If the policy is clear enough, the EU’s new circular economy package of waste, incineration and recycling laws could bring intertwined benefits to business and the environment, Dow Chemicals’ Government Affairs boss in Europe told EURACTIV.
Howard Chase is Dow Chemical’s Director of Government Affairs Europe.
Chase spoke to Deputy News Editor James Crisp.
Why does Dow care about the circular economy?
The circular economy offers a real opportunity to Europe and European industry to make itself more resource efficient, to innovate, to grow, to provide the products and services to make the circular economy work. First and foremost, it’s a real business opportunity in line with policy objectives – if we can make it work.
There’s been controversy over whether it should be seen as primarily economic or environmental legislation.
That’s a fair point. But where I’m coming from, from a business perspective, there are very strong business interests and opportunities in meeting the policy opportunity, i.e. environmental benefits from goods. If we get it right, it can align with the business aspect of the policy.
But there’s anxiety now that the business aspect is the dominant driver of EU policy on the circular economy.
The reason I say it is of interest as a business opportunity is that the targeted resource-efficiency and maximum/optimum use of resources through recycling makes fundamental business sense. Maximising input value makes huge sense from both economic and social perspectives.
Here in Europe, where there is somewhat of a natural resource-constrained economy, maximising resource-use makes a robust economic and business argument, as well as an environmental one. I see them as intertwined issues. The fact that they are not exclusive from one another should be welcomed. As standalone issues, they would have a reduced chance of success.
There have been calls for a market-driven circular economy. How would that work and what would it look like?
Firstly, it’s a question of policy clarity. As far as I understand, there is still a long way to go, which is a different conversation, regarding the types of instruments that could be used [in the new circular economy package]
What is ‘resource optimisation’? We would argue that we are all best served by optimising resources that may or may not be physical recycling of everything. In particular, at what point does it become more efficient to recycle energy rather than every single little thing?
Policy clarity in terms of certain definitional issues is also needed. What is waste? When does waste start or stop being treated? Is it a resource? Can it be freely moved across borders?
A single market in waste?
That was a policy objective. We are, after all, in Europe. Rather than a mechanism, you either want a single European market for waste treatment, or you don’t.
If waste is a resource, why isn’t the market already exploiting the opportunity?
To a certain degree I think it is: metals, glass, paper, plastics etc. On a significant scale. Policy and regulation have undoubtedly prompted this. Regulatory intervention creates the streams of raw materials. Another public policy objective in this area is landfill, which remains an important driver of policy in this area. In a small continent, burying all our waste just doesn’t seem very sensible, especially when it has inherent value. The European plastics industry has already said it has no problem moving to zero landfill by 2025.
In Denmark, waste is imported for incineration.
I see Denmark’s importing of waste to burn as a signifier that the market is working.
Has Europe had its first ‘waste-billionaire’?
Not sure! It’s not me, but there are certainly companies successfully invested in waste collection. On another note, policy direction is not just big-picture; municipal authorities have a role to play.
The circular economy and recycling isn’t really a choice is it? Our resources are finite.
No, one of the interesting issues in the chemical sector is that recycling optimisation is second-nature. Everything that goes out of the plant gets used for something else. Waste heat gets used for other processes, raw materials recycled etc. There’s a great deal of integration. This ethos is embedded in the European chemical sector and has allowed it to remain competitive, despite energy cost disadvantages.
Do you detect political will at national level to make the shift to a circular economy?
It comes back to policy clarity again, and not getting bogged down in mechanisms before the direction we want to go in is established. If we get it right, terrific, if we get it wrong there will be huge costs incurred by lack of competitiveness. That’s why a reasonably consistent European approach that recognises regional issues is important. Our final destination has to be a shared one, but there is room for the route to be tailored.
Will the shift to a circular economy need subsidies or public intervention?
One would hope that the circular economy is not seen as needing subsidies. If the idea works it should be deliverable through normal pricing mechanisms. Setting this up on the basis of pushing it forward with subsidies is not a good idea. No industry should put itself in a position where it is dependent on subsidies.
First there has to be policy intervention. I would still argue that regulatory policy shouldn’t be considered until we know the direction in which we are going. Consensus at European level is crucial, otherwise we will end up building distortions into the single market, rather than taking them out.
The European People’s Party want a light regulatory touch…
When it comes down to better regulation, we could argue that it’s a case of better regulation of what is achievable on a step-by-step basis. Of course this shouldn’t prevent ambitious targets being set, but it serves regulation well to monitor what can be achieved at every step.
What about the circular economy and Europe’s international competitiveness?
I take the view that if the process is economically driven, then I think it stands to reason that at the end of it, you need less raw materials to run the economy and more money is made, it’s a net gain. That’s the danger, if it’s overregulated, then it’ll make a net loss for society.
There’s a long way to go.
There is a long way to go, but for the plastics and chemical businesses, we are very comfortable that the river runs in that direction. We have no disagreements in principle and no huge differences in policy approach.
But does business actually want this?
Slowly, I think, the public’s opinion is becoming the actual public norm. House insulation, central heating, and other reasonable policy objectives are the way forward in this. Net economic benefits would then become the norm.
What size of cost can be accepted by consumers remains to be seen. A 5% increase? Difficult. 10%, definitely not. It’s still a question of optimisation.