As we wait to see what measures the Circular Economy Package’s Action Plan will contain, SUEZ’s external affairs director, Gev Eduljee, says we need to make ourselves heard in the corridors of power…
The travails of the recycling sector as a result of falling oil and commodity prices are but a microcosm of the drama being played out on the world stage. With oil revenues accounting for 95 percent of its export earnings, Venezuela’s economy is on its knees.
Nigeria, heavily reliant on oil exports, is also experiencing turbulence, as are Azerbaijan and Kazakhstan, engaged in emergency talks with the IMF. The Russian economy, with 35 percent of its export earnings attributable to oil, is on a knife edge. Even with diversified economies like those of Brazil and Canada, falling agricultural and mineral commodity prices have reduced their export earnings and put pressure on their currencies. On the flip side, falling commodity prices can benefit net importers. China apparently saves $2 billion for every $1 drop in the oil price, helping counter the fallout from their “bubble economy” that is so exercising our sector.
Our sector is inextricably linked to the wider commodity market, and shares in the gain and the pain of these economies. When belts are tightened and investment and spending stalls, demand for recyclates also falls. And commodity prices generally trend together, so a diversified portfolio (plastics, metals, glass, paper…), while helping to rebalance some of the troughs in cash flow, is unlikely to entirely counter a prolonged downturn.
The factors influencing our business models and costs are quite different to those driving the wider commodity market. De-linking the former from the latter has become a priority – we have asked for so-called “pull” measures to be introduced in the European Commission’s Circular Economy Package to help put commodity procurement decision-making on a more sustainable footing.
What Makes The Action Plan?
Unfortunately the Circular Economy Package as presented on 2 December 2015 put all such potential measures in a “to do” Action Plan. The cynics in our sector have, with some justification knowing the history of the Package, interpreted “to do” as “too difficult”, and the action plan as a way of kicking these measures into the long grass.
The Action Plan was discussed at the 3451st Environment Council meeting on 29 February 2016, with the UK represented by Defra Minister Rory Stewart. Apart from platitudes such as endorsing the objectives of resource efficiency, job creation and economic growth, the provisional minutes are not particularly helpful. A thorough impact analysis to ensure cost-effectiveness and maintain global competitiveness was stressed, as was the need to support new business models. The only concrete pull measure mooted was the promotion of Green Public Procurement, undoubtedly a potent pull mechanism.
It remains to be seen what measures within the Action Plan will be adopted by the Environment Council in June. In the meantime, our sector should not spare the horses in making its voice heard in the corridors of the European Commission and the European Parliament – and not least, in the corridors of our own Government.