Planet, people and profits: How to deliver a sustainable exit from the crisis

Janez Potočnik — European Commissioner for Environment 

Keynote speech at the European Resource Efficiency Forum “Vision 2020 – the role of resource efficiency for Europe’s future”

Berlin, 15-11-2012 — /europawire.eu/ — Ladies and Gentlemen, Minister, Mr. (Jochen) Flasbarth,

Today I see before me so many familiar and influential faces from the world of resource efficiency. I must congratulate Minister Altmaier and the German Federal Environment Agency on this initiative of launching the First European Resources Forum.

I know that it is not necessary for me today to “preach to the converted”. Indeed I would not dream of preaching anything to such an impressive array of experts. And I don’t think I need to go into great detail on what the Commission has already done to establish resource efficiency as a policy priority at European level. I think most of you know the story so far.

No, what I want to focus on today is firstly how we start to deliver on those policy priorities and visions. And secondly, how do we transmit clear messages to the wider world, outside of this room?

I took a conscious decision when I took over the environment portfolio nearly three years ago to make resource efficiency the core and guiding principle of my mandate. It was a risk.

• A risk because the most powerful tool we have in the European Commission is legislation, but here we depend on many softer tools, and on many other actors, on national administrations, the private sector and consumers;
• A risk because it does not always please the constituency of traditionally strong supporters of my policy – environmentalists, who often look to us to curb the greatest excesses of greed and growth, and consider that putting a price on nature is not appropriate;
• And a risk because the business community to whom we are holding out our hand might be willing to “talk-the-talk”, but then not “walk the walk”, happy to paint itself green, and to avoid a more regulatory approach in the meantime.

Despite these risks it was clear to me that we had to bring environment from the margins and put it at the very centre of the policies that influence our behaviour as producers and consumers.

In the immediate context of financial and economic crisis we had to explain that there are jobs in green growth; and in the medium term context of 3 billion new middle class consumers by 2030, we had also had to explain that resource efficiency could be the basis for future competitiveness.

This was pragmatism, not selling out. It was pro-business, not business as usual.

So far I think that we are already being proven right. Looking at the short term, employment in eco-industries has been growing by around 3 % per annum over recent years. In the UK the CBI reckons that one third of economic growth during the crisis period can be attributed to green sectors. With a global market for eco-industries estimated at more than a trillion Euros, and forecast to almost double over the next 10 years this is encouraging. We are doing particularly well in certain subsectors, with a 50 % share globally in recycling, and 35 % in energy efficiency, so we are well-placed to benefit from this growth in global demand.

For the medium term it is perhaps too early to say, but some of the challenges we predicted are already there. Prices of key resources are rising and becoming more volatile. Competition for resources among nations and economic sectors is increasing.

The shorter and medium term benefits of resource efficiency are of course closely linked. It is those eco-industries, so strong here in Germany, that are the enablers for the rest of the economy to perform more efficiently; they are the catalyst to greening our entire economy and making it more competitive moving forward.

Our estimations show that a reduction of the total material requirements of the economy by 17 % could boost GDP by more than 3 % and employment in the EU by around 2-and-a-half million. Today in Germany, as we see heated debate on the influence of higher energy prices on company competitiveness, it is worth bearing in mind that more than 40% of the input costs of manufacturing companies are from materials. Materials that mostly come from abroad and that are increasingly in demand.

Let me move on to my two main themes; the two big challenges: delivery and communication.

First, Delivery

We have already made good progress.

• We have put resource efficiency at the heart of the European structural economic strategy as a Flagship Initiative of the Europe 2020 Strategy, setting the goal of decoupling our economic growth from resource use.
• We have adopted a number of long-term strategies under this Flagship, in the fields of energy, transport, research, inside industrial, cohesion and agricultural policies, climate and biodiversity.
• We set out a comprehensive framework for action, in the Resource Efficiency Roadmap, based on a broad definition of resources – from metals and minerals, to ecosystems, biodiversity, water, air, land and soils.
• We have made proposals for the EU budget for 2012 to 2020 that integrate resource efficiency and greening into mainstream funding for research, cohesion and agriculture, and we proposed a 50% increase for LIFE+.
• And we have set up a high level Platform to guide us in our work.

But I think that most of you know all this already. Let me explain more about what our plans are for more concrete deliverables over the next two years.

We intend to use the potential of the Single Market – one of our greatest achievements in the EU. Early next year we will explain in a communication how we can create a single market for green products, boosting supply and demand for more resource-efficient goods and services and encouraging companies to improve their environmental performance and reduce resource use.

Both business and consumers are asking us for good tools to enable them to recognise the genuine green products and companies on the market. We are already developing common environmental footprinting methods to calculate the sustainability of products and of organisations based on life-cycle assessment. Such a common approach will not only cut costs for business it will also help consumers understand environmental claims and make informed choices.

Eco-design and energy labelling are key in this respect and I will be working already in the next two years on developing approaches to integrating material efficiency and water efficiency into eco-design for those product categories where we identify the highest potential benefits, ensuring durability, water efficiency and recyclability.

Later in 2013 we will come with two communications tackling food and buildings, two of the three areas we identified in our Roadmap as having the greatest impact on resource use. In both of these, we will take a holistic approach, addressing the key resources and the potential for efficiency gains along the whole value chain – from production, processing and distribution, to use, reuse, recycling and disposal. Our real test here will be to convert that holistic and cyclical approach into the right instruments at the right stages in those cycles, as these often depend on very different stakeholders and tools.

The waste stage of that cycle is an obvious area for action. We still have 10 Member States that are landfilling more than 70 % of their municipal waste. This is not just a waste of resources; it is a missed opportunity for jobs. Eliminating such landfilling and meeting higher recycling rates could create additional 130,000 jobs and € 15 billion turnover for the waste sector. Full implementation of the waste legislation could create as many as 400,000 jobs in Europe and increase the turnover by more than € 40 billion.

It is against this background that we will review the existing targets in our waste legislation in 2014, and I would encourage you to participate in the consultation process on this next year.

Water is a precious resource with very specific characteristics, and I am pleased to announce that tomorrow the Commission will adopt the Blueprint to Safeguard Europe’s Water Resources, with proposals including:

• Water balances and accounts for all river basins as the basis for water efficiency targets to be set by Member States,
• EU standards for water re-use,
• Increasing the efficiency of water-using devices in buildings through ecodesign,
• Improving implementation of the “polluter pays” principle, in particular in agriculture, through metering, irrigation efficiency, water-pricing and better economic analysis.

In the spring of 2013 we will be rolling out the activities of the European Innovation Partnership on Water which I launched a couple of months ago, based on a strategic implementation plan which is now being developed by stakeholders. This will support not only research and technological innovation, but also innovative applications of existing technologies, innovative governance, systems and business models, as well as financing mechanisms to bring existing solutions to the market.

So as you can see we are not sitting still.

Is all of this really enough on its own? Of course not. And I can already identify three main challenges that we must tackle if we are to deliver resource efficiency on the scale that we need to meet the milestones and the vision we set out in our roadmap.

First, it is essential that national governments play their role. The majority of the relevant policy tools are based in the 27 national capitals. The Commission is trying to push the capitals in the right direction. We have already started to integrate resource efficiency into the governance mechanism of Europe 2020 – the European Semester.

This year using this mechanism we recommended to 12 Member States that they should shift from labour to environmental taxation, we also made extensive recommendations on energy efficiency and transport. We will continue to push for phasing out environmentally harmful subsidies.

But we need to use this governance system to drive further environmental improvements. For example to exploit the growth and jobs potential in waste and water management, or green public procurement. We expect Member States to report back on the progress in resource efficiency in the updates of their National Reform Programmes, as Germany already does.

That brings me to the second challenge, which is investment.

Some might call me a “techno-optimist”, but although I have great hope in technological progress to deal with the pressures on our planet, I would be one of the first to admit that technology cannot provide all the answers. I would call myself more of an “innovation optimist”, for it is innovation – through the application of existing and new technologies, through new business and market systems, new behaviour and through design – that has the possibility to break us out of our locked in ways: to move us onto a different growth paradigm.

I have every confidence in the private sector to drive the kind of improvements we saw in the last century on labour productivity in the field of resource productivity in this century. Unfortunately I don’t think that the warnings of an enlightened few will do enough to persuade a critical mass of economic actors to invest in resource efficiency. That is why we need to work at the macro level to provide the right incentives, to get the prices right and to use public instruments to leverage private investment.

Our challenge is to mobilise the investment to make that innovation happen on a big enough scale to make a difference. I will be launching a round table of investors early next year to look at how we can address the obstacles to public and private investment in resource efficiency.

Encouraging investment in areas with highest potential for our future competitiveness is the logic behind the revised industrial Policy that the Commission adopted a few weeks ago, and we put the circular economy and resource efficiency at the heart of it.

As policy-makers we must provide the framework conditions and predictability for the transition to a resource-efficient and low-carbon economy to take place in a less disruptive and less costly way, whilst creating a level playing field that will reward the best performers and put European companies in the lead.

The third challenge I see is that resource efficiency alone –getting more value from fewer resources – will not be enough. The McKinsey report which I imagine most of you know, estimated that the key improvements in resource efficiency it identified could provide for about 30% of the increased demand we can expect by 2030.

So it is clear that we need more than just increases in resource productivity, we must also use those same resources again and again. I am sure that this is evident to most of you, but we have to explain that resource efficiency also means creating a closed loop economy. This means designing for recyclability, repair and re-use; developing industrial symbiosis, new business models, better markets for secondary raw materials, and sustainable sourcing. In short, seeking inspiration from the way that nature works to drive a system change in our economies and societies.

So delivery is subject to important challenges, but I said at the beginning that I wanted to raise a second theme – Communication.

Second, Communication

How do we communicate to the consumer, who cares about the environment but for who it’s number ten on their list of priorities this morning? Or to the small entrepreneur who is looking to sell products and pay the bills? Or to the journalist who wants the story that will sell newspapers? How do we get our message into to the mainstream?

The problem is that, on the one hand we have to convert a very complex subject into simple, accessible and compelling messages. And, on the other hand we have to convert a gloomy message about the constraints, boundaries, shocks and higher prices, into a positive story.

I have no doubt about the best medium for the message. It is clear that social media will be the game changer. It is the message itself that I think we need to work on. This problem was perfectly set out in an article entitled “Building the New Environmentalism” I read a couple of weeks ago in the British newspaper The Guardian. It argued that all social and economic transformations – civil rights, neo liberalism, social democracy, international development – have needed an accessible and compelling message to present to the public that resonates with its concerns.

So we need to distil our vision into four or five core messages. And those messages need to be positive. They need to set out the potential for green jobs, celebrate the human capacity for innovation and progress, and make it clear that protecting our planet is actually about improving our wider quality of life.

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Ladies and Gentlemen,

I hope I have convinced you that we are really not standing still. We have created a momentum. With the help of the European Resource Efficiency Platform – including Minister Altmaier in its high level members – we are setting out the direction in which we want to carry on that momentum.

Today our focus, especially in Europe, is on growth and jobs, on exit from the crisis. And rightly so. But I’m convinced that even if we would successfully manage financial and debt crisis we would still face serious challenges connected to our competitiveness. At least in the majority of Europe. These emerge predominantly from globalisation and the necessary adaptation to the new global reality and challenges we face together. A recent article in Nature concludes that all of those challenges are in one or another way basically connected to two things: the growth of population and the growth of per capita consumption. As you know, there are no simple answers and there are no silver bullets. The only answer I know is working in the direction of knowledge based, low carbon, resource efficient economy. Not as a nice, compelling political slogan, but as a reality. Why? Because knowledge and innovation are our strength here in Europe, and because transition to the sustainable future is simply inevitable.

Resource efficiency is for us, in import dependant Europe, not only the question of environmental preservation, it is also the central question of our future competitiveness. Germany is at the forefront, driving that momentum with a target to double raw materials productivity by 2020. Your experience in supporting businesses, particularly SMEs, to become more efficient, to improve products and production processes, can serve as an inspiration to many other Member States. I welcome the engagement of Germany to fuel the discussion on resource efficiency, including with the numerous events taking place this week.

Thank you for your attention.

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