The recent turbulence in the global financial and banking sectors has affected us all. But while we know that the fortunes of the money markets can be restored over time, the same cannot be said of the damage caused by climate change, which is one of the greatest challenges facing humanity today.

Addressing this issue, and the range of environmental problems that it encompasses, will require an energy revolution. Green tech – environmentally friendly and resourceefficient technologies – has an important role to play, providing innovative solutions with a reduced environmental footprint, meeting longer-term sustainability goals, and decoupling economic growth from environmental damage.

The EU is driving green innovation in many areas through environmental legislation, market instruments like the EU Emissions Trading System, initiatives such as green public procurement, and policies such as the climate and energy strategy which sets targets that demand low carbon and highly energy efficient solutions. These targets include cutting greenhouse gas emissions by at least 20% compared to 1990 levels (and up to 30% in the context of a future global climate agreement), saving 20% of energy consumption by increased efficiency, and increasing the share of renewable energy to 20% – all by 2020. But the magnitude of carbon dioxide emissions, the unchecked depletion of natural resources and rising levels of pollution will all require innovation on a grand scale.

That is why the EU is also directly supporting and promoting new technologies which will deliver the tools and processes to bring about change. In the last 25 years, information technology has transformed the way people live and work, so much so that it is now difficult to imagine life without the internet, email and mobile phones. Information and Communication Technology offers the technological capacity to enable energy efficiencies in other sectors, and ICT applications in transport and energy management in buildings, for example, are very promising.

Environmental technology industries have seen rapid growth in recent years. Investment in clean technologies now represents around 10% of all venture capital in Europe. Eco-industries make up a significant segment of the European economy, with an estimated turnover of €227 billion – corresponding to 2.2% of EU GDP – greater than the aerospace or pharmaceutical industries. They account for some 3.5 million jobs. EU companies enjoy a global market share of more than 30% of the eco-technologies market and more than 50% in waste management and recycling technologies. The global market value for environmental industries is projected to reach €2.2 trillion by 2020.

Eco-innovation is a central element in the fight against climate change and is the only way we can fundamentally change our patterns of production and consumption. Massive innovation will be needed in clean, efficient technologies to maintain Europe’s position as a leader in ecoinnovation and to ensure its future competitiveness.

Developing and promoting new solutions through technologies like solar and wind power, fuel cells, bio-materials and energy efficiency devices, is fundamental if we are to trigger the potential for economic benefits through cost savings, innovation and international trade. Viable technological solutions are already available to remedy many of the environmental issues we face, but their commercial take-up can be hampered by obstacles.

This was one reason why the European Commission set up the Environmental Technologies Action Plan (ETAP) in 2004, in an effort to remove financial, economic and institutional barriers to the development of environmentally- friendly technologies and increase market take-up. ETAP bridges the gap between research and market by channelling resources into environmental research. Under the EU’s 7th Framework Research Programme, up to €10 billion of its €32 billion budget for the period 2007-2013will go towards environmental technologies.

Research areas include clean production processes, carbon storage and alternative energy sources. Current ETAP priorities to improve market take-up of eco-innovation include establishing a method for the credible verification of environmental performance to boost confidence in eco-technologies, while future action will focus on areas such as the food and drink, transport and wastewater industries.

The EU’s Competitive and Innovation Programme (2007-13) is devoting €433 million for eco-innovation through assistance such as risk capital financing and networking activities. The EU also recently launched the Lead Market Initiative to identify sectors which have high-growth potential. Most of those identified, such as sustainable construction, recycling, bio-based products and renewable energy, are prime markets for eco-innovation.

The initiative will help reduce the cost of bringing new products or services onto the market and improve access to markets. Some may see climate change as an obstacle to growth but at the European Union we see it as an opportunity for business. Those companies that include the environment in their business strategy will gain the competitive advantage. And not only will they be market leaders, they will also be leading the battle for our planet. �

Stavros DIMAS
Commissioner for Environment

The European Files N°16 - December 2008