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BRUSSELS: Europe can create an annual net benefit of €1.8 trillion by 2030 if it applies circular economy principles says a new report from the Ellen MacArthur Foundation, produced in conjunction with McKinsey and the Endowment Fund for Environmental Economics and Sustainability (SUN).

The study provides new evidence that a circular economy, enabled by the technology revolution, would allow Europe to grow resource productivity by 3.0 percent annually and generate as much as €0.6 trillion per year by 2030.

In addition circularity would produce €1.2 trillion in non-resource and externality gains, bringing total annual benefits to €1.8 trillion.

Circular economy EuropeIn 2012 the average European used 16 tonnes of primary materials while 60 percent of discarded materials were either landfilled or incinerated and only 40 percent were recycled or reused.

The new report analyzed mobility, food and the built environment and concluded the current linear path in these sectors costs Europe €7.2 trillion a year. Of this, resource costs are €1.8 trillion, household and government expenditure are €3.4 trillion and externalities such as traffic congestion, CO2, pollution and noise are an additional €2.0 trillion.

"The circular economy represents a tremendous opportunity for Europe. With its system-wide perspective, [it] has the potential to help us make better decisions about resource use, design out waste, provide added value for business, and proceed along a secure route to society-wide prosperity and environmental sustainability for future generations. Most importantly, under the right rules, the circular economy can shift the economic mix to increase the number of jobs at the same time," said Philips CEO Frans van Houten.

As the European Commission considers its circular economy strategy, the report authors point out that in 2012 the region lost 95 percent of its primary material and energy value because Europe generally uses materials only once.

"The economy is undergoing profound transformation as the technology revolution reaches scale. This report has shown that by applying circular economy principles we can catalyze this change, achieve a real system shift, and open a new era of growth and development, decoupled from resource constraints," added Ellen MacArthur.

By adopting a circular economy the report claims Europe's GDP would increase by 11 percent to 2030 compared to the current forecast of 4.0 percent; the cost of time lost to congestion would decrease by 16 percent; and CO2 emissions across the three sectors alone would drop 48 percent compared to today.

Commenting on the study, former Deutsche Post (DP) chairman and now DP Foundation and SUN president Klaus Zumwinkel said his organization was very pleased to contribute to one of the most important economic debates in Europe: "The report lies at the heart of SUN's focus: research into the economic opportunity of better environmental stewardship," he added.

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