driven. It’s up to the people who are doing it, most is voluntary and there are no bosses. But there are leaders. Different kinds of leaders.

The whole idea of what work is, how to organise it and share the results is up for grabs. Old paradigms of the corporation and corporate control through command and control are probably not going to take us to meet the challenges of the 21st century. But what else is there?

Suggestion #8: Identify new forms of organisation and identify what is being practised in the area.  (Examples: holocracy, sociocracy, dragon dreaming, gift society, circle way, intentional communities, CSA, etc ) These form potential centers of learning and can be potentially scaled. We can even learn a lot from failed attempts at new forms of cooperation.

EXPERIENCE # 7 It’s  resilience, not sustainability

Transition Initiatives have identified that they want to create resilience in their areas, rather than sustainability. It is possible to be environmentally good, but not resilient. You can have a low ecological footprint but be unable to handle the knocks and pressures of, for example, global economic downturn, climate disturbances, or fossil fuel shortages. So being environmental is but a step on the way to becoming resilient.

The opposite of resilience is efficiency. Efficiency is often about having one solution (not bothering with other, redundant, solutions). Resilience is about having more options. I like the idea of three. The idea of three is taught in survival classes: have three ways to make fire, three ways to get water, three ways of keeping in touch with your group, etc.

You can make a crude measure of resilience by listing the essential services in the bio region, and identifying the number of alternatives that are available for each.

The more alternatives, the higher the resilience.

This diagram below gives you an idea of what such an analysis might look like.



The analysis will give you an idea of where to start work. I’d say that those services that are both non-resilient and not performing efficiently are targets for investigation. In the example above, provision of health services is both inefficient and has low resilience. The next study object might be the payments and transactions systems. In the Swedish case, they are going more and more to rely on digital money. If the internet and electricity fail, there will be no money system. Here, experiments with more resilient, robust forms of money would be important to study.

Read more

The idea of regional resilience is explored in other posts about the municipal matrix tool

and how to measure it.


Framing the energy and economy challenge for COP 21 in Paris


In the run-up to the climate talks in Paris, November 2015, the world economy seems to have hit a predicament: restricting fossil fuel burning at a time when austerity measures are biting hard might lower the already less-than-acceptable standards of the least advantaged. Waiting with restrictions on the other hand will risk climate system disruption –and negative effects on the economy – even further. What courses of action are reasonable in this situation? How does the societal system need to change?  Can the problem be part of the solution?

Environmental Fiscal Reform (EFR) needs to happen – that is, economic policy is needed to underpin the rapid change and redistribution needed. This article breaks these challenges down, offering a broad outline of the direction of changes that need to happen over the next 35 years using Sweden as an example. We explain where (EFR) can contribute, and what economic policy makers should aim for so the appeals from the scientists can be translated into a sustainable and fair economic reality.

Energy transition: an introduction to wedges

One aid to visualizing the energy transition challenge is as a set of wedges that frame the changes ahead. Given that fossil fuel intensity in the economy must be reduced radically, we can assume this will have wide-ranging effects on other aspects of the economy and energy provision in particular, hence several different types of “wedges”. Capturing the extent of this transition can be a useful first step in framing economic, particularly environmental fiscal, policy.

The concept of a shortfall of in energy availability, first developed by Hirsch.

The wedge approach to energy intensity reduction in the economy was pioneered by Robert Hirsch in the Hirsch Report (Hirsch, 2008).  The diagram above illustrates the principle: the demand for fossil fuel is likely to increase, but the extraction shortfall means that demand will not be met creating an unfilled gap, the shape of a wedge.

This “wedge” can be mitigated according to Hirsch, using a range of options for replacing fossil energy sources and reducing demand. The various mitigation options can be presented as separate wedges.

The Swedish Sustainable Economy Foundation maintains that these wedges cannot be realized without adaptations of the economic system. To understand the concepts we offer the case of Sweden as a worked example.

Sweden as an example

According to our analysis for Sweden, there are 9 “wedges” to consider. The diagram below illustrates the scenario where energy demand reduces 50% over 35 years, fossil and nuclear energy are phased out completely and alternative energy sources are introduced or increased.

The wedges are a synthesis of opinions and figures taken from a wide variety of publicly available sources but are offered here just as a worked example and do not represent any government policy as a whole or even a comprehensive proposal from the Foundation. This approach can be seen as a working start.

A 50% decrease in energy intensity

Our starting point is that at present the Swedish economy, from the point of view of being capable of handling limitations in oil supply, has developed an over-dependency on oil. This dependency is understandable as oil-based liquid fuels are a highly energy dense and easily transportable energy source. No current technologies can replace this energy source scaling up in the time available or using renewable resources available. Some calculations assume that within the time-frame it will be possible to keep the same energy intensity. The Foundation however takes as its starting assumption that a 50% reduction is reasonable over 35 years.

Swedish energy mix 2014 – cirka 580 TWh in energy produced and 379 TWh in energy used
Swedish Energy mix 2051 – circa 290 TWh energy produced

In terms of living standards, that would put Sweden on a level where it was in the 50-60s.

New technology/efficiency increases

As a first guess, taking Sweden as an example, we envisage that it will be possible to reduce demand with technological fixes by 25% over the 35 years. Import to note is that increasing efficiency – of engines or machines – normally involves them becoming more popular and overall energy consumption increasing.

Refrigerators, for example, are more efficient, but people nowadays usually buy larger refrigerators so the total energy spent on refrigeration is more, despite the efficiency gains.

With the example of Sweden we should be reminded that the cold climate demands energy to heat homes, crucial during the winter, as well as the energy needed in food preservation and conservation. This is where the emphasis on home heating – via biomass, solar collectors and heat pumps – comes in the following analysis.

Another important lesson from this worked example is that the losses in energy – from that produced to that used are in the order of magnitude of almost 200 TWh lost in a production of 580TWh.  The bulk of these losses come from nuclear power (108TWh) so abandoning nuclear power will reduce the percentage of energy lost considerably.

In this case, economic incentives and barriers need to be in place to ensure that efficiency gains are not used to increase energy consumption. The final section of this article discusses policy instruments that might achieve this.

Behaviour change

25% of today’s demand reduction could come from changing behavior, using existing infrastructure. It is reasonable to assume this can be done over 35 years as the potential is there. For example: by sharing cars for lifts to work, the overall traffic in the morning commute could reduce by 50% if everyone shared. Recent statistics show, too, that up to 50% of food produced is wasted.

Renewables: heatpumps

Heat in pumps extract heat from expired air, the surrounding air or from the heat in the ground. For every unit of electricity used they gain about 8 units of heat. Increase in heat pump use would therefore mean a rise in the use of electricity for this purpose and require more electricity produced by solar, wind, biomass or hydro, or equivalent savings elsewhere. In this worked example we envisage heat pump use  increasing by about 400%.

Renewables: biomass

Biomass captures the energy from the sun and is a good potential energy source.  Biomass sources include many forms of waste, firewood and biogas – the latter can produce electricity as well as being used for heating and as a liquid fuel replacement. Some buses already run on biogas – we envisage a rapid expansion over the 35 year period by about 25%.

Renewables: windpower

Windpower produces mainly electricity, (some proponents suggest that the rotating blades can be attached to paddles via gears and the friction of the turning paddles can produce hot water). Hoping that wind technology can develop rapidly, our worked example calls for an increase of 400% in wind power.

Renewables: hydropower

In the Swedish scenario it is generally accepted that the large hydropower installations that regulate most of the large rivers in Sweden should not be extended. The installed base of hydropower is therefore expected to grow only slightly from smaller installation possibilities.

Renewables: solar

Unexpectedly for some, solar power does not show up in the graphs of Swedish energy mix as the present installed base is a small percentage of the total. It is however an important source of electricity and heated water and expected to grow over a thousand percent.

Non-renewables: nuclear

Sweden decided in a referendum to phase out nuclear power, so an initial assumption is a gradual phase out over the 35 year period.

Non-renewables: fossil fuels

Sweden currently produces about 206 TWh from fossil fuels, about 110 TWh goes into the transport system. It might be reasonable to assume that the fleet of fossil-fueled vehicles could be retired, replaced or converted to renewable fuels within the 35 year period.

Reflections on the plan

Requirements on rapid expansion of smallest technologies for buildings

It is remarkable at first sight that solar power, photo-voltaic in particular, shows up as being so small it is almost counted as zero in the overall mix. In 2014, solar accounted for 0.06% of total electricity production.

Even though solar shows up as this small fraction in the overall energy mix, there is potential for a panel to be installed on virtually every roof. The technology is available now, and is becoming better and cheaper.

So although the percentage of the mix is small now, the percentage of solar electricity and solar heat for each building is potentially large.

In other words, taken on a house for house or building for building basis, it is reasonable to assume that today’s 85% reliance on non-renewables can drop rapidly during the time period under consideration.

Year on year change for each wedge

Although the overall challenge might seem insurmountable, it is more encouraging to see the year on year changes required  amounting  to less than 25% year on year.

The concept of economic stabilization with digital technology

Technology has come a long way, and might offer solutions to creating an economy that performs to requirements. For example, transport vehicles today are based on technology that is over 100 years old. However, they are much safer, respond better to driver commands, are more efficient and environmentally safer today even though the basic technology – including that of the internal combustion engine –is the same.

These developments in the vehicle industry point the way to what might be possible with the economy – to use modern information technology to ensure the economy performs to requirements.

Digital control plays a large part in this development. Today, vehicles are equipped with digital control devices that monitor vehicle performance and adapt it according to driver input. Apart from the obvious controls like speed control, this control layer keeps the engine running smoothly and efficiently, it ensures that the breaks do not lock to cause skids, and even in a bend in the road adjusts the relative speed of the outside wheels to the inside wheels thus  increasing traction.

Dividend-bearing, flexible pollutant  surcharges

A dividend- bearing pollutant fee mechanism, also known as flexible pollutant fees has been proposed by many economic policy experts, including Anders Höglund of the Swedish Sustainable Economy Foundation.

The principle of the fee mechanism is a surcharge added to the fees levied when a potential pollutant is introduced to the economy, for example via extraction, import or manufacture.

The fee starts off low, and is raised depending on how society performs to abate the pollution arising from the use of the pollutant.

At the same time, money from the levied is fee is paid back to taxpayers to ensure that spending power, and thereby economic robustness, is unaffected by the levy.

As the fees levied are passed on to consumers, prices of pollutant-containing products rise in comparison to non-pollutant products and services. Consumers will be still able to choose to buy the more expensive product but with a good conscience that they are compensating others for the pollution from the consumption. Otherwise, non-pollutant bearing products become comparatively cheaper providing the economic incentive for society to invest in non-polluting alternatives.

The surcharge levied on import into the economy is paid fully or in part back to taxpayers. The charge is adjusted regularly depending on how well the economy lives up to agreed emissions targets, being raised if performance falls behind.

Similar to base lending rates, it is envisaged a government body is formed to regularly raise the surcharge levy as needed.

Benefits of flexible fees

  • As the mechanism employs modern information technology it ensures that the information acted upon is up to date and relevant. All actors benefit in the long run from a sustainable, robust and well-performing economy.
  • The redistribution mechanism will in practice mean an increase in economic security for the poorest citizens: this is in contrast to other approaches which will reduce the poor’s spending power.
  • By making pollutant import more expensive, the mechanism encourages green consumption and green jobs. It also encourages new investment in recycling technology, ushering in the circular economy.  It is preferable that citizens spend the money they have, rather than invest it in assets like houses and shares, as every penny consumed creates more work and thereby more jobs.
  • Levying a fee on activities that pollute, and paying it back to tax payers ensures the economy is stable, advantages the poor, and sends a strong signal to the investment community on where their money should go.

Applying flexible fees to the energy wedges

Returning to the initial diagram of the energy wedges for Sweden, our worked example could include the following:

  • Surcharges on import of fossil fuels and on nuclear fuels, aimed to drive a 35 year phase out.
  • A surcharge on all products levied according to fossil-fuel consumption in the production and distribution to national borders.

An import surcharge should be fairly simple to implement. Fossil fuel performance can be monitored by the government body, collecting data such as:

  • Efficiency of transport system
  • Uptake of alternatives
  • Investment in fossil-fueled infrastructure
  • Economic performance of transport system actors
  • Transport price development

The wedge approach, then, can be a useful tool for sorting out national energy strategies at high level. The flexible fee mechanism can be employed to ensure consumers continue to purchase in general, thus preserving employment, but finding environmental solutions cheaper they drive a green economy.

To help further understanding of the potential of fees on pollutants the Foundation offers a simulation run  a kind of business game. Read more about the simulations here.

The Foundation collaborates with a wide range of experts and universities. If you are interested in exploring the potential of using the wedges approach, please contact us.


IEA-PVPS  (2014) National Survey Report of PV power applications in Sweden 2014
IEA-PVPS National Survey Report of PV power applications in Sweden 2014

Hirsch, R. L. (2008). Mitigation of maximum world oil production: Shortage scenarios. Energy policy36(2), 881-889.

Contributing to New Book

Experiences of land restoration projects related to the Water and Food Award are the subject of a chapter in the upcoming  book on Land Restoration, with contributions by Stephen Hinton.

Case studies of finalists illustrate how developing an intimate knowledge of the land, rethinking agricultural practices, redefining the role of schools, finding new ways to cooperate, new roles for corporations, new attitudes to grazing animals, rain and water, contribute to restoring land and food security.

Pre-order the book here

The next step in complementary currency

Cover_biomassComplementary currencies like the Bristol Pound act as vouchers for national currency. You swap one Bristol Pound for a Bank of England pound at a  1:1 or 1:0,9 rate. The benefit of a currency like that is that it encourages money to stay in the local economy (jobs with it). The Bristol Pound is valid only locally.

The question is, can complementary currencies take a next step, towards keeping money locally AND stimulating the green economy – an economy where nutrients recycle instead of being brought from outside (entailing a large expenditure of fossil fuel) and an economy where wind, biomass and sun provide the energy.

A recent updated version of a report from Stephen Hinton Consulting demonstrates one way that might be achieved.

The vouchers are not swapped for national currency but for sorted biomass, and for promises to sequester carbon in the soil.

Learn more about this proposal in the white paper.

A complementary currency to drive a cityR5 (.pdf)

Is big data and the big network helping humanity reach new heights?

Amid the signals that capitalism is failing and the climate collapsing I wonder if there is not something very positive happening, too.

Something to do with how all the data and the networking we are experiencing are raising our consciousness and understanding. Continue reading “Is big data and the big network helping humanity reach new heights?”

Economists: Make sure to look in the right direction

As a Brit living in a country that drives on the other side, I still have a moment of hesitation crossing the road; looking both ways, both sides. I was about to cross the road yesterday to go to a conference on banking, and as I stopped the thought crossed my mind that maybe economists in the mainstream are so used to one way of doing things that they are not looking in the right direction either. I couldn’t shake the feeling something has been missing. Why have the warnings about climate change not changed anything? How are things different now that the IPCC has put its foot down and stated clearly that we need to exit fossil fuel burning and transition to clean, renewable energy? Maybe low inflation is not the answer, but HIGH inflation? Continue reading “Economists: Make sure to look in the right direction”

We have to do something else with what we have left

In order to ensure that the climate does not flip to a situation where human life would be drastically reduced, we need to keep warming under 2 degrees. To do that we need to restrict release of climate  gasses into the air. Stopping the burgeoning of fossil fuels is one major part of that. But there is some wiggle room, we could maybe burn a little more……. The question is, what are we going to burn it doing?

If you ask me, ( a few do), I would say we need to use it to create sustainable communities that are far less dependent on transportation of goods to and from them. These communities need to have their own renewable sources of energy, and be designed so food and fiber production is carried out close by without the need to burn fossil fuel.

The diagram below explains how much is left. Anyone got a detailed idea of what we could do with it?

Carbon budget