Jürgen Trittin is discussing options for a sustainable solution in the energy sector with our facilitator Dr. Illinger.
Dr. Flassbeck and Prof. Wengenroth are presenting different solutions to save resources.

Raw materials and energy – Is the world's wealth being redistributed?

Dialogue forum held on 16 February 2012

Who controls access to raw materials? How can the dependencies be reduced and to what extent are prices influenced by the financial markets? These were the issues discussed by Dr. Heiner Flassbeck, Chief Economist and Director of the Division on Globalisation and Development Strategies at UNCTAD, Jürgen Trittin, head of the Green Party’s parliamentary group, and Prof. Ulrich Wengenroth, Professor at the Chair of History of Technology, Technical University of Munich, at the second evening dialogue forum of the 2012 series, the theme of which is“Power and influence: Who controls the world’s destiny?”

It is not just German industry that fears it could soon run out of key raw materials. There is a global competition to secure resources like oil, metals and food. Jürgen Trittin emphasised the scale involved: “Every year, 60 billion tonnes of non-energy, non-biotic resources are consumed, which is 50% more than 30 years ago.” This cannot be good in the long run because many resources are in finite supply. Consequently, Trittin believes that “we need a different resources and innovation strategy that will make us more independent.”

Recycling – Mining of the future?
In order to bring about this change, we need more efficient handling of resources, recycling and substitution. Currently, very little is recycled because the returns are too low. We need a renaissance of the green concept of the circular economy. As Trittin, a former environment minister, put it: “A tonne of electronic waste contains 30 times more gold than a tonne of gold ore.” Exploiting apparent “waste” dumps as the mines of the future is not just ecologically necessary but also offers real economic advantages.

However, not all resources can be obtained from recycling. Trittin and Heiner Flassbeck believe that there is no point in pursuing a national resources strategy in isolation, along the lines of the agreement between Germany and the authoritarian regime in Kazakhstan. We need, if not global, at least European solutions. Flassbeck warned: “We are deluding ourselves if we believe we can safeguard supplies or get a very good price by negotiating bilateral agreements.”

Commodity prices influenced by financial markets
According to an UNCTAD study, commodity prices are, in any case, increasingly dictated by the financial markets because speculation on rising or falling prices carries far more weight than trading in the commodity itself. Since pricing in the physical market is complicated by the sheer number of those involved in the supply and demand process, we are simply guided by the prices imposed by the financial markets. Flassbeck, the Chief Economist at UNCTAD, explained. “If you think the price of oil has something to do with supply and demand, you’re mistaken.”

However, this trend has very serious implications. Commodity prices that are detached from supply and demand no longer exercise their control function properly. They send out the wrong signals because they are distorted by speculators. The industrialised countries are reluctant to address the problem and most economists are also hesitant because to do so would be to cast doubt on the way the market economy functions and thus on an economic philosophy. Flassbeck is nevertheless critical: “How can we talk about checking climate change and switching from fossil fuels without asking who really decides the main determinant of energy consumption – the price?” People still do not understand what incredible distortions the financial markets cause in the real markets and that applies to currencies, as well as commodities. Flassbeck: “But nobody wants to hear that at the big G7, G8 and G20 summits. The politicians don’t want to have anything to do with it because it makes the negotiations more complex.”

Reduce resource-intensive consumption
Prof. Wengenroth also believes commodity prices have an important function: “Nothing fires an engineer’s imagination more than pressure on costs and scarce resources.” He relies on human creativity to solve the resources problem. Moreover, economic growth depends more on production efficiency than our use of resources. Although the goal of “getting more from less” is working in production processes, private consumption continues to be heavy on resources. Furthermore, because consumption is steadily rising, the resources saved in the manufacturing process are being completely consumed. This constant quest for more can be put down to our individual craving for recognition in today’s atomised society.

It is not easy to encourage consumer behaviour that conserves resources. Wegenroth: “I won't recommend you go round in sackcloth and ashes.” Non-consumerism only works in theory, and with a type of person who has yet to be created. However, when we look at young people’s behaviour, there is no need to be so pessimistic. Prof. Wegenroth: “Studies show that smart phones enjoy a higher status than having your own car among the under-25s, which conserves significant resources and is ecologically commendable.” Wengenroth also considers the trend to move from the countryside to the city, occupy less space and lead a car-less existence to be an ecological option that saves resources. On the other hand, he believes our fears concerning the countries that have the resources are unfounded. “We know from what happened in the past that the dangerous countries were not the ones with the resources, but the ones in pursuit of them.”

Cooperation not confrontation
However, there are serious flaws in our relationships with one another. In order to solve the resources problem, more cooperation is needed between the supply side and the demand side. Trittin commented that the “stance taken with Ecuador is a prime example of how not to go about it”. He believes Ecuador’s demands for compensation in exchange for not developing the oil reserves under the Yasuní National Park are justified, but the industrial world rejects such proposals.

Flassbeck also criticises the industrialised countries for their failure to find a global framework for the resources issue: “There is a futile confrontation going on, in which the EU is also involved.” The developing countries are being cast in the villain’s role but Flassbeck believes progress would be made in many areas if we would only start thinking in terms of cooperation models. We have to work with the countries that possess the resources to ensure that those resources are left in the ground to a greater extent, so that they will be available to future generations. Provided this process is allowed to happen over a period of time, people will become accustomed to it. The dialogue forum showed the need for a long-term framework to take the heat out of the resources issue, and the need to stake out that framework now.

The next forum, entitled “Facebook, Twitter & Co. – The power of (new) media”, will take place on 1 March 2012.