Policy context

1. Why eco-innovation matters?

The importance of Eco-innovation is clearly being recognised in the EU and worldwide. Eco-industries and eco-innovation increasingly attract the attention of policymakers and businesses alike, as they promise economic, employment and environmental benefits. This is particularly relevant in a time of mounting economic and environmental pressures.

Eco-innovation is not limited to a sector or solely equated to environmental technologies, goods or services. This pervasive nature of eco-innovation makes the task of ascertaining its full scope more challenging using currently available statistical indicators. It also presents a particular challenge to policymakers engaged in support for eco-innovation in diverse policy areas.

Table 2: Definition of eco-innovation

The EU Eco-innovation Action Plan defines eco-innovation as, “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”.

The Eco-Innovation Observatory (EIO) defines eco-innovation as, “the introduction of any new or significantly improved product (good or service), process, organisational change or marketing solution that reduces the use of natural resources (including materials, energy, water and land) and decreases the release of harmful substances across the whole life-cycle”. EIO also recognises systemic eco-innovations, which can lead to systemic changes in both social (values, regulations, attitudes etc.) and technical (infrastructure, technology, tools, production processes etc.) spheres and, most importantly, in the relationships between them.

Challenging as it may be, the development of eco-innovation and eco-industries does represent a significant economic opportunity. There is mounting evidence that eco-innovation in companies leads to reduced costs, improved capacity to capture new growth opportunities, as well as opportunities to strengthen corporate image in the eyes of customers. Furthermore, eco-innovation appears to be increasingly economically viable. A detailed analysis of around 100 cases where material efficiency measures were implemented with support from the German Material Efficiency Agency (DEMEA) reveals that typical investments pay off within 13 months. (EIO /2012a/, Eco-innovation in business: reducing cost and increasing profitability via material efficiency measures, EIO thematic brief N10, prepared by S. Fischer and M. O’Brien)

Developing and selling eco-innovative goods and services represents another broad category with economic opportunity. There are growing markets for environmental goods and services, for technologies for pollution management, cleaner production, etc. The German Federal Ministry for the Environment and the Federal Environmental Agency (BMU and UBA) estimated that the world's ‘green market’ (10) will represent approx. €1 trillion in 2005. By 2020, this value is expected to double (€2.2 trillion), notably due to the significant growth of the energy efficiency and water management markets. (11)

Growing opportunities are expected in the market for more pervasive and systemic eco-innovations designed to reduce resource use across all aspects of the economy. Examples include new business models based on the sharing of goods, new mobility schemes, product-service systems, sustainable industrial and urban symbiosis. (EIO /2012/. The Eco-Innovation Gap: An economic opportunity for business. Eco-Innovation Observatory. Funded by the European Commission, DG Environment, Brussels)

2. EU policies supporting eco-innovation

  • 2.1 Europe 2020: towards a strategic approach to eco-innovation

    • Since the introduction of the Environmental Technologies Action Plan (ETAP) in 2004, up to the recent approval of the Europe 2020 Strategy, which includes flagship initiatives focusing on innovation, resource efficiency and sustainable industries, eco-innovation has been steadily climbing up the EU agenda.

      At the end of 2011, the Eco-Innovation Action Plan (EcoAP) took over from ETAP and set out a new agenda for eco-innovation for the EC. The action plan includes targeted actions both from the demand and supply-side perspective, on research and industry and on policy and financial instruments. In particular, it maintains ETAP’s priority areas, but also seeks to expand the focus from green technologies to all aspects of eco-innovation. The new plan also attempts to meet the challenges for employment and economic growth in a resource- and environmentally-constrained world. The Commission has identified seven actions as key drivers for promoting eco-innovation:

      * using environmental policy and legislation as a driver to promote eco-innovation;

      * supporting demonstration projects and partnering to bring promising, smart and ambitious operational technologies to the market that have been suffering from low uptake;

      * developing new standards boosting eco-innovation;

      * mobilising financial instruments and support services for SMEs;

      * promoting international cooperation;

      * supporting the development of emerging skills, jobs and related training programmes to match the labour market needs;

      * promoting eco-innovation through European Innovation Partnerships. 

      The implementation of the EcoAP actions is supported by a partnership-based approach between stakeholders, the private and public sector and the European Commission. A dedicated High-Level Working Group brings together Member States to facilitate the exchange of information while providing stronger policy guidance at both EU and national levels.

      The Europe 2020 strategy includes a dedicated flagship initiative on ‘Resource Efficient Europe’ (2011), which responds directly to the challenge of resource scarcity. Eco-innovation is also explicitly mentioned in the ‘Innovation Union’ (2010) flagship initiative, which lists support to eco-innovation among its strategic commitments for action. The flagship initiative, ‘An Industrial Policy for the Globalisation Era’ (2010), includes the issue of sustainable supply and management of raw materials in the context of industrial processes.

      European Innovation Partnerships (EIPs) are a new approach to EU research and innovation under the Innovation Union flagship initiatives. EIPs are challenge-driven, focusing on societal benefits and a rapid modernisation of the associated sectors and markets. The EIPs address such areas as Agriculture and Sustainable Production, Smart Cities and Communities, Water, Raw Materials and Active and Healthy Ageing. Sustainability and eco-innovations are explicitly or implicitly promoted in each partnership.

      The eco-innovation concept is mentioned explicitly in a number of strategic EU policy documents and programmes. Support however varies, depending on the budget allocated to each programme, the scope of the issues covered, stakeholders addressed and the salience of eco-innovation as an issue. In addition, the exact understanding and scope of eco-innovation differs among these programmes. The upcoming Horizon 2020 programme is likely to have a simplifying effect on eco-innovation support by bringing the research and innovation programmes under one roof.

      Furthermore, many other policy fields, notably research, environment, energy and climate provide support to eco-innovation. The following sections briefly introduce key measures and processes that are of relevance for eco-innovation in different policy fields.

  • 2.2 The EU’s research and innovation policy measures relevant to eco-innovation

    • The main objective of environmental research under the 7th Framework Programme for Research (FP7) is to promote the sustainable management of both the man-made and the natural environment and its resources. A key issue is to integrate competitiveness, innovation and sustainability into research activities. Several themes covered by FP7 address eco-innovation. For example, relevant public-private partnerships for the theme, ‘Nanosciences, Nanotechnologies, Materials and new Production Technologies’, include topics such as ‘factories of the future’, ‘energy efficient buildings’ and ‘green cars’.

      ‘Environmental technologies’ research under FP7 looks at technologies for water, soil, waste, built and marine environments, as well as for mitigating and adapting to climate and environmental change. For 2011, the work programme included a specific industry/SME orientated bottom-up eco-innovation call for proposals where applicants could choose the sector and the kind of technologies/solutions to develop. (ENV work programme, 2011)

      Within the FP7, the ERA-NET scheme (23) aims to structure the European Research Area (ERA) in line with the objectives of FP7. Here, it is no longer a ‘stand-alone’ action but an implementation tool, which is used in the cooperation and capacities programmes. An example of a relevant ERA-NET for the purpose of this study is the ERA net on eco-innovation (Eco-Innovera), which builds synergies with other complementary EU initiatives and tools such as the Innovation platform on eco-innovation and the Eco-Innovation Observatory.

      The Competitiveness and Innovation Framework Programme (CIP) supports eco-innovation activities, carried out by SMEs, primarily under the Entrepreneurship and Innovation operational Programme (EIP). EIP facilitates the commercialisation of innovative production processes, products or services and new management and business practices seeking to reduce environmental impacts and to promote an efficient and responsible use of resources, while simultaneously encouraging the competitiveness of European businesses and, ultimately, the growth and competitiveness of the European economy. EIP-eco-innovation addresses almost the entire range of sectors/areas with the exception of renewables and energy efficiency covered by the Intelligent Energy Europe sub-programme of EIP.

      CIP and FP will be replaced by Horizon 2020 - The Framework Programme for Research and Innovation, which will bring together all EU research and innovation funding under a single programme worth about €80bn. Sustainable development will be an overarching objective of Horizon 2020. Eco-innovation is explicitly mentioned in the programme in the context of one of the aims of Europe 2020 and Innovation Union: Industrial leadership (EC 2011). The dedicated funding for climate action and resource efficiency will be supplemented through the other specific objectives of Horizon 2020 with the result that at least 60% of the total Horizon 2020 budget will be related to sustainable development.

      The thematic areas covered by Horizon 2020 address major problems across six key themes:

      1. health, demographic change and well-being;
      2. food security, sustainable agriculture, marine and maritime research and the bio-economy;
      3. secure, clean and efficient energy;
      4. smart, green and integrated transport;
      5. climate action, resource efficiency and raw materials; 
      6. inclusive, innovative and secure societies.

      Eco-innovation is relevant for very nearly all the themes.

      In addition, there are several more targeted EU eco-innovation initiatives. The European Eco-Innovation Platform (Eco-IP) is a European platform established under the Europe INNOVA initiative, with the aim of accelerating the take-up of eco-innovative solutions in Europe. The initiative focuses on the development and testing of new or better innovation support mechanisms for innovative small and medium sized businesses (SMEs), in particular in technological and industrial fields. The Eco-IP brings together public and private partners from different countries willing to cooperate in developing new forms of support for innovation, taking into account the specific needs of those companies holding eco-innovative solutions, as well as the potential role of services' innovation in support of societal needs. The Eco-IP contains four partnerships in the sectors of:

      - bio-based products,
      - water and wastewater,
      - recycling and resource efficiency, and
      - the food industry.

      Each partnership addresses a number of specific challenges with a view to better responding to the specific needs of potential high growth companies engaged in eco-innovative solutions.

      Additional horizontal support action links the partnerships of the Eco-IP to the wider eco-innovation community in addition to fostering the exchange of experience among European innovation champions in the area of eco-innovation. The Eco-innovation Observatory supports the Eco-IP by being a strategic knowledge resource on eco-innovation for businesses and policymakers. As part of ETAP, its main objective is to gather market intelligence on eco-innovation, analyse technology trends and provide sectoral analysis.

  • 2.3 The EU’s initiatives in the area of environment and industry relevant for eco-innovation

    • These initiatives include action plans as well as regulatory, market and financial instruments.

      Environment Action Programmes (EAP) have guided the development of EU environment policy since the early seventies, and the 6th EAP should be seen as part of a continuous process spanning almost 40 years. The 6th EAP, adopted in 2002, constitutes the basic framework underpinning the EU’s environmental policy for 2002-2012. It is aimed at ensuring high levels of protection of the environment and human health, improving the environment and quality of life and at enhancing resource efficiency, resource and waste management. It also seeks to contribute to sustainable development throughout the EU and to decouple environmental pressures (e.g. GHG emissions, resource depletion and waste generation) from economic growth and the rate of growth. Eco-innovation is addressed in the sections on the strategic approaches used and on the climate change priority, which include provisions whereby the EAP will encourage product and technological innovations as well as eco-efficiency practices and techniques in the industry (Art. 3) and promote reduction in gas emissions (Art. 5). A proposal for a new EU Environment Action Programme to 2020 draws on a number of recent strategic initiatives in the field of the environment, including the Resource Efficiency Roadmap, the 2020 Biodiversity Strategy and the Low Carbon Economy Roadmap.

      The Sustainable Consumption and Production Action Plan (SCP-AP), which began in 2008, outlines an integrated approach to sustainable production and consumption patterns and to sustainable industrial production, primarily via regulatory and support measures aimed at enhancing the energy and environmental performance of products and encouraging their uptake by consumers. (34) The support measures set out in the SCP-AP relate to issues including eco-innovation and Green Public Procurement, both key targets of ETAP. It also suggests setting up an EU-wide, voluntary environmental technology verification (ETV) scheme to ensure the independent assessment of the performance and impacts of environmental technologies and to facilitate their uptake by the industry.

      The Green Public Procurement (GPP) is a voluntary market instrument addressed under the SCP-AP. The GPP is to contribute to the reduction of environmental impacts, encouraging sustainable production and consumption patterns and promoting the growth and competitiveness of the environmental industry. Given the importance of the GPP, the SCP-AP, for instance, called for strengthening the GPP via the provision of guidance and tools by the Commission (e.g. setting indicative targets or model tender specifications) to EU Members so as to facilitate their uptake of GPP and the emergence of common GPP criteria for products and services with a view to including them in national action plans.

      The Revised Waste Framework Directive, introduced in 2008, outlines the key concepts and waste management principles, i.e. ‘polluter pays’ and the ‘waste hierarchy’ principle. The revised directive also puts forward examples of new measures that can shape the generation of waste, including the “promotion of R&D for the development of cleaner and less wasteful products & technologies and the dissemination and use of R&D results”. (37) Although the links between the components of the Directive and environmental technologies and eco-innovation are not direct, environmental technologies and EcoAP can play a role in the successful implementation of the Directive.

      The Eco-design Directive of the European Union aims to improve the environmental performance of products throughout their life-cycle. The Eco-design directive prevents disparate national legislations on the environmental performance of these products from becoming obstacles to intra-EU trade. The Eco-design Directive was extended in 2009 to all energy-related products. The EU Commission has recently developed the Eco-design consultation forum for the new working plan for the period 2012-2014.

      The REACH regulation (of 2006) concerns the Registration, Evaluation, Authorisation and Restriction of Chemicals and their use with a view to providing a high level of protection of human health and the environment, promoting alternative methods for the assessment of hazardous substances, permitting the free movement of chemical substances within the EEA and finally, encouraging the innovative performance and competitiveness of the EU chemical industry. (40) The innovation-related objective of the regulation is to promote the development and application of environmental technologies with a view to enhancing the competitiveness of the EU’s environmental technology industry.

      The LIFE+ Programme is one of the EU’s financial instruments promoting environmental technologies during 2007-2013. LIFE+ is managed by DG Environment and focuses on supporting the development and implementation of the EU’s environmental policy, legislation and relevant thematic strategies. Eco-innovation and environmental technologies are part of the Environment Policy and Governance component of LIFE+. In 2009, projects related to innovation in general, including the development of innovative policy ideas, technologies and processes, reportedly accounted for the largest share of the EU support under the LIFE+ instrument, amounting to about €20.9m.

  • 2.4 EU’s climate and energy policies relevant to eco-innovation

    • Energy and climate change policy is one of the most important drivers of eco-innovation in the EU.

      The ‘climate change and energy package’, proposed by the Commission and adopted by the Council and the European Parliament in 2008, constitutes the EU’s integrated approach to climate change and energy policy. The package set the ‘20-20-20’ binding targets to be met by 2020, which would enable a shift toward a sustainable, low-carbon and energy-efficient EU economy. To facilitate the implementation of targets, the EU set a series of binding regulatory measures, concerning, for instance, the EU’s Emissions Trading System, national renewable energy targets and developed new state-aid guidelines to promote the climate change and energy objectives via environmental technologies. (42) The package and the accompanying measures are relevant to eco-innovation as they encourage the demand for innovative environmental technologies.

      The Sustainable Energy Technology Plan (SET Plan) promoted by the Commission (managed by DG Energy) is aimed at expediting the development and application of low-carbon and cost-effective technologies in the EU via strategic planning, effective implementation, increased resources and a concerted approach to international cooperation (43).

      Initiatives by the Commission for the revision of the Energy Efficiency Action Plan (EEAP, 2007-2012) by 2011 stemmed from the EU Members’ commitment to reach the 20% energy consumption target by 2020 by enhancing energy efficiency in key energy-consuming sectors, thereby permitting the EU and its Members to address climate change, energy security and competitiveness. (44)

      The revised Energy Performance of Buildings Directive (EPBD), introduced in 2010, sets an integrated approach to energy efficiency in buildings. (45) The higher performance requirements for buildings and energy supply systems outlined in the EPBD could arguably enhance the demand for environmental technologies.

  • 2.5 Eco-innovation in the EU regional policies

    • The importance given to sustainable development and the fight against climate change is illustrated by the changes introduced by the draft legislative package framing the EU cohesion policy for 2014-2020. As part of its effort to focus resources on a smaller number of priorities, the Commission is proposing that regions concentrate resources on thematic priorities directly linked to the Europe 2020 objectives. This includes the shift towards a low-carbon economy; climate change adaptation, risk prevention and management, environmental protection and resource efficiency.

      In order to ensure that EU investments are concentrated on these priorities, the new framework establishes minimum allocations for a number of priority areas. In more developed and transitional regions, “at least 80% of ERDF resources at national level should be allocated to energy efficiency and renewables, innovation and SME support, of which at least 20% should be allocated to energy efficiency and renewables” (46). Less developed regions will have to devote at least 50% of ERDF resources to energy efficiency and renewables, innovation and SME support (Figure 4). 

      Figure 4: Concentration of ERDF funds by thematic priorities and types of regions in 2014-2020 

      In the coming years, EU Regional Policy will become one of the main EU policies to foster eco-innovation that responds to the challenges of sustainable energy, climate change and the use of natural resources. It is expected to play a pivotal role in strengthening both the sustainability and competitiveness of European regions. Furthermore, the next programming period of the Cohesion Policy (2014-2020) will concentrate public investment on a limited number of growth-enhancing investment priorities. The availability of the Regional Innovation Strategies for Smart Specialisation (RIS3) will be a precondition for eligibility to regional funding. In light of the challenges posed by environmental degradation, climate change and resource scarcity, the EU Member States and regions are encouraged to integrate the sustainability objectives into their RIS3. Under the RIS3, smart growth and sustainable growth are seen as ‘two sides of the same coin’, while eco-innovation is called to be at the core of RIS3. Regions also need to use the innovation-orientated Thematic Objectives of the future regional policy to build a low-carbon economy and promote sustainable and smart growth. 

3. Conclusion – the added value of the interregional cooperation on eco-innovation under the INTERREG IVC programme

The European policy framework in support of eco-innovation is rather dense. This is due to the adoption of an increasing number of policy initiatives exclusively aimed at stimulating the development of eco-innovation but also because there are a number of ‘connected’ initiatives (e.g. industry, climate, environment and energy) that are also of relevance to the field.

European Territorial Cooperation and specifically the INTERREG IVC programme, has a specific added value with respect to these initiatives.

  • Firstly, the collaboration under the INTERREG IVC contains a significant territorial dimension, which is generally absent in many other European programmes. There are disparities in terms of eco-innovation performance and eco-innovation policy-making experience level among EU regions. Therefore, there are numerous opportunities for interregional learning that are being addressed by the INTERREG IVC programme.
  • Secondly, while the cooperation dimension in many EU eco-innovation focused programmes is widely promoted, there is a limited focus on interregional cooperation and exchange. Instead, the focus is set mainly on cooperation and networking among specific research organisations, businesses, innovation intermediaries regardless of the territories they come from. INTERREG IVC adds value by promoting interregional cooperation among innovation players, as well as linking this cooperation with regional development objectives.
  • Thirdly, the interregional collaboration promoted by INTERREG IVC allows to regions to explore and exchange knowledge on innovation from policy and governance perspectives. This makes it distinct from other programmes focusing on an industrial or research perspective. The lack of information regarding the potential benefits of eco-innovation may prevent eco-innovation from being prioritised in the regional policy agenda. At the same time, regions looking to promote eco-innovation lack policy and governance expertise in this area. Currently, the main strategy is one of experimentation and pioneering in promoting eco-innovation, but learning from another experience could be a more efficient approach.

In addition, the INTERREG IVC approach to knowledge-sharing appears to have a strong dimension for capacity building. Participants generally acquire skills and knowledge thanks to their involvement in projects, which they can then put to use in their daily activities.

Finally, the cooperation promoted by INTERREG IVC allows regions to engage in a mutual learning process with other regions with similar interests and priorities. It is specific enough to attract the interest of stakeholders on a particular issue, while allowing for flexibility to adapt good practices to different territorial realities.

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