Being green is taking on a new urgency in Brussels – and a new meaning. The European Commission aims to pioneer a radical shift toward resource efficiency by 2020 and the overhaul could include get-tough measures, such as a Europe-wide ban on landfilling of waste materials.
“We cannot go on producing and consuming in the same way,” argued Janez Potočnik, European Commissioner for the Environment, at a Science|Business Innovation Board conference and webcast, Eco-Innovation: Harnessing R&D For a Green Economy, yesterday (26 September).
The Commission’s goal is to manage what is now perceived to be waste as a resource, encouraging its recycling and re-use, and creating economic incentives for the private sector to develop markets for secondary raw materials. In some cases strong regulation may be needed to accelerate change. In seven or eight European countries for example, 80-90 per cent of waste goes into landfill – and is lost forever. “Taxing landfill is soft policy,” says Potocnik. “If we would introduce a ban on landfilling, we then create a very clear case for investing in recycling… That will move the industry exactly in the right direction.”
The consequence of not making this shift is dire. If the world continues using resources at the current rate, by 2050 it will take two planets to sustain our consumption, according to the 2011 Commission’s Roadmap to a Resource Efficient Europe, which sets out milestones to achieve a sustainable economy. The roadmap targets change in the way companies design and manufacture products, and the way businesses and individuals consume resources.
At its core, resource efficiency is about Europe’s future competitiveness, argues Potočnik. Even without climate change – or financial crisis – growing strains on vital resources including water, raw materials, energy and land, loom as a huge economic threat. “We are a major importer of resources. If Europe wants to be competitive in future we need to be resource productive,” he says.
Green by design
David Eyton, Group Head of Technology at BP and one of several industry executives who participated in the webcast debate on resource efficiency policy, agreed that banning landfill would mean a certain kind of waste was not created. But, asked Eyton, “Can you create a building so you can reuse parts? It’s a completely different mindset from recycling. When it comes to building things that can be recycled and reused the key issue is design. If you have not designed it to be deconstructed and removed, it’s not feasible [to do so].”
The dilemma for politicians and industry is that the global economy is “locked-in” to resource-intensive infrastructures, business models and financial models. “We need to change what we finance and what we reward,” Potočnik said. “The core question is how to develop a more long-term vision.”
That’s the hard part. As Eyton noted, in the energy industry in particular, the innovation process that transforms new technologies into commercial products is longer and more capital-intensive than in other sectors. “You’re looking at decades and many billions of dollars to scale up. So time really matters. And once we’ve built up infrastructure, it sits there and the marginal cost of using it is quite low. So the opportunity to create something that’s better and convince people to give up using the low-cost system they have is extremely unlikely,” said Eyton.
Green Horizon 2020
Engaging the private sector to collaborate on resource efficiency innovation and investment is a top Commission priority. Potočnick plans to launch several public-private partnerships around resource efficiency, including a Water Innovation Partnership in 2013 which has €40 million in earmarked funds. Under the Commission’s €80 billion Horizon 2020 proposal for research and innovation, €3.2 billion would be invested in climate action, resource efficiency and raw materials from 2013 to 2020.
The Innovation Partnerships will focus both on technology innovation and how business models are shaped and how consumers react. “So for the first time, we will put people together from demand and supply side to address the question of why innovation in water is not going faster,” said Potocnik. “That will provide us guidelines on what needs to be done and when, with timelines.”
Green for Growth
But can green products generate real growth? The answer is yes – as long as capital finds the ideas. Over the past few years, GE has targeted investments in smart ideas and innovations in resource efficiency, both in-house and at start-ups and small companies, to build an eco-innovation business that generates more than $20 billion a year in revenues. “The EU has great pockets of strength, but it’s not so good at taking research and commercialising it,” said Tore Land, director of Ecomagination, for GE Europe, Middle East and Africa. “The EU could do much more to support and help small companies scale [up].”
It’s not hard to find examples: One start-up from Imperial College London has engineered bio-plastic, while Aalto University researchers have created a personal computer that is 100 per cent recycleable. “There is an underlying competitiveness [at a] research level,” says Edward Astle, Pro Rector, Imperial College London. “But to get to the next stage, there is a financing gap. There is great fragmentation of venture capital in Europe – it’s local, then regional, then national. Policy can address that.”
The lack of common energy standards and regulations across the EU is another major obstacle to improving resource efficiency. “If you look at a local power generation – and efforts to improve its ecological footprint, you are not dealing with the EU market – you are dealing with the UK, German, or Belgian market. That’s where policymakers and stakeholders could help the market dramatically, said Land. It is an EU market but the legislation doesn’t reflect it. Subsidy schemes differ, and that dramatically slows innovation. Small companies can’t successfully scale up their businesses. “That’s a case where policy can help,” says Land.
Life cycle analysis
Building the tools and standards for life-cycle analysis will provide the foundation for the transition to a sustainable economy. Europe’s Joint Research Centre is working on open access data and common methodologies, which will be used as the basis of green public procurement policies. But industry input is vital.
“We are using design for life cycle analysis performance – so the tools are there, but they have to be deployed in efficient manner. It’s critical to know for what kind of market we design,” said Land. Any bold policy move has to encompass two requirements, he added. “It has to be pan-European and it has to be as long-lasting as possible. For many industries, it’s an infrastructure issue. As long as those two requirements are [met], any industry [will be] willing to respond.”
Even service companies are rethinking business models. One example is French tyremaker Michelin, which now has started renting tyres, thus making it in the interest of the owner that they are used for as long as possible.
“Putting elements of what you want to achieve into the design phase is common in our industry. We have to avoid electronics waste. You don’t design for just cost but also for efficiency,” said John Vassallo, vice president of EU Affairs, Microsoft. “Engineers must have that as part of education. It is a societal shift. It is do-able. Many companies have done it.”
Above all, Europe needs to look at the entire system when assessing efficiency and designing policy. “You can address one issue by pushing it somewhere else,” said Eyton. What is critical is to understand systemic impact of policies you are deploying. “In 2005, only 12 per cent of energy captured at source ended up in useful light, heat, energy – 88 per cent was lost. Some thermodynamically has to be lost. But a lot of that is genuine wastage – it’s all these (inefficient) handoffs in the supply chain, and we don’t realise there are massive losses in the system. And the bigger the nation, or group of nations, the more difficult it is to understand the system,” he said.
The Commission’s Eco-Innovation Action Plan, launched in 2011, encompasses a wide range of measures from prices and taxes, to green procurement and removal of environmentally harmful substances, spanning sectors from research to agriculture. Initiatives include the creation of a system to support SMEs in waste recycling and the creation in 2013 of a network of eco-innovation financiers and investors.
The package of measures for transforming Europe’s economy won’t come cheap. But carrying on without change will be much more costly to society, Potočnik argues. “By 2030 we will face a 40 per cent shortage of water. My message is, we don’t have an alternative. We can’t govern the 21st century in same way as the 20th century. We need to respect the limits that exist,” he said.