woensdag 9 december 2015

Circular economy package out – is it what we were hoping for?

Last week, the European Commission published its long-awaited package on Circular Economy. Appraisals across the internet differ. For some the glass is quite empty, whereas others see it at least half full. [i]

The ambition level, especially in the quantified waste targets in the legislation accompanying the package, is lower than last year’s repealed proposal. The 2014 package called for a 70% recycling target for municipal waste for 2030, and a total ban on landfill for all recoverable and reusable waste. These have been watered down to a 65% recycling target for municipal waste (75% of packaging waste), and landfilling to be reduced to a maximum of 10% of all waste by 2030.

These are the most eye-catching elements of the package.The Action Plan includes further proposed or planned action, but the waste proposals are the only legislation.

So, let’s have a look at a couple of reactions:

EEB, by mouth of Stephane Arditi, its waste policy coordinator, is worried the package pretends to have high ambitions and lots of good intentions, but doesn’t really envisage a process that will transform it into concrete action. He is however, still optimistic and believes there are good positive signs and that the way forward will be to combine business and environment opportunities.[ii]

The group of Christian Democrats in the European Parliament (EPP) might be happy with the package, as it is as they wanted: regulation-light, market-driven.[iii] But Finnish EPP member Sirpa Pietikäinen told EurActiv that she was ‘struggling to find what is more ambitious in the new package’.

And the Alliance for Circular Economy Solutions (consisting of frontrunner business groups and several European environmental thinktanks) has calculated that this proposal makes for less jobs than the previous one.[iv]


Compared to previous plans

Compared to last year’s Circular Economy package, which was meant as Commissioner Potoćnik's cornerstone in the implementation of his ambitious Roadmap towards a Resource Efficient Europe (REE), this new package offers a mixed picture. Let's call into mind the vision of the REE Roadmap, published in 2011:  
By 2050 the EU's economy has grown in a way that respects resource constraints and planetary boundaries, thus contributing to global economic transformation. Our economy is competitive, inclusive and provides a high standard of living with much lower environmental impacts. All resources are sustainably managed, from raw materials to energy, water, air, land and soil. Climate change milestones have been reached, while biodiversity and the ecosystem services it underpins have been protected, valued and substantially restored - Roadmap towards a Resource Efficient Europe, 2011[v]

The REE Roadmap set milestones for 2020 for each type of resource or key issue, and tried to further operationalise these in intended or proposed actions for both Commission and Member States. As the Roadmap aimed at encompassing all relevant policy initiatives, it also included things that were actually already planned or underway (in the framework of Waste, air, water policy, REACH, etc). 

Global total material use by resource type (Source: EEA)

Sad to say, on many intended actions or ideas included in the REE Roadmap, progress has yet to be seen (e.g. on implementing environmental footprints, widening ecodesign to include material efficiency, tackling barriers to eco-innovation, phasing out of environmentally harmful subsidies), whereas progress on others has not yet been measured (e.g. redirecting research and cohesion funding). Member States, local and regional authorities have started to take action on some of the proposed initiatives, but as there is no binding target and no benchmark, nor a timeline to check progress, this is all very vague. Finally, assessing overall progress across the EU has not been possible, because the EU2020 Strategy reviews do not include resource efficiency. Only recently have we seen attempts by the Commission to assess this through the Annual Growth Survey. So progress on this admittedly very complex topic is fragmented, sometimes difficult, and it is not even very clear whether the REE Roadmap is the chief inspiration behind all the individual efforts.

This unsatisfactory situation is of course what EEB’s Arditi had in mind when he talked about good intentions. 

In an attempt to remedy this, the Circular Economy package was proposed in July 2014.  And after its repeal last year by the new Commission, and subsequent overhaul, this is where we are. The Communication actually retables several ideas already floated in the REE Roadmap, like those on Ecodesign, food waste, construction, sustainable consumption. However, on quite a few instances, the new package is more focussed and more action-oriented than both the previous one and the REE Roadmap, as it has a timetable and some Commission actions have been formulated in stronger terms than before.  

Elements in the package

The package is so extensive that it is not feasible to discuss all of the elements it proposes or identifies for further action.Here are a coupleof the eyecatching ones:

-        On the waste side, there is progress, with targets for recycling and landfilling, though less ambitious than was hoped for; though recycling targets could have been set higher. But in one of the accompanying documents, the Commission shows how it has weighed different options against each other, and that we need to bear in mind that the feasibility of these targets is not equal across Member States;  

-        Further encouragement of waste prevention; this is however left to the Member States and remains rather weak;

-        simplified and improved definitions and harmonised calculation methods for recycling rates throughout the EU (this will increase uniformity and clarity, while saving implementation costs);

-        BAT-reference documents for several industrial sectors will be adapted to include ‘guidance on circular economy’; this is promising, yet still rather vague;

-        Standards will be developed: for secondary raw materials (esp. plastics); for material-efficient recycling of WEEE and batteries; important and useful to increase the quality and efficiency of recycling across the EU;

-        Product requirements relevant to the circular economy (i.e. on repairability, recyclability, etc) will be included in the Ecodesign Directive; however, we will have to wait for the Ecodesign working plan for 2015-2017 to see how this will play out;

-        an independent testing programme under Horizon 2020 to help the identification of issues related to possible planned obsolescence (effectiveness will hugely depend on how this is undertaken, but it is an interesting new strand of research);

-        action on Green Public Procurement (GPP), by emphasising circular economy aspects in new or revised criteria, and leading by example in its own procurement and in EU funding (this is new, under the previous Commission this was not actively undertaken or even considered).

-        For further implementation of the many strands of the action plan, the Commission promises to create platforms, develop guidance pilots and targeted outreach. These could be helpful as accompanying measures.

What is still lacking, is demand-side policy, market instruments, setting the prices right, etc. However, as we all know, the Commission’s hands are tied, as these instruments require unanimity (which is not forthcoming). So the Commission cannot do much else than encourage or promote the use of these instruments.

Potential boost from society

So will this package fare better than the previous plans? What potentially will give this a boost now, as was not the case in 2011, is the fact that frontrunner business organisations are now pushing this agenda [vi] and there are many ‘circular’ initiatives and business models that have meanwhile sprung up.

There is larger public interested in more sustainable consumption: organic food sales have gone up, more and more restaurants are putting organic on the menu, there is an interest on declaring a war on waste,[vii] vegetarianism is becoming more accepted and available in shops and restaurants, as is more sustainable or ‘circular’ clothing[viii], there is increased demand for sharing and leasing instead of buying tools, cars, etc.

Don’t we need legislation, because all the rest is just ‘good intentions’?

There is indeed a need for legislation, but also of implementation of legislation that is already there, which requires sronger involvement of all levels of government, as well as business and society. These can be further increased by applying carrot & stick approaches, by co-financing investment in R&D. The Communication includes many of these elements. This package potentially has the tools. 

We count on Timmermans 

And now it is up to the whole Commission, not just Vella, to drive implementation. In industrial symbiosis, ecodesign, empowering the consumer, and boosting demand for material-efficient, circular products and services.
Greening the Economy cannot just be the responsibility of Commissioner Vella. We count on Commission Vice-president Timmermans to make his professed ‘firm belief’ in the circular economy heard across DGs, and his stronger ambition has to be echoed throughout the whole institution. Only then will we see  proposed actions on sustainable production and consumption, that for a long time seem to have been stalled by DG GROW, make certain progress.

What’s next

Next, it will be up to Parliament and Council to support or even strengthen the proposed actions and targets. Business organisations should put pressure on DGGROW and Economic Affairs ministers to support the Action Plan.

Experts negotiating on ecodesign and waste will have to demand ambitious working plans and targets (or at least not water down what the Commission puts on the table). Increasing cooperation between local governments, societal groups, and circular businesses, and redirecting funds for green innovation and investments, is a good idea for all those controlling purse strings. And of course, business can take its own responsibility for its side of the action plan.

So, I take the action plan and its timetable as a starting point for concerted action. See you in the Circular Economy!

Ilia Neudecker - Foxgloves Consultancy – Towards a sustainable Europe www.foxgloves.eu

[vi] In the UK, theAldersgate Group: http://www.aldersgategroup.org.uk/
In the Netherlands, de Groene Zaak: http://degroenezaak.com/about-us/
In Germany, Unternehmensgrün: http://www.unternehmensgruen.org/en/

[vii] UK chef Hugh Fearnley Whittingstall, and his War on Waste: https://wastenotuk.com/

[viii] Amsterdam-based ngo-cum-business network, Strawberry Earth, is particularly encouraging, as it aims at trendy young people: http://www.strawberryearth.com/

zaterdag 27 juni 2015

Closing the loop – EU stakeholdermeeting Circular Economy

On the 25th of June, many representatives of interested parties from industry, policy, science and ngos joined at the Commission’s Charlemagne Building in Brussels to tell the European Commission what the new policy package on Circular Economy should contain.
Last year, as one of the last acts of Commissioner Potoćnik, a policy package on Circular Economy, consisting of a set of communications accompanied by proposals for new legislation, was already presented. This was withdrawn by the new Juncker Commission.
That was probably a mistake, because vice president Timmermans soon turned out to be a convert to the great potential of Circular Economy. At the stakeholder meeting on 25 June, he gave the introductory speech. He now sees that this is the only way forward. Important statement: business has a longer-term view than politicians.

An official from Bienkowska’s Cabinet (Industry) put forward that the European industry should become cleaner and smarter, providing customized products and services, and making efficient use of resources. This is different language from that heard from the previous Commissioner. Apparently the whole Commission feels that the emerging Circular Economy can sustain or even strengthen Europe’s competitiveness and create jobs. This is not just a feeling, there are also figures:

During the crisis period, eco-industries have continued to grow and provide employment.                                                                                                                                                                                                                                                                                                                     Especially Now that China starts embracing the circular economy, the fear is mounting that the EU will be overtaken. Timmermans pointed out that a country like China, where an economic transition can be imposed from above, has a much easier task than a pluralist democratic society like the EU.

Ellen MacArthur presented the new report of her Foundation. Research that has been done by McKinsey shows that developments towards a circular economy to business already underway:

 Source: McKinsey

That indeed is consistent with what Timmermans said about policy lagging behind. That is why this day was so important. What steps should be taken through EU policy and regulations to boost the circular economy? What should be in the policy package?
In the parallel sessions that followed, speakers from business, consumer and civil society organizations, national policy, and science put forward very diverse suggestions. What emerged was that there are many different pictures of Circular Economy, and that it is a very broad field to address through policy. Accordingly, it will be difficult for the European Commission to consolidate what was put forward into a robust and ambitious policy package.

The policy that should pave the road for the Circular Economy turns out to be covering a much broader area than the previous Commission had in mind last year (or was allowed leeway). Increasing the proportion of recycling in Europe (to 30%), through incineration and landfill bans on recyclable waste, is expected to be an important element of the new package. But also and especially outside the waste, and even the environment domain, there are regulations that stand in the way of the transition to a circular economy and shall have to be adapted, in order to stimulate innovation and market development.
Everyone seems to agree that product policy should be back on the agenda (it more or less disappeared after 2002), for example by expanding the rules for ecodesign of consumer products to include material use and address reparability, recyclability, etc.  Another issue that was frequently mentioned was the extension of the guarantee period. And setting quality standards for secondary (recycled) materials can promote recycling and increase consumer trust.

There is no one-size-fits-all solution to product policy. In the automotive industry, a lot of progress in ensuring the product’s longevity has already been made: secondary materials are used, there is a whole system of quality-assured replacement parts, and a car keeps its value for a long time. In other areas this is very different. And there is still the aspect of energy efficiency. Is it more or less sustainable to keep cars or appliances such as refrigerators in use for longer periods of time? Don’t we achieve more resource efficiency by exchanging them every few years for the latest models, which are much more energy-efficient? This can be calculated through life-cycle analysis, but it should be done product-by-product (group).

The role of consumers had a separate session, where also concepts like 'nudge' were raised. The big question is always where the power lies: with the big brands and their sophisticated marketing strategies, or the purchasing consumers who want to be well-informed on the environmental performance of a product, but can no longer see the wood (environmental sustainability) for the trees (labels). The current Directive on Unfair Commercial Practice that aims to address green claims doesn’t function well, because it only enters into action in the case of complaints. Some ideas for a different approach were put forward, making substantiation of green claims a requirement.

The focus was also on the importance of value-chain agreements and self-regulation by the industry. The Dutch Green Deal approach was promoted. Many speakers pointed out that if governments, and big companies as well, take on circular procurement, the demand for circular products and services will be increased tremendously, and innovation will be strongly stimulated. The European Commission can also do much to promote targeted research and innovation (that is already happening through the research framework program Horizon 2020).

The 'how' of it all remained somewhat in the dark. That is the great challenge of the circular economy. Product policy and eco-design are now the most concrete, but will take years of work. in the Netherlands, value chain cooperation, research and innovation, and room for experiment are now the main routes to Circular economy. The European Commission is interested in this. However, to create more volume and to accelerate the transition, more will be required. Can an indicator and a mandatory target for material efficiency steer the economy into the desired direction or not? The parties seem to be diametrically opposed. The Netherlands and other Member States are against it, the European Environment Agency (main supplier to the Commission of facts and figures on the environment) is in favour.

And the big elephant in the room was agriculture. Dame MacArthur showed what a circular scenario for the three main themes - mobility, food, and the built environment - would mean:

Source: McKinsey

But hardly anything was said about achieving those closed cycles in food and agriculture, and previous attempts to address food production in resources policy stranded. That is not due to the agricultural lobby (COPA COGECA), who at this stakeholder meeting were perhaps the only ones raising the issue of the biological side of Circular Economy: natural capital. However, the Agricultural Commission DG was not there. Will there again be a veto on this sensitive topic?