Governance of eco effiency in Japan: An institutional approach

The article analyses Japanese approaches to dealing with eco-efficiency from aninstitutional perspective. Our main outlook is that though promising attempts havebeen made despite the overall economic crisis, a better horizontal coordinationamong both administrations and businesses is required. The governance processescan be analysed following approaches developed by New Institutional Economicsand related policy analysis. The paper is divided into three sections. The first introduces the concept of eco-efficiency and explains the demand for regulatorypolicies from theories of market failures; the paper argues in favour of innovation-oriented regulation. The second examines how a nation's institutional capabilitiesinfluence knowledge generation towards new solutions that sell on the markets;the capacity-building approach as developed by Martin Jänicke is explicitly discussed. The third section discusses contemporary Japanese policies with regardto waste, energy and material flows both on the governmental and the businesslevel. It explains how European approaches diffuse and merge with domestic Japanese institutions. However, governance of eco-efficiency is expected tocontinue to differ due to ongoing national differences and specific conditions of knowledge creation. --

A "Triple-I" Strategy for the Future of Europe. Bruges European Economic Policy (BEEP) Briefing 10/2005

The paper lays down a strategy consisting of Innovation, Internalisation of Externalities, and Integration – called Triple I. ‘Innovation’ is seen along value chain management in a systems perspective, driven by competition and participation of stakeholders. ‘Internalisation’ refers to endogenous efforts by industry to assess externalities and to foster knowledge generation that leads to benefits for both business and society. ‘Integration’ highlights the role business and its various forms of cooperation might play in policy integration within Europe and beyond. Looking forward towards measures to be taken, the paper explores some frontiers for a partnership between public and private sector: i) Increasing resource productivity, lowering material cost, ii) Energy integration with Southeast Europe and Northern Africa, iii) Urban mobility services and public transport, iv) Tradable emission permits beyond Europe. Finally, some conclusions from the perspective of the College of Europe are drawn

Governance of eco effiency in Japan: An institutional approach

The article analyses Japanese approaches to dealing with eco-efficiency from aninstitutional perspective. Our main outlook is that though promising attempts havebeen made despite the overall economic crisis, a better horizontal coordinationamong both administrations and businesses is required. The governance processescan be analysed following approaches developed by New Institutional Economicsand related policy analysis. The paper is divided into three sections. The first introduces the concept of eco-efficiency and explains the demand for regulatorypolicies from theories of market failures; the paper argues in favour of innovation-oriented regulation. The second examines how a nation's institutional capabilitiesinfluence knowledge generation towards new solutions that sell on the markets;the capacity-building approach as developed by Martin Jänicke is explicitly discussed. The third section discusses contemporary Japanese policies with regardto waste, energy and material flows both on the governmental and the businesslevel. It explains how European approaches diffuse and merge with domestic Japanese institutions. However, governance of eco-efficiency is expected tocontinue to differ due to ongoing national differences and specific conditions of knowledge creation

Cognitive and institutional perspectives of eco-efficiency

The paper sketches out a theoretical framework for analysing the interplay between eco-efficiency, cognition and institutions. It derives from analytical shortfalls of the prevailing literature, which features strongly engineering and business economics, by using insights from New Institutional Economics, from Cognitive Science and, partly, from Evolutionary Economics. It emphasises the role cognition and institutions play in the adoption of "green" technologies by firms. A cognitive perspective derives from recent research on simple heuristics and context-based rationality; it is proposed that those findings can serve to analyse decision-making of individual actors respectively firms and, thus, should complement economic analysis. A second proposition is that eco-efficiency and normative rules such as a Factor Four strongly rely upon institutions, i.e. the ability of institutions to evolve over time and the development of those institutions that are most appropriate to enhance technological change. In this regard, business institutions and competition are crucial, but regulatory needs remain in order to safeguard continuity of knowledge creation. The framework allows for an analysis why overall adoption of eco-efficiency still can be considered relatively slow and why some markets and firms are far ahead. As a brief case study the article reflects upon German waste law's ability to enhance eco-efficiency

Informational Barriers to Energy Efficiency – Theory and European Policies

This BEER addresses informational barriers to energy efficiency. It is a widely acknowledged result that an energy efficiency gap exists implying that the level of energy efficiency is at an inefficiently low level. Several barriers to energy efficiency create this gap and the presence of asymmetric information is likely to be one such barrier. In this article a theoretical framework is presented addressing the issues of moral hazard and adverse selection related to energy efficiency. Based on the theoretical framework, European policies on energy efficiency are evaluated. The article is divided into two main parts. The first part presents the theory on information asymmetries and its consequences on energy efficiency focusing on the problems of moral hazard and adverse selection. Having established a theoretical framework to understand the agency barriers to energy efficiency, the second part evaluates the policies of the European Union on energy efficiency. The BEER finds that problems of moral hazard and adverse selection indeed can help explain the seemingly low levels of energy. In both presented models the cost to the principal from implementing high energy efficiency outcome is increased with the informational asymmetries. The theory reveals two implications to policies on energy efficiency. First, the development of measures to enable contractual parties to base remuneration on energy performance must be enhanced, and second, the information on technologies and the education of consumers and installers on energy efficiency must be increased. This could be complemented with certification of installers and energy efficiency advisors to enable consumers to select good agents. Finally, it is found that the preferred EU policy instrument on energy efficiency, so far, seems to be the use of minimum requirements. Less used in EU legislation is the use of measuring and verification as well as the use of certifications. Therefore, it is concluded that the EU should consider an increased use of these instruments, and in particular focus on a further development of standards on measurability and verification as well as an increased focus on education of consumers as well as installers and advisors on energy efficiency.Energy efficiency, Informational barriers, European policies

Informational Barriers to Energy Efficiency - Theory and European Policies. Bruges European Economic Research (BEER) Papers 15/2009

This BEER addresses informational barriers to energy efficiency. It is a widely acknowledged result that an energy efficiency gap exists implying that the level of energy efficiency is at an inefficiently low level. Several barriers to energy efficiency create this gap and the presence of asymmetric information is likely to be one such barrier. In this article a theoretical framework is presented addressing the issues of moral hazard and adverse selection related to energy efficiency. Based on the theoretical framework, European policies on energy efficiency are evaluated. The article is divided into two main parts. The first part presents the theory on information asymmetries and its consequences on energy efficiency focusing on the problems of moral hazard and adverse selection. Having established a theoretical framework to understand the agency barriers to energy efficiency, the second part evaluates the policies of the European Union on energy efficiency. The BEER finds that problems of moral hazard and adverse selection indeed can help explain the seemingly low levels of energy. In both presented models the cost to the principal from implementing high energy efficiency outcome is increased with the informational asymmetries. The theory reveals two implications to policies on energy efficiency. First, the development of measures to enable contractual parties to base remuneration on energy performance must be enhanced, and second, the information on technologies and the education of consumers and installers on energy efficiency must be increased. This could be complemented with certification of installers and energy efficiency advisors to enable consumers to select good agents. Finally, it is found that the preferred EU policy instrument on energy efficiency, so far, seems to be the use of minimum requirements. Less used in EU legislation is the use of measuring and verification as well as the use of certifications. Therefore, it is concluded that the EU should consider an increased use of these instruments, and in particular focus on a further development of standards on measurability and verification as well as an increased focus on education of consumers as well as installers and advisors on energy efficiency

Eco-innovation - putting the EU on the path to a resource and energy efficient economy

The objective of this study is to support the European Parliament’s ITRE Committee in its work on the EU's industrial and energy policy and to give advice on the following issues: Why is the issue of resource scarcity back on the agenda? What are the strategic conclusions for the EU? What can the EU expect from eco-innovation in a large range of industrial sectors? Are existing measures meeting the EU aims and expectations, and what new policy initiatives should be set forward? To meet these objectives, this study is structured as follows: Chapter 2 will give an overview on resource scarcities. Chapter 3 elaborates on ecoinnovation, including trends, barriers and driving forces. Chapter 4 outlines proposals for future EU policies. Chapter 5 sketches out a possible vision for the future. Chapter 2 reveals recent findings on resource scarcity: Global extraction of natural resource is steadily increasing. Since 1980, global extraction of abiotic (fossil fuels, minerals) and biotic (agriculture, forestry, fishing) resources has augmented from 40 to 58 billion tonnes in 2005. Scenarios anticipate a total resource extraction of around 80 billion tonnes in 2020 (200 % of the 1980-value), necessary to sustain the worldwide economic growth. On average, a European consumes per year around three times the amount of resources of a citizen in the emerging countries while producing twice as much. Analysis on patterns of current resource use (direct and indirect use) is still in its infancy and shows data gaps. Based on country studies, however, one can arrive at tentative conclusions. A recent study on Germany reveals that ten production sectors account for more than 50 % of German Total Material Requirements (TMR). Industries of three areas are of strategic importance because here a huge number of technological interactions among production sectors take place: • Stones, construction, and housing = housing • Metals and car manufacturing = mobility • Agriculture, food and nutrition = food. The rapidly increasing demand for resources has led to an unprecedented boost in resource prices, especially during the last five years until the breakout of the financial crisis in Fall 2008. The EU is the world region that outsources the biggest part of resource extraction. In comparison to the overall global growth rate (45 % over the last 25 years), Europe’s resource extraction grew only by 3 %, but studies show that these domestic raw materials are increasingly substituted by imports from other world regions. World reserves in fossil fuels and metals are unevenly distributed across the world regions. Additionally, for various commodities, the peak of extraction has already been reached or is currently about to be reached. Not only for oil and gas, but also for critical metals such as Antimon, Gallium, Indium, Platinum and others the supply for European industry is at risk. Natural gas cannot replace oil as main energy source, once the latter is depleted. From this, the following main conclusions are derived: • The European economy is increasingly dependent on resource imports from other world regions. • Scarcity of ‘Critical metals’ will affect the European economy more subtle, but furtherreaching. High-tech industries, in particular the electronic industry, will be affected by deWuppertal Institute et al. Eco-Innovation iv clining availability of precious metals. Also the development of new eco-technologies, such as photovoltaic electricity generation, could be slowed down by resource scarcity. • It can be expected that worldwide competition for these resources will significantly increase in the near future, potentially leading to serious conflicts related to the access to resource reserves. • In order to deal with this increased scarcity of natural resources, a significant reduction of the worldwide resource use will be necessary. Chapter 3 gives a definition of eco-innovation as well as an overview of different types of eco-innovation and deals with measurement issues. Furthermore, it illustrates selected ecoinnovations in key areas, and highlights also trends, drivers and barriers analysed for these examples and illustrated by fishbone diagrams. The scrutinised eco-innovations and the regarding key conclusions are (1) In the area of housing a. “Deep Renovation”, which enables a minimisation of negative impacts on environment and health by system design and choice of components and is possible in nearly every building, though standardisation is limited, and b. “Smart Metering”, for which there is worldwide evidence that giving consumers appropriate, relevant information on their energy and water use is an important basis for additional measures leading to a reduction in this use and thus in GHG emissions. (2) In the area of mobility a. the “Green Electric Car” and b. “Car sharing”; (3) In the area of food and drink (a) the “Community Supported Agriculture” (CSA) and (b) “Sustainable Sourcing of Retailers”. The chapter concludes that eco-innovation has a crucial role to play in putting the EU on the path to a resource and energy efficient economy and thus significantly reducing the environmental impacts in each of the areas, housing, mobility and food and drink. Experts estimate that this is likely to become an $800 billion market worldwide by 2015 and a$ trillion market afterwards. Overcoming the barriers and building up eco-industries for energy and resource efficiency however calls for an active European Union. It requires the engagement of many different actors in society, and strategies should be implemented from many different sides. For an ecoinnovation to be fully accepted and diffused into wider society, a concerted effort must be made to engage people and target the emotional and psychological aspects required to reinforce its uptake. Chapter 4 (How to speed up eco-innovation in the EU) undertakes an attempt to analyse existing EU policies and initiatives; selected member states’ efforts are also considered. This is done via a comparative methodology with a joint format. The annex to this study contains three further briefing notes on this issue written by other authors. The following policies, initiatives and instruments are considered in this study: • The Eco-design Directive (2005/32/EU) – focuses on energy use for a number of products and neglects other environmental dimensions, functional innovation and system innovation are not yet covered; Wuppertal Institute et al. Eco-Innovation v • The Competitiveness and Innovation Framework Programme (CIP) – first experience suggests a bias in favour of recycling technologies and energy along existing technology trajectories, less visibility of resource efficiency and new pathways; • The Seventh Framework Programme for research and technological development (FP7); • The Environmental Technology Action Plan (ETAP) – Despite many achievements, environmental technologies still remain a niche market; further green procurement, greater financial investments, the establishment of technology verification and performance targets systems, and focussing on sectors with high gains is needed; • The Directive on the energy performance of buildings (EPBD) – good ambitions, but a lack of implementation in many Member states, implementation requires both a speeding up and a scaling up, addressing the resource efficiency of buildings is desirable; • The European Union Action Plan on Sustainable Consumption and Production and Sustainable Industrial Policy • The European Directive on Waste from Electrical and Electronic Equipment (WEEE) • The UK Aggregates Levy and Aggregates Levy Sustainability Fund (ALSF) • Environment-driven Business Development in Sweden • The European Union Energy Label. The analysis identifies specific gaps in the areas of entrepreneurship, pre-commercialisation and mass market development; in addition, the opportunities to refurbish buildings in Europe have not fully been deployed yet (see Figure 1). Based on this and supported by an expert workshop conducted by the ITRE on 12 November 08, the study formulates proposals that could support the EU to speed up eco-innovation. They promote market-based incentives and the reform of existing initiatives; in addition, new proposals are presented that address specific gaps in the areas of entrepreneurship, pre-commercialisation as well as the opportunities to refurbish buildings in Europe. Bearing in mind the importance of construction as a driving forces of resource use, the relevance of the construction industry in the EU Lead market Strategy and current deficits, and the overall success of market-based instruments, this study proposes to extend the existing eco-tax base in Europe by establishing a minimum tax directive on construction minerals. It is expected to drive up eco-innovation because it gives incentives to improve resource efficiency and to refurbish old buildings. In addition, it generates revenues, which can be utilized for specific eco-innovation programmes. A greening of the EU budget would be the material basis for speeding up eco-innovation beyond 2009. This would have to follow two strategic lines: on the one hand unsustainable spending would have to be cut, on the other hand the money saved by this activity could be shifted to support investments in structural eco-innovation. A budgetary strategy could include the following elements: • Further redirecting CAP from direct payments towards integrated rural development schemes, which support eco-innovation in the area of sustainable production of highquality food and biomass. These integrated rural development schemes should include integrated logistical, economic and technological strategies for adapted sustainable natural resource management in the landscape (food, water, soil, biodiversity and closed-loop biomass production and use). These strategies would have to be highly adapted to local economies and landscape conditions thus inducing local eco-innovation and employment schemes. Wuppertal Institute et al. Eco-Innovation vi • Rigorous environmental appraisal and reduction of Regional Policy schemes for large infrastructure projects which could support long-term unsustainable development paths, shifting towards funding for eco-innovation e.g. in the area of decentralized electricity grids (supporting green electric cars and renewable energies) and lighthouse projects on resource efficient construction and resource recovery. • Redirection of Regional Funds from end-of-pipe technologies towards integrated solutions and eco-innovation (e.g. decentralized water treatment) • More advanced schemes for improving energy and material productivity of economies would require an implementation of the CREST guidelines for improved coordination between Structural Funds, the Research Framework Program and the Competitiveness and Innovation Programme (CIP). Only such a concentration of forces could achieve a measurable improvement of resource productivity in Europe by means of regional eco-innovation clusters and a European network of regional resource efficiency agencies. • Integration spending of the European Investment Bank (EIB) for improved cofinancing of eco-innovation Figure 1: Gaps of current EU programmes on eco-innovation Engaging industry in developing eco innovation for sustainable ways of living is considered to be essential. The study identifies six strategy areas where industry can act: 1. Strategy Area 1: Creating and satisfying demand for green and fair products 2. Strategy Area 2: Communicating for low impact product use 3. Strategy Area 3: Innovative after sales services 4. Strategy Area 4: Product and service innovations Wuppertal Institute et al. Eco-Innovation vii 5. Strategy Area 5: Service-oriented business models 6. Strategy Area 6: Leadership for social change and socially responsible business The study formulates proposals to strengthen the SCP Action Plan accordingly, with a special focus on a framework for smarter consumption and leaner production. green public procurement and international processes. Following the gaps identified above, the study also proposes to establish three new initiatives: • A European Trust Funds for Eco-Entrepreneurship, intended to support system innovation driven by new companies; • A Technology Platform for Resource-light industries, intended to develop new markets for European manufacturing industries; • A Programme to foster energy and resource efficiency in the building sector, intended to foster • The deployment of existing opportunities in that area. Finally, a few thoughts are given to the international dimension of eco-innovation and a possible vision of an eco-innovative Europe

Eco-innovation - putting the EU on the path to a resource and energy efficient economy

The objective of this study is to support the European Parliament’s ITRE Committee in its work on the EU's industrial and energy policy and to give advice on the following issues: Why is the issue of resource scarcity back on the agenda? What are the strategic conclusions for the EU? What can the EU expect from eco-innovation in a large range of industrial sectors? Are existing measures meeting the EU aims and expectations, and what new policy initiatives should be set forward? To meet these objectives, this study is structured as follows: Chapter 2 will give an overview on resource scarcities. Chapter 3 elaborates on ecoinnovation, including trends, barriers and driving forces. Chapter 4 outlines proposals for future EU policies. Chapter 5 sketches out a possible vision for the future. Chapter 2 reveals recent findings on resource scarcity: Global extraction of natural resource is steadily increasing. Since 1980, global extraction of abiotic (fossil fuels, minerals) and biotic (agriculture, forestry, fishing) resources has augmented from 40 to 58 billion tonnes in 2005. Scenarios anticipate a total resource extraction of around 80 billion tonnes in 2020 (200 % of the 1980-value), necessary to sustain the worldwide economic growth. On average, a European consumes per year around three times the amount of resources of a citizen in the emerging countries while producing twice as much. Analysis on patterns of current resource use (direct and indirect use) is still in its infancy and shows data gaps. Based on country studies, however, one can arrive at tentative conclusions. A recent study on Germany reveals that ten production sectors account for more than 50 % of German Total Material Requirements (TMR). Industries of three areas are of strategic importance because here a huge number of technological interactions among production sectors take place: • Stones, construction, and housing = housing • Metals and car manufacturing = mobility • Agriculture, food and nutrition = food. The rapidly increasing demand for resources has led to an unprecedented boost in resource prices, especially during the last five years until the breakout of the financial crisis in Fall 2008. The EU is the world region that outsources the biggest part of resource extraction. In comparison to the overall global growth rate (45 % over the last 25 years), Europe’s resource extraction grew only by 3 %, but studies show that these domestic raw materials are increasingly substituted by imports from other world regions. World reserves in fossil fuels and metals are unevenly distributed across the world regions. Additionally, for various commodities, the peak of extraction has already been reached or is currently about to be reached. Not only for oil and gas, but also for critical metals such as Antimon, Gallium, Indium, Platinum and others the supply for European industry is at risk. Natural gas cannot replace oil as main energy source, once the latter is depleted. From this, the following main conclusions are derived: • The European economy is increasingly dependent on resource imports from other world regions. • Scarcity of ‘Critical metals’ will affect the European economy more subtle, but furtherreaching. High-tech industries, in particular the electronic industry, will be affected by deWuppertal Institute et al. Eco-Innovation iv clining availability of precious metals. Also the development of new eco-technologies, such as photovoltaic electricity generation, could be slowed down by resource scarcity. • It can be expected that worldwide competition for these resources will significantly increase in the near future, potentially leading to serious conflicts related to the access to resource reserves. • In order to deal with this increased scarcity of natural resources, a significant reduction of the worldwide resource use will be necessary. Chapter 3 gives a definition of eco-innovation as well as an overview of different types of eco-innovation and deals with measurement issues. Furthermore, it illustrates selected ecoinnovations in key areas, and highlights also trends, drivers and barriers analysed for these examples and illustrated by fishbone diagrams. The scrutinised eco-innovations and the regarding key conclusions are (1) In the area of housing a. “Deep Renovation”, which enables a minimisation of negative impacts on environment and health by system design and choice of components and is possible in nearly every building, though standardisation is limited, and b. “Smart Metering”, for which there is worldwide evidence that giving consumers appropriate, relevant information on their energy and water use is an important basis for additional measures leading to a reduction in this use and thus in GHG emissions. (2) In the area of mobility a. the “Green Electric Car” and b. “Car sharing”; (3) In the area of food and drink (a) the “Community Supported Agriculture” (CSA) and (b) “Sustainable Sourcing of Retailers”. The chapter concludes that eco-innovation has a crucial role to play in putting the EU on the path to a resource and energy efficient economy and thus significantly reducing the environmental impacts in each of the areas, housing, mobility and food and drink. Experts estimate that this is likely to become an $800 billion market worldwide by 2015 and a$ trillion market afterwards. Overcoming the barriers and building up eco-industries for energy and resource efficiency however calls for an active European Union. It requires the engagement of many different actors in society, and strategies should be implemented from many different sides. For an ecoinnovation to be fully accepted and diffused into wider society, a concerted effort must be made to engage people and target the emotional and psychological aspects required to reinforce its uptake. Chapter 4 (How to speed up eco-innovation in the EU) undertakes an attempt to analyse existing EU policies and initiatives; selected member states’ efforts are also considered. This is done via a comparative methodology with a joint format. The annex to this study contains three further briefing notes on this issue written by other authors. The following policies, initiatives and instruments are considered in this study: • The Eco-design Directive (2005/32/EU) – focuses on energy use for a number of products and neglects other environmental dimensions, functional innovation and system innovation are not yet covered; Wuppertal Institute et al. Eco-Innovation v • The Competitiveness and Innovation Framework Programme (CIP) – first experience suggests a bias in favour of recycling technologies and energy along existing technology trajectories, less visibility of resource efficiency and new pathways; • The Seventh Framework Programme for research and technological development (FP7); • The Environmental Technology Action Plan (ETAP) – Despite many achievements, environmental technologies still remain a niche market; further green procurement, greater financial investments, the establishment of technology verification and performance targets systems, and focussing on sectors with high gains is needed; • The Directive on the energy performance of buildings (EPBD) – good ambitions, but a lack of implementation in many Member states, implementation requires both a speeding up and a scaling up, addressing the resource efficiency of buildings is desirable; • The European Union Action Plan on Sustainable Consumption and Production and Sustainable Industrial Policy • The European Directive on Waste from Electrical and Electronic Equipment (WEEE) • The UK Aggregates Levy and Aggregates Levy Sustainability Fund (ALSF) • Environment-driven Business Development in Sweden • The European Union Energy Label. The analysis identifies specific gaps in the areas of entrepreneurship, pre-commercialisation and mass market development; in addition, the opportunities to refurbish buildings in Europe have not fully been deployed yet (see Figure 1). Based on this and supported by an expert workshop conducted by the ITRE on 12 November 08, the study formulates proposals that could support the EU to speed up eco-innovation. They promote market-based incentives and the reform of existing initiatives; in addition, new proposals are presented that address specific gaps in the areas of entrepreneurship, pre-commercialisation as well as the opportunities to refurbish buildings in Europe. Bearing in mind the importance of construction as a driving forces of resource use, the relevance of the construction industry in the EU Lead market Strategy and current deficits, and the overall success of market-based instruments, this study proposes to extend the existing eco-tax base in Europe by establishing a minimum tax directive on construction minerals. It is expected to drive up eco-innovation because it gives incentives to improve resource efficiency and to refurbish old buildings. In addition, it generates revenues, which can be utilized for specific eco-innovation programmes. A greening of the EU budget would be the material basis for speeding up eco-innovation beyond 2009. This would have to follow two strategic lines: on the one hand unsustainable spending would have to be cut, on the other hand the money saved by this activity could be shifted to support investments in structural eco-innovation. A budgetary strategy could include the following elements: • Further redirecting CAP from direct payments towards integrated rural development schemes, which support eco-innovation in the area of sustainable production of highquality food and biomass. These integrated rural development schemes should include integrated logistical, economic and technological strategies for adapted sustainable natural resource management in the landscape (food, water, soil, biodiversity and closed-loop biomass production and use). These strategies would have to be highly adapted to local economies and landscape conditions thus inducing local eco-innovation and employment schemes. Wuppertal Institute et al. Eco-Innovation vi • Rigorous environmental appraisal and reduction of Regional Policy schemes for large infrastructure projects which could support long-term unsustainable development paths, shifting towards funding for eco-innovation e.g. in the area of decentralized electricity grids (supporting green electric cars and renewable energies) and lighthouse projects on resource efficient construction and resource recovery. • Redirection of Regional Funds from end-of-pipe technologies towards integrated solutions and eco-innovation (e.g. decentralized water treatment) • More advanced schemes for improving energy and material productivity of economies would require an implementation of the CREST guidelines for improved coordination between Structural Funds, the Research Framework Program and the Competitiveness and Innovation Programme (CIP). Only such a concentration of forces could achieve a measurable improvement of resource productivity in Europe by means of regional eco-innovation clusters and a European network of regional resource efficiency agencies. • Integration spending of the European Investment Bank (EIB) for improved cofinancing of eco-innovation Figure 1: Gaps of current EU programmes on eco-innovation Engaging industry in developing eco innovation for sustainable ways of living is considered to be essential. The study identifies six strategy areas where industry can act: 1. Strategy Area 1: Creating and satisfying demand for green and fair products 2. Strategy Area 2: Communicating for low impact product use 3. Strategy Area 3: Innovative after sales services 4. Strategy Area 4: Product and service innovations Wuppertal Institute et al. Eco-Innovation vii 5. Strategy Area 5: Service-oriented business models 6. Strategy Area 6: Leadership for social change and socially responsible business The study formulates proposals to strengthen the SCP Action Plan accordingly, with a special focus on a framework for smarter consumption and leaner production. green public procurement and international processes. Following the gaps identified above, the study also proposes to establish three new initiatives: • A European Trust Funds for Eco-Entrepreneurship, intended to support system innovation driven by new companies; • A Technology Platform for Resource-light industries, intended to develop new markets for European manufacturing industries; • A Programme to foster energy and resource efficiency in the building sector, intended to foster • The deployment of existing opportunities in that area. Finally, a few thoughts are given to the international dimension of eco-innovation and a possible vision of an eco-innovative Europe

EU Policies and Cluster Development of Hydrogen Communities

This study takes on the issue of political and socio-economic conditions for the hydrogen economy as part of a future low carbon society in Europe. It is subdivided into two parts. A first part reviews the current EU policy framework in view of its impact on hydrogen and fuel cell development. In the second part an analysis of the regional dynamics and possible hydrogen and fuel cell clusters is carried out. The current EU policy framework does not hinder hydrogen development. Yet it does not constitute a strong push factor either. EU energy policies have the strongest impact on hydrogen and fuel cell development even though their potential is still underexploited. Regulatory policies have a weak but positive impact on hydrogen. EU spending policies show some inconsistencies. Regions with a high activity level in HFC also are generally innovative regions. Moreover, the article points out certain industrial clusters that favours some regions' conditions for taking part in the HFC development. However, existing hydrogen infrastructure seems to play a minor role for region's engagement. An overall well-functioning regional innovation system is important in the formative phase of an HFC innovation system, but that further research is needed before qualified policy implications can be drawn. Looking ahead the current policy framework at EU level does not set clear long term signals and lacks incentives that are strong enough to facilitate high investment in and deployment of sustainable energy technologies. The likely overall effect thus seems to be too weak to enable the EU hydrogen and fuel cell deployment strategy. According to our analysis an enhanced EU policy framework pushing for sustainability in general and the development of hydrogen and fuel cells in particular requires the following: 1) A strong EU energy policy with credible long term targets; 2) better coordination of EU policies: Europe needs a common understanding of key taxation concepts (green taxation, internalisation of externalities) and a common approach for the market introduction of new energy technologies; 3) an EU cluster policy as an attempt to better coordinate and support of European regions in their efforts to further develop HFC and to set up the respective infrastructure.hydrogen, energy policy, clusters, regions, innovation

The Sustainability Impact of the EU Emissions Trading System on the European Industry. Bruges European Economic Policy (BEEP) Briefing 17/2007

This BEEP explains the mechanism of the EU Emissions Trading System (ETS) for the greenhouse gas carbon dioxide and explore into its likely sustainability impact on European industry. In doing so, it focuses on energy-intensive industries like cement, steel and aluminium production as well as on the emerging hydrogen economy. The BEEP concludes that at the moment it is still very inconsistently implemented and has a fairly narrow scope regarding greenhouse gases and involved sectors. It may also give an incentive to relocate for energy-intensive industries. In its current format, the EU ETS does not yet properly facilitate long term innovation dynamics such as the transition to a hydrogen economy. Nevertheless, the EU ETS is foremost a working system that – with some improvements – has the potential to become a pillar for effective and efficient climate change policy that also gives incentives for investment into climate friendly policies