Opinion of the European Economic and Social Committee on ‘The environment as an economic opportunity’
Date: 2004-10-28
Institutions: European Economic and Social Committee
Subjects: ESC opinion, EU environmental policy, competitiveness, economic and social cohesion, economic development, economic policy, environmental protection, sustainable development

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3.4.2.2
Furthermore, the EESC endorses the proposal by the
European Parliament's Committee on Constitutional Affairs to
hold the ratifications on or around a symbolic date (such as
8 or 9 May), insofar as is possible.

3.4.3
Therefore the EESC calls for active involvement by the
European Institutions in the drawing up and implementation of
the communication strategy on the Constitutional Treaty. It is

Brussels, 28 October 2004.

important to work alongside the Member States and to send
out a strong and positive signal to citizens about Europe.

For its part,

3.4.4
messages
achievements of the Constitutional Treaty,
alia, citizenship and participation.

the EESC undertakes to convey clear
the democratic
in terms of, inter

to European civil

society about

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on ‘The environment as an economic
opportunity’

(2005/C 120/24)

In a letter from Mr Atzo Nicolaï, Minister for European Affairs, the future Netherlands presidency of the
Council requested the European Economic and Social Committee on 22 April 2004, in accordance with
Article 262 of the Treaty establishing the European Community, to draw up an opinion on: ‘The environ-
ment as an economic opportunity’.

The Section for Agriculture, Rural Development and the Environment, which was responsible for preparing
the Committee's work on the subject, adopted its opinion on 21 September 2004. The rapporteur was
Mr Buffetaut.

At its 412th plenary session (meeting of 28 October 2004), the European Economic and Social Committee
adopted the following opinion by 130 votes to two with two abstentions.

1. Introduction

1.3
Not until two years later did the European Council take
the decisions which led to the formulation of a strategy for
sustainable development, thus adding to the Lisbon Strategy.

1.1
In a letter of April 2004, the future Netherlands presi-
dency asked the EESC to draw up an exploratory opinion on
the environment as an economic opportunity. The Netherlands
presidency would like to focus on win-win opportunities where
progress
technology and environmental
protection could help to achieve the economic and social
objectives of the Lisbon Strategy.

in environmental

However,

1.4
is environmental protection really a main-
stream issue for the Lisbon Strategy? The stagnation which has
afflicted some European economies has resulted in economic
growth and job creation becoming the top priority, with envir-
onmental protection taking second place on the Roman prin-
ciple of ‘primum vivere, deinde philosophare’. But, given that
importance to our
the environment is of such fundamental
lives, could it not be argued that it is of concern to everyone,
and not only to experts?

1.2 When setting the European Union the very ambitious
objective of becoming ‘the most competitive and dynamic
knowledge-based economy in the world capable of sustainable
economic growth with more and better jobs and greater social
cohesion’, the European Council made little mention of envir-
onmental aspects. Only the term sustainable could be inter-
preted as a reference to the concept of sustainable develop-
ment.

1.5
In this context, major European economic sectors have
been concerned that the determination of the European Union,
and the Commission in particular, to set exemplary interna-
tional environmental standards incurs the risk of them going it
alone.

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For example,

the determination to apply the Kyoto
1.6
Protocol regardless of whether it
is ratified by our major
competitors has aroused a strong reaction from some European
industries, where this determination is seen as reflecting a
dangerously naïve approach which threatens the competitive-
ness of the European economy, faced with the pressures of
fierce global competition. In other quarters, the Kyoto objec-
tives are seen as making a potential contribution a)
to
increasing the efficiency of manufacturing processes, cutting
costs and reducing the pressure on supplies of raw materials
and energy and, as a result, b)
to making the European
economy more competitive. A debate is therefore underway on
the subject, which should be underpinned with specific exam-
ples.

industries using chemicals are concerned
Similarly,
1.7
about
the proposal concerning the registration, evaluation,
authorisation and restrictions of chemicals (REACH), and the
Commission impact study for the proposal was very heavily
criticised.

1.8
These concerns and criticisms cannot simply be brushed
aside. They are not directed against principles or politics.
Rather, they reflect the belief that there is a conflict between,
on the one hand, current practices, with their emphasis on the
demands of economic growth and job creation, and, on the
other, environmental concerns reflected in excessive regulation,
which ignore the reality of economic competition. The
problems appear to arise from underestimation and misman-
agement of tools, procedures and implementation strategies.

1.9
However, at the same time, certain companies, including
some very large companies, and even entire economic sectors,
have made the concept of sustainable development a key
element of their strategy. For example, the chairman of the
French Veolia Environnement Group stated at a government
seminar that:
‘The performance of a company measured in
terms of sustainable development has become not only an
element of legitimacy in the eyes of civil society, but also an
in global competition and for
increasingly valued asset
attracting investors.’ This attitude is becoming increasingly
widespread in economic circles.

1.10
There is thus an ongoing debate on the subject, a
debate which is intense and reflects the whole social spectrum,
particularly economic and social stakeholders and environ-
mental organisations. The issue is clear: does taking the envir-
onment into account merely hinder companies from competing
effectively, or does it offer opportunities for developing new
types of jobs, new markets, and new technologies?

For public opinion, governments,

1.11
trade unionists,
economic decision-makers, consumers and environmentalists,
theoretical discussions which are full of good intentions but do
not lead to practical results are no longer enough. For them,
exact analysis and specific examples are needed now, given that
politics is the art of the real, even if such a pragmatic approach
should be informed by some kind of a vision to give it

purpose. A good example of such an approach is that of the
European paper
sustainable development
strategy.

industry and its

2. Can the environment be an economic opportunity?

2.1
To answer this question we first need to ask ourselves (i)
whether the development of certain economic sectors is depen-
dent on the existence of a high-quality environment in which
both nature and cultural heritage are conserved, and (ii)
whether environmental technologies are capable of making a
genuine contribution to the objectives for social and economic
development set by the Lisbon Strategy. It also means honestly
trying to determine whether environmental standards and
restrictions are merely an obstacle to economic growth, to
competitiveness, and consequently to employment.

Obviously, the tourism and leisure sectors depend on
2.2
the quality of the environment. Entire European regions and
even countries are heavily dependent on tourism for their
In these countries and
social and economic development.
regions, protection of the environment
is an essential pre-
condition for social stability. The economic consequences of
the visual pollution of the countryside, of cities ravaged by
unbridled property speculation, of a degraded natural environ-
ment and polluted seas, would be severe and irreversible.
Sectors such as agriculture, fishing, and even hunting, would
also be affected. As for environmental technologies, their role
in promoting growth and innovation should be evaluated, and
their development and use should be encouraged without
delay, though without any unwarranted distortion of competi-
tion.

2.3
Faced with the legitimate aspiration of the inhabitants of
developing countries to achieve lifestyles comparable to ours,
and given the pressures on natural resources and the environ-
ment which would arise if this were to happen under the
current technological and economic conditions, there is a need
for a real technological revolution. Peripheral innovations will
not be sufficient to deal with the problem. The challenge we
are facing is that 80 % of the world's population is aspiring to
the same living standards as those of the top 20 %. We cannot
afford to continue living as at present since this would have
catastrophic results, though at the same time it is important to
refrain from making overly pessimistic predictions. Some
phenomena (such as melting glaciers, threats to biodiversity,
deforestation, flooding, etc.), do, when taken together, signal a
global environmental change, arising from a combination of
natural causes and human activity. Action taken to remedy
adverse environmental effects,
for example minimising acid
rain through sulphur scrubbing techniques, has significantly
contributed to preventing the demise of European forests.
Timely warnings from environmentalists, though sometimes
overstated, have often had the effect of obliging both the public
and the authorities to react. All stakeholders must have an
interest in working towards balanced solutions in preventive
environmental protection.

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2.4
Although it is natural to think of industrial manufacture
in this context, it is important to remember that agricultural
production techniques, transport and energy production also
impact on the environment and public
have a significant
health. These key economic sectors can also benefit from inno-
vation and environmental technologies.

and control (IPPC) (1) reflect both a concern to solve existing
problems and an attempt to prevent them in the first place,
which fits in perfectly with a strategy for sustainable develop-
ment. Clearly, product design which takes that product's full
life cycle into account leads to the development of technologies
more compatible with a desire to secure sustainable develop-
ment.

It

is important

2.5
Scientific and technological progress and innovation
inevitably have social consequences. The same principle applies
to environmental technologies as to all other innovation, parti-
cularly if they are intended to replace conventional, tried-and-
tested — but not particularly environmentally friendly — tech-
nologies.
to prepare in advance for such
changes, which should be accompanied by new basic training
and vocational training measures. Provided it is based on sound
and well-designed strategies and processes, environmental
protection should not be seen to entail increased unemploy-
ment and de-industrialisation. It is therefore essential for envir-
onmental legislators to engage in ongoing dialogue with repre-
sentatives of social and economic interest groups, so that the
impact of planned measures on economic activity and employ-
ment, including any possible problems, can be anticipated and
measured.

2.6 We are therefore faced with a major technological chal-
lenge. Given the political will, Europe could use its scientific
and technological capacity to act as a trailblazer in the develop-
ment of profound environmental innovations. While it is true
that environmental protection has an economic cost, action is
less costly than failure to act.

3. What is meant by environmental technologies?

In practice,

3.1
types of environmental technologies:

it is possible to distinguish between two

3.2
It should be emphasised that both these types of tech-
nology have a beneficial impact on the environment, and both
can stimulate economic activity and job creation.

Incidentally, the EESC has repeatedly emphasised the
3.3
importance of considering the ‘eco-industry’ as a whole and of
keeping sight of the fact that part of the challenge is to gradu-
ally improve all production methods and all products, from the
perspective of both the environment and resources (2).

(for

innovations

and radical

3.4
Four kinds of environmental technologies can be identi-
fied: end-of-process technologies, integrated technologies, evol-
example,
ving technologies
chlorine-free chemical processes). Integrated and radical tech-
nologies are often deemed to confer potential
long-term
competitive advantages. The problem is that in very competi-
tive markets, companies do not always have the option of
making long-term choices. They are more inclined to favour
gradual processes which still
environmental
improvements are adopted extensively within their regular
investment cycles.

ensure

that

In practice,

3.5
the progress in environmental efficiency
which industrial and service sectors have already achieved and
are continuing to achieve has enabled continuous improvement
of the environment. However, particularly in emerging econo-
mies, the pace of economic growth is such that the pressure on
the environment and on natural
is constantly
increasing, in spite of technological progress.

resources

— environmental technologies intended to improve technical
processes or production methods, in order to make them
cleaner and more environmentally friendly. Examples of
these are catalytic converters, filtration systems on factory
chimneys, technologies for more efficient use of energy,
etc.;

— technological innovations which were specifically conceived
with the environment and sustainable development
in
mind, for example, wind energy, cogeneration of heat and
power, fuel cells, new-generation electric bulbs (LED), etc.

It is not always easy to distinguish between prevention
3.1.1
innovations. The highly relevant,
and cure in technological
in the integrated product policies
useful principles set out
(IPPs) (1) and the Directive on integrated pollution prevention

4. Are environmental demands an obstacle to economic

development?

4.1
Over the last thirty years, a period during which the
factors determining economic growth have become more
complex than during the so-called golden years following the
Second World War, the ability of a company to innovate and
to guarantee the quality of
its products and production
methods for clients, for the environment and for employees has
become the best guarantee of the future for a company and
consequently of the interests of its shareholders.

(1) OJ C 80 of 30.3.2004.

(2) OJ C 32 of 5.2.2004.

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4.2
Even before any legislation in this field, an increasing
number of companies have committed themselves to sustain-
able development and have resolved to publicly account for
their actions and outcomes in this sphere, while coming under
ever closer scrutiny from their clients, civil society, the markets
and public opinion.

Besides,
in many Member States tourism, which by its very
nature is tied to particular locations, helps to create jobs and
maintain balance of payments' equilibrium.

In the context of

4.3
fierce competition arising from
economic globalisation, the quality of the environment and
social balance have also become decisive factors in attracting
and retaining human resources and capital, which WTO nego-
tiations should take into account.

4.4
It is for this reason that, as stated earlier, the perfor-
mance of a company in terms of sustainable development has
increasingly been considered as an asset in global competition
and attracting investors.

it

is vital

However,

in other words,

that environmental

regulations
4.8
comply with the proportionality rule;
the
economic costs of legislation must not outweigh the expected
social and environmental benefits. But the EESC is well aware
of the difficulty of making calculations of this kind: how for
instance, do we evaluate the cost of human health? It is clear
that a balance must be struck between the cost and benefits of
an environmental measure. At the same time, the procedures
for implementing legislation should be manageable for all
concerned. Failure to take these aspects into account could
result in the opposite of the intended effect: a situation where
it is difficult to apply the law for economic and social reasons,
and because of resistance on the part of consumers.

the

that

Therefore,

requirements

4.5
environmental
glib statement
demands impair competitiveness and economic development is
not generally true. The market has already taken on board
numerous challenges posed by environmental
legislation, for
for waste management and water
example
quality. In these two sectors, environmental technologies are
constantly evolving.
In providing an economic response to
these challenges, environmental service companies have created
and preserved jobs. For example, an estimated 300 000 jobs
industry in
have been created by the waste management
France.

The concern to save natural resources has led to tech-
4.6
nical
innovations tending to favour thrifty management and
reduce costs. For example, the paper industry has cut back on
water consumption considerably in recent years: whereas
production of one ton of paper required almost one hundred
cubic metres of water fifteen years ago, on average only 48
cubic metres are needed now. In addition, discharge of pollu-
tants has been reduced by almost 90 %. The benefits are both
economic and environmental.

As already mentioned, the tourism and leisure sectors
4.7
are heavily dependent on the quality of both the natural and
built environment. Far from hindering economic development
and competitiveness, environmental protection is an essential
pre-condition, especially in view of the fact that tourism is a
vital economic sector in many EU countries. For example, in
2003 tourism earnings amounted to $41,7 billion in Spain,
$36,6 billion in France, $31,3 billion in Italy, $23 billion in
Germany, $19,4 billion in the United Kingdom, $13,6 billion
in Austria, and $10,7 billion in Greece. It should be borne in
mind that environmental objectives may conflict with one
another. For example, wind farms can have a negative impact
on the environment and the appearance of the countryside.

4.8.1
Companies in the automotive sector, which have to
operate in a very restricted environment with little room for
manoeuvre due to intense competitive pressure and the beha-
viour of consumers, who are less interested in environmental
aspects than in considerations such as price, comfort, and
safety, are an interesting example. Under conditions such as
these, environmental
technologies are introduced gradually,
more through gradual improvements than revolutionary tech-
nological changes which are still too costly to find a proper
the Toyota
market. However, the petrol-electric hybrid car,
Prius, is a good example of changing consumer attitudes, where
output has recently had to be increased by 50 % to meet world-
wide demand. Although this still only represents a small
proportion of global production, it is an encouraging develop-
ment.

4.8.2
An interesting example is that of particle filters. Diesel
engines produce 25 % less CO2 than petrol engines, but the
particles which they emit are a health hazard. A particle filter
costs about EUR 500 extra (5-10 % of the cost of a small car).
As long as particle filters are not required by law car manufac-
turers have the choice between offering them as an optional
extra or including them as standard and cutting their profit
to raise
margins, since market conditions make it difficult
prices. In practice, whereas 90 % of German customers would
opt for a particle filter, the equivalent figure for the rest of
Europe would be a mere 5 %! Some manufacturers (1) have
therefore decided to phase in particle filters for their vehicles
gradually and reduce profit margins, but it is clear that this
situation cannot continue indefinitely, especially against the
backdrop of
fierce international competition. The natural
tendency will be for particle filters to become more widespread,
but the pace at which this happens will depend on customers'
purchasing power, particularly in the case of small cars.

(1) e.g. PSA and Opel.

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This example clearly shows how environmental
technology
markets come into being: either because of growing awareness
among consumers that they or their environment stand to gain
from the investment, or as a result of legislative measures.
Much of the environmental protection success achieved to date
is the result of appropriate legislation. The motor vehicle sector
in particular is a good case in point (including, among other
things, the introduction of the three-way catalytic converter.

4.8.3
There are other options for environmentally friendly
technological innovations in this sector: for example, vehicles
with electrical starting, improved recycling procedures, reduced
noise pollution, and increased safety. The cost of new tech-
nology continues to be the key issue.

4.8.4
The example of the car-manufacturing sector shows
that environmental technologies will not be widely used unless
they are economically viable, and that for them to be effective,
they have to be adopted in mass production. Practice shows
that in a highly competitive market, environmental technolo-
gies are adopted gradually and continuously. It follows that
what are needed are sound, well-documented impact studies
which take into consideration not only the environmental and
market situation in the European Union, but also international
factors.

4.8.5
The proportionality rule also applies to the challenges
faced by processing industries, such as pulp and paper, metal-
lurgical, and chemical industries. These industries work under
fierce global competition and have a particularly close interac-
tion with the environment. Comparative studies have shown
that production units of these industries located in the EU are
usually very eco-efficient, that is, their use of raw materials and
energy as well as their emissions are as low as technologically
possible. The environmental legislation which applies to them
is the strictest in the world. Better environmental results can be
achieved gradually by investing in more modern and efficient
technologies, but at the same time companies need to remain
competitive in global markets. Requirements for better environ-
mental performance must be synchronised with the technolo-
gical development and investment cycles of each sector. If stan-
dards are raised too quickly, the additional cost burden or the
non-availability of viable technology can undermine competi-
tiveness, and thus put continuing operation of European indus-
tries at risk.

5. How should innovative environmental technologies be

developed?

If innovative environmental technologies are understood
5.1
as technologies which are specifically conceived with the needs
of the environment and less heavy use of resources in mind, as
opposed to those which merely deal with the effects of

pollution, it has to be acknowledged that many of them are
still in the launch or even testing stage.

5.2
Indeed, the results achieved by such technologies vary
enormously. Technologies to harness wind energy and cogen-
eration of heat and power have already proved their worth and
have reached the stage of industrial development, thanks to
market support from very favourable legislation; however, they
are still only marginal energy sources. New-generation LED
lights have only just arrived on the market, but if technological
future looks promising. For
development continues,
example,
they are being used to illuminate the Shanghai
Oriental Pearl Tower (480m) at night — a project which was
managed by a European SME (1) using banks of LED lights
manufactured by a Chinese company (2). Membrane water puri-
fication systems are still at the research stage. Other technolo-
gies, despite being useful, have found only limited application.

their

This wide range of outcomes calls for strategies which
5.3
are sufficiently flexible in terms of
information
exchange and networking, and legal and fiscal tools. It is also
important
in mind the necessity for a selective
approach in order to identify genuinely promising environ-
mental technologies, so as not to waste funding.

funding,

to bear

There is a close correlation between the range of
5.4
possible funding, taxation, and regulatory strategies and the
various stages of implementing innovative environmental tech-
nologies:

— subsidies for research, feasibility studies, and business incu-

bators;

— venture capital for the launch phase;

— subsidised or conventional

loans

for

the development

phase;

— financial incentives for market consolidation;

— environmental

taxes to discourage use of non-environ-
mental-friendly technologies where alternative technologies
exist, and to contribute to environmental research.

For example, the development of fuels of agricultural origin
(such as diester) in France has reached a standstill due to the
fact that they are subject to the same heavy taxation as petro-
In order to
leum products, which are cheaper to produce.
promote their production and use,
tax incentives could be
applied, or it could be made compulsory to add a certain
proportion of such fuels to conventional fuels. In this case, a
balance has to be struck between the economic cost and the
environmental and other benefits.

(1) Citélum.
(2) Shanghai Communication Technology Developments Co. Ltd.

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5.5
Networks for the exchange of information on best prac-
tice and new technologies should also be developed. This is
particularly relevant both to businesses and to government offi-
cials, who need reliable and effective resources in order to help
them make informed choices between conventional, tried-and-
tested technologies, and new technologies which are more
environmentally friendly but also less familiar and less exten-
sively tested.

5.6
This is all the more important if public procurement is
to serve as a means of disseminating and developing environ-
mental technologies. While close attention needs to be paid to
public procurement, the private sector, which is more flexible
and responsive, also need to be taken into consideration. Some
companies have already made sustainable development a
criterion for selecting suppliers, adopting standard clauses
linked to sustainable development and gradually incorporating
these into their contracts with suppliers, and improved training
in sustainable development for their buyers.

5.7
Environmental labelling and various pricing and reward
systems should be used to develop and promote environmental
technology.

5.7.1
At the initiative of the Finnish presidency in 1999, a
debate was launched on the development of a European vision
for quality, which continued under the Portuguese and French
presidencies throughout 2000. This debate gave rise to the
publication of an important document under the aegis of the
European Organisation for Quality. Some of the points raised
then could be relevant to environmental technologies.

6. An issue which affects everybody

6.1
It is not only up to environmental specialists to turn
protection of the environment into a real economic opportu-
nity. Environmental activity is already a key factor in the
economically important tourism and leisure sectors. In the case
of environmental technologies, success is dependent on the
creation of a genuine market and the capability of business to
respond. There is also a need to do more to build on voluntary
initiatives in environmental protection and technological inno-
vation by companies and industries.

It

is clear that

6.2
technologies permit
if environmental
production costs to be cut as a result of reduced consumption
of energy and raw materials, enhance the image of companies
and their products, boost sales and lower environmental costs,
then companies will be interested in them and will ensure their

Brussels, 28 October 2004.

development. However, companies still need be made aware of
such technologies so that they can appreciate the benefits of
using them, and therefore it is essential to set up an effective
network for the exchange of information on best practice and
environmental technology, which might involve public authori-
ties, trade associations, technical centres, and research centres.

It

is essential

to gain the support of

6.3
the industries
concerned. Clients and consumers also need to be won over,
because without them there can be no market. Environmental
technologies must be perceived by the general public as effec-
tive both in terms of environmental protection and of produc-
tion, otherwise they will remain a well-intentioned sideshow to
economic development, which will continue independently of
them.

6.3.1
It is vital for environmental policies to take economic
implications into consideration, just as economic policies need
to take environmental needs into account. One way or another
there must be an interplay between economic and environ-
mental considerations, as policies which lose sight of economic
viability
cannot be
successful.

environmental

and positive

effects

6.3.2
At the same time, the social impact of environmental
standards and the introduction of environmental technologies
should be anticipated as far ahead as possible, and vocational
training should be provided so that the employees can imple-
ment them as efficiently as possible, and without their jobs
being put at risk.

6.4
Large-scale development of effective environmental tech-
nologies is crucial to the modernisation and economic growth
of densely populated, dynamic countries. This is a new model
of economic, social and environmental development which
requires specific planning and implementation. Thanks to its
expertise in the field of environmental technology, the Euro-
pean Union could become the first-choice partner of emerging
economies and benefit from the opening-up of new markets.

6.5
Research and development in the field of environmental
technology already represent an economic asset and have the
potential to make even more of a contribution, as is illustrated
by concrete examples of the application of progressive, inte-
grated and even radical technologies. Indeed, they are a neces-
sity since it is the future of our world that is at stake. No-one
can, in good conscience, afford to look away. We are respon-
sible for the world which our children will inherit.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

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APPENDIX

to the opinion of the European Economic and Social Committee

The following amendment was defeated but obtained at least a quarter of the votes cast:

Amend point 1.8. as follows:

The concerns and criticisms voiced in some quarters cannot simply be brushed aside. They are not directed against prin-
ciples or politics. Rather tThey reflect the belief amongst some economic players that there is a conflict between, on the
one hand, current practices, with their emphasis on the demands of economic growth and job creation, and, on the
other, environmental concerns reflected in excessive regulation, which ignore the reality of economic competition. The
problems appear to arise from underestimation and mismanagement of tools, procedures and implementation strategies.

Result of vote

For: 46

Against: 71

Abstentions: 9