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Green growth for Ireland and Europe

Commission Européenne - SPEECH/12/842   19/11/2012

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European Commission

Janez Potočnik

European Commissioner for Environment

Green growth for Ireland and Europe

Keynote speech at the Irish Institute for International and European Affairs / Dublin

19 November 2012

Ladies and Gentlemen,

Thank you for inviting me here to Dublin; soon to be the driving seat of the Irish Presidency of the European Union. Today I want to ask the question; can “green” and “growth” really go together? I want to explain why I believe that they can, and indeed they have to. I want to share my vision of green growth for Europe, and for your green island.

When I became European Commissioner for Environment nearly three years ago I took a conscious decision to make resource efficiency the core and guiding principle of my mandate. It was a shift in emphasis designed to put environment policy fairly and squarely at the centre of our policy agenda – on the desks of ministers for economy, agriculture, energy and transport – and indeed of prime ministers. Not only environment ministers.

The logic went like this:… Modern environment policy is not an obstacle to economic growth or a constraint on business. It is not about only using legislation to punish polluters once the damage has been done. On the contrary, our future growth and competitiveness will fundamentally depend on our ability to respond to the challenges of resource scarcity and environmental degradation. These challenges will inevitably put a brake on growth unless we tackle them now.

We have to get ready for a world of 9 billion people by 2050. A world where, on the business-as-usual scenario, we will need three times more material resources by 2050, and 70 % more food, feed and fibre.

The days of growth based on intensive use of cheaper and cheaper resources are over. The commodity price reductions of the last Century were already wiped out in the first decade of this Century. Competition for resources among nations and economic actors is increasing. They constitute a high and increasing proportion of the input costs for business. And for many of these resources Europe is highly dependent on imports.

In this context the economic and business logic for moving from resource-intensive to resource-efficient production is clear. In fact it is also clear that we do not really have a choice. The writing is on the wall.

The choice we do have is whether we prepare for a managed transition now - through smart investment and innovation - or whether we continue with that business as usual scenario: and wait for supply shocks to bite, with the disruptive consequences that will surely have.

By putting Resource Efficiency at the heart of the European structural economic policy the European Commission has chosen the first option. The Resource Efficiency Flagship of the Europe 2020 Strategy says that we still have the possibility of growth in the face of those global trends, but only if we can decouple that growth from our use of resources and the impacts of that use.

We have since adopted a number of long-term strategies under this Flagship which put environment at the centre of policies in the fields of energy, transport and research policies, industrial, cohesion and agricultural policies, climate and biodiversity policies.

We adopted a comprehensive framework for action last year in the Roadmap to a Resource Efficient Europe, guided by a 2050 vision, milestones to be reached by 2020 and shorter-term actions both at the EU and Member State level. This year, EU heads of state and government called for the rapid implementation of the EU resource efficiency and low carbon roadmaps (in the conclusions of the Spring European Council, on economic governance).

We take that task seriously. To start with we have brought together the right people to guide the process. Under the chairmanship of your former Taoiseach, John Bruton, we united environmental leaders and academics, business leaders and financiers, ministers, and Commissioners in the "European Resource Efficiency Platform". The Platform already preparing its recommendations on promoting a circular economy, on providing the right conditions for investments, and on that indicators we need to measure our progress on resource efficiency.

And we are making sure we align our financial resources to the task in hand by:

integrating resource efficiency and greening into mainstream funding for cohesion and agriculture in our budget proposals up to 2020.

by proposing a 60% earmarking of research funding for sustainability and climate change, and

by proposing a 50% budget increase for LIFE+.

So what can you expect in the next months and years? What resources will we be tackling and how? I can give you some concrete examples.

Last week we adopted proposals in respect of one of our most undervalued resources: water. We have made progress on water quality in Europe over the past decades, but we still have a problem, both in terms of quality and quantity of water.

Our new Blueprint to Safeguard Europe's Water Resources says that, to reach our objective of “good water status” by 2015, we need better implementation of legislation – yes - but we also need to consider water in other policies such as agriculture, fisheries, transport and energy, and we need investment. We need to improve water efficiency and to maintain our edge in innovative approaches to water management and use.

The Water Blueprint proposes:

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,

improved efficiency of water-using devices in buildings through ecodesign, and

better implementation of the "polluter pays" principle, in particular in agriculture, through metering, irrigation efficiency, water-pricing and better economic analysis.

One of our greatest achievements in the EU is the Single Market, and early next year I intend show how we can use its potential to boost supply and demand for more green goods and services, and to encourage companies to improve their environmental performance and reduce resource use.

Both business and consumers are asking us for tools to be able 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. Creating a Single Market for Green Products and Services based on these tools will not only cut costs for business and provide them with a level playing field, 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 during in the next two years on developing approaches to integrating material efficiency and water efficiency into eco-design for the product categories where we identify the highest potential benefits, ensuring durability, water efficiency and recyclability.

Also next year we will publish two communications tackling sustainability in two of the three areas we identified in our Roadmap as having the greatest impact on resource use: food and buildings. 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.

And in 2014 we will review our targets in waste legislation; updating them to the level of ambition we need to reach the milestones we have set for resource efficiency.

In the Roadmap we called for the virtual elimination of landfilling by 2020. 5 Member States have already shown that this is possible, but we still have 10 Member States that bury more than 70 % of their municipal waste in holes in the ground.

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 130,000 jobs in Europe and generate € 15 billion turnover for the waste sector. Implementing all our waste legislation would create 400,000 jobs, save € 72 billion a year, and increase the annual turnover of the EU waste management and recycling sector by € 42 billion. For Ireland, that would mean several thousand jobs and € 600 million extra turnover. Incidentally it would also reduce total direct and indirect greenhouse gas emissions by around 3 to 5 %... not bad!

So we have done a lot, and we have a clear set of actions for the next two years. But will this be enough to take us to our ultimate objective of decoupling growth from resource use and its environmental impacts? After all, we are talking about a very fundamental transition:… from a growth model based on intensive use of cheap resources, to one based on getting more value from expensive resources.

I believe that we have three particular challenges that we must face if we are to deliver that transition: we must mobilise at the national level, we must invest and innovate, and we must create a circular economy.

First, national governments have to play their role; most of the relevant policy tools are not in Brussels, they are in the 27 national capitals. We are trying to help the capitals go in the right direction. We have started to integrate resource efficiency into the governance mechanism of the Europe 2020 Strategy – the European Semester - encouraging Member States to include resource efficiency in their National Reform Programmes.

This year using this mechanism we recommended that 12 Member States should shift taxation from labour to pollution and environmental degradation. 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.

Ireland was not asked to provide an update to its National Reform Programme this year, but we appreciate your efforts to continue monitoring and acting on the wider range of Europe 2020 commitments. The move towards a resource efficient economy and society underpins the success in the fields of energy, climate change, but also research and development, and employment. The priority that Ireland is giving to targeting research and innovation, demonstrates very well the thinking that future competitiveness and sustainability go hand in hand.

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

I am considered by some to be a "techno-optimist", but although I have great hope in technological progress to deal with the pressures on our planet, I know that technology cannot provide all the answers. In reality I am 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.

It will be the private sector that drives these improvements. Just as we saw it drive up labour productivity in response to rising labour costs in the last Century, so it will respond to drive up 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.

In addition to the European programmes I already mentioned, I hope that the recent increase in the EIB capital will help leverage up to € 60 billion for resource efficiency projects over the coming 3-4 years.

Our challenge is to mobilise the investment to make that innovation happen on a big enough scale to make a difference. That means not just the small but important leverage effect of public money. It needs private investment. 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.

The third challenge is that resource efficiency alone –getting more value from fewer resources – will not be enough. McKinsey has 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. That means moving away from a linear economy - extraction, production, use, and throwing away - to a circular – or "closed loop" - economy, where once a product’s life is over those resources are pumped back into the economy. This means designing for recyclability, repair and re-use; developing new business models, better markets for secondary raw materials and sustainable sourcing, and putting in place industrial symbiosis systems, like your own SMILE Resource Exchange1.

And that brings me on to talk about Ireland.

Ireland is known as a green island, maybe not so much for its environmentalism, even if strong and existing, as for its farming. So I should say a few words on how I see environmental and agricultural policies working together.

Greening the CAP means recognising more clearly the value of ecosystem services and public goods. One of the more relevant greening requirements for the vast majority of Irish farmers will be to protect permanent pastures. They contribute to water protection, the retention of soil carbon and, in many instances, rich biodiversity, besides providing the main feed source for cattle and sheep in Ireland. We want to ask the farmers that CAP supports to contribute to the delivery of these goods in their daily work. This work should be valued, and I also believe that continued public support for farming subsidies will depend on farmers fulfilling that role.

We wish to bring both water and pesticides legislation within the remit of cross-compliance. Yes, we need to ensure that farmers know their legal obligations, but it makes no sense to support with public money the economic activities that cause the damage and then to use more taxpayers' money to clean up the resulting pollution.

I should say that over recent years, notably on nitrates, Ireland has made real progress based on a solid action programme, with significant efforts by the state and farmers alike and with the help of cross-compliance. Good news for all; no reduction in agricultural output, less pollution and lower costs for taxpayers. I trust that you will guard this environmental progress jealously even if the sector expands with the abolition of the milk quotas in 2015.

Before I take some of your questions, let me add something about the coming 6 months. As you might be aware, Ireland will take over the EU Presidency in six weeks. So, where am I looking for input and support from that Presidency in putting in place the kind of approach that I have just explained? What are going to be the big dossiers for the Irish in the environmental and resource efficiency fields?

One eagerly awaited proposal, which will be very much on the table is the new European Environment Action Programme (EAP). It will come as no surprise to you after what I have said today that its key message will be that it makes good economic sense to tackle environmental problems, improve resource efficiency, invest in natural capital and reduce environment-related health impacts. The Action Programme we will propose provides for:

the creation of the right conditions for a single market for sustainable and low-carbon growth;

the strengthening of the EU's ecological and climate resilience; and the contribution of environment policy to better human health and well-being; and

better implementation of legislation and the international dimension of environment policy.

I know that your government is very keen to help secure a first reading agreement on the EAP and we fully support that.

Other key environmental initiatives in our Work Programme for 2013 include:

First, early next year, we will come forward with proposals to set out the EU follow-up to sustainable development goals and to the Rio+20 conference.

Second, we will review our air quality policies. Despite major improvements, about a third of Europe's city-dwellers are still exposed to poor air quality harmful to their health. And progress here will also bring job opportunities and reduced energy use.

Third, we plan to come forward with a framework for exploration and exploitation of unconventional fossil fuel, in particular shale gas. While shale gas offers great opportunities, it also poses new challenges to the environment. We need to ensure clear, transparent rules from the outset and tomorrow in Strasbourg I will be explaining to the European Parliament how we plan to tackle this.

Another area where the Irish have particular experience is in dealing with plastic bags. Plastic bags become litter far too easily, and too often end up in the sea. By imposing a small levy, Ireland successfully reduced its consumption by around 95 %. Several other Member States are developing their own initiatives. We are now looking into the different policy options available for Europe to engage in a concerted effort against the wasteful consumption of plastic bags.

I am confident that the Irish Presidency will be a strong ally in keeping up the momentum on environment policy. Resource efficiency, green growth and jobs for the EU are essential objectives that we can only achieve if we all pull together.

Ladies and Gentlemen,

It is hard to find a politician who was re-elected for defending longer-term interests over short-term benefits. Or a manager who was rewarded because the profits of the company were lower but more sustainable in the longer-term. Long-term thinking is not often rewarded in business and politics, and that is particularly true in today’s economic climate.

But to those entrepreneurs and politicians that are looking more to tomorrow than 2020, I would just point out that employment in the green sectors in the EU has been growing by 3 % a year during the crisis. The global market for eco-industries is estimated to be at least a trillion Euros, and is expected to almost double over the next 10 years.

We have to do away with the thinking that makes a zero-sum game of our present and our future. It is those fast growing green sectors that will be the enablers for us to green the whole economy in the future. Green growth begins tomorrow, not in 2020.

For you in Ireland that means that to the famous “40 Shades of Green” you would need to add a 41st: the green economy.

Thank you.

1 :

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