The circular economy creates wealth and jobs, helps the planet by improving the use of resources and can provide the solution to achieving a sustainable future for Europe.
The circular economy is the subject of a new study put together by the Enel Foundation and The European House – Ambrosetti think tank (with the collaboration of Enel and Enel X). The study was presented on 5 September at the Forum in Cernobbio, the annual event that has been taking place at Villa d’Este on Lake Como, Italy, for almost half a century.
This year the Forum focused on recovery plans for the European economy following the Covid-19 crisis; the health emergency also meant that the workshop had to be held largely in virtual form. The study “Circular Europe. How to Successfully Manage the Transition from a Linear to a Circular World” outlines the way forward. This isn’t only because it’s the first analysis of the circularity levels of the 27 EU member states plus the United Kingdom (with a particular focus on Italy, Spain and Romania), but also because it uses facts and figures to demonstrate the economic benefits of shifting to the circular model.
The boost to GDP and employment
The study points out that in 2018 the circular economy generated between 300 and 380 billion euro towards GDP in the EU 27 plus the UK and created an additional 2.4 to 2.5 million jobs. These results were achieved by attracting investment of around 90-110 billion euro. The rise in GDP per capita amounted to 650 euro while the increase in productivity was estimated at 570-940 euro per employee in Europe.
“Choosing to develop a circular economy is an extraordinary opportunity to make Europe more competitive, modernising its economy, revitalising industry and, at the same time, creating jobs through sustainable and long-lasting growth,” explained Francesco Starace, Enel CEO and General Manager, at the presentation of the study together with Valerio De Molli, Managing Partner and CEO of The European House – Ambrosetti, and Francesco Venturini, CEO of Enel X. “The pandemic showed the fragility of global supply chains. The circular economy therefore acquires a strategic value that perhaps was not so evident prior to the crisis,” Starace added.
EU countries are moving at different speeds
De Molli emphasised the scientific basis of the study, which was certified by the European Commission’s Joint Research Centre. In order to measure the level of penetration, a Circular Economy Scoreboard was developed. The scoreboard introduces 23 homogeneous metrics for all of the member states with 10 main indicators relating to the 4 pillars of the circular economy: sustainable input (the use of renewable energies and renewable, recyclable, recycled and biodegradable materials), end of life (the recovery of goods, products and materials through reuse, regeneration and recycling), extension of useful life (the capacity to extend the useful life of products and their components), and increasing intensity of use (the increase in use of a single product, for example through product-as-a-service or sharing).
The analysis shows that the development of the circular economy is still very uneven and that many EU countries do not yet have a national strategic roadmap to enable them to implement the European directives on the circular economy. “Some countries are leading the change, others are not,” De Molli explained.
The European Green Deal and the New Circular Economy Action Plan, which was adopted by the European Commission in March 2020, have set new, more ambitious targets for Europe. Nevertheless, some countries, in particular those in Eastern Europe, are still in their infancy and are far behind best performers such as Finland, which drafted the first national roadmap for the circular economy four years ago.
The study that was presented can also serve as a snapshot of the current situation in Europe. So far, Venturini explained at the presentation, “the lack of clarity surrounding what it means to be circular and, consequently, the lack of suitable tools to measure and monitor the circular economy have been the two main obstacles to the circular transition. This study enables us to move towards a clear vision and strategy, with measurable goals.”
In addition to the economic advantages, the circular approach offers substantial benefits in terms of environmental impact that the research measured based on materials used (aluminium, iron, copper, nickel, lead and zinc), as well as the potential for reuse (for example, second life for batteries and the repurposing of decommissioned power plants). Enel X, in particular, has developed an autonomous method, the Circular Economy Report, through which it measures companies’ circularity levels, plotting a roadmap to boost circularity and to monitor the economic benefits deriving from the good circular practices introduced. “We are already working with a hundred or so companies and our goal is to reach four thousand companies in the next three years,” Venturini explained at the presentation.
The priorities for Europe’s business leaders
The analyses of the circularity of EU countries + UK included also opinion polls of 300 European business leaders. For almost all of the latter (95% of the total, 90% of SMEs), the circular economy is a strategic priority and a tool with which to obtain a competitive advantage in terms of diversification, market extension and cost reduction. Nevertheless, three out of four believed that their country was not yet ready to rise to the challenge of the circular economy. This problem needs to be resolved. Indeed, in order to reverse this trend, the study does not limit its scope to mere analysis; in its conclusion it identifies 10 areas of policy intervention to accelerate the shift to a circular model. These include eliminating incentives for linear business models or cutting tax on circular models. A set of commandments, therefore, to avoid missing out on the opportunities offered by the circular economy which, according to De Molli, the host of the Cernobbio Forum, has all the attributes to become “a catalyst for the common good, and around which a vision can be developed for the future of Europe.”
“Studies like this show us that the circular economy can represent a formula for a new material constitution for Europe,” concluded Enel Chairman Michele Crisostomo. A way in which the continent can redefine itself, invest in its own future and complete the circle of sustainability.