Resource-efficient green economy and EU policies

In the wake of the 2008 financial crisis the green economy emerged as a policy approach to help solve two problems: the economic slowdown and consequent loss of jobs, and the continuing deterioration of the natural environment, most visible in terms of climate change and ecosystem degradation. This potential double dividend led many European countries to adopt recovery policies in 2008 and 2009 that had a green economy focus. However, as policy focus shifted to the fiscal consolidation and sovereign debt crises in Europe, the concept of the green economy began to lose appeal within short‑term macro‑economic policies. At the same time, the green economy became a pillar of major European and international strategies: most notably within the Europe 2020 strategy adopted in 2010 by the EU to drive sustainable growth, and in the Rio+20 outcome The future we want (UN, 2012) as a tool for achieving sustainable development. The green economy can now be seen as an approach that can achieve a structural and permanent transformation of the economy. This report is guided by the definition of a green economy as: …. combining enhanced resource efficiency with environmental resilience, while boosting prosperity and equity in society (4). Specifically, it analyses macro‑level trends in Europe since the 1990s and addresses those economic factors, drivers, and outcomes that could support a stable shift to a resource‑efficient green economy (hereafter called simply green economy): green innovation, green finance, environmental fiscal reforms and the changing sectoral mix of the economy. A specific focus is the link between the shift to a green economy and the EU policy framework. As illustrated in Towards a green economy in Europe — EU environmental policy targets and objectives 2010–2050 (EEA, 2013), a wide range of specific policies is already in place to support change. However, this report also considers the links between the green economy and policies outside the environmental sector, such as manufacturing and competitiveness policies. The logic of the report's approach and structure is presented in the figure on the following page. Chapters 1–4 highlight the macro‑level trends towards a green economy emerging from the policy framework and the major transformation of the EU economy over recent decades. In Chapter 1, different concepts and definitions of the green economy are discussed. In addition, a brief history of the emergence of the concept of a green economy in the wake of the financial crisis is given. The EU policy landscape, focusing on different EU policy initiatives that promote the green economy, is addressed in Chapter 2. In Chapter 3, recent developments and progress in achieving environmental policy targets are studied. The changing structure of the EU's economy in terms of environmental pressures, and the extent to which manufacturing, services, and trade can play a role, are analysed in Chapter 4. Given the combination of policy pushes and macro‑level transformations of the economy, Chapters 5–8 address key enabling factors that can help to promote or hasten the development of a green economy (Figure I.1). Chapter 5 focuses on the role of eco‑innovation diffusion as an established enabling condition in Europe. The role of the international transfer of green knowledge, another enabling factor, is presented in Chapter 6. The role of environmental fiscal reforms and economic instruments are analysed in Chapter 7. Finally, the role of finance, and particularly of innovative green finance as an enabling condition of the green economy, is analysed in Chapter 8. In short, eco‑innovation, green knowledge transfer, environmental fiscal reform and green finance (Chapters 5–8) are seen as levers for effecting a shift within the framework of favourable and unfavourable macro trends emerging from EU policies and the transformation of its economic structure (Chapters 1–4). With this logic, the report seeks to contribute to an understanding of the major forces that promote or hinder progress in Europe, and of the policies needed to guide it.