The circular economy, a new model for Italy

Published on Friday, 14 July 2017

A model of Circular Economy for Italy. Since July 12th, on the website of the Ministry of the Environment, the public can consult a document that, for the first time, calls for a "change of paradigm" for Italy’s economy. A new way to consume, produce, and do business.

The introduction by the Minister of the Environment Gian Luca Galletti and the Minister of Economic Development Carlo Calenda reads, “A new industrial policy aimed at sustainability and innovation capable of increasing the competitiveness of Italian products and manufacturing.”

The document, open to comments and additions until September 18, is a fundamental part of broader Italian National Strategy for Sustainable Development, a road map that the Italian Government will soon submit also to the UN, following on from the 17 sustainable development goals (SDGs) of Agenda 2030 and of the Paris Climate Agreement, both adopted in 2015.

The circular economy is a business model with enormous potential, but it requires a new approach to the market, customers and resources, based on the use of waste, on a greater use of renewables, and on the reuse of raw materials. It is a model that Enel is already concretely applying, for example, in the Futur-e project, which provides for the requalification of 23 thermoelectric power plants with the support of local communities to find a new purpose for these sites.

The Government believes that Italy, a country that lacks raw materials but that can boast a long tradition of creativity and design, has the characteristics and capabilities to develop “circular” business models to better leverage Italian workmanship and the role of the many small and medium-sized enterprises.

Innovation is the lynchpin of the transition from the linear to the circular economy. The digital transformation of the productive system and the technologies of the so-called Industry 4.0 already offer solutions to make more sustainable production possible and efficient. But the transformation of waste into resources with high added value requires technologies, processes, services and creative business models, as well as investments in research and innovation. According to the document, "it will be necessary to devise and develop systems for regeneration, reuse and repair of goods, facilitating the maintenance of products and increasing their useful life. Businesses will have to devise their own products in such a way as to allow that these, once used, can be repaired and reused."

The document touches on pre-existing measures (Green Power Procurement, industrial symbiosis, minimum environmental criteria and Extended Producer Responsibility) and suggests a revision of incentives for businesses and families. The former mainly relate to the mining of raw materials, to research and innovation, and to design and production. The review of the implementation of environmental policies in Italy by the European Commission in March 2017 has suggested shifting a part of the tax burden from labour to natural resources, with the possibility of obtaining a double dividend, i.e., in terms of the environment and economic efficiency. Incentives to families, instead, concern ‘demand’ to shift the tax burden from income to consumption. Incentives that encourage the recycling/reuse and discourage disposal in landfills can affect both categories.

All "Circular Economy" actions must necessarily be measurable. The document of the Ministry takes the approach to the measurement of circularity developed by Enel as a benchmark. The latter takes into account all 5 pillars of the Circular Economy: sustainable input, sharing, product as service, extended useful life, and end of life.

The course charted by the Government collects not only the conclusions of the recent B7, organized by Confindustria in view of the G7 hosted by Italy, but also those of the first Festival of Sustainable Development organised by ASviS.

In the presentation of the consultation, the Italian Government says that it is convinced that "these objectives are broadly shared,” but, considering the complexity and the importance of the document, it has decided to "collect, in full transparency, the contributions of all the competent institutions, enterprises, experts and citizens who deal day after day with the issue of the circular economy to develop a document that is the result of a shared and participated process.”

A circular approach to move together toward a new economic model.

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