ERA and the Circular Economy Package
On the 2nd of December 2015, the European Commission published the Circular Economy Package. It includes several initiatives towards a Circular Economy and is accompanied by legislative proposals.
The objective of a circular economy is to maintain the value of products, materials and resources in the economy for as long as possible, while minimising the generation of waste.
In December 2014, the Commission decided to withdraw a pending legislative proposal on waste, as part of the political discontinuity exercise carried out for the first Work Programme of the Juncker Commission. The Commission committed at that time to use its new horizontal working methods to present a new package by the end of 2015 that would not only cover waste reduction targets but the full economic cycle, drawing on the expertise of all the Commission’s services.
As part of the process to develop the Circular Economy Package, the Commission organised a circular economy conference in Brussels in June 2015, attended by 700 stakeholders, wishing to contribute to shaping European economic policy making. Also, a 12-week public consultation took place from 28 May to 20 August, which received 1,500 submissions, among which ERA’s.
In addition, the Commissioners, their Cabinets and the services held intensive and collaborative consultations with key stakeholders.
The Commission is now calling on the European Parliament and Council to build on this important preparatory work and prioritise adoption and implementation of the legislative proposals.
ERA’s position and undertaking:
In April 2015, ERA, the European Rental Association, wrote its first position paper on the revision of the Waste Framework Directive 2008/98/EC to the European Commission and met with the Environment Directorate – General of the European Commission.
In August 2015, ERA contributed to the Public Consultation on Circular Economy and sent a second position paper to the European Commission on the contribution of the equipment rental industry to a European Circular Economy.
At the same time, ERA decided to start an advocacy campaign towards some of the Permanent Representations to the European Union, with the objective not only to get a support towards the European Commission, but also to reach the national authorities. The ERA Secretariat met with the Permanent Representations of the UK, Denmark, Sweden, Finland, France, Spain and the Netherlands during 2015.
In November, ERA obtained a meeting with Member of Parliament, Sirpa Pietikainen, rapporteur for the Circular Economy towards the European Parliament.
Now that the European Commission has issued the Circular Economy Package, the stakeholders have the possibility to react on it and to send their comments to the European Commission.
ERA has been analysing the Circular Economy Package and will issue a Position Paper very soon taking into account the pros and cons of the Package. It will then be communicated to the Directorate-General for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW) and to the Environment Directorate – General (DG ENV) and ERA will go back to the Permanent Representatives so that they can support the rental industry and, at the same time, ERA can help them in their answer to the Commission, who will be eager to receive some comments.
Why did ERA take position on the Circular Economy?
In 2013, the ERA Board decided to revive the Sustainability Committee. It was aimed at supporting the rental industry in promoting the environmental benefits of rental as well as in developing tools for helping members to respond to requests from customers and aligning practices in the industry where relevant.
The ERA Committee chose to appoint the consulting firm Schuttelaar & Partners to carry on a study about sustainability in the rental business. This study confirmed and highlighted the benefits of the equipment rental industry in improving sustainability. The rental business has intrinsic benefits with regard to sustainability, which deserves great recognition.
ERA decided to work with its 13 national rental associations and IPAF and to make sure that all the rental companies, and especially the SMEs, are aware of the benefits of being sustainable. As a reminder, ERA has around 100 registered members all over Europe, although it represents over 5,000 rental companies thanks to its 13 national rental associations and IPAF members of ERA.
At the same time, Schuttelaar & Partners concluded an audit of European rules and regulations in order to allow ERA to better engage with policy makers. This audit identified an opportunity for ERA to take position in the revision of the Waste Framework Directive and more widely in the new Circular Economy Package planned for the end of 2015. This is where ERA started its advocacy campaign towards the European institutions.
ERA called on the European Union to promote the environment benefits of the rental concept. The concept of rental is of course known from the European authorities but is very often referred to as “leasing” or as “sharing economy” and one of ERA’s objectives is to have rental mentioned as such, since rental is different from both concepts.
The motivation of ERA comes from the 5 principles used in the rental business:
- Shared usage,
- Resource use,
The construction companies and the other customers of the rental industry (industry, agriculture, etc.) can access equipment when required and the centralised ownership leads to a more frequent and therefore more efficient use of the equipment.
Product design that facilitates maintenance and repair has a positive impact on the life-cycle of the equipment and therefore contributes to the circular economy. To improve the reparability of a piece of equipment, the rental business focuses on two issues:
• Building more robust equipment that lowers the number of breakdowns;
• Standardising equipment which is one of the most important issues for the rental industry in the search for cost optimization.
The availability of information on product repair contributes as well to the circular economy. Rental companies being able to maintain and repair equipment effectively and according to users’ specification helps in extending the equipment life-cycle.
The rental companies focus on spare parts management: the increased availability of spare parts improves the reparability of rental equipment.
Lowering resource use in the use phase of the equipment is an important factor in the circular economy. The resource efficiency of equipment, meaning its consumption of water, electricity or fuel, depends on two criteria: the design of the equipment and how it is used.
Product design: rental companies actively search for more sustainable equipment to offer the greenest options to their customers. Large rental companies also, if possible, use their bargaining power to demand their suppliers to invest more in R&D to increase safety and limit/reduce pollution and non-recyclable material in equipment.
Use of the equipment: at the request of their customers, rental companies can provide them with theoretical and practical trainings, which are followed by an evaluation of the operator’s performance in the workplace, in order to enable them to optimize the use of the equipment.
Components of the dismantled construction equipment can be reused.
As re-use is considered to be a form of waste prevention, the rental concept is also closely linked to this concept, which is the preferred option in the waste management hierarchy.
Rental companies take care of their equipment by repairing when it is still possible, recycling when it is at the end of its life cycle or selling it to second hand markets, if it still complies with the regulations.
Recyclability is a pillar of the circular economy that becomes increasingly important in the rental business.
The larger rental companies can also use their bargaining power to demand equipment suppliers to invest more in R&D to limit the use of non-recyclable material and take responsibility for end-of-life equipment by collecting, reusing or recycling.
All those principles are reminded in the Manifesto for the promotion of the sustainable benefits of the rental concept, also used by ERA in its advocacy process towards the European authorities. The Manifesto is available on the ERA website, http://erarental.org/en/publications/sustainability.
Since ERA has started its advocacy works, the reactions of the European authorities have been very positive and supportive of the rental business. As mentioned before, rental was meant by many but leasing was used and promoted in the texts but all of them understand how rental can contribute to a European Circular Economy.
In the report ”Resource efficiency: moving towards a circular economy”, the European Parliament highlights the importance of identifying possible regulatory uncertainties, barriers and/or gaps that can hamper the development of new business models, as the rental one, which are based on resource efficiency. According to ERA, the concept of rental also requires a proper definition and regulation considering its importance in the perspective of saving energy and resources and contributing to a European circular economy.
ERA has recently published its online Sustainability brochure, available at http://sustainability.erarental.org. The brochure presents a dynamic set of best practices on sustainability in the rental industry, categorized according to their role in the supply chain.
The rental companies have the possibility to share more best practices from their own company and to send it to the ERA Secretariat. If the best practice is selected, it will appear in this brochure at the next update and it will be automatically selected as an entry for the Sustainable Business Innovation Award in Rental, one of the 6 awards of the next European Rental Awards, which will be held on 8 June 2016 in Stockholm, during the ERA Convention.