EU, a 10-point strategy to support eco-industry

The European Commission has outlined a new, 10-points policy to support the level of competitiveness of European eco-industry and maintain global leadership.

The new policy is based on a study which screened and analyzed core eco-industries – air-pollution control, collection and treatment of waste and sewage, renewable energy and recycling – to identify shortcomings in current policies, such as the European Structural Fund, the Cohesion Fund and the Competitiveness and Innovation Programme (CIP). Key actions to sustain competitiveness include uniform implementation of directives, improvement in the supply chain and greater access to finance.

The ten points proposed to maintain Europe’s position as global leader in eco-industry range from  the improvement of the statistical observation of the sector as current quantitative information is limited to ensuring the Sustainable Consumption and Production and Sustainable Industrial Policy Action Plan benefits eco-industry, from harmonization and implementation of directives, standards and certification procedures for the internal market to the introduction of EU-wide functional performance criteria and technical standards to reduce administrative burdens. Other points are the creation of a skilled workforce through training programmes, lifelong learning and the influx of highly skilled non-EU workers and the enhancement of equal access to information between eco-industry, its clients and suppliers.

Research and development is another point the EU wants to stress and support with these new policies, through the promotion of ETAP and the Seventh Framework Programme for research (FP7) and the maintenance of financial-support schemes for R&D and innovation in eco-industry. In order for these two previous points to be succdessful, the EU consider important di harmonize and promote green procurement and create an open marketsat a global scale to ensure a level playing field.

In 2008, the EU eco-industry provided 4 million jobs. With a turnover of €300 billion and a growth rate of 8% a year, eco-industries are a key contributor to the Europe 2020 strategy for smart, sustainable and inclusive growth.

From 2004 to 2006, eco-industry productivity was higher than that of manufacturing industry. However, due to cost factors associated with the application of new technologies and scale economies, as well as the impact of fragmented markets and administrative burdens, this high level of productivity did not translate into high profitability.

Europe is leading the way globally in exploiting technological and economic opportunities in eco-industry. It is ahead in recycling with a 50% market share, water supply with 30% and renewable energy with 40%. However, in certain areas, global competitors are in a better position. While the EU focuses on pollution abatement, waste management and integrated chain management, Japan and the USA concentrate on hardware development and eco-design, enabling them to take the lead in hybrid cars, cradle-to-cradle approach and eco-design.

Policies and regulations, prices and the availability of raw materials and fossil fuels, and technological developments are the key drivers for competitiveness in eco-industry. While the early adoption of environmental policies and regulations has given Europe a global competitive edge, this is under pressure. Emerging nations such as China have been particularly successful in developing high-tech sub-sectors through foreign direct investment.

However, through globalisation, Europe could play a key role in waste management, recycling through integrated chain management and specific renewable-energy sub-sectors such as wind energy and biomass.

Growth of EU eco-industry supply chain

With respect to the EU eco-industry supply chain, the boundaries between eco-industries and conventional industries are blurring. Strong interdependencies have emerged between eco- and conventional industries. These will increase as conventional industries adopt their own green business strategies.

Eco-industries have the potential to contribute to these strategies by offering added value and reduced costs through the integration of measures such as water purification, energy production and heat capture.

However, there are challenges to overcome to ensure an efficient eco-industry supply chain. In particular, there is a need for a strong organising entity – such as found in the supply chains of the automotive industry, where original equipment manufacturers play a key role as organisers.

Moreover, barriers to technology transfer, such as limited adoption of environmental technologies, insufficient capital markets for eco-industry and inadequate clean tech investment in conventional sectors are inhibiting the development of the eco-industry supply chain.

Barriers hampering framework conditions

The absence of a well-functioning single European market and of uniform implementation of relevant European Directives at Member-State level put a strain on investments and growth. A long-term stable policy framework, with greater coordination across the Member States, is therefore crucial.

Shortages in skilled work forces and limited access to finance are also obstacles to be overcome. In terms of finding talented employees, measures to educate the current labour force and revise inflexible labour market regulations are needed.

While some larger companies in certain sectors may find it easier to locate financing for innovation, others – particularly SMEs – in what are perceived as ‘riskier’ sectors are forced to rely on traditional local banks rather than venture capitalists for support. An attractive climate for investment must therefore be created to encourage financial support of eco-industry.

Overall, in addition to increasing the amount of statistical data available on the EU eco-industry, it is essential that European Directives are correctly enforced throughout the Member States. Moreover, by supporting the development of eco-innovation, Europe can maintain its position as a global eco-industry leader.



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