Raw materials matter, but…

Raw materials matter, but their beauty lies in the eye of the beholder. I attended the conference Industry and Society’s needs for sustainable management of raw materials in Europe: Exploring solutions for future action, which took place on 28 – 29 November 2013 in Brussels. It was the kick off event of the three-year FP7 project COBALT that is funded by the European Commission (http://www.cobalt-fp7.eu). The conference’s objective was to shape the further work of the project as well as moderate future policy and research debates – including the work of the European Innovation Partnership on Raw Materials. My goal was to better understand the motives of the different stakeholder involved.

Around 150 participants discussed the challenges and opportunities concerning a sustainable management of raw materials. One key outcome became clear right from the start. Given the heterogeneous backgrounds of the participants, each stakeholder represented a different view on the topic. Supply risks, technological innovations and affordable prices of raw materials played an important role for the industry but also policy makers. The environmental and social impacts of raw material usage were dominantly represented by NGOs and affected individuals. The lack of reliable data on raw materials throughout their life cycle and legal uncertainty concerning the management of raw materials was raised by academia. This fascinating mixture of interests made me realize how difficult it is to find a ‘good’ solution for managing raw materials.

Little consensus was reached with regards to the role of innovations. On the one hand, some participants argued that through higher and increasingly volatile prices, the incentive to reduce raw material dependency increases. This leads to an increase in R&D expenditures with the aim to use raw materials more efficiently. Substitution can additionally play a role in overcoming constraints on the supply of raw materials. Hence, innovations will ultimately solve many challenges. On the other hand, several participants argued that addressing the issue in the long run requires changing our current consumption patterns. They claimed that there are limits to the amount of raw materials we can use even if innovations occur.

European Commissioner Potočnik introduced the EU response. As the EU is a net importer of raw materials, its economy faces major challenges. Resource efficiency, eco-innovations, eco-design and moving towards a circular economy are some prominent solutions, yet lacking clear targets and broad political support so far. The subsequent panel discussion pointed out that there are internal controversies in the European Commission. DG Enterprise and Industry covers raw materials whereas resource efficiency generally lies within the competences of DG Environment. However, this separation might result into a fair competition of partly diverging interests in order to come up with the ‘best’ solutions.

Further discussions revealed that information seems to be essential. We still do not know enough about resource flows to adequately assess their impact on the economy, environment and society. Besides developing more suitable indicators, product labeling might be one solution to provide better information to customers. Training companies and fostering venture capital to invest in resource efficiency might help to get broader support by the private sector. The idea of ‘getting the price right’ by including negative externalities seems difficult to achieve in practice but an important path of setting incentives for individuals and the industry. At the same time, the competitiveness of the European industry should not be undermined – especially given the EU’s goal that industry’s share of EU-GDP should be around 20% by 2020.

In summary, the conference provided a fruitful exchange of ideas of various stakeholders involved in the topic. It helped me to debate diverse concepts for future action with a variety of different actors. After all, we have to find a way of aligning the incentives of all participants in order to address the major challenge of a sustainable management of raw materials in Europe – even if their beauty lies in the eye of the beholder.

Florian Flachenecker, UCL ISR Doctoral Researcher

About Florian

Florian completed his MA at the College of Europe in European Economic Studies. His Master thesis ‘Sustainability and Resources – An Assessment of Resource Efficiency Policies in the European Union’ (forthcoming) received the ALCOA-award for best thesis on sustainability. Florian holds a BSc in Economics from the University of Mannheim – including an exchange semester at the Tecnológico de Monterrey – specialising in political economy, environmental economics and econometrics. He worked as a student assistant at the Centre for European Economic Research (ZEW) as well as the collaborative research centre ‘The Political Economy of Reforms’ at the University of Mannheim. Throughout his studies, Florian was awarded scholarships from the German Federal Ministry of Education and Research, the Friedrich-Ebert-Foundation and he received the BHP Billiton Doctoral Studentship. Florian had the opportunity to gain practical experience at Deutsche Bank AG Research for Economic and European Policy Issues and at UBS Deutschland AG at the Chief of Staff. Furthermore, he worked as a teacher in an elementary school in Peru and received a high school diploma in the USA.