Getting the framework right


What obstacles prevent the EU from becoming a circular economy? How can we use targets, taxes, industrial policy and other instruments to address them? These were the issues discussed at the Green Week session on ‘Creating the framework conditions for a circular economy’.

Bas de Leeuw, Managing Director of the World Resources Forum, opened the session by asking contributors to focus on the policies that were needed to support the circular economy.

“For 100 years, the prices of commodities and energy steadily declined,” said Jocelyn Blériot, Head of Editorial and European Affairs at the Ellen MacArthur Foundation, “but in 2002 this trend hit a turning point.” He explained that a century of decline in the price of raw materials has been erased in just 10 years.

"80% of environmental policies in Europe are set by the EU, and 95% of Europeans believe protecting the environment is important!"

Basing their approach on lessons learned from long-distance sailing – travelling light, managing resources and reducing waste as much as possible – the Foundation has developed a four-point approach to moving our current linear economy towards a circular model. It involves design for reuse, enabling business models that favour access over ownership, reverse logistics for the return and reclaiming of products, and greater collaboration across sectors and industries.

Incentivising these changes, he said, would need a shift in the tax burden from labour to resources, a change in producer responsibility, and a greater focus on eco-design.

Absolute decoupling

Sebastien Godinot, Economist at the WWF European Policy Office, explained how the WWF uses the Living Planet Index and the Global Ecological Footprint as indicators. “Currently, we globally need 1.5 planets per year,” he said, due to the overuse of natural resources and stress on ecological services. If the world consumed at the EU rate of consumption, two planets would already be needed.

Preserving natural capital, he explained, requires a transformation in the political and economic system, addressing governance and finance in particular. The key is to cut resource consumption in absolute terms, not just make savings. We need consumption to decrease even as GDP grows.

Much over-consumption is linked to waste and inefficiency: “The world wastes 1 billion tonnes of food every year”, he said, “even as 1 billion people are starving.”

Looking to solutions, Godinot called for ambitious targets for energy and climate, including mandatory targets for energy efficiency; an EU framework for resource efficiency with targets for carbon, water and land footprints; indicators such as Natural Capital Accounting, which can be integrated into policy processes; green public procurement; and a supportive industrial policy. He reminded the audience that the WWF is calling for 10% of EU tax revenue to come from green taxes by 2020, a four-percentage-point increase from the current average in OECD countries.

The EU also needs to provide international leadership, moving from the post-2015 Millennium Development Goals towards Sustainable Development Goals and providing financial support for climate and biodiversity actions in poor countries. He suggested phasing out harmful subsidies such as those for fossil fuels, and using these efforts to help tackle problems like youth unemployment. From his analysis of the EU budget, he concluded that conservation, resource and energy efficiency and renewable-energy spending are the most effective in terms of job creation.

Godinot concluded by emphasising the importance of EU policy frameworks. “Don’t forget, 80% of environmental policies in Europe are set by the EU”, he said, “and 95% of Europeans believe protecting the environment is important!”

Industrial policy

Jean-Paul Albertini, Executive Commissioner for Sustainable Development at the Ministry of Ecology, Sustainable Development and Energy, France, reviewed the policies that governments could use. They should include bringing stakeholders together, investing in R&D, and formulating sectoral, value-chain and territorial approaches.

A sectoral approach should encourage cooperation, support voluntary agreements and extend producer responsibility, he explained. He also suggested involving local and regional governments in a new industrial policy, as is now the case in France, where each region develops strategies for the circular economy and industrial ecology. Turning to R&D, he called for more eco-design for products, processes and services, a greater understanding of consumer behaviour, and a systemic approach to the innovation chain.

Speaking of the French government’s current initiatives, he referred to the recent launch of a national strategy for green jobs and policies to address consumer law, longer-lived products and product lifetime labelling.

France is also planning to halve the 2010 national waste levels by 2020, with more support for local policies on waste sorting, and an effort to include social costs in landfill prices. He added that the French government is working on ecological taxes and better performance indicators.

Moving to the EU level, Albertini emphasised the need for full implementation of the 7th Environmental Action Programme, as well as the greening of the European Semester of economic governance under the Europe 2020 strategy, with the inclusion of the “material productivity” indicator in the process.

William Neale, Member of Commissioner Potočnik’s Cabinet, noted how the circular economy is essential for attracting industry to Europe and keeping it there.

Previewing the policy package launched on 2 July, he noted the important role played by European waste legislation in the past as a driver for change. The coming proposals, he said, preserved the existing waste hierarchy, and aimed to raise average recycling rates in Europe to the levels that are current in the Member States where rates are now highest.

The circular economy would not be driven by technology alone, he said, but also by changes in demand, which makes policy more important in setting up the enabling factors. These include the Single Market, looking at product life cycles and footprints, eco-labels, eco-design, market-based incentives, pull-and-push policies for innovation, and longer-term financing.

As for shifting taxes, the EU can set targets, he said, but it is up to the Member States to choose their actions. Landfill charges, he remarked, were one such effective policy.


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