Tuesday

6th Jun 2023

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

  • "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.

Magazine

One industry's waste is another's resource

The issue of circular economy is back on the agenda in Brussels this week, but the world's first industrial symbiosis is over forty years old.

Analysis

Final steps for EU's due diligence on supply chains law

Final negotiations on the EU due diligence law begin this week. But will this law make companies embed due diligence requirements in their internal processes or incentive them to outsource their obligations to third parties?

Latest News

  1. Final steps for EU's due diligence on supply chains law
  2. Top EU court rules Poland's court reforms 'infringe law'
  3. Sweden's far-right is most anti-Green Deal party in EU
  4. Strengthening recovery, resilience and democracy in regions, cities and villages
  5. Why Hungary cannot be permitted to hold EU presidency
  6. Subcontracting rules allow firms to bypass EU labour rights
  7. Asylum and SLAPP positions in focus This WEEK
  8. Spanish PM to delay EU presidency speech due to snap election

Stakeholders' Highlights

  1. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  2. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  3. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  4. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  5. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics
  6. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains

Stakeholders' Highlights

  1. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  2. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  3. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  4. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  5. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence
  6. Nordic Council of MinistersCSW67: The Nordics are ready to push for gender equality

Join EUobserver

Support quality EU news

Join us