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Circular economy presents an economic and ecological win-win scenario

Submitted by on 28 Sep 2015 – 09:05

Many businesses have recognised these facts and started to act accordingly. Sirpa Pietkainen, European Parliament’s rapporteur on resource efficiency spells out the huge opportunity within the circular challenge

Sirpa Pietikäinen

It has been forecasted that global demand for resources will triple by 2050. That demand, however, cannot be satisfied. We already consume some 1.5 planets’ 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.

We are in overshoot mode, and that mode has to be switched to a more sustainable one.

In June, the European Parliament’s environment committee adopted my report on circular economy. The report emphasizes the need for a true paradigm shift, one that will benefit both our economy as well as our environment. 

Saving natural resources is not only about saving raw materials for future generations but creating multiple benefits starting from reducing waste and ending with new innovative business opportunities. 

Europe is extremely dependent on imported raw materials and energy, much more so than many of our competitors. When raw materials are running short, what are the guarantees that this flow of raw materials will keep up? 

Resource scarcity also increases prices – that is simple economics

Almost 90 percent of European companies expect their material input prices to continue rising, according to a Eurobarometer survey. If we look at these facts, it is clear that European economy can’t survive – let alone grow – unless we take some radical steps to increase our resource efficiency and move towards a true recycling economy. We have to stop wasting precious resources and start using them more efficiently. However, there is a huge opportunity in this challenge. 

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. In circular economy there is no waste, products are designed to be durable, reusable, repairable and recyclable, and when they come to the end of their life the resources in them are pumped back into productive use again. 

This is a major paradigm shift where we need to produce the same welfare for the people, better competitiveness for our industries and profits for our companies with a tenth of the resources for goods we are using now. 

Business-driven studies demonstrate significant material cost-saving opportunities for EU industry and a potential to boost EU GDP by up to 3.9 percent by creating new markets and new products and creating value for business. The Commission has calculated that increasing resource productivity by 2 percent would create 2 million new jobs in the EU by 2030.

Many businesses have already recognised these facts and started to act accordingly. They have taken a leap to a different mind-set, to one where the whole logic of successful business is turned upside-down. These firms have created new business models to deliver greater resource efficiency and circular models including increased renting, sharing, leasing, different types of industrial symbiosis, bio-innovations a remanufacturing and many more. 

In order to support this change, we also need to change the rules of the game

That is the work of us politicians. Regulation is never neutral. A lot of our thinking and also a big part of the current legislation is created for the needs of consume-and-throw-away-society. Therefore, it has to be changed to fit the new world order.

To drive the business revolution, we need to create a stable and predictable regulatory environment.

We need commonly-agreed and harmonised indicators and targets to measure the change. We need to abolish environmentally harmful subsidies. We need to draft newer legislations that will make sure what is considered waste today is not considered such anymore – but seen as a resource. This requires a change to how things are being produced: products need to become more durable, easy to upgrade, reuse, refit, repair, recycle and dismantle for new resources.

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.