Dare and Care

The following briefing note has been prepared by the Federation of Enterprises in Belgium. The summit – titled Dare and Care – will be held on 26th and 27th March 2009.

Please feel free to comment before and after the session about the topic below.

Stuart Langridge
Director of Blogactiv.eu

1. Introduction

Definition of eco-innovation
• Eco-innovation may be described as the production, assimilation or exploitation of a novelty in products, production processes, services or in management and business methods, which aims, throughout its life cycle, to prevent or substantially reduce environmental risk, pollution and other negative impacts of resource use (including energy use).
• The following typology of eco-innovation can be made
o Cleaner process technologies
o Environmental management and auditing schemes
o Environmental services (Eco-lease)
o Green alternative system innovations

Facts and figures about eco-innovation
• The EU is a strong global player in eco industries with around 30% of overall world turnover, and more than 50% in water and waste management

• Europe scores highly in eco-innovation in general and more specific in patent registrations in the fields of renewable energy (44,8%), waste management (37,8%) and motor vehicle abatement technologies (50,3%) in particular. (Source: OECD)

• The whole environmental technology market is forecast to double by 2020 to some €2,300 billion. The current EU turnover is €227 billion, accounting for 2.2% of GDP and generating 3.4 million jobs.

• Europe scores less well on the level of cleantech investments (measured by venture capital investments) and runs far behind North – America. For 2007 an annual investment of 3750 million dollar was quoted for North-America. Europe had to do it with only 1250 million dollars.

• For Energy R&D Japan and the US are investing more than Europe. Moreover the trend of these investments are negative in Europe contrary to those of Japan and the US.

2. EU policies

• Innovation is a crucial part of the Lisbon agenda. As a result of this, several instruments have already been created at the European level: the European Technology Platforms, the Joint Technology Initiatives, the European Research Area, the European Institute of Technology, the Seventh Framework Program, the Risk Sharing Finance Facility of the European Investment Bank,…
• From 2007 to 2013 The Competitiveness and Innovation Framework Programme (CIP) runs and aims to encourage the competitiveness of European enterprises. With small and medium-sized enterprises (SMEs) as its main target, the programme will support innovation activities (including eco-innovation), provide better access to finance and deliver business support services in the regions. It will also promote the increased use of renewable energies and energy efficiency.

• Energy and climate change are high on the political agenda. In December 2008 the European Parliament and Council reached an agreement on the package that will help transform Europe into a low-carbon economy and increase its energy security. The EU is committed to reducing its overall emissions to at least 20% below 1990 levels by 2020, and is ready to scale up this reduction to as much as 30% under a new global climate change agreement when other developed countries make comparable efforts. It has also set itself the target of increasing the share of renewables in energy use to 20% by 2020.
• Different instruments have been created. Central to the strategy is a strengthening and expansion of the Emissions Trading System (EU ETS), the EU’s key tool for cutting emissions cost-effectively. Next to that the Directive on renewable energy sources, the Directive on the Energy Performance on Buildings, the Directive on Energy Taxation, the Directives on Energy Labelling of Appliances will contribute to the development and implementation of low carbon technologies.

• On 22 November 2007, the European Commission has launched its European Strategic Energy Technology Plan (SET-Plan). The main goal of the SET-Plan is to accelerate the development and implementation of low carbon technologies.
• The SET-Plan calls for the establishment of a Steering Group on Strategic Energy Technologies by early 2008 to reinforce the coherence between national, European and international efforts, the launch of six new European Industrial Initiatives in 2008 that will target sectors (e.g. wind, solar, bio-energy,…) for which working at Community level will add most value and the presentation of a Communication on financing low carbon technologies to examine the opportunity of creating a new European mechanism/fund for the industrial-scale demonstration and market replication of advanced low carbon technologies.
• In July 2008, The European Commission has proposed an Action Plan on Sustainable Consumption and Production and Sustainable Industrial Policy (SCP-SIP). The goal is to create a virtuous circle by improving the environmental performance of products throughout their life cycle, promoting and stimulating demand for better products and helping consumers to make better choices. The building blocks of the European Union’s policy on sustainable consumption and production include:
o Integrated Product Policy (IPP)
o Thematic Strategy on the Sustainable Use of Natural Resources
o Thematic Strategy on Waste Prevention and Recycling
o Eco-Management and Audit Scheme (EMAS)
o Ecolabel Scheme
o Environmental Technologies Action Plan (ETAP)
o Green Public Procurement (GPP)
o Eco-design of Energy Using Products Directive (EuP)
o European Compliance Assistance Programme – Environment & SMEs
Some of these policies will be therefore be revised, extended or launched. Remaining actions will follow later in 2008/2009: promoting resource efficiency; promoting eco-innovation; developing industrial policy initiatives for environmental industries; sectoral approaches; promoting good practice internationally; promoting international trade in environmentally friendly goods and services.

3. Issues and challenges

Important business opportunities
• Clearly, eco-innovation represents a key opportunity to establish Europe’s leading role to overcoming the world’s sustainability challenges.
• Enterprises can be frontrunners in eco-innovation
o Why?
• Eco-innovation can contribute to new business opportunities which could make firms or sectors more competitive
• Eco-innovation can lead to a sustainable growth and the capacity to attract the best and most motivated employees
• Eco-innovation can reduce your cost on a long term perspective
• Eco-innovation can improve your image and give you a “license to operate”
o How?
• creatively make use of new emerging business opportunities (pioneer approach)
• form early alliances with relevant stakeholders (incl. Research & NGOs) to push new developments (instead of trying to retard things)
• early impact and stimulate legislation to set up the necessary framework in a supportive way (instead of ex-post trying to change burdensome regulations developed without appropriate industry participation)
• To enhance Europe’s market share, we need a step change in our innovation performance. Doing better will not be enough, Europe needs to be better than the rest.

Some barriers to Europe’s innovation
• European Innovative framework still weak: patents are still expensive and complicated, fragmented research and markets, shortage of skilled personnel
• Funding or access to capital is poor: Europe scores less well on the level of cleantech and energy investments. It is crucial that Europe changes this negative trend and build up a leadership in this import market to create growth and jobs.
• Limited consumer demand: consumers aren’t always aware of the eco-innovative options and stay close to their habits. Nothwithstanding the fact that a lot of them are cost-effective.
• …

Governments have a key role to play across the innovation chain
• Providing testing facilities and contributing to demonstration projects
• Financial incentives
• Long-term stable market conditions and effective policy implementation are essential for eco-innovations to mature, become marketable and succeed in the marketplace
• Making better use of public procurement
• Creative instruments to encourage sustainable lifestyles (behavioural change)
• More public funding in R&D
• …

4. Possible questions for the thematic session
• European Policy
a. Why should Europe become a world leader in eco-innovation?
b. How will Europe become a leader
i. invest in eco-innovation/ in R&D?
ii. defining ambitious objectives? Stringent policies?
iii. Set an exemple by green public procurement?
iv. Encourage companies by incentives or others?
• Fields
a. In which Eco-innovative fields, Europe has a comparative advantage/is already a frontrunner
b. In which fields, Europe has a comparative disadvantage
c. Can politics focus on specific domains, technologies or do they rather have to be neutral?
• Companies
a. What are currently the main barriers for companies?
b. How can politics help companies to become more eco-innovative
c. What are the key success factors for business?

5. Further reading
European Eco-innovation Forum
Measuring Eco-innovation
European Climate Package
• Insead, Greening the economy: Create a climate for change, 2008.
• OECD- Environmental innovation and global markets, 22 feb 2008
• DEFRA – Environmental Innovation, Bridging the gap between environmental necessity and economic opportunity, nov 2006

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