The newsletter of Technopolis
An international research business focusing on the evaluation
and development of policy in the fields of research and innovation
April 2017 - N° 16
Editorial 2
Circular Economy:
regulatory barriers in a
paradigm shift
3
International comparison
of energy transitions: bold
choices have shaped today’s
systems4
Innovative tools for
regulatory assessment: an
example on chemical
policy5
The Green Growth
Paradox: combining private
sector development and
environmental protection6
Technopolis Group designs
a waste heat recovery
guarantee fund7
The importance of
standardisation as an
instrument for a proactive
environmental policy8
Technopolis
Group explores the
environment and
economy nexus
April 2017 - N° 16
‘T
echnopolis Group is strongly committed to contributing to an environmentally sustainable society. Our ambition is to use our decades-long experience in research,
innovation and economic policy to address societal challenges. For this purpose, we
established in 2015 a cross-border and multi-office Thematic Business Unit on ‘Green Economy’
that brings together the work we do on this topic in many geographical locations. Key areas that
we cover include eco-innovation, circular economy, resource efficiency, sustainable energy and
energy efficiency.
As editor of this edition of the Technopolitan, we are pleased to introduce
Ruslan Zhechkov, who has led this Business Unit since the summer of
2016. Ruslan is an economist with 16 years of experience in conducting research and providing
advice in a number of fields at the crossroads of environment and economy. These include: transition to a low-carbon economy, environmental infrastructure investments, eco-innovation, and
economic and fiscal aspects of waste, water and climate policy.
There are strong synergies between green economy policies and ‘mainstream’ research and innovation policies. However, there are also some differences. While general research and innovation
policies mostly rely on financial instruments (e.g. institutional funding, grants, loans and credits),
the green economy domain uses a wider set of policy measures, such as regulation, legislation, financial engineering
and standardisation. We have expanded and innovated our policy support services to analyse, design and evaluate a
broader range of instruments.
This edition of |the| technopolitan gives a flavour of the work we have done on green economy in the past year. The
first article discusses regulatory barriers for the circular economy, based on a study for the European Commission.
Energy transitions today rely on bold decisions taken in the past, as our country comparison illustrates. A fitness check
on EU regulatory frameworks led us to develop an innovative method to conduct Cumulative Cost Assessments, in
this case for the chemicals industry. Emerging and developing countries have an urgent need for private sector development, to balance economic growth and environmental protection. Standardisation is an excellent way to have a
pro-active environmental policy as our German study shows. And finally, financial engineering instruments are being
used more and more, demonstrated by our design of a waste heat recovery guarantee fund.
Patries Boekholt, Group Managing Director
[email protected]
2
April 2017 - N° 16
Circular Economy: regulatory barriers in a
paradigm shift
At the end of 2015, the European Commission introduced the Circular Economy Package: “An EU action plan for the circular economy
that establishes a concrete and ambitious programme of action, with measures covering the whole cycle: from production and consumption to waste management and the market for secondary raw materials.”
Regulation plays an important part in the Circular
Economy Package. In order to gain more insight into
this, Technopolis Group, in consortium with Fraunhofer
ISI, Thinkstep and the Wuppertal Institute, conducted
an analysis of the regulatory barriers for the Circular
Economy in Europe.
The study team went through a longlist of 60 sectors and
materials, taking deep dives into 30 of them, and finally
published 10 case studies in our report. In each case, we
considered the volume of the material lost, its environmental impact and the economic opportunity to be gained.
From the analysis, we concluded that regulatory barriers
for the Circular Economy can be categorised in six ways,
stemming from:
1. T he lack of definitions and the occurrence of gaps in
legislation
2. Unclear definitions of targets in legislation – for example,
in the context of the Waste Framework Directive
compared to traditional linear approaches.
Overall, the circular economy paradigm defies borders,
whether national, sectorial or technological. We concluded
that, to ensure its success, it is important to conduct a
thorough and more holistic assessment of the potential
for circularity before looking at the removal of regulatory
barriers.
Issues beyond existing legislation hamper circularity; the
issue is at system level. As yet, there is no clear recipe to
achieve a circular economy in Europe through legislation.
As many stakeholders and sources stated in the research
for this project, however, internalising environmental costs
and the value of recuperation of materials, combined with
extended producer responsibility – which stimulates design
for circularity – could well be part of such a regulatory
approach.
3. Outdated or irrational definitions for the numerical
limits in regulations – for example, in the REACH
and ‘Classification, labelling and packaging’ (CLP)
regulations
This could create economic incentives for frontrunners
to invest in circular economy processes, innovation and
business models. Introducing such a change requires new
regulation and careful implementation, possibly with
increasingly strict targets to make entrepreneurs invest and
innovate.
4. L agging or incomplete implementation or enforcement
of legislation – notably, the Waste Framework Directive
and the Exports and Shipment Regulation
An integrated analysis of regulatory barriers and economic
incentives is required, in order to develop or support
circular economy alternatives.
5. Different and conflicting national implementations of
legislation – notably, directives or national action plans
derived from the Waste Framework Directive, Basel
Convention and WEEE Directive
6. Regulations that conflict with each other because they
represent conflicting values, for example: hygiene vs food
waste or livestock hygiene vs nutrient transportation.
More than just regulation
A related barrier, though not directly due to legislation, is a
lack of information on the amount of material or value lost
as waste, which holds back actions to stimulate circularity.
National borders can also hamper shipment of waste to the
most efficient processing facilities, which means they fail to
reach sufficient scale of operations. Other barriers include
stringent requirements to use specific technologies that
were the best available at the time, which now prevent the
emergence of innovative new ones. In almost all cases, regulatory barriers do not prevent more circular solutions, but
they do make them more costly (sometimes unnecessarily)
The final report is available on our website at: http://www.
technopolis-group.com/expertise/green-economy/
For more information, please contact:
[email protected]
[email protected]
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April 2017 - N° 16
International comparison of energy transitions:
bold choices have shaped today’s systems
All countries in Europe face the challenge of ensuring a stable supply of energ y that is affordable and clean at the same time. While it
could be argued that all countries have access to the same globalised technolog y base, historically, institutional choices have led countries
to emphasise different approaches in achieving a transition towards a more sustainable energ y system.
In 2016, Technopolis Group analysed how the energy
transition is going in Belgium, Denmark, France,
Germany and the United Kingdom compared to the
Netherlands. Our aim was to answer the questions: Why is
the energy system the way it is? What are the institutional
factors? And how does the behavior of particular actors
shape the outcome?
From the five country reports, we conclude that a
long-term vision shapes both the energy system
and the industrial system that builds it. It is clear
that through consistently upholding strategic choices,
investors gain confidence and start contributing to that
choice. In time, a choice for sustainability becomes a vested
interest of the investors and industries contributing to it.
We thus see a tipping point in the transition, where industrial structure is redefined to such an extent that industry
becomes a driver of alternative energy and technology
policy rather than an opponent.
Different strategic choices
Denmark is the most prominent example, where a focus
on fossil fuel independence since the 1970s implied choices
for wind-energy – their most abundant natural asset –
and district heating. District heating covers most urban
areas and is increasingly fed by renewable heat sources.
Moreover, Denmark is now a key exporter of wind-energy
technology and the industry is asking for more ambitious
environmental targets to boost their market.
In France, the consistent focus on nuclear energy was
driven by the desire for independence. Here too, this has
resulted in a successful technology export sector, though
societal movements are increasingly questioning nuclear
energy as a responsible strategy.
The successful German Energiewende policy is largely
paid for and supported by civil society rather than industry.
As industry pays little of the cost, they resist less, while
entrepreneurial citizens and energy cooperations quickly
grow in numbers and size. These are now becoming the
drivers of change.
In the Netherlands, Belgium and the United Kingdom,
strategic choices for affordability and security have
prevailed. As such, the market is still dominated by traditional energy suppliers using mostly conventional energy
technology.
We further observe that much attention is on electricity as an energy carrier, and on clean electricity
production. However, electricity usually represents
only one-third of total final energy consumption.
In addition, buildings remain an enormous challenge in all
countries, due mostly to finance and the question of who
pays for renovations, tenants or owners.
Transport receives an increasing amount of attention,
and rightly so, but technical solutions for many means of
transport are either uncompetitive economically or in their
performance. As for aviation, the energy density it requires
forces the sector to rely on liquid fuels for the foreseeable
future.
In conclusion, we see that systemic change requires
perseverance to reach a tipping point, beyond
which energy systems become self-propelling and
accelerating. In addition, there is an urgent message for
policy makers: tackling the built environment should have
a high priority, as energy poverty is an emerging issue for
the poorest households. This forces us to ask the question:
will we pay their heating or renovation costs for them?
The reports can be downloaded from: http://www.technopolis-group.com/expertise/green-economy/
For more information, please contact:
[email protected]
[email protected]
4
April 2017 - N° 16
Innovative tools for
regulatory assessment:
an example on chemical
policy
Europe is a global leader in the production of chemicals.
While chemicals are used in everyday products, and cover a broad
range of applications, the impact of a series of chemical substances on the environment and health remains uncertain. Recently,
chemical policy has been at the top of the EU political agenda:
hot topics include the classification of glyphosates (one of the most
used substances in pesticides), restrictions on use of Bisphenol A
(primarily used to make plastics), human exposure to a “cocktail
effect” of chemicals in our bodies, and the definition of criteria to
characterise endocrine disruptors.
The EU’s pioneering, ground-breaking and comprehensive chemical legislative framework
impacts the chemical industry as well as consumers’ health
and the environment. Its further development will be a
critical turning point for ecological modernisation, influencing the EU and the rest of the world.
Regulatory Costs. The former developed a methodology for the Commission’s new instrument, the so-called
cumulative cost assessment2, and focused on the
costs borne by chemical companies operating in the EU.
The latter compares these results with the costs borne in
competitor countries – China, India and the United
States – using a cost-justification approach that investigates what are the expected returns at the given costs.
Technopolis Group’s team is investigating the respective
legislative frameworks, their levels of enforcement, and the
subsequent benefits: such as new product lines or markets,
more environmentally sensitive practices and reduction in
occupational hazards.
Margot Wallström, the former Vice President of the
European Commission, has described chemicals as “a
blessing and a curse”. These paradoxical feelings
are shared by the European population at large: the
2013 Chemical Flash Eurobarometer suggests that while
three-quarters of Europeans consider that new chemical
substances are involved in most industrial innovations, opinions on whether these substances contribute
to a better environment are deeply divided.
Results from the cumulative cost assessment at a glance:
The European Commission’s Directorates General for
the Environment (DG ENV) and the Internal Market,
Industry, Entrepreneurship and SMEs (DG GROW), are
jointly running a Fitness Check on the most-relevant
chemical legislation1, assessing whether the regulatory
framework for chemicals is fit for purpose. The exercise
should make EU chemical regulation more efficient for
industry and better for environmental protection and
human health.
The EC launched two flagship studies under the Fitness
Check: one on the regulatory fitness of the legislative
framework governing risk management for chemicals – the
‘Classification, labelling and packaging’ (CLP) Regulation
and related legislation (excluding REACH) – and the other
on the most relevant chemical legislation other than CLP.
The latter, led by Amec Foster Wheeler and involving
Technopolis Group, reviews the current approaches to
identifying hazards outside CLP. It performs specific
assessments to manage the risks to the environment and
health.
Balancing costs and returns
In addition, Technopolis Group has led two studies
that will provide relevant data to the Fitness Check:
the Cumulative Cost Assessment for the
Chemical Industry and its ongoing follow-up study
on the International Comparison of Cumulative
The stakes of modernising chemical legislation and the
chemical industry are higher than ever. Through its past
and current work on chemical policy, Technopolis Group
reiterates its commitment to supporting policy
makers in making the right choices, in terms of social
and environmental sustainability, for a safer and responsible chemical industry.
For further information, please contact:
[email protected]
1 Evaluation and fitness check roadmap, http://ec.europa.eu/smart-regulation/roadmaps/docs/2015_grow_050_refit_chemicals_outside_reach_en.pdf
2 DG GROW, Cumulative Cost Assessment for the Chemical Industry, 2016, https://ec.europa.eu/growth/sectors/chemicals/ec-support_en
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April 2017 - N° 16
The Green Growth Paradox: combining private
sector development and environmental protection
Balancing economic growth and environmental protection has long been a major policy dilemma and subject of public debate. While
this issue is relevant for all countries, it is particularly so for developing countries. These countries have an urgent and major need for
private sector development (PSD), but also possess some of the world’s most important natural capital stocks and are especially vulnerable to environmental damage. Well-known images of deforestation for palm oil production in Indonesia or oil spills in the Niger delta
vividly illustrate the environment-economy dilemma.
International and bilateral development agencies focus
increasingly on supporting developing countries in
addressing these challenges. In particular, the quest for
a framework that provides ‘win-win’ solutions gathered
speed in the 2000s through the OECD’s Green Growth
Strategy. This strategy focuses on exploiting the significant economic potential of new ‘green’ sectors such as
renewable energy, thereby creating new green jobs.
Strengthened by the policy objectives for sustainable
private sector development (PSD) in the new Sustainable
Development Goals, donors have recently begun focusing
on a more holistic ‘green PSD’ approach. This approach
seeks to go beyond simply avoiding potential negative spillovers and addressing trade-offs between environmental
and economic objectives, instead it aims to build mutual
synergies based on integrated approaches. Key questions
that are raised include:
• How can PSD initiatives strengthen the environment
and increase natural capital (beyond protection)?
• How can environmental protection measures generate
positive spill-overs for PSD and innovation?
• What kind of business environment reform (BER)
measures can support green PSD?
Turning ambition into action
Technopolis Group is supporting donor agencies and
policy makers in translating these ambitions into policies
and action, by facilitating learning through analysis,
monitoring and evaluation. It is currently working with
the Donor Committee on Enterprise Development
(DCED), a multi-donor forum focused on PSD, identifying how to support policy makers in scoping synergies
and trade-offs between environmental sustainability and
business environment reform.
Working with Globelics, a global research network
on the role of innovation in development, Technopolis
Group produced a policy brief on how innovation linkages
between natural resource-intensive industries and the
rest of the economy can help countries to achieve sustainable PSD and escape the ‘resource curse’. Through
an evaluation of the Compete Caribbean Program
funded by the Inter-American Devleopment Bank, Global
Affairs Canada and the Department for International
Development of the UK, we investigated the capacity
challenges faced by policy makers in integrating the environmental perspectives in BER initiatives.
A few initial lessons emerge from this work. First of all,
specific policy instruments seem very well placed to contribute to ‘green PSD’, including the introduction of
environmental standards, business license reform, research
and innovation capacity building, integral landscape
(ecosystem services) management schemes and subsidy
reform. However, the ability to mix environment and PSD
is not limited to the choice of policy instruments and policy
mixes. In addition, it includes involving private sector and
environmental stakeholders in the design and implementation of these initiatives, strengthening environmental
safeguards in capital investments, and capacity building
for programme management and staff on environmental sustainability or BER. New insights are expected to
emerge as the work advances, as recent programmes enter
operational or evaluation stages, and as pilot initiatives are
gradually scaled up. Technopolis Group will continue to
provide sound advice to policy makers and practitioners
based on its pioneering work in this field.
For more information, please contact:
[email protected]
[email protected]
6
April 2017 - N° 16
Technopolis Group
designs a waste heat
recovery guarantee fund
Financial engineering instruments (FEIs) contribute increasingly
to public policies in Europe, notably within the implementation
of the cohesion policy1. A large variety of FEIs exists, ranging
from loans to interest rate subsidies or rebates, and from equity or
venture capital to guarantees.
In comparison to ‘traditional’ grants, FEIs have several
advantages:
• Sustainability, as they are repayable investments,
they are revolving and impact positively the leverage of
public money
• Improved quality of projects, as investments must
be repaid and therefore the pressure for success is bigger
• Fostering co-operation between public and
private sectors, as the repaying of investments offers
a return, and thus private sector involvement in (and
funding for) public policy objectives.
For several years, Technopolis Group has been active in
this field. For instance, ex ante evaluation is a condition for
the implementation of FEIs funded by EU programmes.
Technopolis Group has supported several regions in
defining FEIs on a range of topics, including economic and
agricultural development, innovation, renewable energy
development and energy-efficient housing refurbishment.
FEIs are not used only in the implementation of European
policies. Due to scarce public funds, national and regional
administrations also deploy FEIs. Recently, Technopolis
Group contributed to a feasibility study for a guarantee
fund to support industrial waste heat recovery projects.
Waste as a hot topic
Heat is a necessary by-product of processes using energy.
Waste heat is released, for example, in the hot fumes of a combustion engine or in a factory chimney. Waste heat recovery,
therefore, deals with energy efficiency and is an important
concern for industrial stakeholders, as it contributes both to
mitigation of environmental impacts and improved competitiveness by cutting energy-related expenses.
power plant produce about 10-13 TWh annually.
Although the potential is significant, very few waste heat
recovery projects are implemented in practice. Complexity,
lack of end-users, technical constraints (e.g. set up during
downtime periods), extended payback periods, and lack of
visibility of industrial activities are some of the underlying
reasons for the low take-up.
Cluster Energie 2020, ADEME Hauts de France and the
Regional Council ordered a study on the feasibility of a
guarantee fund to cover some of the risks associated with
these projects. It comprised a technical and economic
study, and risk analysis of different types of projects4, and
an optional part on legal and financial engineering, and
structuring of the fund.
Partnering with an engineering company, a law firm and
a financial consultancy, Technopolis Group was responsible for the risk analysis of the projects and defining the
fund’s response to cover these risks. The study selected
industrial stakeholders in Nord-Pas de Calais with waste
heat recovery projects either in development, already
implemented or abandoned. With our technical partner,
we conducted a market study to characterise the projects,
understand the risks, and assess the potential impact
of a guarantee fund and its ideal characteristics. Using
regional analogies, this first analysis was then scaled up to
the regional and national levels. During the second phase,
we assisted the legal and financial partners in defining the
structure of the fund, notably by performing a benchmark
study. Legal proposals and business plans were discussed
with the project steering committee.
As a result, a fund covering only the residual risk left after
all other solutions (insurance, commercial agreement,
etc.) was deemed interesting and useful by most stakeholders, with a potential to boost the number of projects
implemented. For instance, the fund could partially cover
projects in which one of the stakeholders closed down, but
not technical risks. Due to a significant level of risk, and in
order to attract private investors, extension to the national
level is recommended. Discussions with national stakeholders, notably the Agency for Environment and Energy
Management (ADEME), are currently underway.
For more information, please contact:
[email protected]
In the industrial Nord-Pas de Calais region, it is estimated
that industrial waste heat, above 100°C2, represents 7
TWh a year. In France, industrial waste heat above 100°C
amounts to 51 TWh, equivalent to 16% of energy inputs3.
For comparison, the two nuclear reactors of the Fessemheim
1 D uring 2014-2020, the European Commission aimed at mobilising at least 10% of the European Structural and Investment Funds (ESIF)
through financial engineering instruments.
2 The lower the temperature, the lower the interest in recovery. 100°C is deemed a lower limit.
3 ADEME 2015, La Chaleur Fatale Industrielle
4 Types of projects studied included direct supply to an external industrial stakeholder, internal use or supply to a heat network
7
April 2017 - N° 16
Information
The importance of standardisation
as an instrument for a proactive
environmental policy
Today, almost all goods and services are standardised. A
standard is, according to DIN EN 45020, a document defining the recurring application rules, guidelines or characteristics for activities or their results. In everyday life, however, the
impact of norms and standards often goes unnoticed, such as
paper formats – for example, DIN A4 – and the standards for
office supplies and furniture based on them. Standardisation is a joint task of science, industry and
society. However, developments in the field of standardisation have changed over the past 30 years. While
standardisation used to focus primarily on technical
and economic aspects, consumer and environmental
protection are becoming increasingly important.
Standardisation activities are shifting from national to
the European level. In addition, European legislation
increasingly relies on European (CEN) standards as
an instrument to develop legislation – for example, for
environmental and quality requirements. As a result,
a tension has arisen in which national areas of activity
become ever less important.
In this context, the Frankfurt office of Technopolis
Group was commissioned by the Federal Environmental
Agency (UBA) to carry out a comprehensive analysis of
the possibilities for influencing and shaping standardisation processes in all fields relevant for environmental
protection. This study is based on analysis of the overall
situation of European standardisation activities and
will develop recommendations and guidelines for the
central question: which measures can the UBA use to
optimise its standardisation work, considering future
developments in European and international standardisation activities?
For more information, please contact
[email protected]
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