EUobserver opinion: How to finance the circular economy

This week the eyes of the world are on Paris, where we hope for a global deal to reduce greenhouse gas emissions and limit global warming.

For years already, Europe has been a frontrunner, showing global leadership in tackling climate change.

Part of the challenge lies in transforming our economy from a ‘linear’ to ‘circular' one. This means that the ‘take-make-dispose’ pattern on which most of our economy rests is no longer sustainable.

Faced with a shortage of natural resources, the responsible thing is to recognise the value of products and materials we throw away every day.

In a circular economy, the value of materials and products is sustained for as long as possible; resource use and the production of waste are reduced to a minimum; and when a product has reached the end of its life, its components are used again and again to create further value.

This is not just the right thing to do for our environment - it is also a smart and profitable thing to do. By boosting resource efficiency and going circular, we can build a competitive edge in the production and consumption patterns of the future, generate new business opportunities and create new jobs.

We can reduce our dependency on raw materials whose prices fluctuate widely, often originate from unstable parts of the world and that in general make our economies and societies vulnerable.

Circular economy

Last week, the European Commission presented new ideas for the circular economy.

We are not starting from scratch. Creative initiatives by businesses and citizens are already showing us the way ahead. And many EU countries have already started to gear their policies in this direction.

The EU will not substitute these initiatives. Action at the European level should build on these and leverage the Single Market to accelerate the transition and reach a wider scale.

The European Commission's proposals for the circular economy aim to do just that: provide a framework that combines innovation, smart regulation and financial incentives to serve as a catalyst for change, supporting national and local authorities, businesses, consumers and civil society.

Horizon 2020

Innovation plays a particularly central role in this transformation. To find new models of producing and consuming goods, our Circular Economy proposal recognises the need to support further research and innovation in this area.

That's why in the next two years, over €650 million from Horizon 2020, the EU's Framework Programme for Research and Innovation, will be invested in showing the economic and environmental viability of new circular economy models.

To so do, we need to support innovation in all forms, including technological, social, regulatory and organisational as well as boost the impact of our research through access to open data and collaborative efforts among scientists, business and end-users.

In another concrete commitment to boosting innovation for the circular economy, we will also review the rules and risk coverage for loans and guarantees offered by the European Investment Bank and backed by the Horizon 2020 programme, to accommodate applications by circular economy projects as of 10 December 2015.

Our other actions proposed under the Circular Economy package encourage better product design that improves the durability, reparability and recyclability of products; resource efficient production processes with minimal waste; helping waste or by-products of one industry becoming inputs for another and promoting industrial symbiosis.

Business

This also means developing a real market for secondary raw materials, and making progress towards reaching the UN Sustainable Development Goals of reducing marine litter and halving food waste by 2030.

We have also looked at the best way to encourage better waste management across Europe. Our proposals set an EU-wide target for 65% of all municipal waste and 75% of all packaging waste to be recycled by 2030. These ambitious targets show our global leadership, but they also set a credible path, because real ambition lies in real progress.

We know there is no way we can boost recycling without moving away from landfill. This is why we are making it a priority. We are therefore proposing to set a binding target for a maximum of 10% of all waste to end up in landfill by 2030. It is ambitious, but it can be done.

We chose not to ignore the wide diversity of starting points among EU Member States - 64% of recycling in some, 10% in others; at the same time, no country will be able to just sit and wait. Because they are credible, these targets provide the private sector with the long-term certainty that will trigger investment and a lasting change in economic models.

It is time to transform our economy in a way that reduces costs for business, creates jobs, and makes our environment cleaner.

Carlos Moedas is EU commissioner for research, science and innovation