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“Energy and Resources as a Service” emerging as a game changer in progress towards a circular economy

Natural Resources

Realization of the Sustainable Development Goals will require massive inputs of low-carbon energy, critical raw materials, and other natural resources, including land and water. These demands are aggravated by rapid urbanization of the world’s population, which stresses grid-based power, availability of clean cooking fuels and other raw materials required to ensure energy and resource efficiency. Current patterns of resource use will not be able to meet the demand reasonably. Energy and Resources as a Service (E-RaaS) is a new paradigm shift that will be required to decouple the use of energy and resources and sustainable development.

The roundtable on “Energy and Resources as a Service” at the 30th Session of the Committee on Sustainable Energy, 24 September 2021, Geneva, explored the paradigm shift that will be required to kick start a circular economy model. Panelists discussed innovative paradigms to help progress towards a circular economy. Several models being applied by the IT, mobility and other sectors could be easily adapted by the energy and resource industries.

“Current resource use varies significantly between low-income and high-income countries by a factor of over ten,” observed Scott Foster, Director, UNECE Sustainable Energy Division, when opening the panel. “As the quality of life improves for a vast global population, the demand for energy and natural resources, including critical raw materials required for sustainable energy transitions, will increase immensely and our world cannot sustain that demand. We must break current commodity models and usher in a new era of Energy and Resources a Service to ensure the sustainability of energy and resource production and use.”

Rapid progress to a circular economy is seen as essential. However, energy efficiency improvements are stagnating, and the amounts of materials recycled remains at a dismal rate of about 8 per cent. The E-RaaS paradigm involves moving away from current commodity and product-based business models to a subscription-based industry that is outcome-focused. Such a model will ensure the most efficient use of energy and resources.

The panel participants noted the giant leap in Software as a Service (SaaS), including hardware. Mobility as a Service (MaaS) is another example that is receiving a lot of attention. “As a Service model” offers the most significant opportunity and support for the progress towards a circular economy. Some modest beginnings are visible in E-RaaS, but the concept holds a lot of promise and is still in its infancy.  The United Nations Resource Management System (UNRMS), developed by UNECE, has “service orientation” as a core principle.

The United Kingdom has started testing the applicability of the UNRMS for rebuilding the mineral industry in the region of Cornwall in the south-west of England. The region has well-established kaolin mines and massive potential to exploit technology metals such as lithium, tin, and tungsten. Deep geothermal energy and offshore wind offer additional opportunities.

“The test case will examine RaaS models for selling resources, building a new value chain for critical raw materials and finding synergies between businesses to create a circular economy,” said Professor Frances Wall, Camborne School of Mines, University of Exeter and a member of the UNECE Expert Group on Resource Management. “Such models could make a positive contribution to the region’s population, who have low income despite the mineral wealth.

As in other industrial sectors, the energy and resource sectors are expected to be drastically transformed by “as a service” models. This could be a welcome game-changer for an industry that is constantly plagued by “boom and bust” cycles of the commodity market. Moreover, it could integrate with new platform approaches through blockchain and attract Environmental, Social and Governance (ESG) funding.

Governments need to be aware of the policy and regulatory support required to tap into the new opportunities opened by “as a service” models. For industries, this will mean a new era of partnership and perseverance.

For more information on UNRMS: https://unece.org/sustainable-energy/unfc-and-sustainable-resource-management.

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