The green economy:
matching long-term ambitions
with short-term actions
Dr Hans Bruyninckx
EEA Executive Director
Informal Council of Environment Ministers
Milan, 16th July 2014
The 7th EAP: a long term vision of sustainability
“In 2050, we live well, within the planet's ecological limits. Our
prosperity and healthy environment stem from an innovative,
circular economy where nothing is wasted and where natural
resources are managed sustainably, and biodiversity is protected,
valued and restored in ways that enhance our society's resilience.
Our low-carbon growth has long been decoupled from resource
use, setting the pace for a global, safe and sustainable society.”
Source: 7th Environmental Action Programme
Other EU policies offer similar perspectives: Europe 2020 Strategy, EU Energy Roadmap 2050, Roadmap
to a Resource Efficient Europe, Roadmap for a competitive low-carbon economy in 2050, etc.
The 2050 vision requires Europe to adopt a systemic
approach & foster transitions
‘Systemic risks’ (persistent problems) require fundamental solutions
 “Regular policies” offer no fundamental solutions:
 Incremental institutionalism is too slow and often doesn’t touch the core issues
 Market creation and commodification in itself is not a solution
 Resource efficiency gains are necessary, but are not sufficient for ecosystem,
economic and societal resilience
→ Transitions
= fundamental shifts in the systems that fulfil societal needs,
through profound changes in dominant structures, practices,
technologies, policies, lifestyles, thinking …
Green Economy: Living well within ecological limits
ECOSYSTEMS
Withdrawals
from the
ecosystems
SOCIO-TECHNICAL SYSTEMS
providing social needs and value
Policy
Industry
Energy system Food
system
system
Ecosystem
services
Values
system
system
Mobility
system
Science
Technology
Environmental
externalities
Market
Deposits
Emissions
Pollution
We need better sectoral accountability
Source: Eurostat
The growing influence of global megatrends on Europe’s
long-term future
Past and projected global economic output (2005 USD PPP), 1996–2050
Note: gross domestic product expressed in billion 2005 US dollars at purchasing power parity.
Source: OECD 2013: 'All Statistics - OECD iLibrary'.
Back in Europe: energy efficiency has increased, but we
are far from a low-carbon economy
Economic growth
Resource use
Efficiency gains
Source: EEA (CSI 028)
Homes are now more energy efficient, but also much
larger, increasing pressures on land, water and materials
Index 1990 = 1
1.3
Consumption
1.2
Total energy
consumption of
housing stock for
space heating
Energy consumption
per dwelling for
space heating
1.1
Resource use
1
Energy consumption
per m2 for space
heating
0.9
0.8
Efficiency gains
0.7
Source: SCP023 indicator (draft)
Growth in floor area
of housing (19 EU
countries)
Cars are more efficient but contribute to a range of
negative impacts on people’s quality of life in cities
160
Index, 1990 = 100
150
Consumption
GDP (fixed prices)
140
Total car km travelled
130
120
Resource use
110
Specific fuel consumption
of average car (litres/km)
100
Efficiency gains
90
Total fuel consumption of
private cars
Total CO2 emissions of
cars
Stock of cars
80
To reach ambitious environmental visions
Not just incremental efficiency gains ...
nor new technologies only ...
Copyright: Tesla
Environment and climate policies can be engines
driving future economic performance
“Our actions must leave us better placed for the future
through smart investment in greening and new
technologies.”
Jose-Manuel Barroso, March 2009
“In the EU, we have developed the world's most
ambitious climate policies for 2020 whilst in the midst
of an economic crisis! It shows that we believe in a new
growth model: green growth, sustainable growth.”
Hermann van Rompuy, May 2011
Policy tools that can help achieve 2020 targets in
line with 2050 visions
• Regulation
• Fiscal reform
• Financing tools
1. Well-designed legislation stimulates innovation
Policy analysis and research demonstrate that
well-designed regulations can stimulate innovation.
Legislation supports the global ‘race to the top’
• Legislation ‘export’ gives European businesses a head start
in global markets.
• Environmental policy is regarded in some quarters as
Europe’s most successful foreign policy.
• The EURO emission standards and REACH legislation are
examples of European regulation ‘export’. This spreads
higher environmental standards around the world.
EU emissions standards are adopted across Asia,
giving European exporters access to huge markets
Source: CAI, 2011
2. Environmental fiscal reform
• Shifting taxes from societal goods – employment,
investment – to societal bads – pollution and overconsumption
• Taxation shift puts a price on environmental externalities,
thereby reducing pressures on human and ecosystem
health while also supporting economic efficiency and jobs.
• Removing harmful subsidies
Environmental taxes are an under-used tool
“Labour taxation is still too high, while growth-friendly
bases, such as environmental taxes, are under-used in
many countries. The tax shift away from labour, which
we have consistently called for to allow our businesses
to regain competitiveness, still has to materialise.”
Statement by Commissioner Šemeta on Taxation Trends in Europe
June 2014
But environmental taxes are an under-used tool in the EU
3.00
2.50
2.00
1.50
1.00
0.50
energy taxation
transport taxation
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0.00
resource/pollution taxation
Environmental taxation as a percentage of GDP (distinguished between energy,
transport and pollution/resource) in the EU-27
Source: Eurostat http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=env_ac_tax&lang=en
Eco-innovation and competitiveness are compatible
Finland, Germany and Sweden are highly competitive, and leaders in eco-innovation
Global Competitiveness Index 2013-2014
Eco-Innovation Index 2012
3. Several sources of financing the green economy shift
• Estimates for the financing needs of the green economy
range from between US$70bn and several trillion dollars
per year.
• Public funding: European Commission, European
Investment Bank, the Green Climate Fund.
• Private funding: pension funds and insurance companies.
• Mixed public/private sources: ‘green bonds’, the Project
Bond Initiative.
The global green bond market in 2011
Source: Della Croce et al., 2011
Some final reflections
• Is Europe making enough use of the tools at its disposal to
create a green economy?
• The 7th EAP is a critical element of the transition to a
circular economy.
• The EEA will provide the tools and knowledge base to
inform the transition to a green, circular economy.
• Our five-year Multiannual Work Programme has identified
the theme of transitions to a green, circular economy as a
priority area.