Opinions & Ideas

Category: Brussels


Next Monday I will attend a meeting in Brussels of the

European Resource Efficiency Platform, of which I am Chairman.

The Platform brings together European Commissioners, MEP’s, Government Ministers, NGOs and business representatives.

The aim is to agree a strategy on how to reduce Europe’s use of any material resources that will eventually run out. 

In the course of their daily lives, Europeans use up 15 tonnes of physical material every year. 80% of it is never recycled. Much of it is a non renewable resource dug up from the ground.

Some of these are materials whose scarcity could be used as a form of political blackmail by those who control them. A third of the 15 tonnes we each use up every year is imported from outside the EU, much of it from politically unstable places like Russia and the Middle East.

The oil crisis of the 1970s was a notable example of the use of  the scarcity of a finite material to achieve a political goal. 

The present dependency of EU countries on Russian natural gas is another example. If Russia supplies 40% of Europe’s gas, that reduces Europe’s political independence of Russia.

Energy is not the only area in which Europe needs a common policy if it is to maintain its political independence and freedom of action.

 A little discussed but very important example of a resource that is in finite supply, and which could be used for blackmail, is phosphate.

 It is anticipated by some that the world’s known phosphate deposits could be exhausted by the end of the century. The largest phosphate deposits are found in North Africa (Morocco), the United States, and China.

Although phosphorus is used for other purposes, its use in agricultural fertilizers is critical for the future of civilization.

Heavy users of phosphate, like Ireland and the rest of Europe, have no indigenous supplies of phosphate. We could starve without imports of phosphate.

Without mineral phosphate, I doubt if the world’s agricultural land could feed the world’s present population, even if all farming became organic. While renewable are a substitute for  fossil fuels used for energy, there is no known substitute for phosphate used in agriculture, and phosphate prices have trebled since 2000.

Today much of the fertilizer phosphate that is used is being wasted, leading to excessive run off of this mineral, inducing algal blooms in lakes and rivers and contributing to ocean dead zones.

Other non renewable resources modern societies depend upon include

+ zinc,+ iron ore,+ bauxite (to make aluminum), and +“rare earths” (used in many electronic gadgets including smart phones,most of which are never recycled)

Water is another scarce resource that needs to be conserved, used sparingly. Some forms of agricultural production, particularly in hot countries, are running down irreplaceable supplies of underground water resources that are not being naturally replenished. When that water is gone, it is gone! Some of the food, produced by use of that irreplaceable water, is then being flown to far away markets using untaxed aircraft fuel that is also derived from finite oil supplies.

Now is the time for Europeans to start economising on our use of non renewable resource for the sake of our lives, and of our political independence.

Basically, Europe must find a way to decouple economic growth from the depletion of all resources that will eventually run out.

We must increase our productivity by getting more income, from less physical material.

We must reuse material, rather than dump it.

We must insulate our dwellings properly.

We must replace non renewable energy supplies with renewable ones, which will involve  reorganising our electricity grid, which  in turn will also involve  pylons and windmills(to which some mistakenly object).

The era of very cheap air travel may end if, in the interests of fair competition, airline fuel were to be taxed on the same basis as is fuel used in road and road transport. That would be particularly severe for islands like Ireland which depend on air travel more than continental countries.

In the short run, all this will be costly and politically difficult, and households, businesses and countries may need to be given financial incentives that mitigate those costs.

Some particularly wasteful activities may have to be totally banned.

Getting 28 countries to agree on issues like this will be far from easy, but it is ultimately a matter of political survival.

It is better to do something now, and do it gradually, than to wait for a war or some other crisis to force us to do it all suddenly in a rush.

Is the panic justified?

The  recent panic in the markets about the sovereign debt of peripheral euro zone countries , like Ireland and Portugal, lacks objective  justification.
Bondholders are afraid they will not be repaid in full because of a proposal by Germany to amend the  EU Treaties to allow for bondholders of  euro zone countries , that  get into difficulties and have to get EU help, to have haircut or discount applied to the amount they are repaid. This would be part of a new crisis mechanism(ECRM)
Markets seem to be reacting as if this proposed mechanism could be applied to existing bonds or to bonds issued before the proposal  became law.  I believe they are wrong.
The Brussels based think tank, Breugel, has produced a paper on the subject, which is worth reading.
It says
“The creation of the of the ECRM would likely need to be established by a treaty. The mechanism would, therefore, only apply to future debt issuance”
I believe the European Commission and the German  Government would do themselves, and everybody else, a  big favour by making this clear.
It is a fundamental principle that laws cannot be applied retroactively, and the markets need to be told that.

Powered by WordPress & Theme by Anders Norén