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Speech 'Cities will define our future'

Commission Européenne - SPEECH/13/326   17/04/2013

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European Commission

Janez Potočnik

European Commissioner for Environment

'Cities will define our future'

7th European conference on sustainable cities & towns

Geneva, 17 April 2013

Ladies and Gentlemen,

It is a pleasure for me to be here today. Just a few years ago the theme of "cities" would have been jealously reserved to discussions between the city leaders or to the national level at best! And today, we see multiplication of initiatives like this conference that brings together cities from 84 countries. This is a remarkable step forward in our understanding of the important role of cities and local governments in shaping the world we live in.

The vast majority of us in Europe, but also around the world, are living in cities. And there is no doubt that cities will to an important extent define our future. They are the engines of economic growth, job creation and innovation.

It is a fact that the world has changed. We are more interconnected and interdependent than ever. It has become a global village. Technological advances and globalisation have considerably reduced the distance that separated us in the past. And it is a privilege to have the opportunity today to exchange views and experiences on how to best put into practice the sustainable development agenda.

Many challenges, like for example climate change, disappearing biodiversity, scarce resources (like water, land or oceans), potential pandemics, poverty, global security … can only be addressed if we join our forces. Only by working closely together and moving in the same direction will we be able to obtain long-lasting results.

A scientific article in the journal Nature (July 2012) stated the following: "Today conditions are very different because global-scale forces including, but not limited to, climate change, have emerged as a direct result of human activities. Human population growth and per-capita consumption rate underlie all of the other present drivers for global change".

Our planet's population is expected to rise to more than 9 billion by the middle of this century. And by 2030 we will already share our planet with an extra 3 billion middle class consumers. These figures are repeated by many and may no longer sound dramatic. So, let me slightly rephrase them. The world's population is increasing by 140,000 people per day, all aspiring… legitimately… to the same living standards that we enjoy. In just 30 years - one generation - 2 billion more people will share the planet, which is more than the total amount of the population on the planet at the beginning of the 20th Century. On top of that, in just over 15 years from now there will be an additional 3 billion middle class consumers, which corresponds to twice the total population at the beginning of the previous century.

Of course, this is great for those 3 billion whose living standards will rise, and for the businesses that will thrive in providing for those demands, but this will put immense strain on many resources. We will need three times more resources -140 billion tons annually- by 2050. The demand for food, feed and fiber is projected to increase by 70%.

But already 60 % of the world’s major ecosystems on which these resources depend are degraded or are used unsustainably. (fish, water … biodiversity, climate change). Without important efficiency gains, by 2030, we will need 40% more water than we can access.

A few days ago the departing Environmental Editor of The Independent - after 15 years of work – wrote (I'm summarizing): "Earth is under threat, as it has never been before, from the ever more oppressive scale of the human enterprise. We have the knowledge and capability to destroy our own home and ourselves. We have a terrible potential for destruction, for causing suffering to others and, indeed, now, for destroying our own home."

The conclusion is evident and clear. Looking to the future, the "business as usual" scenario simply will not work. Transition from our current resource intensive growth model to a resource efficient growth model, to a circular economy, is absolutely necessary. It is actually inevitable. For the first time, we humans, are affecting the balance of our planet.

Why is all this so important today also in Europe, including for our exit from the economic crisis?

Firstly: we use a lot of resources. The European economy is built on decades of resource intensive growth. We use 16 tons per person per year, we throw away 6 tons of that, and half of that waste is buried in the ground as landfill: 3 tons per person every year;

Secondly: resources and energy (World Energy Outlook: International Energy Agency) are becoming more expensive. After a century of declining resource prices in real terms, pressures on resource supplies have led to a steady increase in prices since 2000. On average, real prices for resources increased by more than 300 % between 1998 and 2011. At the same time, resource price volatility also increased. In Europe, 87 % of EU companies expect resource prices to continue rising in next 5 years. We are going to have to get used to higher energy prices and higher resource prices in Europe because they are here to stay for quite a while.

Thirdly: already today resources are the dominating factor in the cost structure. For example in German industry 43% of the total costs can be attributed to the use of resources and only 18% to the cost of labour. We are still very much focussed on labour productivity, and macroeconomists are used to talking about labour and capital productivity because they are the traditional drivers of growth and also, let us be honest, they are relatively easy to measure. But if you dig a little deeper most of them will admit that labour and capital are no longer the main drivers of growth. In the jargon of growth accounting, more than half of growth comes from what is called 'total factor productivity'. Total factor productivity captures the impact of innovation and technological change on growth. And at our stage of economic development here in Europe, these are the main determinants of growth.

And fourthly: we import most of our material resources. More than half of the materials that we use are imported. We import six times more than we export. We have the world's highest net imports of resources per person. And our dependency on imports is increasing. We get 48 % of our copper ore from abroad, 64 % of zinc and bauxite and 78 % of nickel. We import all of our cobalt, platinum, titanium and vanadium, as well as rare earth metals.

Thus, the real innovation challenge for companies is to shift innovation potential from labour to resource productivity. This is also the core question connected to necessary structural changes. It is not only a question of our future environmental agenda, as some might see it, it is actually a central question of our future competitiveness, and it should be the essence of our new industrial policy. To be clear, I'm absolutely not supporting deindustrialization of Europe, but I do believe dematerialization of our industry is necessary, as a precondition to keep industry in Europe.

The importance of this transition is also already understood worldwide. Last year's Rio+20 Conference reinforced the idea that sustainable development needs to be built upon strong protection of the environment, as well as a social and economic dimension. The Rio Conference did not lead to the ambitious outcome many - including myself - had hoped for. But it did reach a very important milestone: a renewed commitment in favour of a global transition towards a green economy. I find it highly important that cities and towns continue to play their part. This is also stressed in the Rio+20 Outcome document

"The Future we want", which contains a specific chapter on sustainable cities and human settlements.

In the European Union we recently adopted the 7th Environment Action Programme that will help us do just that. The Action Programme has a strong and clear message: If we want to live well in the future, we have to do so within the limits of our planet.

What we propose is a programme that sets out a clear vision for the future and explains how – even in times of economic crisis – well-being and prosperity are goals that are still within reach.

Let me briefly expand on our priority objectives which as you will see are closely related to the urban environment.

The first three address the major themes facing the environment and the green economy.

The first is to protect, conserve and enhance our natural capital base, which is, after all, the foundation on which so much of our economic activity is built. Here we're talking about implementing existing policy and legislation, from biodiversity and nature protection to climate change, water and marine. Land degradation and soil quality are key environmental challenges which are attracting more global attention following Rio.

The second is to put in place the right conditions for resource-efficient, low-carbon growth and innovation, which is at the core of the green economy we want to create.

The third is to tackle new and emerging environmental risks, to help safeguard the health and well‑being of Europe's citizens. The goals of clean air and clean water, the need to cut noise and deal with the increasing risks from endocrine disruptors, all feature under this objective, as does the need to prepare our society to face the impacts of climate change.

Four other objectives involve cross-cutting issues that are necessary to support the achievement of the thematic objectives. I tend to refer to them as the "four i's": implementation, information, investment and integration.

Finally the programme specifically addresses the need to strengthen our regional and global engagement, and aims, - particularly relevant for today's meeting - to help EU cities to become more sustainable. In short, 7EAP is focusing on three thematic priorities, four enabling conditions and two specific areas, one of them being cities.

Compared to rural areas, cities can benefit from economies of scale. However, unsustainable patterns of growth too often lead to negative environmental impacts, which can reach a point where urban, and especially metropolitan areas, become less competitive. Not to mention, less healthy. This not only influences the attractiveness of a given city to firms and skilled workers, but can also lead to direct costs in the long run, for instance, higher health costs and lost working time linked to pollution.

This is where the concept of resource efficiency becomes particularly appealing for cities. Policies that promote energy efficiency and reduce resource consumption and waste, increase the attractiveness of the urban environment, and support urban economic growth.

Cities have a key role to play in this transformation. They have a number of instruments in their hands, such as green public procurement, waste and water management, improved mobility, housing improvements, stimulating eco-product markets, and urban planning. We are also starting to talk about urban mining. Urban mining may sound like an urban legend, but for making one gold wedding ring you would need approximately 10 tons of golden ore but only 10 kilos of mobile phones.

Green Infrastructure and efficient land use are also important. Cities can benefit in many ways from establishing such networks of high quality green spaces, which use nature to deliver multiple benefits to our citizens. In the EU, Green Infrastructure projects have shown that ecosystem enhancement can go hand‑in‑hand with, for example, protection against flooding, and support the tourism sector. The deployment of Green Infrastructure creates jobs: for integrated planning in urban areas, for the construction of green roofs and walls, planting and maintaining the city's forests and park systems, for the restoration of brown‑field sites and opening up river courses flowing through the city. Investing in Green Infrastructure also saves money: it is more resilient and often cheaper than purely technical solutions in the long run.

***

Ladies and gentlemen,

I could go on and on talking about the importance of cities in this transformation process, and about the importance of this transformation for cities and their citizens. But you already know this.

So, let me conclude with a more general observation: Planning the transition to a sustainable economy is the only sustainable way forward. And it is not about tomorrow - it is actually about today. It is the only way to avoid going from a financial to an “environmental credit crunch”. This is not just a 'green growth' agenda, it is a growth agenda that happens to be green. If Europe wants to retain an industrial base, it must start to innovate, invest and specialise in the activities where it will have a comparative advantage in the global context of competition for resources.

To put it simple: It is actually not about "green growth", it is just about growth. Full stop. Also in the cities.

Thank you for your attention.


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