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Green Transition

The Smaller Market: a New Common Market for Green Restructuring and Experience

By Michael Minter

If Europe is to meet the challenge of preventing climate change and putting its economy on a sustainable track, there needs to be an EU-level shift in how we consume and live. Concito’s Michael Minter outlines why this transition is necessary, and how it might take place. 

Ever since the establishment of the EU single market nearly 20 years ago, its aim has been to promote the free flow of goods, services, capital and workers. It has opened more to competition, created new jobs, ensured lower prices for consumers and given businesses and citizens the opportunity to benefit from a wide range of services.

Even before its formal establishment, the idea of a common market paved the way for a common European environmental policy. This policy was meant to prevent environmental dumping and harmonise the environmental regulations of member states and ensure a high level of protection, so that goods could be moved freely without undermining the protection of the environment and consumers in the most environmentally conscious member states. At this time the EU’s environmental policy was mainly concerned with protecting consumers and minimising pollution of our local environment. Today, the EU’s environmental policy is about much more and much less at the same time.

EU’s Environmental Responsibilities Are Global

According to the EU’s Europe 2020 strategy, a prioritised focus area is to ensure sustainable growth which mitigates climate change and uses global natural resources in an effective, sustainable way.  The debt crisis and unemployment crisis in the EU, together with the global climate, food and resource crises, mean that our task now is to get the economy going at the same time as ensuring a dramatic reduction in European consumption of energy and natural resources, especially in the wealthiest European countries.

European Commissioner for the Environment Janez Potočnik was exceptionally clear in his description of the challenge facing Europe, when he laid out the EU Commission’s roadmap for a resource-effective Europe in September 2011: “The era of plentiful and cheap resources is coming to an end.  Raw materials, water, air, biodiversity and terrestrial, aquatic and marine ecosystems are all under pressure. We need to call for radical change in the way we operate, in the way we produce and consume – basically, in the way we live. The critical problem we face in Europe today is that after centuries of resource-intensive growth, we are “locked-in” to resource inefficient structures, “locked-in” to resource inefficient economic systems, “locked-in” to resource inefficient business models and “locked-in” to resource inefficient behaviour. Breaking out of that “lock-in” requires new technologies, and it requires innovation: technological innovation, innovation in our systems and business models, and innovation in our behaviour.”

According to a report delivered by the Global Sustainability Panel to the Rio+20 conference in June 2012, the relationship between the supply and demand of very basic resources such as food, energy and water will become increasingly unbalanced over the next 20 years as the earth’s population expands and is expected to exceed 8 billion. The report points out that the earth will need at least 50% more food, 45% more energy and 30% more water by 2030. Moreover, the economic growth in developing countries like China and India means that another 3 billion people will enter the large category of middle-class consumers who will also be in line to buy resource-intensive consumer goods such as houses and cars and have diets with a lot of meat. For these reasons, the EU’s environmental political agenda will expand its scope beyond our immediate natural surroundings, environment and infrastructure to take into account global development, geopolitics, security of supply, sustainable growth and new business opportunities.

If the strategy for a resource-effective Europe goes according to plan, it will place higher demands on member states and European businesses to improve the effectiveness of their resource management. As we approach 2020, a revolution must be set into motion, both to deal with scarce resources in an intelligent way and to support the development of a new generation of businesses basing their operations entirely on resource efficiency. The internal market must become a smaller market in a real, material sense.

Less is More

This necessary revolution can be achieved partly through the development of new, resource-effective technologies and production methods. But in order to even come close to keeping global warming under two degrees Celsius and reducing the consumption-related CO2 emissions of Europeans to 2 tonnes per person per year by 2050 –  17 tonnes less than today’s average Danish consumer – we will have to start to depend much more on each other for entertainment and comfort instead of relying on speedy import of consumer goods from abroad. We have to produce more with less and develop a new economic paradigm around the concept of ‘Less is more’.

Less habitual thinking and unwinding more innovation and development. Less import of fossil fuels, more production of renewable energy. Less use of resources in production, more recycling and employment. Less intake of meat, more animal welfare and healthier lifestyles. Less material consumption, more quality, time, service, experiences and time spent together.

A resource-effective Europe is not an agenda of restrictions and reductions; rather, it is an agenda for development, and the new climate-friendly lifestyle could very well turn out to be more attractive than the consumerism that has dominated our lives with increasing intensity over the past decades. It also stands to profit the economy and welfare in society, as money spent on service, experiences, renovation and repairs generally works to create more jobs on the ‘home market’ than money spent on new and often imported consumer goods. For example, according to CONCITO’s carbon footprint calculations, 700€ spent on ten rock concerts or ten good dinners at a restaurant produces approximately 100kg of CO2, while the same amount of money spent on a large flat-screen TV produces one tonne. If the money is spent on a plane trip to Bangkok, the emissions amount to a staggering 6.4 tonnes.

The Challenges of 2020 Must Be Met Together

The challenges of the EU’s 2020 strategy are deeply interconnected and cannot be solved in isolation. It will do no good to solve the environmental and resource crisis if it means more unemployment and poverty or a poorer standard of education, research or development.

The challenges can only be met together, however, if we acknowledge that a sustainable European economy cannot be created through technological solutions alone, but demands, as well, that we confront the consumerist culture we live in, where we continue to buy – often with borrowed money – more and more new things to keep the wheels turning.

The planet, the economy and our welfare are fiercely challenged today by this form of economic growth. At the same time there are many things that still need to be developed and improved. So instead of more economic growth or degrowth, a sustainable Europe must endeavour to create, first and foremost, what could be called ‘regrowth’. Just like in nature, where old plants die and decompose and new ones grow in their place. And like a tree that, having begun to grow a branch in the wrong direction, gives up on that branch and starts to grow a new and better branch instead.

Roadmap in Difficulty

Understanding a problem is half the solution. This is why it is a positive thing that both the European Commissioner for the Environment, Janez Potočnik, and the European Commissioner for Climate Action, Connie Hedegaard, dare to speak up where others stay silent, and clearly outline the challenges at hand.

The individual initiatives in the flagship initiative for a resource-effective Europe are, in contrast, less clear, and there is often a great deal of resistance from member states when it comes to dealing with concrete suggestions at the Council of Ministers. This is the situation for example in the case of Connie Hedegaard’s Roadmap 2050 for a competitive low carbon economy, which Poland opposes, and in the case of the energy efficiency directive which was very difficult to get approved in an even moderately ambitious version.

The aim of the resource efficiency strategy is to restructure production and consumption in such a way that gives investors an incentive to promote green innovation, enables environment-friendly design and ecolabels play a more prominent role, and encourages public institutions to buy green. European governments are encouraged in general to shift taxation away from labour and income to pollution and resources, and prices must be adjusted to reflect the real costs of using up resources. The Commission will make use of legislation, market-based instruments, reorientation of subsidies and voluntary schemes to promotion sustainable production and sustainable consumption. By 2013 at the latest, clear goals and indicators for the programme that everyone can understand must be in place.

These are all good initiatives and instruments, but they have been under discussion for several decades without leading to the restructuring that is needed. Now they will once again be put through the EU machinery. Hopefully the seriousness and the interconnectedness of the various challenges we face will soon dawn on more EU politicians, so that this time we can build a new and less material common material market focused on green restructuring and the good life.

The article was originally published by Concito.

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