A common feature of forward-looking businesses is that they don't criticise politicians who promote stricter environmental and climate standards. Quite the contrary, the future-oriented businesses acknowledge the fact that well-targeted, ambitious and properly implemented regulatory framework is the prerequisite for the best companies to grow and our economy to prosper on the long term.
Intelligent resource use is first and foremost a question of industrial and competition policy. It has been forecast that global demand for resources will triple by 2050, including some 70 % increase in demand for food, feed and fibre. We already consume some 1.5 planet's worth of resources every single year, and following the estimates, would need around four planets full of resources to satisfy the demand by 2050 under business as usual. There are however limits to growth – we only have this one planet.
Europe is extremely dependent on imported raw materials and energy, much more so than many of our competitors. Increased resource scarcity has already led to increased prices for these resources and this trend is set to continue with 86% of European companies saying they expect their material input prices to continue rising.
If we look at these facts, it is self-evident that our European economy will not be able to survive - let alone grow - in the future unless we take some radical steps to increase our resource efficiency and move towards a true recycling economy.
In this challenge lies a huge opportunity, however. The one who can deliver solutions for the resource efficiency dilemma, is also the winner of the new economic race: this means solving the problem of doing more with less - getting more added value with less resources. Ultimately, resource scarcity will affect us all, and the one who holds the keys to viable solutions, can expect huge demand for those solutions.
Many firms have already recognised the immense challenge and fundamental change ahead us. What we need is a true leap in innovation to create a system whereby the whole logic of successful business is turned upside-down. In circular economy there is no waste, products are designed to be durable, repairable and recyclable, and when they come to the end of their life the resources in them are pumped back into productive use again. New business models to deliver greater resource efficiency and circular models include increased renting, sharing, leasing, different types of industrial symbiosis, bio-innovations, remanufacturing... The Netherlands has a golden opportunity now to be in the forefront of this change, as we already have strong know-how and a broad base of nascent circular economy industry models.
In order to support this change we however also need to change the rules of the game. A lot of our thinking and the bulk of the current policy in the EU is created for the needs of consume-and-throw-away-society. The EU needs a new regulatory framework that fits the new world order. Legislation is one of the essential drivers of the business revolution, as businesses and investors alike need a stable and predictable regulatory environment in order to change.
This was the main driver behind the work of the high level European Resource Efficiency Platform, which for over a year gathered together politicians, businesses, academics and NGOs to think about what we need to bring the change forth. A set of final recommendations was published at the end of March. These included developing a clear resource productivity target and resource efficiency indicators, eliminating environmentally harmful subsidies, and integrating current and future resource scarcities coherently into wider policy areas.
The fingerprints of this manifesto can be seen all over the Commission's circular economy package adopted today. The package injects new ambition into European targets for recycling with a 70% rate for municipal waste by 2030 and 80% for packaging waste. It also proposes to ban recyclable materials from going to landfill by 2025 and aim for the phasing out of landfill by 2030. It also includes measures to reduce food waste generation of 30% by 2015 and measures to reduce marine litter.
This fits in well with the premise that in a circular economy there should be no place for waste. But legislation-push should be matched by the pull of the market demand for secondary raw materials. On this side too the Commission package makes proposals. From eco-design of products, stimulation of innovation, extended producer responsibility schemes, unlocking investment and financing, better organisation of markets and standards for secondary raw materials, the package looks at all stages of the circle. It estimates that whilst the new direct job opportunities in waste management and recycling from the new targets are just short of 600,000, the impact on the wider economy are far greater, with a 20% reduction in total material requirements leading to a 3% boost in GDP, while creating 2 million new jobs.
But perhaps the most compelling reason to embrace resource efficiency and circular economy models is that we don't really have a choice. Further pressure on supplies of resources as demand increases in emerging markets will force us – sooner or later – to use those resources more carefully. The Commission argues that sooner is better than later and that investing upstream will lead to less dislocation downstream.
It is said that the best time to plant a new tree is twenty years ago, but the second best time is today. So the seed of Europe's future growth should be sown in time to give us the right trajectory out of the crisis.
Janez Potočnik is European Commissioner for Environment.