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Janez Potočnik
European Commissioner for Environment
Raw Materials: Not just about economics but physics!
3rd Annual European Raw Materials Conference
Brussels, 19 March 2013
Ladies and gentlemen,
Let me start by welcoming you to the third session of this conference on Raw Materials
which is devoted to one my favourite topics, and one that I have placed at the centre of
my mandate: ‘Resource efficiency and the use of secondary raw materials’. And you will
understand why in a minute.
There is no doubt that raw materials are the life-blood of EU industry. At least 30 million
jobs in the EU depend on access and on the availability raw materials.
But as all of you know, Europe imports most of its raw materials, and this makes
Europe’s industry very dependent on international markets to secure the raw materials it
requires. And today these markets have become a place of fierce competition that
involves both the developed countries and the fast growing emerging economies.
What does this mean for our industry?
Well, the combination of increasing global demands, pressures on resources and
Europe's import-dependency, means that European companies have to pay a lot more
than they used to for the relative cost of resources, such as materials and energy. 75 %
of European businesses have experienced an increase in material costs in the past five
years. And 87 % of European companies said that they expected the costs of their
material inputs to continue to increase in the medium term.
This trend is clearly undermining Europe's competitiveness. We cannot reduce our
dependency by producing ourselves more resources, because this is just not feasible.
But what we can do, is make better use of what we have and what we buy from other
countries: What we can do, is promote a more efficient use of the raw materials we
have, and where possible recycle and reuse.
This is why I have placed ‘Resource efficiency’ at the centre of my mandate as European
Resource efficiency is a key element of a successful strategy for future competitiveness.
It is not simply about protecting the environment. Through resource efficiency policies,
we can reduce our import dependency, create new business opportunities, make Europe
an attractive place for industrial investment and bring European companies to the
forefront in innovation. And yes, at the same time we address negative environmental
and social impacts associated with raw material extraction and production.
In an era marked by unprecedented population growth, increased consumption and
production and an increasing exploitation and scarcity of natural resources, including raw
materials… We need to have a comprehensive approach, which combines better use of
natural resources, secures fair access to global resources and improves resource
I was very encouraged to see the support of industry for the Roadmap to a Resource
Efficient Europe and the readiness of a number of individual companies, as well as
business organisations, to work together to advance the life-cycle approach and closedloop economy. The industry has rightly understood its key role in the transition to a
resource efficient economy, confirming that resource efficiency… does not mean deindustrialisation… on the contrary. Resource efficiency has a strong business case;
Resource efficiency can contribute to competitiveness, both in the short-term by cutting
costs for business, and in the long-term by responding strategically to rising resource
prices and risks of supply shocks.
The analysis of our 2012 Competiveness Report found that "Eco-innovating firms are, on
the whole, more successful than conventional innovators".
Our analysis shows potential gains for businesses of between 3 % and 8 % of
turnover by using resources more efficiently.
Our modelling shows that a one percentage point reduction in material use in
Europe would be worth up to € 23 billion to business and between 100,000 and
200,000 new jobs.
Just to give you an example, full implementation of EU waste management policy, i.e. a
policy that aims at diverting waste from landfills and returning it into the economy as
valuable materials, could create an additional 400,000 jobs by 2020 and increase the
annual turnover of the waste sector by € 42 billion1. Eliminating landfilling and ensuring
that incineration is limited to waste that cannot be recycled could increase the benefits
to around 520,000 jobs and € 55 billion.
Ladies and gentlemen,
The argument that our high environmental standards put EU firms at a disadvantage is
simply wrong. And even the countries, like China, have clearly understood this. China
uses the Euro norms for vehicle emissions, its chemicals legislation has been influenced
by REACH as well as our legislation on WEEE, biodiversity and water. And critical air
pollution in biggest cities is simply not allowing the 'no action' policy.
Resource efficiency is also good for trade. We still have a first mover advantage to be
exploited in many sectors and many high added value goods and services. For example
Europe has a strong export position in the eco-industry market. The global market for
eco-industries was worth roughly 1.15 trillion Euros a year in 2010, and was forecast to
double by 2020. And ensuring that products put on the European market meet high
standards is not handicapping European industry, on the contrary it favours higher
quality, higher added-value products. A resource poor and knowledge rich continent
should have no interest in trying to compete by a regulatory race to the bottom.
The potential of resource efficiency and in particular, of innovative resource efficient
technology is recognised in the recently adopted Industrial Policy Update. In our new
industrial policy, we are focusing our efforts on six priority areas where we see
significant opportunities for growth. These include advanced manufacturing technologies
for clean production; key enabling technologies; bio-based product markets; sustainable
products, construction and raw materials; clean vehicles and vessels; and smart grids.
Perhaps it is no surprise given the track record of companies which are highly
competitive in these sectors.
Resource prices
Some of you may be thinking “isn’t there an elephant in the room?” If we are more
resource efficient doesn’t that mean we need fewer primary resources? And doesn't that
mean our mining companies will suffer? For those of you that follow these things closely,
this is what we call the "absolute decoupling" issue: should we try to increase GDP while
using fewer resources?
Source: IP/12/18
Well, let me tackle this head on, because I think that this issue needs to be de-mystified.
We are heading for a world of 9 billion people by 2050, and 3 million extra middle class
consumers in emerging economies by 2030. There will be plenty of demand for primary
resources; I do not have too many worries for the extractive industries – they have a
profitable future. But this also means that the era of cheaper and cheaper resources is
over. On average, real prices for resources increased by more than 300 % between 1998
and 2011. Even since 2000, prices have increased by almost 6 % per annum in real
terms. At the same time, resource price volatility has also increased.
So, for a Europe whose manufacturing industry is so dependent on imported materials, it
is inevitable that we must use fewer resources for each Euro of output, if we want to
stay competitive.
To be frank, without decoupling, our economies simply won't be able to grow much more
in the future. And I talk about absolute decoupling. Not due to the soft laws of economy,
but due to the hard laws of physics.
The innovation challenge for Europe for the next decades will be in increasing our
resource productivity with the same creativity and dynamism as we did in previous
decades in raising labour productivity.
While mining is seen as a key approach to tap Europe's unexploited minerals, recycling
will be essential for reducing European demand, including for non-EU raw materials.
There is potential to extract sizeable quantities of raw materials from end-of-life
industrial and consumer goods in Europe such as the rare earths found in computers,
platinum found in car exhausts or wood from furniture.
In addition, Europe is a world leader in technological Research and Development (R&D)
in the field of substitution of critical raw materials. This means replacing an industrial
component with a more readily-available raw material in the EU, whether it is a rare
metal or an import dependent material such as natural rubber.
Towards a circular economy
Resource productivity alone – getting more value from fewer resources – will not be
enough. The McKinsey report estimated that the achievable improvements in resource
efficiency it identified could provide for about 30 % of the increased demand we can
expect by 2030.
How do we fill the gap? By using the same resources again and again. That means
creating a closed loop economy. It means designing for recyclability, repair and re-use;
It means developing industrial symbiosis; It means new business models, for example
using peer-to-peer leasing, better markets for secondary raw materials, and sustainable
sourcing. In short, seeking inspiration from the way that nature works to drive a system
change in our economies and societies, based on millions of years of gains of experience
and adaptation.
In order to achieve that, we have to get business on board. Some may argue that "the
job of business is to do business" and not to take care of the environment. Yet resource
efficiency goes to the core of the drive for profit and success; challenging the creativity
of companies and systems to re-invent the ways they actually get there.
Companies harvest and extract materials, use them to manufacture a product, and sell
the product to a consumer – who then discards it when no longer needed. In terms of
volume, some 65 billion tonnes of raw materials entered the global economic system in
2010, and this figure is expected to grow to about 82 billion tonnes in 2020.
Throughout its evolution and diversification, our industrial economy has scarcely moved
beyond the fundamental characteristic established in the early days of industrialisation:
a linear model of resource consumption that follows that ‘take-make-use-throw away'
pattern. Today, in Europe, we use 16 tons of materials per capita annually, we throw
away 6 tons, and half of that waste is then landfilled.
This linear model was feasible for as long as only a fairly small proportion of the world
was growing rich. Fortunately today many more billions are on a path to comfortable
middle-class consumer lifestyles. And fortunately our companies will be able to satisfy
many of those new markets. But unlimited growth on a limited planet means that this
linear approach will inevitably lead to scarcity, price-volatility, supply disruptions and
pricing levels that are unaffordable for our economy’s industrial base.
The answer is, instead of burying or burning those materials at the end of their life, we
have to bring them back into the economy. So our second innovation challenge for the
coming decades, after increasing the productivity of our resource use, will be to move to
a circular economy. And it is businesses like yours that will be at the forefront of that
Sustainable sourcing
But if we keep this in perspective, even if we could achieve a 100 % circular economy,
most of our resource input will still be primary resources. So, to these two innovation
challenges I would add a third: to develop stewardship and sustainable sourcing for both
renewable and non-renewable materials.
Waste policy role in Resource Efficiency agenda
Environmental legislation has a role to play in improving our resource efficiency and our
material efficiency. Our waste legislation has already driven the beginning of a revolution
in European waste management; we are composting and recycling more than ever, and
landfill is progressively falling – even if the story significantly varies from country-tocountry.
Our ambition is to accelerate that move up the waste hierarchy. In the Resource
Efficiency Roadmap and the 7th Environmental Action Programme we set out our
aspirational objectives to be achieved by 2020:
waste generated per person should be in decline;
Re-use and recycling should be at their maximum level – already today some
Member States are recycling and composting more than 60 % of their municipal
waste. This implies the generalisation of separate collection and the development
of attractive markets for secondary raw materials;
Incineration should be limited to non-recyclable materials;
And last but not least, landfilling should be virtually eliminated as a waste
management option.
These aspirational targets for 2020 may seem ambitious but already today several
Member States are close: for instance, 6 Member States are landfilling less than 1 % of
the waste they generate. They have shown what instruments work; and in some cases
what instruments we should avoid.
We are now translating these into more specific waste targets as we look at the review
clauses in our waste legislation2 and we will present results next year.
The Commission will work towards this mid-term vision, through its own instruments, for
Using the Ecodesign Directive to ensure that products are designed to be
dismantled and recycled.
Encouraging companies to measure and improve the life cycle performance of their
products in order to build a single market for green products.
Using economic instruments to promote resource efficiency so that we get the price
of resources right, taking into account the true cost of their use and their
environmental impacts.
Expanding and clarifying the concept of producer responsibility.
Developing further End-of-Waste criteria in order to boost confidence in recycled
On top of specially adapted fiscal policies (such as landfill and incineration taxes, pay as
you thrown schemes), producer responsibility schemes are essential. There are large
differences in the cost effectiveness of the various systems in place in the European
Union and we are now preparing guidance on Extended Producer Responsibility (EPR) on
the basis of these experiences.
Taking the Roadmap's aspirational objectives as a basis, the Commission is launching a
review of key targets in EU waste legislation this year. The results of this review will be
presented in 2014. I would strongly encourage you to participate in the consultation
process on this review before the summer.
Ladies and Gentlemen,
You will have seen that recycling and resource efficiency are integrated into the
Commission's Raw Materials Initiative, and into the mandate for the European
Innovation Partnership on Raw Materials. I hope that I have made it clear this afternoon
why this makes sense, and why I am working so closely with my colleague, Antonio
Tajani, to make sure that Europe's industry has access to sustainable and secure
supplies of raw materials.
The challenge Europe is facing is very complex and demanding.
Waste Framework Directive, the Landfill Directive and the Packaging Directive.