circular economy

A new report released by Enel in partnership with The European House – Ambrosetti has become the first in Europe to measure the art of circular economy.

The report analyses the impact of a circular economy on the bloc’s GDP, employment, investments, labour productivity, and the environment.

Circular economy would help Europe to develop a positive and long-term vision for the future, according to the report, Circular Europe: How to successfully manage the transition from a linear to a circular world.

In the EU, Circular Economy is linked to €300-380 billion of GDP, €90-110 billion of investments, and up to 2.5 million jobs in 2018, according to the study.

The positive environmental benefits from circular economy rise through the use of renewable energy, from re-use and recycling, a circular design from an early stage, and targeting future life cycles, thereby extending useful life and ultimately increasing the intensity of the use of goods and products.

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An increase in the penetration of renewable sources in energy production by one percentage point reduces greenhouse gas emissions by up to 72.6 million tonnes of CO2 equivalent in Europe and 6.3 in Italy (about 50% of the annual GHG emissions in the Municipality of Rome).

Although the bloc unveiled its European Green Deal and the related Circular Economy Action Plan recently, many countries do not yet have a national strategic roadmap that recognises circular economy as a crucial factor.

Member countries have mixed results in terms of transition to circular economy: Italy and Spain show a medium-high level of development, while Romania is at the bottom of the ranking.

To measure performance over time, the Circular Economy Scoreboard analysed a 5-year period.  Romania improved significantly over the last five years, Spain made intermediate progress, while Italy moved more slowly along its transition to a circular model.

The study is based on a survey that asked 300 European business leaders about the need to take action towards circular models within their companies.

Up to 95% consider circular economy a strategic choice for their company: it is above all a tool to gain a competitive advantage in terms of diversification, market expansion, and cost reduction.

However, most European business leaders believe that their country is not ready to face the Circular Economy challenge. This is due to uncertainty about value creation (43.6% of the responses) and lack of skills (35.9%), which are the two most frequent replies when asked about the factors hindering Circular Economy development in Europe.

Ten areas of intervention, with specific policy actions, in order to address the challenges related to the circular transition and to reap its benefits effectively include:

  • Define national strategies for circular economic development for EU Member States
  • Redefine the governance of Circular Economy to support a comprehensive transition across all sectors
  • Leverage on legislation to promote the circular transition; create competitive conditions with respect to non-circular solutions
  • Use finance as a lever to promote Research and Development and good Circular Economy practices
  • Address the lack of a clear definition and consistent and comprehensive metrics
  • Transform waste-generating business models into circular models
  • Promote cross-cutting and coordinating measures for all sectors affected by the transition to a Circular Economy
  • Leverage on Circular Economy to reshape cities and urban spaces
  • Promote culture and awareness about the benefits of Circular Economy.

Francesco Starace, the CEO of Enel, said: “Aiming at the development of a Circular Economy is an extraordinary opportunity to make Europe more competitive, modernising its economy, revitalizing its industry and creating jobs through sustainable and lasting growth.

“In this context, the increasing penetration of renewable sources, together with the increased use of electricity as an energy carrier for end-user consumption, can boost the opportunities arising from Circular Economy and is the most efficient way to decarbonize the economy and the society we live in.”

Valerio De Molli, the CEO of The European House – Ambrosetti, adds: “The world is facing huge challenges. Profound and swift economic, climate, and technological changes are taking place and are shaping our societies and lifestyles. The time for Europe has come. Circular Economy has what it takes to become a “catalyst for the common good”, around which we can develop a broad vision for the European future.

“The innovative Circular Economy Scoreboard developed by Enel Foundation and The European House – Ambrosetti, together with Enel and Enel X, reveals a very diverse situation at the European level. Italy and Spain have a medium-high level of development: Italy excels in end-of-life, ranks well in the use of sustainable inputs and extension of the useful life of products, while it must strive to increase the intensity of use of products and services. Spain, on the other hand, has a good ranking for the use of sustainable inputs, end-of-life, and increase of the intensity of use, while it has a medium-low positioning in the extension of the useful life of products and services. Romania is instead facing a substantial growth path on all four pillars.”

The report is available for download.