“The growth path we are following is not the right one” - Main contents

European Commission

[Check Against Delivery]

Janez Potočnik i

European Commissioner for Environment

“The growth path we are following is not the right one”

Meeting with the Environment Committee of the European Parliament

Brussels, 3 September 2014

Ladies and Gentlemen,

First of all let me congratulate all of you on having been elected to the European Parliament. I am pleased to see there are a number of you in the Environment Committee with whom I have worked closely over the last five years.

For those of you who were around five years ago for my hearing, you will remember that as a Commissioner‑designate for Environment I made a commitment, which has been a guiding light throughout my mandate. I vowed to make my first priority ensuring that the Europe 2020 agenda for growth and jobs is built on a strong foundation of sustainability and resource efficiency. Ever since, I have fought hard for an integrated approach between economic, environment and social policies.

The Circular Economy package adopted by the Commission in July succeeded in integrating these three dimensions. And more importantly - it recognised that the growth path we are following is not the right one for Europe in the 21 st century.

Today I would like to reiterate what I said at the beginning of my mandate in 2010: that the 21 st century will be the century of fragility, and that this very fragility makes the environment such a key part of our positive agenda for the future.

"Living Well within the Limits of our Planet"

This graph shows what I mean. Here you can see the Human Development Index i (HDI) on the horizontal axis, and the ecological footprint per person on the vertical axis. The dots represent countries across the globe.

It shows that a higher HDI, meaning a better quality of life, is still tied to a higher environmental footprint. In order to achieve sustainability, countries must move towards the bottom right-hand corner marked in green and as such decouple human development from natural resource use and environmental impacts.

Today not a single country is within the 'green box' of living well… and sustainably.

We are locked into the linear economic model that developed over centuries of abundant resources. We extract resources, only to discard them as waste, without realising their full potential value and use.

What we need is a growth model that enables the rich economies to move their economies to sustainable levels whilst continuing to maintain or indeed improve living standards, and one that enables emerging economies to move across to the right without moving up too much.

Our responsibility, individual and collective, is increasing and cannot be compared to the responsibility humankind was facing a century ago. Change in the way we produce, consume, in the way we live, is unavoidable.

In Europe we recognised this when we integrated resource efficiency as a Flagship of the Europe 2020 Strategy. We made it our objective to "decouple" growth from resource‑use and its impacts - this was our plan for getting into the green zone - to achieve what the 7 th Environment Action Programme calls "Living well, within the limits of our planet".

Environment policy was no longer to be seen as a constraint on growth. In fact our future growth would be determined by our ability to face resource constraints and get more value out of each tonne of materials, each hectare of land, each cubic meter of water, and each joule of energy.

This makes sense both from an environmental and an economic point of view. Europe is locked into a resource‑intensive economic model. Our companies face increasingly volatile resource prices, which is already the dominating cost factor for a majority of them. For example, recent studies on the steel and aluminium sectors show that raw materials make up around

30 to 40 % of the sectors' cost. Moreover, they are sectors which are import-dependent for raw materials and energy.

If we want to maintain our quality of life, but we do not want to lower our wages and social standards, we have no other option but to increase the value-added through improving the productivity of both, labour and resources.

The Circular Economy package is a major conceptual contribution to the shift in the direction of improving resource productivity. It reinforces a positive vision of a resource-efficient Europe, exploring new, sustainable sources of growth and prosperity. It is a contribution both to the Commission's policy for growth and jobs and to environmental protection. It is a clear recognition that both policies can go hand‑in‑hand, and that is why the proposals in the package are led not just by me, but also by my fellow Commissioners for research and innovation, for employment and for enterprise and industry.

The EU's future industrial competitiveness will depend not only on using fewer raw materials, less energy and less water, but also on our ability to replace raw materials and imports with supplies of secondary raw materials, where they are available, and to produce goods that can be re-used, repaired, refurbished and recycled.

This is what we mean by a circular economy. In essence, we are proposing to make Europe a society without waste. We want to take the 600 million tonnes of materials contained in our waste and pump them back into productive use in the economy.

So, we have made the revision of some of our waste legislation an integral part of our circular economy package - a package that looks at every stage in the cycle of our production and consumption. A package that identifies the market failures and bottlenecks and sets out how to provide the right framework conditions for transition.

We look at how we can make markets for secondary raw materials work better; we look at business models that are more resource‑efficient; and we look at how to encourage design for durability, for repairability, for recyclability. We seek to provide consumers with better information about the life‑cycle impacts of products. We propose an aspirational target to give us a clear direction for progress in achieving resource productivity, and to provide predictability and clarity for investors and businesses.

The package contains:

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  A Communication "Towards a Circular Economy: A Zero Waste Programme for Europe";
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  Revision of Waste legislation including the targets in the Waste Framework Directive, the Packaging and Packaging Waste Directive, and the Landfill Directive; and
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  Three further Communications on:
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  Green Employment and Skills
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  Green Action Plan for SMEs
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  Resource Efficiency Opportunities in the Building Sector

Waste policy and the review of waste targets are at the core of the package, as in a circular economy there should be virtually "zero waste". New approaches are proposed to address key resource challenges.

We propose to:

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  boost re‑use and recycling of municipal waste to a minimum of 70 % by 2030;
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  increase the recycling rate for packaging waste to 80 % by 2030, with interim targets of 60 % by 2020 and 70 % by 2025, including targets for specific materials;
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  ban landfilling of recyclable waste by 2025, while Member States should endeavour to virtually eliminate landfill by 2030.

The waste targets in black on the slide are legally binding, whereas those in red are not. Even where they are legally binding, we don't want to simply wait until 2030 to find that some Member States have not managed to fulfil them. We are therefore proposing a monitoring and early warning mechanism which builds on the help and advice we have already started to give to those Member States who need it most.

We have also taken advantage of the review of waste legislation to lower administrative burdens with the introduction of electronic reporting on hazardous waste, basic minimum standards for extended producer responsibility schemes, and simplified and reduced reporting requirements.

Finally, we are determined to further promote the development of markets for high quality secondary raw materials, including through evaluating the added value of end-of-waste criteria for specific materials.

As members of the Environment Committee you will no doubt go through all these important details and I count on your ambition to turn the waste legislative proposals into a reality in the EU.

But let me continue now with the broader political agenda that will be set with the review of the Europe 2020 Strategy.

This brings me to the cornerstone of the Circular Economy package - that is, the need to set a headline target for resource efficiency. Such a target will focus political attention on the opportunities coming from higher resource efficiency and will prompt vigorous and effective strategies to be implemented by the EU, Member States and business to improve their performance.

We consulted widely and carefully analysed the alternatives before making a choice. Based on the evidence that we have put together, we concluded that Resource Productivity as measured by Gross Domestic Product divided by Raw Material Consumption is the best available indicator and the most able to convey the importance and relevance of resource efficiency.

Raw Material Consumption (or RMC) is relevant for all sectors of the economy. It takes into account the full value-chain, including imported goods and materials, and is strongly linked to our energy use. By ensuring that similar products, whether produced in the EU or imported, carry the full 'rucksack' of materials needed for their production, it is compatible with our re‑industrialisation goal. It is the most robust and representative proxy for overall resource efficiency, yet it is simple enough to enable us to communicate clearly.

Indicators for land use, water use and greenhouse gas emissions provide a more complete picture, but as a proxy, Raw Material Consumption divided by Gross Domestic Product provides the best indicator for setting a target.

Now to the question of the right level of ambition.

Between 2000 and 2011, Resource Productivity improved by just under 2 % per annum.

Our forecast of the changes in Raw Material Consumption, based on current policies, implies that by 2030, Resource Productivity would be around 15 % higher than today, as businesses improve their efficiency in response to rising resource input prices. But the annual improvement rate in Resource Productivity would nevertheless slow down from its current rate of 2 % per year to less than 1 % per year.

We need to reverse this slowdown. The European Resource Efficiency Platform, which included also some Members of the European Parliament, recommended at least a 30 % increase in Resource Productivity by 2030. Such a goal would be ambitious yet achievable, and would maintain the long-term trend of an annual 2 % improvement in Resource Productivity.

We commissioned macroeconomic modelling to have a first assessment of the impacts on growth and jobs of such a target. The results confirm that by becoming more resource‑efficient, the EU will perform better economically.

Broadly speaking, improving our current Resource Productivity by 30 % would increase GDP by up to 3 % and create around 2 million more jobs than under the 15 % baseline scenario.

Moreover, it is estimated that measures such as better eco‑design, waste prevention and re‑use could bring net savings to businesses in the EU of up to € 600 billion or 8 % of their annual turnover ¹ .

It would deliver both social and environmental benefits while supporting economic growth. Such a target is therefore entirely coherent with the three-pillar approach to growth, and fills an important gap in today's Europe 2020 Strategy.

So, what next?

A non-binding Resource Productivity target could be set at EU level, leaving Member States free to set their own individual objectives and decide on an optimal policy mix to achieve them. A combination of national and EU policies, for example policies to deliver a Circular Economy, could be used to meet the target.

You can see on this slide the classical and familiar depiction of the Circular Economy and how the revised waste targets will reduce loss of resources, whereas the resource productivity target will increase the value that we get out of resources - raw and recycled - that are in the system.

Our proposals on the Circular Economy identify resource productivity as a candidate for setting a headline target under the Europe 2020 Strategy. The decision will have to be taken in the context of the mid-term review, taking into account the results of the on-going public consultation, together with the recommendations of the European Resource Efficiency Platform.

I encourage you to actively support a Resource Productivity target in the review. It is a way of ensuring that the links between environment and growth and jobs are better exploited in the Europe 2020 Strategy and its governance process - the European Semester.

To summarise, without boosting resource efficiency, the competitiveness of European industry is at risk, and without a political target at EU level we will never create the framework conditions and incentives needed for this transition.

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Ladies and Gentlemen,

Last, but not least, I would like to express my deepest appreciation and gratitude for the excellent cooperation I have enjoyed with the ENVI Committee. I am sure that my successor will enjoy the same trust and support that you gave me.

I count on you to take resource efficiency and circular economy forward and encourage you to work closely with other Committees on the ways to ensure sustainable growth and jobs.

Thank you for your attention!

¹ :

"Guide to resource efficiency in manufacturing: Experiences from improving resource efficiency in manufacturing companies". Europe INNOVA (2012).