DBJ Research Center on Global Warming
Discussion Paper Series No. 39 (7/2011)

Cities and Material Flows

Tadahiro Mitsuhashi

This paper is a preliminary material in the draft form to stimulate discussion
and comments from academics and policy makers. Views expressed in thispaper are those of the author(s) and do not necessarily reflect the official
views of the Development Bank of Japan.

1

Cities and Material Flows
Tadahiro Mitsuhashi

1. Resource Circulation on a Finite Planet
1.1 "One-way" Lifestyles since Humanity Began
It is possible to trace the history of the human race back about five million years. Since thattime, humanity has exploited and manipulated nature for its own benefit and livelihood.
Humans have obtained from nature the food needed to survive, and after consuming it
they disposed of the organic waste in one direction --- back into nature. Humanity hasraised its standard of living by making tools and using resources from nature --- wood andstone; oil and other forms of energy; and iron, copper, aluminum and other metals.
Similarly, when tools were no longer needed, they were simply thrown back into nature. In
short, from humanity's earliest days until the present people have lived "one-way" lifestyles--- in which the necessary materials were taken from the natural world, used, and then castback into the natural world.
How has this one-way lifestyle been possible? It is only because the humanpresence on the planet was, until now, much smaller than it is now. Until recently,
humanity could have described this planet as infinite and its resources impossible todeplete. "Infinite" meant that resources were in such great abundance that no matter how
much was used, they would never run out. The fact that the Earth did not deterioratesignificantly despite becoming the receptacle for toxic substances from humanity was
thanks to the enormous self-cleansing capacity of nature. If enough time went by, nature
would return to its original healthy state. In other words, we have lived on this planet under
the assumption that it was like a superhero who could never fail us.
We humans have built a comfortable living on what we thought was a limitless,indestructible planet by conquering, modifying, exploiting, and plundering nature. We havecleared the forests for agricultural land, and learned the technologies to systematically
produce crops. Eventually, we constructed roads and railways, and then built houses,
factories, schools and hospitals near them, formed towns and cities, and dramaticallyincreased the comfort of our daily lives. Meanwhile, we extracted natural resources such asoil, iron, copper and aluminum from the Earth's crust, and manufactured the many items
required for daily life, such cars and household appliances. These all helped to bring us

2material abundance.
Over the two hundred-plus years that have passed since the Industrial Revolution,at the end of the eighteenth century, until the twentieth century, humanity feverishly
pursued material wealth as it also developed modern technologies. The ultimate means that
could be used to pursue this material wealth was a one-way economic system that
depended on mass production, mass consumption and mass waste. But this system, whileon one hand delivering material wealth to humanity, also brought with it the early signs ofresource depletion, as the global environment became severely damaged and natural
resources were consumed in huge quantity. To make matters worse, manmade chemical
substances, such as those that generate endocrine disruptors, could be threatening the very
continuation of the human race. As a result of pursuing a one-way life style, we havecrashed into the limits of the Earth.

1.2 Lifestyles for a Finite and Vulnerable Planet
One of the main factors forcing the present generation to confront the Earth's limits is thesudden population explosion of the twentieth century. In 1700, before the Industrial
Revolution, the global population was only 640 million people. By 1800 it had expanded to
890 million, and then to 1.65 billion at the start of the twentieth century. A population at
this level would probably still be within the Earth's carrying capacity, but it is above thislevel that the problems began to appear. By 1950 the global population had risen to 2.5
billion. By 2002 it was up to 6.2 billion. Over the course of just one hundred years theglobal population has swelled by more than 3.5 times. The pace of growth will not stop,and the United Nations Population Fund predicts that it will rise to nine billion in about
2050. If the population continues to increase at this rate, the Earth will simply be too small
for the human presence. Calculated according to the "ecological footprint" approachdeveloped at the University of British Columbia, if all people in the world were to live likethe Japanese, 1.5 more Earths would be needed. 1 To live American style, 4.5 more Earths
would be needed (Table 1).
Due to the population explosion and the economic expansion driven by industrial
mass production methods, from the human perspective the Earth has been transformed
from being infinite and indestructible planet to a planet that is indeed finite and vulnerable.
The more resources we use, the more the reserves are reduced, and eventually we will reachthe end of the supply. If we continue to spew toxic substances into the natural world, we
1

Ecological footprint: The area on the Earth required in order for one person to live sustainably, considering theconsumption of resources such as food and timber, and the sequestration of carbon dioxide by forests, etc.

3will pollute the air, soil and water, and threaten the very conditions required for humansurvival. The Earth in the 21st century has become as vulnerable as a house of cards andhas a fragile existence. If we deplete our resources and cause the natural environment todeteriorate even further, the very continuation of the human race will become untenable.
In order to avoid catastrophe, we must adjust our ways to recognize the finiteness of the
Earth.
For this purpose, we must very quickly transform our one-way societies into
resource-recycling societies, or societies with sound material flows.

1.3 Boost Resource Productivity
Figure 1 is an illustration of the conventional one-way society (expanded equilibrium
society). The vertical axis shows social welfare and the level of nature utilization, and thehorizontal axis shows the time scale. Social welfare could be interpreted as, for example, alifestyle satisfaction level or the standard of living. Between the Industrial Revolution andthe twentieth century, humanity increased its social welfare by exploiting nature, making
life more convenient, extracting materials from the natural world, and manufacturing thethings needed for living. In other words, the more nature was made accessible for
exploitation and the use of materials, the higher the level of lifestyle satisfaction.
Accordingly, the figure shows the utilization of nature and social welfare both increasingfrom the left. In other words, this figure shows the positive correlation between the two.
If this positive correlation were permitted to continue indefinitely into the future,
there would be no need to challenge our one-way societies. But the finiteness of the Earthis now obvious for all to see --- in the worsening of the global environment and thedepletion of resources. The one-way society as shown in Figure 1 can no longer continue.
During the 21st century, humanity must adapt itself to live with the Earth's
finiteness. Humanity must not only avoid increasing the exploitation of nature, but in fact,must reduce it. On this path, there are two options. One is the contracted-equilibrium
society.
Figure 2 shows a contracted-equilibrium society. Here the path is to reduce social
welfare in order to reduce the amount of exploitation of nature. The course shown here
has exactly the reverse of the expanded-equilibrium society in Figure 1. It involves reducing
the standard of living as a means of reducing the amount of exploitation of nature. Bothstraight lines are declining to the right. If we are to become a contracted-equilibrium
society it will not be possible to return to the lifestyles of thirty or forty years ago. But this4
option is more easily said than done, because people would have to be prepared fornegative annual economic growth of several percent for many years into the future. Today
Japan faces an unemployment rate of about 5.5%, and this is already causing major stress insociety. If the goal is a contracted-equilibrium society, the unemployment rate may exceed
20 and even approach 30%. Such conditions would probably be seen as unacceptable forsociety. Thus, the contracted-equilibrium society is probably not feasible in the real world.
Another option is a society with sound material cycles, as shown in Figure 3. As
one can see in the figure, the exploitation of nature is declining, but social welfare
continues to increase. How can such as world be possible? In order to explain this, theconcept of "resource productivity" is needed.
Resource productivity (P) is the social welfare (W) that can be obtained per unit ofresource investment (R). This can be expressed with this formula:
P = W / R.
Resource productivity can be increased by obtaining more social welfare from lessresource investment.
To illustrate, let us assume that a given society can obtain five units of lifestylesatisfaction per unit of resource investment. Now, suppose that this society, throughtechnological innovation or lifestyle transformation, has transformed into a society that canobtain the same lifestyle satisfaction level for each 0.5 units of resource investment. The
reason such as transformation is possible is that the resource productivity has doubled. Ifsociety succeeds in raising resource productivity, it is possible to reduce the exploitation ofnature without reducing social welfare.
The reason that no effort was made to raise resource productivity until now is thatenergy and resources were thought to be limitless and their prices were set low, so there
was little incentive to raise resource productivity. Instead, society increased its laborproductivity and pursued economies of scale through the mass consumption of energy (oiland other forms) and other resources. Now, in the 21st century, it will be important forbusiness and society to increase labor productivity by raising the productivity of energy andother resources.

1.4 Ten Ways to Boost Resource Productivity
There are many ways to boost resource productivity. Table 2 shows ten such ways. They
include, for example, actions by corporations, lifestyle changes by individuals, and policy
incentives such as institutional and tax reforms by national and local governments. What is5needed for a country's economic renewal is not simply to choose one among them, butrather, to combine a variety of methods to boost overall resource productivity. The
discussion below will not explain each of the ten points, but instead focus on the aspects
that relate to the title of this book, "An Urban Renaissance for Japanese Cities."
First of all, it will be possible to boost resource productivity by transforming thecurrent one-way economic system of mass production, mass consumption and mass waste
disposal into a society with sound material cycles --- one that has appropriate production,
appropriate consumption and zero emissions. The mass production approach produces
products in large quantity through forecast-based production. But if the forecast is wrong,a large stock inventory may be left over, and as a result a large quantity may be thrown
away, resulting in a huge waste of resources. Also, mass consumption is based on athrow-away culture; because things that could still be used are always being thrown away,
this behavior also creates a huge waste of resources. The waste from the production andconsumption phases is eventually disposed of in the natural world, so under this system,
resources can only be used once. As a whole, the one-way economic system of mass
production, mass consumption and mass waste has the lowest resource productivity of all
economic systems.
In contrast, the circular design of an economy with appropriate production,
appropriate consumption and zero emissions --- in other words a society with soundmaterial cycles --- can create a large boost in resource productivity. The core concept of theone-way economic system is continually "making, consuming, and throwing away." In
contrast, the core concept of the economy of a society with sound material cycles is "makeonly what is necessary, consume only what is necessary, and then recover and reuse
resources from waste."

1.5 Production-on-demand Reduces Waste
At this point we must ask exactly what "appropriate production" is? Stated concisely, it is"production-on-demand" --- that is, manufacturing in response to orders received. There isno need to keep a product inventory, because production is done only to fulfill orders, andthere is no need to carry a huge inventory of parts at the manufacturing stage.
Production-on-demand is based on small groups of one to about six multi-skilled workers.
The production-on-demand factory uses less floor space and there is no need forwarehouses to store inventory, because products are manufactured in a flexible anddynamic response to orders. Compared to factories with long conveyor belts, this type of

6factory is much better at conserving energy and resources.
Production-on-demand is based on the "cell production" method. In the past few
years, companies such as copier makers Canon Inc. and Ricoh Company, and electronics
maker Sony Corporation, have been removing the conveyor belts from their main factories
and converting to the cell production method. This method differs fromconveyor-belt-driven, large-lot production, by instead creating products in small quantities.
In the case of Canon, which is making a major shift to the cell production method,
cells of about five people complete a task in about 15 minutes, and cells of one personcomplete the planned task within 90 minutes by using multi-task operations. This company
calls its top-class multi-skilled workers "meisters" after the German word for mastercraftsman. Some meisters working alone have the skills to assemble a complete color
copier in about 14 hours, using about 2,700 parts. The name of the worker is displayed
inside these color copiers, which are essentially assembled by hand --- for example, "Madeby Ms. Ochiai." The cell production method reminds us of the way small- andmedium-sized companies make things using multi-skilled workers. But there are two key
factors that are different from the earlier methods of small- and medium-sized businesses:
production management based on a solid grasp of demand trends; and "supply chain
management." 2What are the benefits of changing to cell production methods? Over four years,
from 1998 through 2001, Canon removed all the conveyor belts from about 45 factories
around the world, and converted to the cell production method. Over a period of four
years, 18 km of conveyor belts were removed, and this eliminated the need for 540,000
square meters of space (equivalent to an area 540 by 1,000 meters).
If this area reduced was originally leased land, this reduction alone would make fora huge cost savings in leasing fees. If it was owned land, it could be sold or rented out inreturn for revenue. Besides these benefits, the company was also able to eliminate a large
amount of warehousing that was previously needed to store products and parts, thereby
reducing storage costs significantly.
By switching to the cell production method, many inefficiencies were eliminated,and over four years it was possible to reduce staff by 18,000 persons. 3 Productivity rose by
35%, and the company's total cost savings amounting to about 118.8 billion yen. On the
Supply chain management is an integrated approach in which companies use information technologies (IT) between
themselves and their suppliers to handle key functions, including materials procurement, product ordering and receiving,and inventory control.
3 In the table, the term "labor pool made available" refers to the number of personnel who were made redundant by thechanges. The company chose not to refer to them as being redundant or "excess" employees, but rather to consider
them as valuable personnel who could be employed in other divisions.
2

7environmental dimension, the company was able to cut carbon dioxide emissions by about
7%.

1.6 Conveyer Belt Going the Way of the Mammoth
What kinds of cost reductions are possible by converting to cell production methods? The
author was able to find the answer to that question at Ricoh's factory in Gotemba, Japan.
The Gotemba factory started operating in October 1985 with a conveyor belt system, andfor years has been producing office equipment, particularly copiers. By the second half ofthe 1990s, as large changes appeared in the marketplace, product inventories grewsignificantly since the company was still using a mass-production system. The need thus
arose for a production-on-demand system directly linked to the market through proper
assessments of market trends. The company started to remove the conveyor belts in 1999
and converted the factory to the cell production method.
There were huge benefits compared to the conveyor-belt style of production: (1)the work-in-process inventory could be reduced by 80%, (2) lead time (time from parts
delivery to completion of the product) was reduced by a factor of five, from 325 down to
65 minutes, (3) and the factory space was reduced by a factory of three, from 1,160 to 380
square meters.
And that is not all. The equipment setup costs of 20 million yen that would havebeen required when subcontracting to a conveyor belt company were reduced by a factor
of about seven, to merely 2.8 million yen, thanks to the expertise and know-how of thelocal workers. Costs of conveyor belt maintenance that would have been subcontracted
outside drop to zero as employees take over this function, and the need for power to run
equipment (e.g., electricity to move the conveyor) is eliminated, so large cost reductions canbe expected overall.
In cases where a certain fixed number of units per day is being produced by mass
production using a conveyor belt, the potential savings effect is huge. Consider for example
a factory designed to produce 1,000 copiers per day. If that factory needs to reduce its
production to 500 or even 300 units per day, a production system using a conveyor belt
suddenly becomes very inefficient and the factory utilization rate drops considerably. If theplant construction, maintenance, and utility costs were also calculated on the assumption of
1,000 units per day, the factory could easily be operating in the red.
Large-lot production using the conveyor belt approach is not suited to small-lot
production demanded by mature societies today. In a mature society people enjoy a high8degree of material affluence and their tastes are diverse. As mentioned above, a maturesociety has sound material cycles based on the concept of making only what is necessary,consuming only what is necessary, and then recovering and reusing resources from waste.
The conveyor belt system of production enjoyed 100 years of popularity, but it is notunlike the mammoth, which disappeared after it could not adapt to changes in the global
environment.

1.7 Cell Production: A New Business Model from Japan
One way to describe mass production by conveyor belt is manufacturing of a small numberof models in large production volumes. In contrast, the cell production method has a large
number of models and small production volume. If one looks only at demand structure,
this description certainly makes sense. But it is too superficial to explain the shift to cell
production methods as simply a response to changes in the structure of demand. In amature society, it is necessary to view this new system as part of a new economic systemwith sound material cycles, one that aims for energy conservation, resource conservation,and high resource productivity.
The economic system of a recycling-oriented society is based on sound material
cycles: from appropriate production, to appropriate consumption, to zero emissions (i.e.,
waste is recycled), and back to appropriate production again. It responds to the demands ofthe new era based on making only what is necessary, consuming only what is necessary, andthen recovering and reusing resources from waste. Cell production plays a part in all this.
The division of labor in the case of production by conveyor belt is based on
single-task workers who participate in only one process --- such as turning screws, or
attaching one part to half-finished products along the conveyor belt --- and they mustbasically just become cogs in the machinery. The dehumanizing nature of work arises fromthat reality. In contrast, under the cell production method, the local workers on the factory
floor themselves arrange things in ways that are best for them, such as making or
rearranging the work tables or shelving for parts as they wish. With complex products likecolor copiers, skilled workers assemble the parts to make the final products, and they put
their own names on the product. They have greater motivation, but their responsibility isalso greater. They are not part of a machine, but work as living human beings.
In the past, Japanese corporations aggressively promoted total quality control(TQC) policies, with the aim of product defect rates of zero. Workers on the production
floor eagerly submitted detailed and excellent suggestions to make improvements, and the9achievements of this approach were huge. In the same way, cell production also elicits
suggestions from workers, and through daily improvements, companies can achieve
outstanding results. But with such an approach differences can emerge between factories.
There are no manufacturing processes and standard ways of doing things that exist under
the conveyor belt system. In their place, there are people who apply their wisdom about
creating products that consider the environment.
In October 2001, Canon surveyed 50 workers at its Ami Factory in Ibaraki
Prefecture, asking their views about the conveyor belt versus cell production systems.
Whereas 38.5% said they felt a "sense of achievement" under the conveyor belt system,
83.7% did so under the cell system. Whereas 32.5% said they felt "motivated in their work"
under the conveyor belt system, 71.4% did so under the cell system.
The cell production method is a new "made in Japan" business model. It is no
coincidence that companies like Canon and Ricoh --- quick to recognize changes in theworld and alter their production methods --- are enjoying record profits these days.
Japanese corporations are in the process of creating new business models that balance theenvironment and the economy, and are strengthening their global competitiveness --- justas when Japanese automobile makers overcame stringent new emissions regulations here
(the Japanese equivalent of U.S. Air Quality Act) and then went on to expand their share of
the global auto market.

2. Zero Emissions
2.1 The Pursuit of Industrial Ecosystems
Section 1 points out that in order to create a sustainable society that recognizes thefiniteness of the Earth, we must shift from the one-way economic systems of the past to
economic systems based on sound material cycles. To create such resource-recycling
societies, it is necessary to dramatically raise resource productivity. For this, the concept ofzero emissions is powerful tool.
The term "zero emissions" emerged as a concept at the United Nations University
in 1993 and was first shared internationally at the "International Conference on Zero
Emissions" organized by the United Nations University in April 1995. In recent years, theconcept has been used more broadly than the literal meaning that "zero waste is emitted."
Today the term has also taken on a broader meaning that encompasses social andeconomic systems --- of local communities or corporations, for example --- that are based

10on the assumption that the Earth is finite, that things must be used carefully and made tolast a long time, and that they are recycled when their useful life is over.
Implicit in the term zero emissions is therefore the aim of efficiently utilizing
limited resources and energy. The idea of the zero emissions approach was inspired bynatural ecosystems. In the natural world untouched by human hands, waste does not exist.
Every component of the ecosystem plays some role for some other member of theecosystem, so no waste is ever generated.
Ecosystems consist of three components. Plants are the producers, animals are
the consumers, and soil microorganisms are the decomposers and recyclers. In an
ecosystem, it is only plants that (through photosynthesis) use carbon dioxide in the air andenergy from the sunlight to produce useful goods (grains, fruit, etc.). Herbivorous animals
eat them. Ultimately, by eating the herbivores, carnivorous animals also depend on the
goods produced by plants. After plants (producers) and animals (consumers) die and returnto the soil, they are completely decomposed by soil microorganisms and then become thenutrients for new production by plants. In this circular process, waste simply does not exist.
In this sense, a natural ecosystem is the ultimate zero-emissions system. If we could makethe contemporary industrial structure to be more like an ecosystem, we could create a new
industrial structure that turns waste into resources. It might not be possible to completely
eliminate waste, but we can strive to make the amount of waste continually closer to zero.
Based on these concepts, the overall aim of the zero emissions concept is to create"industrial ecosystems" that mimic natural ecosystems.

2.2 Six Principles of Zero Emissions
In order to shift industrial structures toward zero emissions, it is important to respect thefollowing six-part code of conduct:
1)

Do not consume renewable resources in an amount above their capacity torenew themselves.

2)

Raise the resource productivity of non-renewable resources, develop clean
renewable-resource alternatives, and then the renewable amount of thosealternatives can be consumed.

3)

Do not emit waste in amounts that exceed nature's carrying capacity.

4)

Dematerialize economic activities and lifestyles.

5)

Utilize above-ground stocks effectively.

6)Internalize environmental costs and create market economies that have high11environmental efficiency.
Below is a further explanation of each part of the code of conduct.
1)

Do not consume renewable resources in an amount above their capacity to renew
themselves.
If logging continually exceeds a forest's pace of regeneration, in the end the forest

will be destroyed. The same is true for other renewable resources. The reason that many
tropical forests are being rapidly depleted is that this code of conduct is not being
respected. Many experts also predict that water shortages will become a more serious
problem during this century because the first principle is not being respected.
2)

Raise the resource productivity of non-renewable resources, develop clean
renewable-resource alternatives, and then the renewable amount of those alternatives
can be consumed.
In the case of a non-renewable resource, the resource disappears in proportion to

the amount that is used. But this does not mean that non-renewable resources must never
be used. If a resource is used, the greatest possible effort should be made to raise its
resource productivity. In addition, alternative resources should be developed, and then it ispermissible to consume up to the amount of these resources produced.
3)

Do not emit waste in amounts that exceed nature's carrying capacity.
If toxic waste is continually dumped into the natural world, eventually nature's

ability to restore itself will be exceeded, and the global environment will steadily deteriorate.
Certain problems we face today have arisen because this principle is not being respected.
Examples include acid rain, ozone layer depletion, and climate change, which someconsider to be the most serious environmental issue of this century. The world witnessed a
population explosion during the twentieth century, and the United Nations Population
Fund predicts that current population growth will continue until the mid 21st century. In
order to sustain this planet, which is quickly becoming too small for the human race, wemust ensure that we do not emit waste in excess of nature's carrying capacity.
4)

Dematerialize economic activities and lifestyles.
As stated above, we must raise resource productivity if we are to utilize scarce

resources efficiently. Dematerialization does not simply mean that we should not use

12resources. This term implies having a new look at the traditional materialistic market
philosophy, and consider the how to use resources in ways that allow us to obtain thegreatest benefits for society with the lowest possible input of resources.
In societies that are well along the path of dematerialization, the industrial
structure has a high proportion of tertiary (service) industries. In some developed countries,
tertiary industries account for 70 to 75% of gross domestic product. A society where thisratio has reached 90% could probably be described as a society with sound material cycles
and low material dependency. The low material dependency translates into a societysustained by services, software, and information, with a high degree of value added in theeconomy. This type of society is more likely to be in harmony with the environment.
Automobile use, for example, will shift toward rentals instead of personal ownership --- ashift that helps to promote dematerialization (Table 2).
5)

Utilize above-ground stocks effectively.
In the past, developing countries had abundant underground reserves of natural

resources. Many of these have been exploited over the past 100 years to support rapid
economic growth. As a result, today, many underground resources have been depleted. But
this does not mean that they have disappeared from the face of the Earth. They are being
stored in different forms --- in manmade structures such as railways, bridges, factories,
schools, hospitals, office buildings, homes, automobiles and home appliances, to name afew. These could be called above-ground stocks. Until now, many above-ground stocks
were simply disposed of as waste after being used. But we must realize that these resources
have been depleted, and that it is about time to stop tolerating this kind of waste. For
manmade objects that have come to the end of their life and become waste, it is necessary
to skillfully extract the many above-ground stocks of resources stored in them, and findways to reuse them. To accomplish this we need ecological design. For example, we must
consider at the product design stage how much of which materials are being used in whichparts, how long is the useful life of parts, and when product life is over what kind of design
will facilitate dismantling?
Developed countries have huge above-ground stocks of resources, and in thatsense could be considered resource-rich in above-ground stocks. There are two key
features of above-ground stock resources. First, if they can be properly recovered fromproducts, they can be used (recycled) almost forever. For example, steel and copper can berecovered and reused many times, as long as they have not rusted or become degraded.
Second, using above-ground stocks is a excellent way to conserve energy. For example, to13
produce one ton of crude steel it takes only about a third the energy to refine scrap iron in
an electric furnace compared to virgin iron ore in a blast furnace. Making a ton ofaluminum takes 190 times more energy to refine the ore compared to recycling --- a goodreason this metal is known as "canned electricity."
Developed countries that are rich in above-ground stocks need to pay more
attention to the effective use of these resources and leave more underground resources for
future generations and for developing countries, which need to accumulate more
above-ground stocks.
6)

Internalize environmental costs and create market economies that have highenvironmental efficiency.
Market economies use the market to coordinate the supply and demand for goods,

and this could be described as the best system for optimizing the allocation of resources.
But why have market economies led to the depletion of resources and to environmental
destruction? As pointed out above, there is no other explanation than that the market
economy operates on the assumption that our planet is infinite and indestructible. In otherwords, the main cause is that costs of environmental degradation have not beeninternalized into market economies.
In the 21st century, the internalization of environmental costs into market
economies must become an integral part of the system. For example, if we continue failingto properly deal with global warming, climate change will occur on a global scale, sea levels
will rise, and agricultural land will be flooded. In order to avoid such a catastrophe, it isnecessary to limit the carbon dioxide emissions that are making a large contribution to
global warming. For this, it will be necessary to introduce carbon taxes and other taxes on
fossil fuel consumption and to introduce economic measures to control wasteful use ofresources. Many countries in Europe have already introduced carbon and energy taxes inorder to limit fossil fuel use.

3. The Challenge to Create Zero-emission Societies
3.1 Creating New Industrial Chains that Utilize Waste
The United Nations University has been promoting the zero emissions approach in order
support the transformation from the current industrial structure to one based on industrial
ecology --- one that relies on cooperation between different industries in order to turn

14
waste into resources. We call this the industrial cluster revolution. For example, Company
B uses the waste from Company A, Company C uses the waste from Company B,
Company D uses the waste from Company C, and so on. If we can create new industrial
chains such as this that use waste as raw material inputs, waste emissions can approachzero. In the strictest sense, there are, of course, limits to how far one can go towards
completely recycling resources, but it is indeed possible to form industrial clusters thatapproach zero waste output.
Some Japanese corporations have already aggressively worked to recycle waste
into resources. For example, coal-fired power plants emit huge amounts of sulfur oxides(SOx) and nitrogen oxides (NOx), both of which cause acid rain. Can these waste materials
be used as resources? Ebara Corporation, an environmental equipment manufacturer,
tackled this question in cooperation with the Japan Atomic Energy Research Institute andChubu Electric Power Co. They succeeded in developing the technology to convert
substances into chemical fertilizers such as ammonium sulfate and ammonium nitrate, byadding ammonia to the SOx and NOx and then exposing them to a special electron beam.
Meanwhile, the coal ash can be used as a raw material for making cement. Thus, if acoal-fired power plant, a fertilizer factory, and a cement factory can be located close
together and interlinked, a zero-emissions type of industrial cluster can be created. Thesesame partners, on request from Chengdu, the capital of China's Sichuan Province, built a
fertilizer factory that uses SOx and NOx, beside a thermal power plant. It started
operations in September 1997. Recently, Chubu Electric continued such efforts to recycle
waste when at its West Nagoya Thermal Power Plant it started operations of a similar
facility that uses a crude oil desulfurization process.
A growing number of industrial parks are also starting efforts to achieve zerowaste. The largest industrial estate in Japan's Yamagata Prefecture is the Kokubo Industrial
Park. With a total of 24 companies, including Yokogawa Electric Corporation, Matsushita
Electric Industrial Co., and Fujitsu Quantum Devices, and total employment of about
5,500 workers, it is the home to factories that produce electrical equipment and electronic
components, among other products. Together they emit about 7,400 tons of waste per year.
They have already launched many activities, including recycling of paper waste, conversionof waste plastic into refuse-derived fuel (RDF), recycling of organic waste by collective
treatment facilities, and production of products molded from used-paper pulp (e.g., forpackaging and cushioning materials) (Figure 4). The park is now considering installing agasification melting furnace in the park for the chemical treatment of waste acid and alkali,
and the dismantling of used products.

15
In these ways, the zero emissions program of the Kokubo Industrial Park focuseson cooperation between companies within the park to recycle the waste they emit andavoid carrying industrial waste outside the park. In this process, for example, they areturning the waste paper and used paper into toilet paper and paper products molded from
pulp and using preferential purchasing policies for them within the park. In addition, they
are composting organic waste from the company cafeterias and the resulting fertilizer isbeing used in orchards in the vicinity. In return, the companies in the park give theseorchards preference when purchasing peaches and other fruit.
This approach could be called the Kokubo Park Approach, and could beconsidered one model for efforts to achieve zero emissions at an industrial park. But
despite these examples, there is still no successful example in Japan of the type ofzero-emissions industrial cluster of corporations in different industries cooperating to turnwaste into resources --- at least not in the strictest sense being promoted by the United
Nations University.
Nevertheless, the zero emissions industrial park of small- and medium-sizedcompanies being promoted by Kawasaki City as a strategy to address the exodus ofindustry along its waterfront could be considered as Japan's first real attempt at azero-emissions style of industrial cluster. Using financial support from the Ministry of
Economy, Trade and Industry (METI) and the Japan Environment Corporation, the city
brought together 13 companies in different industries, particularly small- and medium-sizedcompanies, on an area of about 80,000 square meters, to create a corporate park designedwith waste recycling in mind. The total project budget was about 20 billion yen, and it
started operations in the spring of 2002. The aim is to promote the recycling of waste
within the park, but some challenges remain. For example, in the case of difficult-to-treat
waste, because the focus is on small- and medium-sized companies, the waste cannot be
handled on-site. It is melted in furnaces nearby and the fused slag is used off-site as
construction material. The park still needs cooperation from off-site corporations along thewaterfront.
Thus, no industrial clusters yet exist in Japan that, in the strictest sense, areactually practicing the recycling of waste through cooperation between companies indifferent industries within a clearly-defined zone. But this model already exists in Europe,
as we will see below.

3.2 Kalundborg's Experiment with the Zero Emissions Model

16
Kalundborg is a city in Denmark with a population of about 20,000, located about 150 km
west of the capital city, Copenhagen. It has been attracting the world's attention in recent
years for being the home of an industrial park that has, in effect, already been putting thezero emissions concept into practice for many years.
As pointed out zero emissions are achieved when Company B uses as a resource
the waste emitted from Company A, Company C uses the waste from Company B, and soon. If the companies in different industries can between themselves use waste as resources,
the amount of waste emitted approaches zero.
At the Kalundborg industrial park, this corporate cooperation is called "Industrial
Symbiosis." The industrial park consists of five corporations in different industries and one
municipality, Kalundborg. The companies are Energy E2 Asnæs Power Station (electricalgeneration), Statoil Refinery (oil refinery), BPB Gyproc A/S (plasterboard production),
Novo Nordisk A/S (pharmaceuticals manufacturing), and A/S Bioteknisk Jordrens Soilrem(soil remediation), which joined in 1998. From Kalundborg Municipality, the waterworks
and energy departments are participating as partners.
This utilization of waste between companies, or resource recycling in other words,
is not something that started just recently. It has evolved gradually over 30 years, and has
developed into 19 projects today.
As shown in Figure 4, the original motivation for establishing the zero-emissions
project at the Kalundborg industrial park was simply to boost profitability. It was simple:
by cooperating they would all benefit. The cooperative relationship started with theutilization of waste heat and wastewater.
For example, the steam coming from the Energy E2 Asnæs Power Station during
power generation is sold to Statoil Refinery and Novo Nordisk A/S. The steam is used at
the oil refinery as a heat source to warm pipes, and at Novo Nordisk A/S as a heat source
for sterilizing the raw materials for pharmaceuticals manufacturing. Meanwhile, Statoil
Refinery is selling cooling water back to the Energy E2 Asnæs Power Station. The coolingwater is used at the refinery for refining oil, and at the power station as cooling water forboilers. The water changes state between gas and liquid as it circulates between thecompanies.
The supply of gypsum from the Asnæs Power Station to BPB Gyproc A/S is also
an easy-to-understand example of resource recycling. Gypsum is a byproduct of theflue-gas desulfurization process at the power plant. It is used as a raw material at BPB
Gyproc A/S. Until this project began, the company was importing natural gypsum all theway from Spain. By using gypsum from the power plant, however, it was possible to make

17
huge savings on transportation costs. Not only that, the quality of the gypsum from thepower plant was high, and the supply was reliable. For the power plant, this arrangement
meant revenues from the sale of gypsum.
The industrial symbiosis at Kalundborg had its beginnings from the fact that
almost 40 years ago, the Statoil Refinery was drawing huge amounts of water from nearby
Lake Tissø (Figure 4). Later, this activity expanded into an experiment to create a closed
system, to make raw material inputs out of the waste that was being emitted from thefactories and town, such as coal ash, gypsum, sludge, waste heat, steam, and effluent, etc.
Heated water from the power plant is now being used for a district heating system, as well
as for fish farming (it is warmer than seawater). Today about 100 tons of trout are being
harvested each year from the fish farm.
Through this experiment in industrial symbiosis at Kalundborg the cooperative
relationships have expanded over the years, and their effective use of waste will probably
continue to expand in the future. To date, the experiment in industrial symbiosis hasbrought huge benefits for each of the companies in terms of business performance.
On this point, E. Pederson, director of the Kalundborg industrial park's Industrial
Development Association, says "We have invested a total of about U.S. 75 million dollars
to date into Industrial Symbiosis. In return, the cost savings and revenues of all partners areabout a cumulative 1.6 billion dollars compared to the situation had we not started
Industrial Symbiosis. In the past few years alone, the returns have been 15 million dollars
per year." He adds, "The experiment in Industrial Symbiosis started for purely economic
reasons --- in other words, the pursuit of profits. There was not one iota of concern about
the environment or about avoiding resource depletion. We were surprised that we wereattracting attention in recent years as a model of a resource-recycling economy. When wewere told that we were on the leading edge of a new era, this became a hugeencouragement for us."
They are proving that resource recycling from waste --- in other words, the zero
emissions approach --- is economically sound, and their case will continue to be a usefulreference for initiatives around the world.

3.3 Sweden's Växjö Municipality Attempts to Go Fossil Fuel FreeThe next case has no direct connection with zero emissions, but it is worth mentioning
here, as any efforts to address the reality of the planet's finiteness cannot succeed without
the efficient use of sustainable resources. Sweden's Växjö Municipality, which is aiming to18
create a "compact city," has declared that it will break free from unsustainable fossil fuels,
and is showing signs of success on the path to create a fossil-fuel free community.
Växjö is a key city in the country's Smaland region, about 450 km southwest of
Sweden's capital city of Stockholm. With a population of about 74,000, it is a quiet country
town surrounded by forests. The reason it began to attract attention was its Fossil-Fuel
Free Declaration in November 1996, a year before the historic Kyoto Conference that let
to the adoption of the Kyoto Protocol, an international treaty aiming to tackle the issue ofclimate change.
Sweden's energy sources in 1999 included fossil fuels (38.2%, mostly oil), nuclear
power (34.6%) hydropower (11.5%), and biomass (15.1%), with a little less than theremaining amount (less than 1%) coming from waste heat utilization and electricity imports.
The major sources of electricity were nuclear and hydro power, with fossil fuels accounting
for only a small proportion. Fossil fuels such as oil were mostly being used in thetransportation sector, and for heating in this country known for its long, cold winters. As
one can see from this energy breakdown, for Sweden to go fossil-fuel free its strategy must
be based on changing the energy sources used for heating and in the transportation sector.
In 1974, Växjö started using its district heating system, which relied completely on
petroleum as its energy source (Figure 5). In 1979, petroleum provided 100% of the energy
for heating, but starting in 1980s, the ratio of biomass increased gradually to 80% in 1995,
compared to 20% for petroleum.

3.4 Inspired by Agenda 21
How did Växjö become the first municipality in the world to declare its goal of goingfossil-fuel free? There were a number of factors. First, the dependence on oil imports
presented too great of a risk in the case of sudden events like the outbreak of war. The
town had already suffered through two oil supply shocks in the past, and in a country withlong, cold winters, heating is a matter of survival. Fortunately, this town, surrounded byforests, is endowed with wood biomass, which raises the opportunity to make use of
biomass as an energy source instead of petroleum. The heat efficiency of biomass is only
about 20% that of petroleum, but this disadvantage can be overcome throughtechnological innovation, and experiments in the 1980s have opened up the huge potential
for biomass.
The second factor was that the town was inspired by Agenda 21 (the global action
plan for achieving sustainable development), which was adopted at the UN Conference on

19Environment and Development (UNCED, or Earth Summit) in Rio de Janeiro in 1992. As
Agenda 21 stresses the importance of local governments in environmental protection, thetown established the Växjö Agenda 21 Committee, which reports directly to the mayor. In
Sweden, environmental non-governmental organizations have a respected status in society,and with comprehensive cooperation from the Swedish Nature Foundation, the committee
prepared concrete scenarios of environmental strategies for the town. The idea of goingfossil-fuel free was included as a core concept in this process.

3.5 Cut CO2 Emissions by 50%
The third factor was the supportive mood in the world for efforts to address climatechange, in the year before the Kyoto Conference. By replacing petroleum with cleaner,renewable energies such as biomass, town planners realized that it would be possible tosuppress emissions of carbon dioxide and contribute significantly to efforts to fight global
warming. If the town made a fossil-fuel free declaration before other cities, it would becovered in the media and enjoy a boost in its reputation. Based on this assessment, thetown issued the fossil-fuel free declaration and took the lead in a new era.
Speaking about the development of scenarios to promote efforts to go fossil-fuelfree, Sara Nielson, the coordinator of the city's Agenda 21 Committee said, "Weconcentrated on presenting concrete targets that any citizen could understand." The main
target was "to cut CO2 emissions in half in 2010 compared to 1993." The Kyoto Protocol
uses 1990 as its base year, but this town did not have accurate statistics on carbon dioxide
emissions before 1993. As a result their base year is different by a few years, but their figure
is clearly ambitious compared to the 6, 7, and 8% reductions in the official commitments ofJapan, the United States, and the European Union, respectively, under the Kyoto Protocol.

3.6 Co-generation Companies Betting on Wood Biomass
The foot-soldier of efforts to go fossil fuel free was Växjö Energy Ltd. (VEAB). Though it
is 100% owned by the Växjö Municipality, it is purely a profit-seeking company. There aremany companies of this type of in Sweden. They are different from quasi-governmental
corporations in Japan. Those in Sweden adhere to the general objectives of themunicipality, but they are private companies in which the management is allowed to
conduct profit-seeking activities. The business of VEAB is primarily cogeneration(combined heat and electricity supply systems) and the district heat and hot water supply.
Heat supply is based on a system of heating water in boilers and supplying it to homes and20businesses via a piping system.
At present, the main plant has the capacity to produce 38,000 kilowatts ofelectricity and has the capacity to supply 66,000 kilowatts of heat. In addition, the company
has small-scale cogeneration systems at Växjö Airport and various locations in the city.
There are 74,000 persons in the district served by the company, of whom about 50,000(25,000 households) live in urban areas. The company provides about 30 to 40% ofhousehold electricity requirements, with the remainder being provided by other utility
companies.
Of the15,500 apartments in the district, 14,000 (90%) are supplied by the district
heating system, but only 1,700 (20%) of the 9,500 detached homes are receiving heat
supplied by the company. Most of the detached homes are in the suburbs, and installationof a piping system for district heating there will raise costs. Nevertheless, because
centralized district heating would save energy in the long run compared to independent
heating for each house, the company's policy is to install district heating pipes to as many
houses as possible.

3.7 Biomass Also Being Promoted for Detached Homes
At present, over 80% of detached homes have their own household heating system. The
main energy source is petroleum (only a few use electrical heating systems). For the town
to go fossil-fuel free, it will be necessary for these homes to switch from petroleum tobiomass. The city authorities are promoting conversion by offering subsidies for thispurpose. The conversion costs amount to about 700,000 yen. This is not exactly a small
sum of money, but because the city subsidizes 25% of this amount, the actual burden on
owners is just over 500,000 yen. Meanwhile, the price of biomass is not subject to taxation,
so it is cheaper to use. Thus, the annual energy costs of biomass use will be considerably
lower than for petroleum, allowing owners to recover their investment in ten years, after
which the difference means pure savings.
The author toured a private suburban home that had converted from petroleum
to biomass. In the boiler room, instead of a fuel tank, there were four white bags
containing wood pellets (16 kilograms per bag). This fuel is easy to ignite, and the chimney
could be used with no change from the time when petroleum was used. One inconvenience,
if it could be called that, is that the wood biomass fuel receptacle must be refilled manually.
But a system is being devised to do the refilling automatically, so this problem will besolved in due course. In contrast to petroleum combustion, no nitrogen oxides or sulfur

21
oxides are emitted in the chimney smoke in the case of biomass fuel, giving the ownersome satisfaction that he was helping to protect the global environment.
Some detached homes are also testing the installation solar heaters for roomheating, and solar collectors for water heating. For these installations, 35% of the cost is
subsidized. The author has some question about how much the proponents can expectfrom using solar collectors in a place with Sweden's short hours of sunlight and long
winters, but was impressed with their bold spirit to try anything with the potential to help
them go fossil-fuel free.

3.8 Peat: A Non-renewable Resource
Figure 5 shows the energy shift from petroleum to biomass in the town. Peat makes up alarge proportion of the town's fuel, as it is considered to be a form of biomass. But startingin the 1990s the town debated whether or not peat was a renewable form of biomass, andconcluded that it is not. Today, most of the wood biomass being used in the town's heat
supply and cogeneration consists of sawdust from sawmills, bark, branches and cuttingsfrom logging operations, but about 10% still comes from peat. Reducing the use of peat
further remains as a future task for the town.

3.9 Taxation Also Provides Major Support
To systematically promote the conversion from fossil fuels to wood biomass as an energy
source for district heating, one cannot ignore the strategic role of selective taxation (byboth national and local governments) on energy sources. Figure 6 shows the taxation byenergy source used in the district heating supply. Petroleum, liquefied petroleum gas (LPG)
and natural gas are all subject to a high energy tax, carbon tax, and sulfur tax, etc.
Meanwhile, biomass is not taxed at all. As a result, the energy cost per kilowatt-hour forbiomass is about one-third that of petroleum, and only one-quarter that of LPG. It is notdifficult to imagine that with such price differentials in the taxation system, there is a huge
incentive for the use of biomass.
After issuing the fossil fuel free declaration, Växjö city raised its biomass
dependency to 95% by 2000 for its heat supply sector (the remaining 5% was still provided
by petroleum). One could say that the town has almost achieved its goal of going fossil-fuelfree in this sector.

3.10 Transportation Sector Still a Challenge

22
Figure 7 shows the trend in carbon dioxide emissions per capita in Växjö. In the energy
supply sector, due to the bold conversion from petroleum to biomass, carbon dioxide
emissions per capita have been cut in half from 20,000 tons in 1990 to less than 10,000
tons today. In contrast, the emissions from the transport sector have increased. This trend
is partly due to an increase in car use, but it shows that the town has been making lessprogress in going fossil-fuel free in transportation compared to the heating sector.
As part of its fossil-fuel free strategy, in recent years Växjö has been aggressively
promoting low emissions vehicles such as ethanol-powered and electric cars. In addition, inorder to keep cars out of the city center, the city is working on various projects tocompletely redesign the downtown core's transportation systems, by encouraging cycling,
converting intersections from being car-friendly to pedestrian-friendly, and creatingcar-free streets. The results are not yet evident in the statistics, however. Evidently, a
breakthrough in the transportation sector will be the biggest challenge Växjö will face as it
aims to go completely fossil-fuel free by 2010.

23
Table 1: Ecological Footprint in the WorldCountry

Population

Ecological
Footprint

Available Areas

Debt for theEnvironment(person)(ha/person) (A)(ha/person) (B)(ha/person) (A-B)

World Total

5,744,872,000

2.85

2.18

0.67

Japan

125,769,000

5.94

0.86

5.08

USA

269,439,000

12.22

5.57

6.66

Germany

81,909,000

6.31

2.48

3.83

China

1,232,456,000

1.84

0.89

0.96

New Zealand

3,720,000

9.54

15.80

-6.26

Ethiopia

56,789,000

0.85

0.68

0.18

Bangladesh

120,594,000

0.60

0.08

0.52

Brazil161,533,000

2.60

11.56

-8.96

(Source) WWW, Living Planet Report 2000, Ministry of Environment, Annual Report on theEnvironment in Japan 2001.

24
Table 2: Way to the Higher Resource Productivity
1.

Mass Production, Consumption, Waste => Appropriate Production
Size, Zero Emissions for Consumption

2.

Disposable Products => Long Life Products

3.

Large and Heavy => Compact and Light

4.

3R (Reduce, Reuse, Recycle)

5.

Privately-owned => Rental

6.

Innovation (Improvement of Energy-efficiency)

7.

Introduction of IT to Economy: Non-digital Goods => Digital
Goods

8.

Tax Reform: Tax Levy to 'Bads,' Tax Reduction to 'Goods'

9.

Improvement of Lifestyle

10.

Centralized Society => Decentralized Society

25
Figure 1: "One-way" Type Society

26
Figure 2: "Contracted-equilibrium" Type Society

27
Figure 3: Recycling Based Society

28

Figure 4: Kalundborg Industrial Park

29
Figure 5: Shift of Energy Source in Växjö (1979-2000)(Note) Peat is included in biomass.
(Source) Växjö Energy Ltd. (VEAB).

30
Figure 6: Taxation by Energy Source Used in District Heat Supply(Note) 1 krona = 100 öre (1krona is approximately 12.5 yen equivalent).
(Source) Växjö Energy Ltd. (VEAB).

31
Figure 7: Trend in CO2 Emissions per capita in Växjö(Source) City of Växjö.