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# 52011DC0899

**COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Innovation for a sustainable Future - The Eco-innovation Action Plan (Eco-AP) /\* COM/2011/0899 final \*/**

  

1.
INTRODUCTION

As a response to the economic and financial
crisis, the Europe 2020[1]
strategy reinforces the EU's capacity to deliver smart, sustainable and
inclusive growth. The strategy’s objectives are being implemented through a
number of Flagship Initiatives addressing the main challenges.

The Innovation Union[2] Flagship Initiative will ensure
that innovative ideas are turned into products and services that create growth
and jobs and address Europe's major societal challenges. As a step in this
direction this Flagship Initiative commits to developing an Eco-innovation
Action Plan building on the Innovation Union and focusing on the specific
bottlenecks, challenges and opportunities for achieving environmental
objectives through innovation.

The Eco-innovation Action Plan (EcoAP) also complements
other Europe 2020 Flagship Initiatives. A major building block for the
transition towards a green economy is the "Resource Efficient Europe"[3] Flagship and its roadmap[4], creating and reinforcing
demand for eco-innovation and related investment. . The "Industrial Policy
for a Globalized Era"[5]
places the EcoAP as one tool to identify and implement measures for the
deployment of key environmental technologies, to enhance coordination and
cooperation between the EU and Member States and to generate awareness of the
potential of new technologies. The Agenda for new Skills and Jobs[6] calls for the EcoAP to support
competences for sustainable development, and promote appropriate skills
development and tackle skills mismatches.

The EcoAP will therefore focus on boosting
innovation that results in or aims at reducing pressures on the environment and
on bridging the gap between innovation and the market. It will, inter alia,
take further some actions identified in the Resource Efficiency Roadmap.

Eco-Innovation[7] is any form of innovation resulting in or aiming at significant and demonstrable progress towards the goal of sustainable development, through reducing impacts on the environment, enhancing resilience to environmental pressures, or achieving a more efficient and responsible use of natural resources.

As part of the multi-annual financial framework
for 2007-2013, the European Commission is supporting research and demonstration
projects for eco-innovative technologies and for their market penetration
within (1) the 7th Framework Programme for Research and
Technological Development (FP7), (2) the Competitiveness and Innovation
Framework Programme (CIP), Eco-innovation First Application and Market
Replication Projects, (3) the European Eco-innovation Platform, and (4) under
the Environmental Part of the LIFE+. In synergy with these programmes, Member
States and regions can also draw on Cohesion Policy support for the further
deployment and replication of eco-innovation.

In its Communication on a Budget for 2020[8], the Commission has indicated
that research and innovation will be structured around three mutually
reinforcing themes (1) excellence in the science base; (2) tackling societal
challenges; (3) creating industrial leadership and competitive frameworks. The
Commission has also committed to mainstream climate action into EU spending
programmes and to direct at least 20% of the Union's budget to climate-related
objectives.

Horizon 2020[9], the Framework Programme for Research and
Innovation for 2014-2020 will strengthen the role of
eco-innovation and provide adequate financial means for the implementation of
this Action Plan post-2013. In particular, actions to enable the transition to
a green, low carbon and climate resilient economy as foreseen in the context of
the Societal Challenge "Climate Action, Resource Efficiency and Raw
Materials" are of great relevance.

The partnering[10]
approach in research and innovation will accelerate the path of innovative
research towards market applications.

2.
THE ECO-INNOVATION CHALLENGE

Eco-innovation needs to be accelerated in a way
that boosts resource productivity, efficiency, competitiveness and helps to
safeguard the environment. More and more severe environmental challenges and
resource constraints have lead to growing worldwide demand for environmental
technologies, products and services and have facilitated the emergence of green
industries (see Annex 1). Accelerated market uptake and dissemination of
eco-innovation will lead to improved environmental performance and resilience across
the economy being at the same time cost-effective and good for business and
society as a whole.

3.
Barriers and drivers for eco-innovation in SMEs

Eco-innovation has until now penetrated to the
markets relatively slowly, with the exception of renewable energy as a result
of energy and climate policies. Bottlenecks to eco-innovation include the
failure of market prices to accurately reflect environmental costs and
benefits, rigid economic structures, infrastructure and behavioural lock-ins,
and harmful incentives and subsidies. Other aspects hampering the spread of
eco-innovation include limited knowledge and certainty of the markets. Although
many of these barriers are similar to those faced by innovative businesses at
large, they tend to be more severe for businesses focusing on eco-innovation.

To address some of the barriers the European
Commission launched already in 2004 the Environmental Technologies Action Plan[11] (ETAP).

A recent Eurobarometer survey on the attitudes
of European SMEs to eco-innovation[12]
gives a good insight into perceived barriers and drivers for eco-innovation.

Barriers to accelerated eco-innovation
uptake and development for companies

Drivers that could accelerate eco-innovation
uptake and development

This survey shows that the uncertain demand
from the market and return on investment are two of the main barriers, while
high energy and material prices, new regulations and standards, and access to
knowledge are among the main drivers.

Building on the Europe 2020 Flagship Initiatives
and on the ETAP lessons learnt, the EU can accelerate further eco-innovation
with well targeted policies and actions. In particular, measures in the areas
of regulatory incentives, private and public procurement and standards and
performance targets can help create stronger and more stable market demand for
eco-innovation. Additional funding must also be mobilised for investment in
eco-innovation and policy measures are needed to lower and manage the risks for
entrepreneurs and investors.

A long term strategy on eco-innovation, based
on partnering, will reinforce eco-innovation by increasing the critical mass
required for innovation, exchanging ideas and good practice and creating networks
and commercial relationships.

4.
Eco-innovation opportunities and EU action

Eco-innovation is closely linked to the way we
use our natural resources and to how we produce and consume. The expected
environmental, societal and commercial benefits of wide-spread adoption of
eco-innovation can be considerable. European eco-industries are already a
significant economic sector, with an estimated annual turnover of € 319
billion or about 2.5 % of the EU’s gross domestic product[13] (GDP). In the past two years
45% of European companies operating in manufacturing, agriculture, water and
food services have eco-innovated and benefited from it.

During 2012-2013, under current EU financing
framework, EcoAP will support the introduction and scaling-up of environmental
technologies in the market, in particular by supporting demonstration projects.
This will pave the way for more comprehensive follow-up actions under the EU2020
Flagship Initiatives and Horizon 2020.

In the medium and long-term, in 2013-2020,
eco-innovation should benefit from the emerging EU instruments and vehicles of the
Innovation Union and Resource Efficient Europe Flagships as well as the post-2013
Cohesion Policy and Horizon 2020. For example, the Commission has proposed a
strong innovation component within the provisions of the 2014-2020 Cohesion Policy,
which will give greater prioritisation to innovation due to the explicit
conditions for Member States in this direction.

Further analysis of the challenges and
opportunities will lead to further actions for accelerating eco-innovation.
This work should be based on a multi-stakeholder group and on the partnering
approach starting from 2012.

5.
The Eco-Innovation Action Plan

The Plan includes targeted actions both on the
demand and supply side, on research and industry and on policy and financial
instruments. The implementation of the actions will be supported by the
partnering approach between stakeholders, private and public sector, and the
European Commission.

The Commission will foster key drivers for the market uptake of
eco-innovation by:

·
using environmental policy and legislation as a
driver to promote eco-innovation (Action 1);

·
supporting demonstration projects and partnering
to bring promising, smart and ambitious operational technologies to the market
that have been suffering from low uptake (Action 2);

·
developing new standards boosting eco-innovation
(Action 3);

·
mobilising financial instruments and support
services for SMEs (Action 4);

·
promoting international cooperation (Action 5);

·
supporting the development of emerging skills and
jobs and related training programmes to match the labour market needs (Action
6);

·
promoting eco-innovation through the European
Innovation Partnerships foreseen under the Innovation Union (Action 7).

5.1.
Action 1:       Environment policy and
regulation for promoting eco-innovation

EU environmental legislation has traditionally
been one of the most important drivers for eco-innovation and for the
development of strong European industries in areas such as water, air
pollution, waste management, recycling, and climate change mitigation. Environmental
policy can also direct research and development efforts and set the pace of
technological change.

For example, the REACH[14] regulation lists substances of
very high concern (SVHC) for which substitution is required when safer
alternative substances or technologies become technically and economically
feasible. This incentivises the active search for alternatives and stimulates
R&D activities towards delivering competing and safer substitutes. The
REACH regulation is also an example of how EU policies can drive innovation
worldwide. Chemical companies across the world follow the REACH when developing
products which should meet the requirements of EU markets.

On the other hand a regulatory framework creating
lock-ins into insufficiently ambitious or outdated standards or technologies may
be a barrier to eco-innovation. Legislation should therefore be revisited and
reinforced to deliver strong and steady incentives driving eco-innovation as
well as sufficient predictability for investors.

As foreseen in the Innovation Union the
Commission will undertake a screening of the regulatory framework in the
environmental area. In this context possible gaps will be identified, new rules
implemented and existing ones reviewed in order to provide a coherent
legislative framework that promotes eco-innovation.

For example, in the future, when designing,
revising an implementing environmental legislation and policies, attention should
be paid to:

(a)
the potential of innovation for improving the
environment for example through allowing for flexibility in prescribed
technological solution or by providing room for more stringent and robust environmental
standards (in order to avoid technological lock-ins);

(b)
the barriers to innovation within environmental
legislation and its implementation;

(c)
the need to facilitate the emergence of
commercially viable new products or practices;

(d)
the need to accelerate the uptake of
eco-innovation in all policy areas.

Valuable work already carried out in
cooperation with OECD[15]
recognises the need to improve policies to better support eco-innovation taking
into account factors such as market dynamics, technological trajectories,
coordination and consistency of different policy instruments.

Milestones

·
Based on existing work the Commission will
develop in 2012 a methodology aiming at assessing the likely barriers, drivers
and impacts of environmental legislation, policy and regulatory initiatives on
eco-innovation and at optimizing its market diffusion.

·
In the revision of existing water policy, air
quality and emission standards, building standards, existing prevention,
re-use, recycling, recovery and landfill diversion targets, as foreseen in the
frame of the Resource Efficiency Roadmap respectively in 2012, 2013 and 2014,
the Commission will integrate eco-innovation objectives.

·
Eco-innovation potential should be at the centre
of the revision of existing infrastructure standards, including transport,
energy, buildings, and ICT, while simultaneously leading to enhanced climate
resilience.

·
When developing implementing measures in 2012
under the Waste Framework Directive and under other waste legislation, the
Commission could for example:

–
promote eco-design for implementing the ELV
(End-of-Life Vehicles), WEEE (Waste Electrical and Electronic Equipment), RoHS
(Restriction of Hazardous Substances), Batteries and Accumulators, and
Packaging Directives;

–
develop end-of-waste criteria under Article 6 of
the Waste Framework Directive for copper, paper, glass, plastics, compost and,
possibly, other waste streams. These criteria will be designed to develop
demand and confidence in secondary raw materials and support and drive
innovative waste collection, separation and treatment technologies for high
quality secondary materials;

–
develop minimum standards for waste treatment
activities at EU level in response to Article 27 of the Waste Framework
Directive, where such standards are cost efficient, based on best available
techniques and innovative solutions.

5.2.
Action 2:       Demonstration projects and partnerships
for eco-innovation

In spite of on-going funding programmes and
initiatives, a significant gap still exists between the availability of new
technologies and their commercialisation into marketable products. This is for
example the case for innovative wastewater treatment and water purification
technologies[16]
such as membranes, or new technologies for biological removal of ammonium
developed by the ICON project[17],[18].

In their final report to the Commission on 28
June 2011[19],
the High Level Expert Group on Key Enabling Technologies (KETs) underlines the
importance of funding opportunities for product development and demonstration
activities in order to fill the gap between technology and market up-take to
increase European competitiveness.

As from 2012 the Commission will support targeted
eco-innovation demonstration projects and ad hoc partnerships implementing
innovative technologies which in spite of their high environmental and
commercial potential did not succeed in reaching the market. Priority will be
given to technologies suitable for reaching stricter, smarter and ambitious environmental
standards than those currently in place effectively and efficiently. Overall
goal of this action is to demonstrating the market viability of these
technologies

Starting 2014, Horizon 2020 will continue to support
such demonstration projects as well as projects implementing technological and societal
innovation.

Milestones

·
Selection of the above described technological demonstration projects by end 2012 as part of the last FP7 call for
proposals. Participation would be open to all industrial sectors. Possible
fields include demolition waste - the largest waste stream -; remediation of
soil, sediments and groundwater; wastewater and sludge treatment; pesticides
and fertilisers in agriculture; urban mining; waste electric and electronic
equipment, including rare elements and gold; climate change adaptation.

·
Selection of technological and societal
demonstration projects from 2014 and onwards that could be supported and
implemented under Horizon 2020.

5.3.
Action 3:       Standards and performance
targets for key goods, processes and services to reduce their environmental
footprint

New and ambitious standards and performance
targets are a powerful tool for supporting innovation, increasing productivity
and opening up opportunities of the Single Market.

As a complement, labelling schemes indicating
performance standards of a product can be a powerful tool to communicate the
benefits of eco-innovation. For example, since the adoption of the energy
efficiency policy and the energy labelling directive[20] the market for household
appliances has been transformed towards energy-efficient products, giving 700
TWH[21]
of energy-savings and increasing the competitiveness of European industry.

Building on the standardisation package[22] the Commission, in cooperation
with stakeholders, will ensure that new or revised standards result in strong
incentives for innovation, do not create inertia or lock-ins, are
performance-related, and take resource efficiency, environmental and climate change
concerns into account.

Milestones

The European Commission with the Member States and in cooperation
with international standardization bodies will set up an interactive process to
identify and prioritise those areas where the development of standards and
performance targets has the greatest potential in terms of driving eco-innovation.

Some examples of such areas that could be considered as from 2012
are:

·
on-site verification of characterisation of
waste;

·
drinking water and sewage collecting system
pipes;

·
waste treatment activities in response to
Article 27 of the Waste Framework Directive.;

·
sustainable construction materials and
insulation of buildings to support the implementation of the Directive on the
Energy Performance of Buildings[23].

5.4.
Action 4:       Finance and support services for
SMEs

Public-sector financing is needed and justified
to accelerate eco-innovation in the private sector, particularly in SMEs. Due
to the relative immaturity of the market, access to finance is especially
difficult for small businesses engaging in eco-innovation where the perceived
commercial risk is greater. Financiers and investors tend to use the same
investment rationale for eco-innovation as for other investments i.e. the same
expected returns and same level of accepted risks. Moreover, the added value
created by reducing environmental pressures is not accounted for and only plays
a marginal role in investment decisions.

Policy measures can help create more favourable
financial and more flexible risk-sharing conditions. Further support to SMEs
should be mobilised to improve investment readiness, networking opportunities
as well as market confidence in eco-innovation.

ETAP and other European policies and
initiatives, such as the Cohesion Policy, have already taken some steps to
mobilise funding for eco-innovation. Efforts to mobilise funding for
eco-innovation will continue as part of current multiannual financial framework
2007-2013 and will be reinforced under Horizon 2020 Specific Programmes
"Tackling Societal Challenges" and "Creating industrial
leadership and competitive frameworks". The Commission is considering the
earmarking of funding for eco-innovation, in order to face the specific
financing challenge in this area.

Milestones

In the context of current multiannual financial framework:

·
The Commission, in cooperation with the
Enterprise Europe Network[24],
will expand the activities of the "environmental assistants for SMEs".
The assistants will help SMEs seize the business opportunities created by
eco-innovation. The scheme will consolidate environmental sound approaches in
SMEs, raise their awareness and facilitate the acquisition of skills to
stimulate eco-innovation.

·
In 2012 the Commission will establish a European
network of eco-innovation financiers and investors with a view to mobilising
them and defining better their policy needs in order to provide faster
investment and finance.

·
The Commission will help eco-innovative European
enterprises gain better access to global markets. The Enterprise Europe
Network, European technology centres outside Europe and the EU Delegations will
provide additional support for participation in trade fairs and trade visits,
for links between SME support networks in Europe and elsewhere and for market
intelligence and technology needs assessments.

·
Furthermore, the European Commission will
develop initiatives to improve confidence in new environmental technologies and
eco-innovative solutions entering the EU and global markets, informed by the
results of an experimental voluntary pilot programme on environmental
technology verification (ETV), whose principles and benefits are described in
the Staff Working Paper attached to the Action Plan.

As from 2014, in the context of the next multiannual financial framework,
including Horizon 2020 and the Cohesion Policy, the Commission will take
appropriate initiatives to:

·
Work with the Member States and regions to
mainstream eco-innovation in the 2014-2020 operational programmes of the
Cohesion Policy, in particular through the regional innovation strategies for
smart specialisation, which are proposed as ex-ante conditionality.

·
Develop two innovative financial instruments: an
EU Loan & Guarantee Service and an Equity Instrument for research and
innovation. The first will have a demand driven as well as a policy driven
component which will include eco-innovation. The second will concentrate on the
start-up and growth phase and have a thematic focus linked to eco-innovation.
Both instruments will feature ad-hoc investment incentives to promote
mobilisation of private finance in the area of eco-innovation;

·
Develop technical assistance schemes to help
SMEs and the financial sector develop bankable projects, appraise their
bankability and implement projects benefiting from risk financing;

·
Horizon 2020 will strengthen the role of
eco-innovation and inter alia support eco-innovative SMEs in their early stage
of market penetration.

5.5.
Action 5:       International cooperation

Eco-innovation is key to facilitating the
global transition towards sustainable development by greening the economy. In
this context the Commission’s Communication on Rio+20[25] emphasizes inter alia the need
to put in place market and regulatory measures that foster eco-innovation
globally and ensure their enforcement.

The communication "A strategic European
framework for international science and technology cooperation"[26], the Commission proposes actions
to deepen the European Research Area (ERA) through greater integration and
cross-border coordination of research investments and activities. It aims inter
alia to increase Europe's attractiveness as a place to invest in research
and innovation.

In this context a Strategic Forum for
International Science and Technology Cooperation (SFIC) has been established to
drive forward the European Partnership for Science & Technology
cooperation. This Forum will aim at identifying and coordinating joint
initiatives between Member States and the Commission vis-à-vis third countries.
Initiatives could include eco-innovation and eco-innovation capacity building
and adaptation according to the needs of recipient countries.

Emerging economies such as China, India, Brazil
and Russia offer significant market and partnership opportunities for European
eco-innovators. However, accessing those markets remains a challenge due to high
and unidentified risks, investment protection and lax intellectual property
right protection.

To support market access and partnerships, the
Commission will take appropriate initiatives to:

·
Promote benchmarking and harmonisation of
standards and requirements for environmental goods and services and for the
environmental performance of products. This is to be encouraged within bilateral
and regional dialogues with emerging economies. Relevant programmes and projects
will be supported under cooperation programmes such as the SWITCH[27] Asia Programme to promote
sustainable consumption and production. Expansion of such programmes to other
regions, particularly in Africa and Latin America will be explored.

·
Promote, in bilateral and multilateral policy
dialogues as well as in trade negotiations and agreements, exchanges on
policies for eco-innovation including measures for the liberalisation of trade
in environmental goods and services, elimination of cost barriers to SMEs
involvement in global value chains, investment protection and IPR protection.
Networking between investors, financiers and enterprises will also be promoted.

·
Include environmental technologies and
eco-innovation in co-operation with neighbouring countries, such as the Eastern
Partnership[28],
the Partnership for Democracy and shared Prosperity with the Southern
Mediterranean and the Black Sea Synergy.

·
Cooperate with the United Nations Environment
Programme (UNEP) and the United Nations Industrial Development Organisation
(UNIDO) in reinforcing the network of national cleaner production centres.
These centres will facilitate the dissemination of eco-innovation best practice
and facilitate networking between eco-innovators in developed and emerging
economies.

Milestones

·
In 2012 the European Commission will develop a
policy toolbox supporting technology transfer of established environmental
technologies and solutions.

·
As part of the Rio+20 process the European
Commission together with international partners will contribute to set up a
framework for integrating eco-innovation into the international sustainability
dialogue and outcomes of the Rio+20 summit in 2020, as a possible trigger to
accelerate the transition towards a green economy.

5.6.
Action 6: New skills and jobs

New skills are required to facilitate the
transition to a greener economy and to provide related reinforced skilled
workforce for businesses. The Agenda for New Skills and Jobs underlines the
need to match skills supply with labour market needs, in particular in terms of
newly-emerging and expanding skills such as those required by green and greener
jobs.

A European Sector Council on skills for green
and greener jobs will be established to facilitate exchanges of information
between the Member States on skills profiles, training programmes and skills
gaps in the environmental goods and services industry and in other relevant
industries.

Milestones

·
With the establishment of the "EU Skills
Panorama", from 2012 the Commission will contribute to increased mobility
on the labour market by providing information on current and future skills
supply and mismatches. It will include a specific focus on skills for green
jobs.

5.7.
Action 7:       European Innovation Partnerships

European Innovation Partnerships (EIPs) are proposed
under the Europe 2020 Flagship Initiative for an Innovation Union. The objectives of these EIPs are to join up actors and resources
around common targets to speed up breakthrough innovations to solve specific
societal challenges where there is also a large market potential for EU
business.

Resource efficiency is a priority notably in
the fields of raw materials, sustainable agriculture and water, where EIPs are currently
under consideration. By bridging the gap between a more resource efficient economy,
ambitious environmental goals as well as business opportunities eco-innovation
is a major tool supporting these EIPs.

Milestones

·
Potential actions could include testing green
public and private procurement for promoting eco-innovation. Networks of public-
and private-sector procurers and purchasers could be set up and tender
specifications could be tested and developed for wider use in both public and
private sectors;

·
Other promising areas that may be considered
include bio-gas from bio-waste, sustainable chemistry and eco-system services.
Best approaches for combining demand and supply-side measures in these areas
will be identified by the Commission in close consultation with stakeholders
and Member States.

6.
Governance and awareness
6.1.
Governance structure

Governance-specific networking activities and
schemes to improve the knowledge base and awareness for eco-innovation will be
established under the Innovation Union as well as under Horizon 2020. Simple
and flexible systems in which the participation of key stakeholders is broad
and balanced[29]are
foreseen.

In this context, and building on the positive
experience of the (ETAP) High Level Working Group, an Eco-innovation High Level
Multi-stakeholder Steering Group will be set-up for mainstreaming eco-innovation,
facilitating policy learning, peer reviewing the measures undertaken, as well
as to monitor implementation of this Action Plan.

In addition, a dedicated High-Level Working
Group will continue bringing together Member States to facilitate exchanges of information,
provide stronger policy guidance, at both EU and national levels.

The ETAP Stakeholder Forum which mobilizes and
facilitates networking between sectoral stakeholders will have a more focussed
orientation on business and will develop targeted and reachable recommendations
that can be integrated into EU and national policies.

Milestones

·
As from 2012, this High-Level Multi-stakeholder
Steering Group, composed of representatives of Member States, business,
industry, particularly SMEs, research and other key stakeholders, will support
measures for eco-innovation uptake, if necessary with the support of specific
thematic Multi-stakeholder expert working groups.

6.2.
Cooperation between the Commission and the
Member States

Regular exchanges of information and good
practice between Member States as well as the regions on eco-innovation
policies are essential. A better knowledge base on environmental pressure
points, policies, markets and the environmental goods and services industry
will also be needed to promote eco-innovation in Europe and lead to appropriate
policies.

Milestones

·
Based on the lessons learned with ETAP roadmaps,
voluntary Eco-innovation national roadmaps will be agreed with Member States
with the aim to identify most efficient policies, facilitate policy learning
between the Member States as well as set the appropriate level of
implementation required to create the conditions for eco-innovation. These
Roadmaps will build on existing initiatives for promoting environmental
technology but with a sharper focus on eco-innovation in both the private and
public sectors and will take into account global sustainability goals to
contribute to their attainment.

·
The Commission will cooperate with the relevant
national and regional authorities to integrate eco-innovation in the
initiatives of the Cohesion Policy and the Rural Development Policy in the area
of innovation. In this respect the on-going development of the "Smart
Specialisation Platform"[30]
represents a key instrument in building the adequate governance capacity.

·
The Commission will build on the experiences of
the "Eco-innovation Scoreboard"[31]
and other relevant indicators for eco-innovation to monitor and review measures
and action taken by Member States and the EU.

·
The initiative on "Accelerating
eco-innovation policies"[32]
for identifying best practice in eco-innovation policy-making will be
re-enforced in order to scale up good practice in Member States.

6.3.
Raising awareness of eco-innovation benefits and
opportunities

Uncertainty about demand from the market is one
of the main barriers to a fast up-take of eco-innovation. Greater social
acceptance of eco-innovative technologies, processes, services and products
needs to be achieved.

This social acceptance can be achieved if all
interested parties make efforts to raise awareness of eco-innovation, including
Member States, local and regional authorities, industry and civil society. The
Commission will also take actions to explain the importance of eco-innovation
as a key driver towards a greener and more sustainable economy, with a
particular focus on its potential to generate growth and create new jobs. These
efforts will build on existing communication activities undertaken as part of
the corporate communication of the European Commission, such as on Resource
Efficiency.

7.
CONCLUDING REMARKS

Five years of implementation of the EU policies
on environmental technologies, and the emergence of vibrant green businesses in
the EU, have shown the potential for eco-innovation to create new business
opportunities and growth and jobs in Europe.

However, more remains to be done requiring
strengthened and broader actions. That is why current actions should be stepped
up, why use of existing resources should be optimised and additional financial
resources mobilised. The Action Plan boosts efforts for eco-innovation,
provides a clear way forward and is thus a logical successor to ETAP.

An ambitious EU eco-innovation agenda will also
help to respond better to global environmental challenges and to seize the
opportunities on the global markets in line with the goals of the Europe 2020
strategy. It will provide the European Commission and the Member States with
new tools to achieve the Europe 2020 goals and sets out a future framework for
eco-innovation. The mid-term review of the upcoming financial perspective will
provide a good opportunity to assess the achievement of the goals set in this
Action Plan.

Annex 1. Eco-innovation benefits business
and the environment

The global economy will have no choice but to
adjust to environmental and resource constraints and this will need
eco-innovation. This can also generate jobs and growth and is essential for
competitiveness of the economy, particularly in Europe, which has historically
based its economic growth on intensive resource use.

The EU is well placed to take up its role in
the global transition towards a more sustainable economy

European environmental policies and increasing
global environmental challenges have led to the emergence of a significant and
competitive environmental goods and services sector in Europe.

For example, European eco-industries are
already a significant economic sector, with an estimated annual turnover of € 319
billion or about 2.5 % of the EU’s gross domestic product[33] (GDP). This means that they
are larger than the steel, pharmaceuticals or automobile industries. Recently,
eco-industries have been growing by around 8 % a year. The main
sub-sectors deal with waste management (30 %), water supply (21 %),
wastewater management (13 %) and recycled materials (13 %). The
sector directly employs 3.4 million people, around 1.5 % of all Europeans
in employment. Around 600 000 additional jobs were created between 2004
and 2008. The annual growth rate in employment in all subsectors between 2000
and 2008 was roughly 7 %.

European businesses recognise the
opportunity

The potential of eco-innovation is recognised
by the business community. Venture capital (VC) investments in Europe[34] have increased greatly over
the last decade. In 2010, they added up to app. € 1.3 billion in this
sector, up from € 0.3 billion in 2004. Despite growing market uncertainty
the figure was down only 7% compared to 2009, showing the great resilience and
potential of the sector. Energy generation and energy efficiency dominate these
investments. These two sectors alone took 71% of the capital invested in the
fourth quarter of 2009.

Environmentally safe and energy- and
resource-efficient products, processes and services are increasingly enlarging
a competitive advantage across many businesses and sectors. Manufacturing firms
have moved from ‘end-of-pipe’ solutions to ‘closed-loop’ approaches that
minimise material and energy flows by changing products and production methods
and reusing waste as a new resource for production - all of which cut costs. However,
bottlenecks and barriers still prevent the full exploitation of such potential.

Protection from climate change impacts and
weather-related disasters will also provide a wealth of opportunities. Since
1980, about 95% of economic losses caused in Europe by catastrophic events
resulted from weather and climate-related events, and such pattern will be
exacerbated by climate-change. In the field of climate change adaptation and
Disaster Risk Prevention (DRR), investing options will expand and innovative
funding and climate-proofing schemes will be needed. The insurance industry
will also be confronted with novel challenges and opportunities.

Future global opportunities must be seized

The EU has the technological capability to
become a major player for green goods, processes and services. The EU has a
thriving research community and a technological lead in many areas. This is
reflected in its leading position in world trade, as shown below (excluding
intra-EU trade).

The European eco-industry sector is
well-positioned globally [35]

The global market for environmental industries
was worth € 1 trillion in 2007, with energy-efficient technologies playing
a large part (€ 450 bn). Europe's market share differs from one
sector to another. For example, in the cases of automatic separation of
materials and solar power stations, Europe accounts for more than 70 % of
the total market. In synthetic biofuels, solar cooling systems and
energy-storage technology, European industry leads R&D. The average market
share of European companies was above 30 % in waste management and
recycling, power generation, sustainable mobility, energy efficiency and
sustainable water management.

The world market for these products and
services is growing by 5 % a year and is expected to triple by 2030 (see
the graph below for growth projections). The EU makes up roughly one third of
the world market and is a net exporter. However, global competitors are
emerging. In the wind energy sector, incumbent EU suppliers face new entrants
seeking to profit from global efforts to limit climate change. The EU must
build upon its capabilities and boost the underlying drivers in order to
consolidate its leading position and seize the opportunities emerging.

Expanding Global Markets for eco-industries[36]

EU SMEs must benefit from the transition

The make-up of eco-industries varies widely
from one sector to another. For example, for waste management, soil
remediation, wind power and renewable energy, approximately 10 % of
companies account for almost 80 % of the turnover. On the other hand,
small firms are stronger on new regulation-driven markets, such as
eco-construction and renewable energy. It is also worth noting that for SMEs
the potential to eco-innovate and as a result improve resource productivity is
expected to be higher than for large enterprises. Case studies on material
efficiency improvements in Germany have revealed that on average around EUR
200,000 have been saved per company, with investment costs under EUR 10,000 for
nearly half of the companies[37].

All in all, eco-industries are marked by the
presence of large numbers of small and medium-sized enterprises (SMEs). These
firms account for approximately half of total employment. Hence, SMEs in
partnership with industries must play increasing role in innovating new
technologies and solutions and also use them. Public policies and action
must create better conditions for eco-innovation

[1]               COM(2010) 2020: Communication from the Commission "Europe
2020: A strategy for smart, sustainable and inclusive growth".

[2]               COM(2010) 546: Communication from the Commission: "Europe
2020 Flagship Initiative: Innovation Union".

[3]               COM(2011) 21: Communication from the Commission:
"A resource-efficient Europe – Flagship Initiative under the Europe 2020
Strategy".

[4]               COM(2011) 571 final.

[5]               COM(2010) 614: Communication from the Commission:
"An integrated industrial policy for the globalisation era: Putting
competitiveness and sustainability at centre stage".

[6]               COM(2010) 682 final: An Agenda for new skills and
jobs: "A European contribution towards full employment".

[7]               Adapted from Decision N° 1639/2006/EC establishing a
Competitiveness and Innovation Framework Programme.

[8]               COM(2011) 500; A Budget for 2020- Part II: Policy
fiches

[9]               COM (2011) 808/3 final: Communication from the
Commission on Horizon 2020 – The Framework Programme for Research and
Innovation.

[10]             COM(2011) 572 final: Communication from the Commission:
Partnering in Research and Innovation

[11]             COM (2004) 38 final, Communication from the Commission,
Stimulating technologies for sustainable development: An Environmental
Technologies Acton Plan for the European Union

[12]             Flash Eurobarometer 315: Attitudes of European
entrepreneurs towards eco-innovation, March 2011

[13]             IDEA Consulting and Ecorys, ‘Study on the competitiveness
of the EU eco-industry’, 2009; Roland Berger, ‘Innovative environmental
growth markets from a company perspective’, 2007.

[14]             Regulation (EC) No 1907/2006 of the European Parliament
and the Council on the Registration, Evaluation, Authorisation and Restriction
of Chemicals (REACH)

[15]             OECD, ‘OECD studies on Environmental Innovation –
Better policies to support eco-innovation’, 2011.

[16]             "EIO Thematic Report: Water Innovation"
Eco-Observatory, May 2011.

[17]             http://tnw.tudelft.nl/en/about-faculty/departments/biotechnology/research/research-cooperation/icon/

[18]             http://ec.europa.eu/research/water-initiative/pdf/4th\_wwf\_brochure\_en.pdf

[19]             http://ec.europa.eu/enterprise/sectors/ict/key\_technologies/kets\_high\_level\_group\_en.htm

[20]             Council Directive 92/75/EEC on the indication by
labelling and standard product information of the consumption of energy and
other resources by household appliances

[21]             Estimated savings due to energy labelling for cold
appliances, dishwashers and washing machines between 1996 – 2020.

[22]             COM (2011) 311 final: Communication from the
Commission: A strategic vision for a European standard: Moving forward to
enhance and accelerate the sustainable growth of the European economy by 2020

[23]             COM 2002/91/EC, Directive on the energy performance of
buildings

[24]             http://www.enterprise-europe-network.ec.europa.eu/index\_en.htm.

[25]             COM(2011) 363 final, Communication from the Commission,
"Rio+20: Towards the green economy and better governance"

[26]             COM(2008) 588 final, Communication from the Commission,
"A strategic European framework for international science and technology
cooperation"

[27]             The SWITCH-Asia Programme is a grants programme funded
through the EU's Development Co-operation Instrument (DCI), Regulation (EC) No
1905/2006 (OJ L 378/41) - http://ec.europa.eu/europeaid/where/asia/regional-cooperation/environment/switch\_en.htm

[28]             COM (2008) 823 final: Communication from the Commission
to the European Parliament and the        Council: ‘Eastern Partnership’

[29]             SEC(2011) 1028 final, "The pilot European
Innovation Partnership on Active and Healthy Aging (AHA). First experiences on
governance and processes"

[30]             http://ipts.jrc.ec.europa.eu/activities/research-and-innovation/s3platform.cfm

[31]             See the EU-funded project Eco-innovation Observatory; http://www.eco-innovation.eu/

[32]             See the EU-funded project "Accelerating
eco-innovation policies", http://www.ecopol-project.eu/

[33]             IDEA Consulting and Ecorys, ‘Study on the
competitiveness of the EU eco-industry’, 2009; Roland Berger, ‘Innovative environmental
growth markets from a company perspective’, 2007.

[34]             Cleantech Group press release of January 7th,
2010 on Cleantech venture capital investments in 2010. The figures provided
refer to cleantech investments for the Europe/ Israel region.

[35]             Source: IDEA Consult, ECORYS, 2009. Study on the
competitiveness of the EU eco-industry; Federal Ministry for the Environment,
Nature Conservation and Nuclear Safety, 2009, "Greentech – Made in Germany
2.0"

[36]             Source: IDEA Consult, ECORYS, 2009. Study on the competitiveness
of the EU eco-industry; Federal Ministry for the Environment, Nature
Conservation and Nuclear Safety, 2009, "Greentech – Made in Germany
2.0"

[37]             Eco-innovation Observatory, Annual Report 2010,
“Business perspective: Saving material costs”

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