Janez Potocnik graduated from the Faculty of Economics at the University of Ljubljana, Slovenia, earning a PhD in 1993. He began his career in 1989 as a researcher at the Institute for Economic Research in Slovenia, and in 1994 he became director of the Institute for Macroeconomic Analysis and Development. He was appointed head of the negotiating team for the accession of Slovenia to the European Union in 1998. He was director of the Government Office for European Affairs (2000), minister councillor at the Office of the Prime Minister (2001) and minister responsible for European affairs (2002). In 2004 he joined the European Commission, first as "shadow" European commissioner for enlargement and then as commissioner responsible for science and research. Between 2010 and 2014, Potocnik served as European commissioner for environment. He now co-chairs the United Nations Environment Programme’s International Resource Panel.
Please can you say a few words about the challenges and strategies related to the circular economy?
Resource issues are at the core of sustainable development. Future growth, prosperity, human development and the eradication of poverty will be determined by our ability to deal with resource constraints. For this we need an economic growth model that enables the rich economies to improve their sustainability whilst continuing to maintain — or indeed improve — living standards; and that enables emerging economies to grow while decoupling human development from natural resources use and environmental impacts.
The circular economy recognises that while there is much scope for major improvements in resource efficiency in the prevailing linear system — where we extract, produce, consume and throw away — there are even greater rewards in gaining added value from the materials in those products after they are thrown away, by collecting and processing them and putting them back to productive use.
By 2050, the global population is expected to reach nine billion, and within one generation three billion people will achieve “middle-class” consumption patterns, leading to resource extraction more than doubling over this period. This is an unsustainable burden on the planet that will affect both economic growth and the environment. Technological innovation will provide some solutions, but we will also need to change the way we produce and consume. We will need to develop markets for secondary raw materials and increase resource efficiency. This goes beyond recycling waste: we also need waste prevention and product re-use, refurbishing and re-manufacturing, including developing products that are more durable, upgradable and repairable.
There is a perception among many businesses and policy makers that the circular economy is an “environmental policy” and that it will therefore limit business, economic growth and job creation. In fact it is a pro-growth industrial and innovation policy, with potential advantages for business, such as reduced costs and new markets.
Policy makers should provide a predictable policy and legal framework for businesses to invest and remain competitive, remove regulatory obstacles, plan long-term scenarios, and provide incentives for businesses and consumers. Policy areas to focus on include using taxes and subsidies to alter production and consumption; developing sustainable food systems covering production, distribution and food waste; setting aspirational targets for resource efficiency based on material productivity (with additional indicators measuring water and land efficiency and greenhouse gas emissions); and setting achievable goals for resource productivity. For example, it is estimated that a 30 percent increase in resource productivity by 2030 would increase European Union GDP by up to 3 percent and create around two million more jobs than under the 15 percent baseline scenario.
Such a fundamental shift in approach to economic policy making will not be easy, particularly as there are many "lock-ins" to the prevailing system — in infrastructure, in financial systems and in behaviour. But such a change will become inevitable as the global pressures on resources increase. Credible and accurate analyses and prognoses of the effects of these resource pressures are therefore essential to help policy makers act in the right ways and in good time. That is why the work of the United Nations Environment Programme’s International Resource Panel — the organisation that I co-chair — and others such as the Ellen McArthur Foundation and McKinsey is so important in providing the research and evidence base to help policy makers and business leaders develop policy responses. The REC will play an ever more important role in this transition over its next 25 years.