The European Green Recovery goes through a Circular Economy
Virginijus Sinkevičius is a Lithuanian politician and European Commissioner for Environment, Oceans and Fisheries since 2019. Previously, he was Minister of the Economy and Innovation (2017-2019) and Chair of the Parliament Economics Committee (2016-2017) of Lithuania. In this conversation, we talk about the recent EU Circular Economy Action Plan and the opportunities and challenges on the way of making the circular economy a key driver for a green, sustainable and prosperous Europe.
Hi Virginijus, it’s a great pleasure to (virtually) sit down for a conversation. Let me start from the newly adopted Circular Economy Action Plan, one of the main blocks of the European Green Deal. What objectives do you believe the circular economy will help achieve in building a sustainable and prosperous Europe?
The Circular Economy Action Plan is essential to deliver the objectives of the European Green Deal – which is both our strategy for sustainable growth and jobs, and our recovery pathway from the COVID-19 crisis. In the Green Deal, we recognise that environmental protection and economic growth have to go hand-in-hand, and that we cannot choose one or the other.
We also recognise that the goal of reaching climate-neutrality by 2050 can only be achieved if we accelerate the transition to a fully circular economy. The linear economy continually increases its demand for energy and natural resources. This is incompatible with living within our planetary boundaries, especially when we consider that currently half of global greenhouse gas emissions come from extracting and processing resources. By shifting to a circular economy, we will therefore reduce the negative effects of production and consumption patterns on our environment.
The transition to a circular economy is also an exciting economic opportunity. It will lead to a sustainable economic system that creates growth, jobs, and attracts investments. It is also an important driver for innovation. More circularity also responds to business needs of price stability, securing access to raw materials, and diversifying and localising supply chains.
In academic and civil society environments, there is a growing debate among ‘green growth’ and ‘degrowth’ proponents. Do you see the circular economy as a tool able to deliver economic growth, while having a responsible and sustainable management of resources? Or do you believe that an absolute reduction in material consumption is required to reach a sustainable EU?
In short, yes - the circular economy can deliver sustainable economic growth, while at the same time reducing pressure on natural resources. We need to make decisive changes now to ensure we move from the linear model of consumption and disposal to a circular one, where resources are kept in the economy for as long as possible.
Especially in the context of the economic recovery from the COVID-19 pandemic, we need more circularity to help our society become more resilient. Now is a good moment for all actors to rethink the systems that underpin the economy, to ensure our growth is in line with planetary boundaries. The Commission therefore proposed in its economic recovery plan—NextGenerationEU—and its long-term budget for the next seven years that all future investments should follow the ‘do no harm’ principle. This principle is about making policies and investments truly future-proof by aligning them with the need to address climate and environment challenges.
We know that if our society continues to consume resources at the current rate, by 2050 we will be consuming as if there were three Planets Earth. Global material consumption and waste generation will also increase dramatically. We cannot allow this to happen – and the circular economy is key to avoiding this outcome. Not to mention that we can reduce material consumption while creating economic value, for example through repairing and re-using products such as clothes, furniture and electronic devices. This is what we have suggested in our new Circular Economy Action Plan and we are working towards creating a ‘right-to-repair’ for all Europeans and expect to make our proposal later this year. By extracting more value and functionality from products and materials, the circular economy also has the potential to create local jobs at all skill levels.
Much of the EU circular economy action has focused on targets and measures mostly based on resource efficiency and waste management. Is embedding social justice in the CE Action Plan a priority? Do you think that the circular economy can have widespread social benefits, alongside economic and environmental ones?
Social justice is an important element of the Circular Economy Action Plan - the transition to a circular economy must be achieved in a just and inclusive way. No one should be left behind. We have integrated circular economy aspects into the updated European Skills Agenda, which supports Member States in developing skills for the circular transition. We will also ensure that all regions across the EU benefit from the transition by harnessing the potential of EU financing instruments and funds to support the necessary investments at a regional level. These include the Just Transition Mechanism, InvestEU and Cohesion Policy funds.
Not only that, citizens should be empowered to make sustainable choices. We will support citizens to adopt more sustainable lifestyles through several actions, such as introducing the right to repair I mentioned before, by introducing reliable and trustworthy information on the sustainability of products, and by increasing protection against unfair commercial practices, such as greenwashing or early obsolescence.
The circular economy can be an important solution to the biodiversity crisis we are experiencing globally. What is your opinion about formally linking CE targets to biodiversity strategy at the EU level?
Achieving a successful and just transition towards a sustainable future requires full mobilisation of a number of EU policy domains. This applies in particular to our policies on the circular economy and biodiversity, as well as to all other policies we are proposing as part of the European Green Deal. The transition towards more circularity will undoubtedly help us address the biodiversity crisis in parallel. In fact, more than 90% of biodiversity loss and the pressure on quality and quantity of water resources come from extracting resources and processing materials, fuels and food. By using and consuming raw materials in a more circular way, we can substantially reduce the impacts of human economic activities on the environment, and in particular on nature.
When it comes to the role of regulatory bodies in building a sustainable Europe, a great part of civil society points to the imperative to end fossil-fuel subsidies. Why is it not happening?
To decarbonise our economy by 2050, it is clear that we need to develop a power sector that is largely based on renewable sources - complemented by the rapid phasing out of coal and the decarbonisation of gas. In this context, the Commission has also made clear that the end of fossil-fuel subsidies is required.
Ending fossil fuel subsidies will not be achieved overnight. It will require a wide range of policy tools, legislation, and financial and fiscal measures - both at EU and national level. The EU does not subsidise coal mines or any coal-related economic activities - any remaining coal-related subsidies are provided at national or regional level and are closely scrutinised by the Commission. Through EU funding, we are systematically trying to facilitate the shift away from coal and other fossil fuels towards clean energy. This includes promoting structural change and investment in renewable energy and energy efficiency, the circular economy, and fostering cooperation into research projects. Shifting from fossil fuel to clean energy requires the full cooperation of all actors, and must be achieved in a cost-effective, transparent and just way.
What is your view on a structural fiscal reform leading to higher taxation of virgin resources and a lower taxation of labour? Is it something up for discussion in the future agenda?
Green taxation can contribute to achieving environmental policy goals. Indeed, we know that certain economic activities are not resource-efficient or can cause harm to the environment and biodiversity. Green taxes can help set a price on the costs these activities incur on society, as the price of pollution has to be paid, whether by present or future generation. Putting a price on pollution can also change how companies and citizens make decisions and incentivise behavioural changes towards greener habits. If appropriately designed, green taxes can also help promote sustainable growth and support intergenerational fairness.
In addition, green tax reforms could maintain tax revenue levels for EU Member States while bringing about positive economic effects by using this revenue to cut other distortive taxes. This is particularly relevant in light of the EU’s recovery from the COVID-19 pandemic: as mentioned, we want to ensure that our recovery is green. The Recovery and Resilience Facility (RRF) provides us with an opportunity to match investments and reforms and creates room for extending the scope and use of environmental taxes. The Commission encourages Member States—in particular those lagging behind on their environmental and climate objectives—to design green taxes that can raise much-needed revenue, while making sure that those who pollute bear the consequences of their acts.
In a previous conversation with former EU Commissioner for the Environment, Dr. Janez Potocnik, Dr. Potocnik highlighted the importance of broadening the debate about climate to all sectors and industries “in order to give much more convincing and credible answers to climate change policies”. Do you see at present wide collaboration and communication among stakeholders in all EU sectors? Or do you believe that we are still working too much in sectorial silos?
First, let me say that I am very lucky to have Janez as one of my predecessors and now as my advisor. He can rightfully claim to be one of the architects of what the EU has achieved so far in the area of circular economy, he really put it on the agenda. I know that one of his main concerns was—and remains—integrating environmental concerns into other sectoral policies. We have taken this approach much further with the European Green Deal, which aims to boost the efficient use of resources across all sectors of the economy and all layers of society. It is clear that all sectors must participate in achieving its ambitious goal of net zero greenhouse gas emissions by 2050. This is where the circular economy comes forcefully in: its potential to contribute to mitigate climate change is large.
We can see that sectoral transformations are already possible using current technologies, and the links across sectors are becoming increasingly important. Increased circularity in our economy will prolong the useful life of products and other assets and allow waste streams to become valuable inputs for other sectors. It’s very simple – for instance, if we use our clothes or our mobile phones two times longer before throwing them away, the environmental impacts of production will be reduced by half. Working in sectoral silos is always a risk and we are constantly looking to increase cooperation and broaden the debate. I am, however, encouraged to see the trend towards the breaking of silos and closer cross-sectoral cooperation growing in strength and importance.
As a concluding question, what do you see as the greatest challenges towards a EU wide implementation of circular economy across several sectors? What is needed to overcome these challenges?
I believe that we are at a decisive point in history, where the decisions we make today on how we want to rebuild our economy will shape the direction we take for decades to come. If we want to reach our global climate commitments, halt environmental degradation and biodiversity loss and ensure a safe, green and just future, we must build back in way that is green and future-proof. We cannot afford to lock ourselves into obsolete technologies or business models from the past. While I am positive about the developments on the EU level towards the goal of a climate-neutral circular economy, we must ensure that everyone is on board. This means that public authorities on the national, regional and local levels, and also companies, consumers and ultimately, citizens, need to be engaged.
The EU is also leading the way on increased cooperation globally to make the transition towards a full circular economy. We launched our Global Alliance on Circular Economy and Resource Efficiency last month, which will bring together governments and relevant networks and organisations. The aim of the alliance is to provide a global impetus for initiatives related to the circular economy transition, resource efficiency and sustainable consumption and production, and I am confident that by working together, our European vision for a circular economy can become a global reality.
March 2021
A conversation between Virginijus Sinkevičius & Emanuele Di Francesco
