Janez Potočnik, European Commissioner for the Environment, highlighted the potential of resource efficiency to be an economic pillar of Europe’s 2020 strategy “to recover sustainability from the worst economic crisis in recent times and to maintain long term competitiveness”.

Resource efficiency “lies in the very heart of the necessary structural changes to maintain and boost competitiveness of the EU business sector”. Businesses can gain the competitive edge by cutting waste and improving production, extending markets by improving products and innovating. If “we don’t start to fundamentally change some of our patterns of production and consumption we will hit the walls”. He noted that his discussions with the business sector suggested that while the public is cautious about new legal requirements, many businesses are pushing for them.

“Resource efficiency policy does not hamper growth and can actually enhance it. A reduction of the total material requirements of the economy by 17% could boost GDP by more than 3%, and employment in the EU by around 2.5million.” The risks inherent in perpetuating the status quo are clear, with over half of the resources in the EU imported “and the forecasts show that this dependency is increasing”.

The Commissioner highlighted three key problems with this agenda:

(1)   Policy coherence, as businesses need a consistent and predictable long-term message;
(2)   Market failures, as many natural resources are not valued accurately;
(3)   The lock-in of our economic structures, business models and infrastructure. “All of these lock-ins are diverting us from policy decisions which would be supportive to the business that we need in the future”.

Resource efficiency is a broad agenda covering “policy fields from energy to transport, construction, agriculture, cohesion policy, taxation, climate, water and biodiversity to air”. Environment ministers need to start integrating their objectives in these areas. A step-by-step approach establishing 2020 milestones and immediate actions for the next few years will be important in leading towards the wider 2050 vision.

This year the EU will propose recommendations to individual member states for a shift towards environmental taxation, removing fossil fuel subsidies and “greening” public procurement.

Sir John Harman, Director of the Aldersgate Group, argued that “the mismatch of economic activity and the ecological basis for that activity”, means that for the first time “environment and economic policy are actually hand in hand.”

“This is a mainstream economic argument, not principally a green one.” Sir John argued that environmental policy and competition policy are best dealt with on a continent wide basis, noting “nobody has really questioned the good sense that those two areas of policy should be managed under European-wide policy because of the gradients you create if there are different national regimes”.

The challenge is to “plot your way to a more resource competitive future while navigating as effectively as possible the short-term difficulties”. The point that the Aldersgate Group has argued is that “longer-term gains are much more important than the short-term losses”. Short-term competitiveness counteracts this argument for many businesses, pushing them away from sustainable courses of action because “those short term competitive losses are going to overwhelm (their) will to do anything about the longer term”.

Paul Ekins, Professor of Energy and Environmental Policy at University College London, announced that “every economy in the world, including the emerging economies, is going to take this (resource efficiency) agenda seriously.”

To be competitive in the green race certain industries will sunset as “new industries with far greater growth potential in the medium and longer term are allowed to sunrise”. Businesses need to be created “that will punch their weight in the competitiveness battles between losers and winners”. There are a number of “green sectors in Germany which are now able to stand up to the energy intensive sectors and are able to fight their corner for public investment and other kinds of public policy”.

Research by Defra shows that the UK economy has resource efficiency opportunities worth at least £23billion, “that can give an immediate impulse to growth”, and Professor Ekins’ work with the National Industrial Symbiosis Programme has established “that it is perfectly possible to realise these resource efficiency opportunities on a large scale”.

One of the most obvious opportunities is energy efficiency in the housing stock, but a skills shortage is hampering progress. An energy efficiency qualification would allow builders to be “qualified in an energy efficiency sense and see energy efficiency opportunities” to implement in households. The driver for this will be regulation of energy efficiency in the building stock, to ensure a market for those builders with the requisite skills and expand the energy efficiency work that is underway.

The “Government has to get into research and development, it has to support demonstrating and deployment”, and help with the finance of green infrastructure. There needs to be a shift in relative prices while environmentally perverse subsidies must be removed, the greatest of which in the UK is the 5% rate of VAT on domestic fuel. “We have to be smarter in addressing the social equity issues and ensuring that the rich pay their way in consumption.”

David Baldock, Director at the Institute for European Environmental Policy, argued that resource efficiency “is essential not just in terms of long-term sustainability, and the EU’s place in the world in terms of equity, but also in terms of green recovery and green growth”.

As Europe faces a period of extreme economic challenges, “knee jerk responses and reactions which are quite disproportionate” must be avoided and progress must be driven through a mixture of strong leadership, regulation, incentives, targeted public expenditure, tax reform and support for research and development. The car industry provides a clear demonstration of the sort of progress that is possible, as “the fuel consumption parameter shows quite a clear response to regulatory certainty.”

Competitiveness concerns with the rest of the world will arise during this time and they will have to be addressed. It is important “to obtain some sort of certainty for people who are trying to invest in the future.”

Mr Baldock suggested one means for the EU to contribute to a resource efficient future would be for it “to be one of the major players in raising new finance”, particularly by mobilising private sector capital. There is a lot of development and a number of innovative mechanisms in this area, which can be expanded very considerably. For example, the European Energy Efficiency Fund and “there are quite a lot of ideas popping up in regional policy and cohesion funds”. “There is a need to expand and accelerate that process of bringing in new approaches, moving away from a grant based involvement”, and the EU’s credit worthiness could be used to lever in a lot more loan based support.