How the EU finances circularity
Adapted from GreenFin Weekly, a free newsletter. Subscribe here.
BASQUE COUNTRY, SPAIN: The first time I spent Christmas with my future husband’s family, his mother Mila gave me a beautiful woolen shawl that she had knitted by hand. That was about 20 years ago, long before we talked about circular economy, but this shawl was as circular as it gets. Because to make this gift for me, Mila had carefully untied the thread of one of my husband’s sweaters, a sweater that his ex-girlfriend had given him.
I know! I’ll give you a moment to appreciate the exquisite symbolism of this story before explaining its relevance here. You’re welcome.
So, a few weeks ago, on our annual summer visit to the Basque Country, I traveled to Amsterdam to learn more about the circular textile and fashion industry there. (FYI: It’s booming. Stay tuned for more on this story.) Along the way, I discovered how the European Union is now following in my beautiful- mother, and I thought it was worth highlighting how the Europeans fund their efforts and how the United States can learn from it.
To begin with, the circular strategy of the European Union is rooted in the European Green Agreement, launched in December 2019 with three main objectives: achieve zero net emissions by 2050, create an inclusive green transition and “decouple growth from resource exploitation”. The EU made circularity a pillar of its first climate policy for good reason. Extraction and processing of material resources accounts for about half of global greenhouse gas emissions and more than 90 percent of biodiversity loss and water stress related to land use, according to the United Nations Environment Program.
The EU aims to make it as easy and attractive as possible for ESG investors to support circular initiatives by European companies.
Then you have the wording: decoupling growth from resource exploitation. Another way to put it could be: Europe is betting its economy on circularity! The European Commission is defining a strategy to achieve this objective in its Circular economy action plan, adopted in May 2020, which emphasizes driving the transition through research, innovation and digitization.
As we bicker over the bare minimum of climate policy and succumb to the oil and chemical industry’s propaganda over plastic bans – because, really, what says more freedom than aspiring to liquid through a petroleum based stick? – European companies with circular initiatives benefit from a strategy that encourages innovation and private investment, from venture capital to green bonds, while providing abundant public funding.
In addition to incentives, EU policies include taxes, such as landfill and incineration taxes, and extended user responsibility requirements, which make companies responsible for the treatment or disposal of waste. their products after their customers have used them.
A bunch of carrots
But I would like to focus here on “carrots” because we are talking about a big batch of them.
To start, the European Parliament approved in June three funds totaling 243 billion euros (around 287 billion dollars) to strengthen regional development and cooperation, with at least 30% of these resources earmarked for climate action, circular economy and investments in growth sustainable development and job creation. This followed the adoption by parliament of the € 17.5 billion (US $ 20.7 billion) Just Transition Fund, which will also finance projects contributing to a sustainable, climate neutral and circular economy.
That’s not all. Additional proposals from the European Commission call for further boosting funding for the Green Deal by making it one of the three priorities of the EU’s 750 billion euro ($ 886 billion) COVID recovery strategy, a.k.a. Next-generation EU recovery plan. Coupled with the long-term EU budget, this plan is part of a Recovery plan of 2,000 billion euros (2.38 trillion dollars), the largest in European history, which will help rebuild a “greener, more digital and more resilient Europe” post-COVID.
As if that wasn’t enough, in July the commission also released a Sustainable finance strategy channel private investments towards relevant sustainable economic activities, as well as a European standard for green bonds to help increase the size and increase the environmental ambitions of the green bond market.
All of this means that the EU aims to make it as easy and attractive as possible for ESG investors to support circular initiatives by European companies.
Are you listening, Washington? Can you hear me, Corporate America?
Europe is asserting itself as a leader in circularity – I’ve heard this over and over again in Amsterdam, which is one of the six pilot cities participating in the EU-funded initiative REFLOW project. The project aims to make participants – Amsterdam (textile), Berlin (wastewater heat), Milan (food), Paris (temporary construction), Vegle, Denmark (plastic) and Cluj-Napoca, Romania (energy) – models to be continued. for other cities trying to switch to a circular and regenerative economy.
In other words, they want us to copy them!
Of course, all of this could have happened much sooner if the EU had just listened to my mother-in-law. Nothing goes to waste in his house – no food, no old clothes, no reusable packaging. I doubt she’s ever bought any Tupperware – if you open the plastic ice cream container in the freezer you’re just as likely to find leftovers as dulce de leche.
This tendency to avoid waste arose out of hardship, having grown up in Franco’s Spain, the child of parents who survived the Spanish Civil War to face poverty and hunger. These lessons are not easy to unlearn. Just days before returning home to New York, Mila was wearing a backpack she made from one of my stepfather’s shirts.
It was cute. I told him: There is now a lot of demand for these kinds of articles. She is expected to sell her creations at the weekly outdoor market. She rejected the idea: “I’m already retired,” she said.
I guess the EU will have to find its way without it. I hope we don’t wait until it’s too late for us Americans to start learning from them.