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 This was withdrawn by the new Juncker Commission.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?