Thursday

14th Dec 2017

Circular economy could deliver €1.8tn for Europe

  • High interest in the European Commission's stakeholder conference on Circular Economy (Photo: EUobserver)

The circular economy is Europe’s next big thing, according to a new study, and EU policy-makers are keen to get in on the act.

"Circular Economy is becoming a viable option for Europe – for the first time", Martin Stuchtey, director of the McKinsey Center for Business and Environment, last week told a packed Brussels audience, including three EU commissioners.

Thank you for reading EUobserver!

Subscribe now for a 30 day free trial.

  1. €150 per year
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

  • "If somebody had said four years ago they they were going to build the biggest hotel chain in the world? Who would have thought that possible?" says Ellen MacArthur about Airbnb. (Photo: European Commission)

"The model would yield annual benefits of up to €1.8 trillion by 2030", according to the report, 'A Circular Economy: vision for a competitive Europe' from McKinsey.

The study predicts that fully implementing a circular economy will bring €3,000 extra to all European households and make Europe meet its climate commitments ahead of time.

"We are not discussing the if – but the when and how," environment commissioner Karmenu Vella said.

Uber and Airbnb

The interest in the report’s findings reflects a gradual recognition by business that it make more economic sense to consider product recycling and resource efficiency throughout the whole life-time of a product.

The current economic model has not changed much since the industrial revolution. Nature's resources are used, goods are produced at the lowest cost possible and waste is thrown away. This is the linear economy.

But resources are limited and there is a growing global demand for them.

Europe imports 60 percent of its fossil fuels and metal resources and the EU has already listed 20 materials resources as critical in terms of security and supply. These imports cost €766 billion a year.

In the future the cost of resources will play a bigger role than the cost of labour, forcing a change in business models towards a circular economy.

Private ownership will give way to leasing and sharing products – the new car-sharing service Uber and private lodging service Airbnb are early examples of this.

"If somebody had said four years ago they were going to build the biggest hotel chain in the world? Who would have thought that possible? But it has happened with Airbnb", said Dame Ellen MacArthur, whose eponymous foundation raised the money to pay for the McKinsey study.

Statistics showing where economies and society could be made more efficient and less wasteful are eye-opening.

Almost a third (31%) of food produced is lost or wasted. As much as 50 percent of most city land is dedicated to roads, parking and alike.

A typical European car is parked 92 percent of time, it sits in traffic 1 percent of the time and is looking for a parking space 1.6 percent of the time. It is only used for driving 5 percent of time.

One obvious way forward would be to focus EU regional aid and the EU’s new €315bn investment fund on the circular economy.

Systemic change

The European Commission is due to come with proposals on the circular economy later this year.

It is currently gathering ideas from stakeholders in a process that will last until 20 August.

But there are questions about how it should approach the issue, such as whether it is just about better implementing existing legislation or should binding targets be set.

The McKinsey report suggests that a more fundamental change is needed, however.

"Shifting to a new model starts with acknowledging the systemic nature of the change", it says.

But this longterm approach contradicts the short-termism of politics.

"To survive in democratic politics your perspective is four sometimes five years, while in business to survive your perspective must be 20-25 years", EU commission vice-president Frans Timmermans acknowledged.

"Politicians can only survive if people keep voting for them. Democracies have difficulties in doing this. If you could impose what you have to do without fearing of winning the next elections, it would be easier. We need to convince our constituencies in democracies that we need to take long term steps,” he added.

But there is already widespread support for the idea of being less wasteful. Eighty percent of respondents to a 2014 Eurobarometer poll believed resource efficiency to be highly important for economic growth.

"There is something in this for all companies", McKinsey's Stuchtey said. "Only the laggards are the losers. It's a question of being fast or slow".

Opinion

Europe’s Kodak moment and the circular economy

If I were a business leader, I would be on high alert to ensure my company not become the cassette tape, correction fluid, or photographic film manufacturer of our time.

Facebook to shift ad revenue away from Ireland

Public pressure about low corporate taxes appear to have pressured Facebook to launch plans to stop routing international ad sales through its Dublin-based headquarters in Ireland.

Stakeholders' Highlights

  1. Dialogue PlatformThe Gülen Community: Who to Believe - Politicians or Actions?" by Thomas Michel
  2. Plastics Recyclers Europe65% plastics recycling rate attainable by 2025 new study shows
  3. European Heart NetworkCommissioner Andriukaitis' Address to EHN on the Occasion of Its 25th Anniversary
  4. ACCACFOs Risk Losing Relevance If They Do Not Embrace Technology
  5. UNICEFMake the Digital World Safer for Children & Increase Access for the Most Disadvantaged
  6. European Jewish CongressWelcomes Recognition of Jerusalem as the Capital of Israel and Calls on EU States to Follow Suit
  7. Mission of China to the EUChina and EU Boost Innovation Cooperation Under Horizon 2020
  8. European Gaming & Betting AssociationJuncker’s "Political" Commission Leaves Gambling Reforms to the Court
  9. AJC Transatlantic InstituteAJC Applauds U.S. Recognition of Jerusalem as Israel’s Capital City
  10. EU2017EEEU Telecom Ministers Reached an Agreement on the 5G Roadmap
  11. European Friends of ArmeniaEU-Armenia Relations in the CEPA Era: What's Next?
  12. Mission of China to the EU16+1 Cooperation Injects New Vigour Into China-EU Ties

Latest News

  1. Estonia completes two out of three priority digital bills
  2. EU countries are not 'tax havens', parliament says
  3. Tech firms' delays mean EU needs rules for online terror
  4. Slovak PM: Human rights are not a travel pass to EU
  5. British PM limps to EU capital after Brexit defeat
  6. US pleads for clarity on Brexit aviation 'black hole'
  7. Tusk migration note prompts institutional 'hysteria'
  8. Migration looms over summit, as Africa pledges fall short

Stakeholders' Highlights

  1. EPSUEU Blacklist of Tax Havens Is a Sham
  2. EU2017EERole of Culture in Building Cohesive Societies in Europe
  3. ILGA EuropeCongratulations to Austria - Court Overturns Barriers to Equal Marriage
  4. Centre Maurits CoppietersCelebrating Diversity, Citizenship and the European Project With Fundació Josep Irla
  5. European Healthy Lifestyle AllianceUnderstanding the Social Consequences of Obesity
  6. Union for the MediterraneanMediterranean Countries Commit to Strengthening Women's Role in Region
  7. Bio-Based IndustriesRegistration for BBI JU Stakeholder Forum about to close. Last chance to register!
  8. European Heart NetworkThe Time Is Ripe for Simplified Front-Of-Pack Nutrition Labelling
  9. Counter BalanceNew EU External Investment Plan Risks Sidelining Development Objectives
  10. EU2017EEEAS Calls for Eastern Partnership Countries to Enter EU Market Through Estonia
  11. Dialogue PlatformThe Turkey I No Longer Know
  12. World Vision7 Million Children at Risk in the DRC: Donor Meeting to Focus on Saving More Lives