- Angela Oblasser, Fundación Chile’s VP of Sustainability recommends applying the circular, doughnut, collaborative, and functional economic models to lower implementation costs.
- Diario Financiero published this interview on June 15, 2021.
Earlier this year, Bill Gates developed the Green Premium concept, which consists in the difference of cost between a product/service that generates carbon emissions versus a ‘green’ alternative. Gates estimated that to achieve the global zero emissions target by 2050, the Green Premium, or cost gap, would amount to US$ 5 trillion, or roughly 6% of the global economy.
To bridge this gap, Angela Oblasser, Fundación Chile’s (FCh) VP of Sustainability, believes it is necessary to lower the costs of new sustainable technologies -promoting investments so they become more competitive- and that the value of current non-sustainable technologies reflect the real cost of social and environmental externalities.
“If technologies were to include these environmental and social cost externalities, they would be more expensive, and therefore the premium, the difference between a more polluting technology and a more sustainable one, would be reduced and therefore the more sustainable solutions would be easier to implement,” says Oblasser.
The expert suggests that to achieve both measures, it is necessary to accelerate the adoption of green economic models that “seek to place well-being and sustainability as fundamental objectives of economic development.” Among them, she suggests the circular, doughnut, collaborative, and functional economies.
“Somehow, economic growth is the current economy’s goal. Meanwhile these new models argue that the economy’s goal is gaining social and environmental welfare, using economic growth as a measure to attain it; placing economic growth at the service of a greater growth,” she states.
While Chile has several initiatives based on these new models, Oblasser says that their implementation must be accelerated and that “they will require a regulatory and tax policy framework to support them so they can be developed at large scales.”
Oblasser considers “it likely” that the new green economic models will arise in the new Constitution’s debate, “since citizens have a good sense of it, they are aware.”
Albeit there are several ‘green’ economic models, Oblasser singles out four economies: collaborative, circular, doughnut, and functional, based on their global implementation levels, “which must continue to be encouraged.”
She explains, “there is no perfect model, or one that is better than the other. In the end, what will be implemented are a combination of models.”
The circular economy -perhaps the best known of them- is based on creating “positive value cycles” where products or materials are reinserted in the cycle at the end of their useful lives. Ideally, to this end, products should be ecologically designed, made out of renewable or recycled resources that will be reused and recycled.
Among other domestic examples of this model, she mentions the startup Algramo and the Extended Producer Liability Law (REP Law for its initials in Spanish), which is “an exponent of circular economy focused on certain priority products such as plastics, electrical and electronic waste, batteries, and tires.” She explains that the doughnut model has been growing steadily in recent years
It requires the mechanism of the circular economy and operates under two limits: the ecological ceiling and the essentials of an equitable society, such as the right to food, education, health, housing, gender equality, civil liberties, and water. “It is shaped like a donut, hence the name. The center hole depicts the social ceiling, which are the life essential conditions that must be fulfilled for all people in society. The crust represents the environmental ceiling, the countries’ and the planet’s ecological ceilings, and the economy should not extend beyond those boundaries,” Oblasser explains.
In 2020, Amsterdam (Netherlands) tackled a five-year circular economy strategy and hired the creator of the doughnut model, Kate Raworth, to apply it to the city’s environmental and social issues. The plan entails several measures for businesses, the municipality, and citizens, aiming to halve the use of new raw materials by 2030; and by 2050 the city is expected to operate with a fully circular economy.
The third model Ms. Oblasser suggests is the collaborative economy, which involves exchange of goods and services among private individuals for an agreed compensation between them, for example, the Uber or Airbnb applications. As she explains, it is a model that allows optimization of resources, greater supply for the consumer, and the generation of an ecosystem based on entrepreneurs with new businesses.
The functional economy meanwhile, promotes the usage value of products beyond their ownership.
As a result, production within this model is expected to be “more reliable, repairable, and easier to maintain, guaranteeing the sustainability of resources and taking into account the environmental impact of the goods in their life cycle,” the expert expounds.
Michelin is an example of functional economy; it changed its business model and started selling kilometers per tire, multiplying their useful life up to three times and reduced the number of tires recycling them.