The EU’s Eco-Innovation Action Plan: ‘green jobs and green growth’

In December 2011, European Commissioner for the Environment, Janez Potočnik, launched the Eco-Innovation Action Plan (EcoAP). This is an over-arching strategy to guide regulation, standardisation and R&D support towards a top-level goal: stimulating demand and supply of green technologies in Europe. Its premise is that eco-innovation already is economically important – and will become even more so in future if the policy environment is right.

The Commission estimates that companies in this broadly defined sector have annual turnover of €319 billion, or around 2.5 per cent of the EU’s gross domestic product, and has recently been growing at rate of 8 per cent, employing around 3.4 million people.  At the launch, the Commissioner said: "The innovation challenge for this Century will be making our resources go further - doing more with less – and reducing the impact of our activities. Europe must be in the lead in meeting that challenge if we want to be competitive in a world of increasing resource constraints…This is a plan for green jobs and green growth."

As a broad strategy document, the EcoAP is long on intentions and short on specifics; those are still being developed inside the Commission. But it has broad political support, and is part of the Commission’s economy-wide Europe 2020 agenda and its goal of a smart, sustainable and inclusive economy. It updates a 2004 EU initiative, the Environmental Technologies Action Plan. And it is, as one Commission official put it, “a political document that identifies priority areas for actions where money will be spent.”

The need for a new approach

The EcoAP outlines seven areas for action:

• Policy and regulation: Update related EU legislation with more evidence-based and environmentally friendly policy regulations.
• Project showcasing: Increase market credibility and uptake of eco-innovation technologies by funding demonstration projects for all industrial sectors and themes.
• Standardisation: Prioritise the setting of standards and targets with Member States and international standardisation bodies.
• SMEs: Create a network of eco-innovation public and private financiers especially for small and medium-sized enterprises while expanding other services and networking to increase their participation.
• International Cooperation: Promote the establishment of European business and technology centres to assist European businesses seeking to expand abroad and improve global capacities for eco-innovation in developing countries.
• Education: Information exchange with Member States on training schemes targeted at eco-innovation. This will be done through the “EU Skills Panorama,” an online database containing updated forecasting of skills supply and labour market needs. The Commission hopes to meet the Europe 2020 goal of 75 per cent of 20-64 year-olds to be employed.
• Creating Partnerships: Focus will be put on bringing together public and private actors in a range of areas including raw materials, sustainable agriculture and water to contribute to greater resource efficiency. An example of this is a recent call for proposals that involves the establishment of trans-national networks of green public and private procurers.

Funding for eco-innovation

Eco-innovation is as an important priority under the Competitiveness and Innovation Framework Programme (CIP), which has a dedicated budget of approximately €433 million for 2007 to 2013. This budget is aimed at removing barriers for better market penetration of innovative, environmentally friendly solutions and facilitates access to finance for eco-innovative SMEs.

Most recently in May of this year, a call for eco-innovation projects worth €34.8 million and targeted particularly at SMEs was launched, and is expected to fund around 50 new projects in the areas of materials recycling, water, sustainable building products, green businesses and the food and drink sector. At the launch, Potočnik said: "For the past four years, CIP Eco-Innovation has helped more than one hundred innovative green products reach the marketplace. The programme shows how businesses can help our economies to grow in an environmentally sustainable way, once they have the right support.”

Starting in 2014, the main source of funding for the EcoAP will be Horizon 2020. At this time, there are no hard figures as to what the EcoAP can expect to receive for its specific programmes. But in the European Commission’s Horizon 2020 proposal, €3,160 million has been earmarked for climate action, resource efficiency and raw materials initiatives – both   of which relate to eco-innovation. The Commission had also planned to launch two new instruments in 2012 in the form of an EU Loan and Guarantee Service and an Equity instrument to encourage private sector investment in eco-innovation. Both instruments have now been pushed back to 2013, with little detailed information provided in the meantime.

The road ahead: Concrete steps taken or planned

1.    Identifying the barriers

The EcoAP has started by focusing on the attitudes and perceptions of those in the industry, particularly SMEs. In a Eurobarometer survey on the perceived barriers and drivers for eco-innovation, SMEs said the top barrier is uncertain demand from the market. Other barriers identified:  uncertain return on investment, and lack of funds. The Commission attributes these problems to low confidence in the market due to lack of information, and a weakness in current policy in providing enough incentive to keep companies innovating.  Using this survey information, the EcoAP has been working on policies and programmes to counteract this lack of confidence and information.

2.    Increasing confidence in eco-innovative products

In a first real step to combat barriers to eco-innovative technologies the Commission launched a pilot Environmental Technology Verification (ETV) programme. This would create a third-party stamp of approval for eco-innovative technologies, which the Commission says would help back up manufacturers’ claims and reassure buyers.

Already used in varying forms in the USA and Canada for over a decade, the ETV method moves beyond simply being a labelling scheme by providing information specific to individual products and does not depend on any pre-defined labelling criteria. Once an assessment of the technology has been made, the information will be published on a public website. This will provide a reliable source and facilitate comparison of data which would position new technologies to be better taken up by the market.  It will also help avoid technological ‘lock-in’, since it is often the case that innovative technologies have no existing standards and can be overlooked as a result. Already, Belgium, the Czech Republic, Denmark, Finland, France, Poland and the United Kingdom are participants in this ETV programme.

3.    ‘Dynamic standards’

Standardisation can sometimes stall rather than speed advancements, Commission officials say. “Once the regulatory standard is met, there is no incentive to go beyond that standard,” said Luca Venerando Giuffrida, an official in DG Environment. This is particularly true in eco-innovation where sectoral standards in energy efficiency only require companies to produce within certain guidelines, rather than encourage them to do even better than required.

To combat this issue, the Strategic Implementation Plan, an internal Commission document, is looking into the possibility of introducing “dynamic standards” to the regulatory framework of some sectors in the EU. These dynamic standards work by updating and revising sectoral standards based on best performers. Giuffrida says this approach, which is similar to the idea of survival of the fittest, has been used successfully in Japan to improve the energy efficiency of selected products. This is one of the many measures the EcoAP aims to implement during its run.

4.    Steering eco-innovation

In welcoming the European Commission’s communication on the EcoAP, the Council of the European Union called on the Commission to use proposed steering-groups in order to develop the Eco-Innovation Action Plan into a strategic cooperation with Member-States and all relevant stakeholders. To that end, the EcoAP is establishing two high-level groups.

The first, High Level Working Group, is organised by DG Environment and will build on the experience gained from a similar group under ETAP. It will consist of representatives from the Commission and Member States. This group will work internally and have an important role to play in driving the eco-innovation agenda in the EU and also in facilitating an exchange of information, while providing policy guidance at both EU and national levels. At the moment, efforts are underway to fill places within the group and determine its detailed functions.

The second, High Level Multi-stakeholder Steering Group, will be organised by DG Research and Innovation and represents the more public of the two groups: it will consist of representatives of Member States, business and industry (particularly SMEs), researchers and other key stakeholders. The function of this group will be to facilitate policy studies, enable peer reviews of current and future actions and also to monitor the implementation of the EcoAP. Although it was stated in the Commission’s communication on the EcoAP that this group would start to meet in 2012, it is more likely that they will become active in early 2013.

5.    Measuring the impact

According to a European Commission impact assessment, “the previous experience of ETAP showed difficulties in attributing effects to ETAP actions”. In order to avoid similar criticism, the EcoAP already has a number of tools in its kit to track and monitor changes in buyer and consumer confidence and perceptions, best practices and funding levels.

The Eurobarometer, the Eco-Innovation Observatory and its European Innovation Scoreboard already provide an overview of public, academic and market attitudes to eco-innovation among the EU member states. Even though the Observatory project will come to an end in 2012, the EcoAP plans to make continued use of the Scoreboard as it is the first tool to track eco-innovation performance of EU Member States. Based on the Scoreboard criteria, Finland, Denmark and Germany are leading the way in the EU, while Romania, Slovakia and Lithuania need to put in more effort if they want to catch up. According to a 2010 report by the Scoreboard, there is no country that can serve as an eco-innovation role model in all areas. For this reason, it is critical that performance continues to be monitored and coordinated.

The EcoAp will also be evaluated internally and externally. From the launch year of 2011, a mid-term evaluation will be given in 2016 and a final assessment of the programme made in 2020.

For more information on the event, please click here: Q&A on Eco-Innovation with European Commissioner for the Environment, Janez Potočnik