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European Commissioner for Environment
Scottish Parliament - Committee on Rural Affairs, Climate Change and Environment
Edinburgh, 20 June 2013
Ladies and Gentlemen,
Thank you for inviting me here today.
I'd like to talk to you today about the context of our work and in particular the need for a New Environmentalism. Actually that begs the question, what is… or was… “old environmentalism”, and what is… or was… wrong with it.
Well, if "old environmentalism” was about putting limits on the excesses of our old path to prosperity, the job of new environmentalists is to show that there is a possible new path to prosperity and well-being through a sustainable model of economy and society.
I would not want to criticise old environmentalism, or old environmentalists. Actually I think they were right, and we owe them a debt of gratitude. Much of the legislation that is today stopping the worst excesses of our industrialisation and growth model was due to their courage and intelligence. We can thank them for cleaner air and water, for safer products and better waste treatment. And that approach should continue. But the world has changed.
We know for a long time that our economic activities have an impact on the environment. Our reaction has generally been to legislate to protect excess and punish polluters.
But today we see that pressures on the environment are having a real and increasing impact on the economy. The soft laws of economics are coming up against the hard laws of physics as we hit physical resource constraints. We now start to see that tomorrow's growth will depend on making environment part of our economic policy.
For me that is the essence of new environmentalism. It is tackling environmental problems before they happen, building it into our economic policy, our industrial policy, our energy policy, our transport policy, our agricultural and fisheries policies.
I believe that is the only way that we will be able to cope with the new economic paradigm where we share the physical limits of the earth with 140,000 new neighbours every day. By the way, that is the population of my country – Slovenia –every two weeks.
Europe's economies are built on decades, indeed centuries, of resource intensive growth. Throughout their evolution and diversification, our industrial economies have provided great advances in wealth, health and living standards. But at the same time they have scarcely moved beyond the fundamental structure established in the early days of industrialisation, where economic growth relies heavily on the increasingly extensive use of cheap and abundant resources, not just minerals and metals but also natural capital. Our growth and competitiveness has been built on ever increasing labour productivity through innovation, and increasingly available and cheaper resources.
This worked well for as long as the global middle class population numbered a few hundred million. Today that is no longer the case. And by 2030 a further 3 billion will rise from subsistence to consumer economies and consumption habits. Our old resource-intensive growth model is simply not feasible on this scale and on a limited planet. Many of the resources our economies depend on are already scarce (like energy or some raw materials) and others are limited and vulnerable (like clean water, clean air and nature).
In concrete terms the global competition for resources will mean that we will be obliged to increase resource productivity, particularly in Europe where we are so dependent on imports of materials. But resource scarcity will also mean that we will have to move away from our linear model of resource consumption where we consider it normal to ‘take-make-use, then throw away'. Actuaries and risk analysts are already starting to look at companies' ability to resist input scarcity, price-volatility and supply disruptions.
The transition to resource efficiency and a circular economic model is inevitable, particularly for Europe.
For me New Environmentalism is about making sure that we make the change now, in a managed way, rather than when we hit environmental limits, tipping points and catastrophes. That is a major challenge – perhaps the principal challenge – for we policy makers in Europe in the coming decades.
“But”… you may well be asking… “isn’t this just a challenge for the private sector to face?”
Well, clever companies are certainly getting ready. They see that natural resources are a significant factor of production. They see that resource costs have become more critical to manufacturing productivity than labour costs.
I speak regularly to such companies, and they reassure me that I am right. Yet I am constantly aware that most companies have still not woken up. For many smaller companies this is simply because they do not have the luxury of teams of strategists – they are just getting on with their core daily business. For others it is because they are delaying the inevitable, trying to squeeze the remaining rent they can get from the existing system… living in “never-never-land”.
But if Europe’s future – in macro-economic terms – is in maintaining competitiveness through better use - and then re-use - of resources, what can new environmentalism do to facilitate this transition?
The change in mentality is the biggest challenge we are actually confronted with. Our economies are locked into the resource intensive industrialization and post industrialisation growth paths of the past centuries. Global resource constraints mean that we have to change the way our economy functions, the way we produce and consume: the way we live.
This fundamental change will not be easy and there will be losers. But the earlier we prepare the fewer losers and the more winners there will be. Implementing the resource efficiency agenda and moving to a circular economy is not only about policies and legislation, it requires the active engagement from all economic actors.
Legislation will still be important in setting the right framework conditions and investment predictability, and that will be the role of parliaments like this one. Civil society and business will also have to play a key role. We will need to abandon old habits, systems, infrastructures and policies and redefine new ones that will allow us to live within the limits of our planet and obtain more value from less.
As policy makers we must help our business sector keep ahead of the curve in adapting to this global megatrend of increasing resource competition and constraints. If we do not we will lose relative competitiveness to regions of the world that are not locked-in to our more resource intensive infrastructures and systems and whose comparative advantage in terms of cheap labour and access to resources we cannot resist for long.
It is for public authorities, including at EU level, to show leadership and give the right signals. We need to work towards consistent restructuring measures; we need to build predictability and confidence of business in the long and medium term in order that they are ready to invest in the short term.
This is why our approach to environmental policy must be based on carrots as well as sticks. We need to go beyond the traditional "three C's" - command, control and compliance – the basis of old environmentalism encapsulated in the “polluter pays” principle,… and develop the "three I's" - innovation, incentives and integration.
Just to be clear, I did not say we get rid of the “three C’s”, it is just that they are no longer sufficient: we need to complement them.
Whilst it is enterprises that will innovate on the scale needed for our transition, it is public authorities and governments that need to provide direction, incentives and leadership in order for enterprises to make the right investments in change. As the situation is today, market forces are too slow and imperfect; the financial, business and economic world takes too much of a short-term view; and politicians tend to work too tightly only around electoral cycles.
We should work in parallel on three different time-frames:
On Monday, we held a meeting of ministers, MEPs, CEOs and other stakeholders -the European Resource Efficiency Platform – which adopted recommendations on what actions we need in the short term to become more resource efficient.
The Platform called for clear resource efficiency targets and a range of practical steps that businesses and public authorities can take to deliver the benefits of a more circular economy where waste is eliminated. They were also keen to state that the distinction between the short term and the long term is a dangerous one. We cannot continue to argue that our short term problems mean that we don’t have the luxury to think about the long term.
To provide the right framework we need to give clear signals to the private sector so that it can make the up-front investments needed to become more resource efficient. So that companies are ready for input price increases, not just responding to supply shocks. This is particularly important for SMEs.
The European Industrial Policy that we have recently put foreword embraces this new philosophy with:
Ladies and gentlemen,
Parliaments have an essential role in shaping European policies and making sure that they can be implemented at national level. Being in daily contact with your voters, local organisations and businesses, you can ensure that environmental policy-making is realistic, feasible, understood and well grounded.
As legislators, I believe that this committee – responsible for environment - should be putting environmental considerations at the centre of all policy areas in Scotland. Environment policy should not be a ghetto, it should not be confined to this committee, and it should not be considered as a constraint on our economies. It must go hand‑in‑hand with economic policy. Developing a new economy based on a more efficient use of our natural resources will create jobs, support competitiveness and cut costs, while preserving our health and our environment.
Thank for your attention and I look forward to hearing your views.