Europe’s environmental industries’ answer to the recession

by Adrian Wilkes, Chairman of the Environmental Industries Commission

As recession spreads across the continent UK and the EU, politicians also face a second challenge: the dawning ecological crisis. Adrian Wilkes, Chairman of the Environmental Industries Commission (EIC), looks at how the environmental industry can help Europe out of recession.

These challenges are interlinked and thereby also bring opportunities. At the heart of our response must be a major new action plan for growing the environmental technology and services industry - an engine for growth to take Europe out of recession by creating millions of “green jobs”. Hence EIC’s recently published “Growth Plan for Europe’s Environmental Industries”.

Encouragingly, recent developments show that politicians are becoming aware that environmental protection yields significant economic benefits as well as ecological gains. The Chancellor’s pre-Budget Report talked of promoting ‘high-value green-collar jobs – a potential one million jobs in low carbon industries in the next 20 years.” And then EU Heads of State have now endorsed the Commission’s “Economic Recovery Plan”, which talks of “turning the crisis into an opportunity to create clean growth” through “smart investment” to become a dynamic low-carbon economy for the 21st Century.

The challenges facing Europe are indeed huge. Our Toxic Financial Time Bombs mean that the world’s financial institutions are nursing losses of $2,800,000,000,000 ($2.8 trillion) according to the Bank of England (whose Deputy Governor called the situation “possibly the largest financial crisis of its kind in human history”).

The second huge challenge, sadly under-reported and sidelined, is our Toxic Ecological Time Bombs. Humans are using 30% more resources than the Earth can replenish – an ecological debt of $4,000,000,000,000 ($4 trillion) a year, according to the recent Living Planet Report from WWF.

And additionally there are the substantial financial impacts of future climate change. Lord Stern predicted that failure to act on climate change will be equivalent to losing at least 5% of global GDP each year, now and forever (and this could rise to 20% of GDP or more).

But these two huge challenges can be jointly tackled to mutual advantage.

A substantial new industry has arisen: Europe’s environmental industry, which currently boosts a €227 billion turnover with 3.4 million jobs (with 1.8 million people employed in Germany alone).

The global market for environmental goods and services is already worth $1,370 billion per annum and is predicted by UNEP to grow to $2,740 billion by 2020.

This is indeed “an opportunity that should create thousands of new businesses and millions of jobs in Europe” as Commission President, Jose Manuel Barroso has recognised.

And environmental protection is also good news for mainstream industry. It has been calculated that in the UK, for example, the total value of potential resource efficiency savings to British businesses ranges between £5.6 billion to £7.4 billion.

As the environment is a “market failure”, this new green economic opportunity is totally dependent on Governments intervening, so Governments must not be deflected by scaremongering about the short-term costs. Policy debate needs to focus on the reality.

And the current recession must not deflect Government action. Encouragingly, UK Prime Minister Gordon Brown recently said “Some people say that these difficult economic times should or will reduce the Government’s commitment to building a low carbon economy. They should not and will not.”

But we urgently need actions to follow through on these words of political intent to seize these huge environmental markets.

The USA is once again a major competitive threat for Europe’s environmental industries. US President-Elect Obama has a raft of detailed policy proposals to help return the USA to world leadership, including a pledge to invest £150 billion to create 5 million new green collar jobs by 2020.

EIC believes that we urgently need an “Environmental Industry Strategy” to coordinate five key policies to make Europe’s environmental industry a global success story.

First, we need long-term regulatory targets as they are the key support for investors and innovators. So the European Union should, inter alia, regulate in step with leading Member States and our major international competitors (Japan, for example).

Second, we need a range of properly funded support policies, such as using public procurement to trigger the development of domestic markets and boosting investment (eg. through tax credits).

Third, we need policies to promote technology diffusion to mainstream industry, particularly, tax incentives for the decommissioning of old ("dirty") technologies and the use of cleaner technologies.

Fourth, funding for environmental R&D should be increased in line with major international competitors (particularly the USA and Japan).

And fifth, the European Union should create a "European Export Council for Environmental Technologies" to help environmental exporters with, inter alia, export credits and demonstration projects in overseas countries.

It is time for action to seize the opportunity.

For a copy of EIC’s “Growth Plan for Europe’s Environmental Industries” or further information, please email: info@eic-uk.co.uk

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