By Katsiaryna Serada – Research fellow & policy analyst at Tondo
In December 2019, the EU launched a European Green Deal, a new sustainable economic growth strategy and policy agenda aimed at decoupling economic growth from the use of the primary natural resources and building a globally competitive, digitalized, low-carbon, climate – neutral, resource-efficient economy. A new growth strategy underscores the importance of the twin transformation – green and digital – to increase the global competitiveness of the EU industry, benefit the consumers and protect the environment.
Despite the sweeping adverse economic impacts of the quarantine measures to fight COVID-19 taken worldwide, the European Green Deal is likely to sustain the increasing political pressures of reprioritization. First, positive short-time effects of the reduction of the GHGs emissions due to the global economic slowdown are likely to be off-set by the rebound effect of the economic stimulus policy packages aimed at supporting the industries, therefore, the commitment to achieve climate policy targets and goals remains valid. Second, the European Green Deal is framed as an industrial and economic strategy aimed at “stimulating the development of lead markets for climate neutral and circular products, in the EU and beyond” and enhancing European Single Market. The implementation of the European Green Dean is supported with the new comprehensive EU policy package that includes new European Industrial Strategy, European Circular Economy Action Plan, Biodiversity Strategy, SME Strategy, Farm to Fork Strategy. The Commission’s European Green Deal Investment Plan (EGDIP), a renewed sustainable finance strategy, to be launched in the third quarter of 2020, is to further scale up sustainable finance to meet the investment needs of moving towards greener and more circular economy. However, the European Regional Development Fund, LIFE and Horizon Europe will complement private innovation funding and support bringing innovative solutions to the market.
Circular Economy has been placed at the heart of the new strategy to keep the resources in the economy the longest possible and make sustainable products a new norm in the EU.
Transition to circular economy implies fundamental shifts in ways how primary resources are used, end-of-life (EOL) products are reused, remanufactured or recycled. It has major implications for supply chains. To offset possible adverse impacts for businesses, European Green Deal aims to support building the integrated internal market for secondary raw materials (including through considering a compulsory recycled content for various product flows) and by-products, restructure the supply chains within the market and shape the strategies of the importers, which will be affected by the new EU at-border measures related to discouraging the imports of environmentally unfriendly goods and services.
A new Circular Economy Action Plan ‘For a cleaner and more competitive Europe’ was adopted by the European Commission in March to support the circular ambitions of the European Green Deal. It seeks to disrupt a linear business model “take-make-use-dispose” through a set of the interrelated incentives aimed at developing a comprehensive product policy framework to be drafted during the year. This framework will provide a comprehensive set of the requirements to ensure that all the products placed in the EU market become increasingly sustainable and stand the test of circularity of their material content. The core of this legislative initiative will be extending the outreach and the scope of application of the Eco-design Directive beyond the energy-related products so to cover the widest possible range of products to deliver on circularity. According to the intentions announced, the Commission is planning to regulate the following aspects related to the product: (i) extending product durability, reusability, upgradability and reparability, addressing the presence of hazardous chemicals in products, and increasing their energy and resource efficiency; (ii) increasing recycled content in products, while ensuring their performance and safety; (iii) enabling remanufacturing and high-quality recycling; (iv) reducing carbon and environmental footprints; (v) restricting single-use and countering premature obsolescence; (vi) introducing a ban on the destruction of unsold durable goods; (vii) incentivising product-as-a-service or other models where producers keep the ownership of the product or the responsibility for its performance throughout its lifecycle; (viii) mobilising the potential of digitalisation of product information, including solutions such as digital passports, tagging and watermarks; (ix) rewarding products based on their different sustainability performance, including by linking high performance levels to incentives.
A new Circular Economy Action Plan primary focuses on the resource intensive sectors also referred as “key product value chains” with the high potential for circularity such as electronics and ICT to have longer product lifetimes, and improve the collection and treatment of waste; batteries and vehicles to boost the circularity of the materials and components; packaging and new mandatory requirements on what is allowed on the EU market, including the reduction of (over)packaging; plastics to phase-out single-use wherever possible and replace by durable products for multiple use, and acting on microplastics – restricting intentionally added microplastics, increasing the capture of microplastics at all relevant stages of the product lifecycle; textiles to strengthen competitiveness and innovation in the sector and boost the EU market and new business models for textile reuse; construction and buildings; food processing and retail sectors by taking action on transport, storage, packaging and food waste; water and nutrients. The new Plan aims to ensure less waste and make circularity work for people, regions and cities, empower consumers and public procurers.
Implementation of the European Green Deal and a new policy package opens numerous business opportunities, particularly, for the ICT sector that plays a key role in driving twin transitions – green and digital.
Development of the globally competitive EU circular economy markets of the circular products and secondary resources depends upon the availability of the vast sets of digital data about the characteristics and origins of the materials, sourcing conditions, packaging materials, shipping, social requirements, circularity index, carbon footprint, etc. This information needs to be collected and integrated along the entire supply chains and lifecycles of each product and service. It opens a range of business opportunities for ICT sector on the EU level and nation-wide both in industry and consumer goods sectors where the demand for traceability has been gradually growing in the last years.
The potential projects are many and include, but not limited to facilitating circular business models and circular value chains through digital tools and applications to facilitate reverse logistics (tracking, take-back of products for reuse, repair or recycling), improving resource efficiency and monitoring of the resource- and – material flows; developing and integrating the ICT tools for predictive maintenance and repair to extend the life of products; building virtual marketplaces for secondary raw materials or second hand/repaired/upgraded products; creating digital material passports and related data repositories to facilitate the tracing, marketing and trade of secondary raw materials in end-of-life products and constructions; developing consumer- centred (raising awareness) digital tools and applications to empower the consumers.
The Commission foresees profound synergies between digital and green transition, which will affect every part of our economy, society and industry; create innovative business models and new markets of products, technologies and services, pave Europe’s new industrial way.