Publications Eco-Innovation English

The future of Eco-Innovation in Europe -
Opportunities for policy and business

Prof. Dr. Friedrich Schmidt-Bleek [1], Keynote at EUROPE INNOVA MEETING,
Royal Olympic Hotel, Athens, 5th November 2007


The 1st Phase of Protecting the Environment

The first phase of environmental protection in industrial nations started in 1972. It was designed as an add-on to the economy and focused primarily on the tail end of production and consumption cycles, when technical, business and societal decisions had long been made. Its principal purpose was preventing specific dangerous substances from entering the environment.

But there are hundreds of thousands – still "unsuspected" - different kinds of emissions and effluents emanating from the technosphere, and 6 or 10 million potentially dangerous products and services are traded around the world. The megatons of nature entering the metabolism of the world economy are growing constantly.

It may be worth reminding the reader that it is scientifically not possible to observe, simulate or elucidate, let alone quantify, all possible effects of even one single chemical on the millions of different targets in the environment. The implications of this fact seem to be sometimes forgotten during discussions about the value of “certificate” solutions and also, when cost-benefit calculations are recommended for designing economically sensible solutions for environmental problems. Of course one practical and often applied shortcut is to trust Paracelsus, the grandfather of all toxicologists, who stated in the 16th century “dosis facit venum” - the dose makes toxicity. In other words, one can focus on the large material flows first.

In spite of its shortcomings, this policy served – and still serves – important purposes: Enormous progress has been made in environmental analytics and in developing sophisticated technology for recycling, for waste treatment as well as for cleaning up effluents, emissions and soils. This policy has created jobs in industrialized countries for producing and exporting “environmental technologies”. This policy is also behind the efforts to slow-down the emission of CO2 and it has achieved a large scale reduction of CFC’s emissions, it is responsible for the improvement of the air quality in mega-cities as well as the cleaning of waste waters in many industrial countries.

The first phase of environmental protection policy turned out to be very costly, so costly in fact that most countries cannot afford it. It is based on order and command policies to a considerable extent, and it has created an army of bureaucrats for enforcing its application [2].

By design this policy is not preventive. And since it is not based on systems considerations, it is not very helpful for approaching sustainability. It does not concern itself, as an example, with the situation that due to collapsing underground caves originating from coal extraction in the Ruhr Region of Germany, ten thousands of hectares have subsided several meters and would be flooded, if it were not for pumping continuously huge quantities of water away. Sometimes in the future the electricity used for this procedure will surpass the energy extracted and future generations may have to pay forever for the industrialization of Germany.

The 2nd Phase of Protecting the Environment

The focus of the second phase of protecting the environment will have to be very different. It does not replace the first, but it rather enlarges the scope of environmental protection decisively at a net cost that should be far more moderate to society than the first phase.

Whereas the focus of the 1st phase was dealing with selected symptoms, the 2nd phase will be governed by a systems approach, aiming at correcting the root cause for the current incompatibility of the human economy with the laws of nature. Without undertaking this effort, the chances for a wealth generating economy far into the future is in question. Even the survival of humankind on earth may be threatened if we fail to act.

The reasons are these:
The current mode of industrial wealth generation erodes the life-sustaining services of nature as evidenced for example by growing water shortages and soil erosion in important agricultural regions, desertification, climatic change, the decreasing fecundity of sperms and seeds as well as evidenced by the growing incidences of violent catastrophes like hurricanes and floods.

Environmental Services (Services of the ecosphere, Services of nature) means the cost-free and absolutely essential support for life on earth without which humans would not have appeared on planet earth and without which they could not survive. These services include for instance the availability of clean water and air, the formation and maintenance of productive soil and green plants, the protection from dangerous radiation from outer space, they include a high biodiversity, and the propagative power of sperms. Environmental services cannot be generated by technology on any noticeable scale and they are vulnerable to human economic activities. Already today, costly consequences of such activities can be observed, e.g. massive soil erosion, floods, water shortages, loss of species, and climatic changes. FSB

Note: Even if all technical CO2 emissions could be eliminated tomorrow, sustainability would not yet have been achieved. The ecological problems caused by our technical ways of creating wealth are more pervasive. Our obviously parasitic economy must therefore be adjusted so that it can serve human beings in better harmony with nature. For designing the new economic approach, the root cause of the present problems must be identified.

Every dislocation and removal of material from its natural setting disturbs the local dynamic equilibrium of nature and forces adjustments (in most cases unknown to us in kind, size and location), leading in turn to different environmental conditions. The same is true when a natural surface with its biological components is denuded, plowed under or sealed. As these technical encroachments of the earth happen billions of time every day, a growing erosion of environmental services is bound to ensue [3].

The physical root cause for the mismatch of our current wealth production and the maintenance of the life-sustaining services of nature therefore is obviously the production and consumption of enormously resource intensive industrial goods, infrastructures and services.

The enormous resource intensity of industrial goods, infrastructures and services is the physical root cause for the destructive impact of the present economy on the life-sustaining services of nature.
FSB, 2007

For example: On the average, every European consumes 50 tons annually of non-renewable resources. In addition, some 500 tons of water are used per person to run the economy. On the average, only some 2 to 5 % of the originally disturbed environment material is found in our goods at the point of sale, the rest of the resources has fallen by the wayside as waste on the way to the point of sale. Only a very small part of the biomass we grow finds its way into foodstuff and other needed things. For generating ICT only 1/300 of the material input from cradle to the point of sale is found in the equipment. It takes 1000 liter of water to produce one kg of bread and 30 tons of water for the production of 1 kg of raw cotton in some cotton exporting countries. In addition, many of the products we use have very big appetites for material and energy in order to give us service. Note: There is no service provided in the technosphere without putting goods and infrastructures to work.

In sum: The ecological rucksack of our products is obviously enormous. In other words, the resource productivity of our economy is dismally low [4]. Many published practical examples demonstrate, however, that this is not necessary from an engineering point of view.

Now let us turn to the economic root cause for the mismatch between our current wealth production and the maintenance of the life-sustaining services of nature.

Traditionally, the economic assumption has been that there exists no limit to natural resources and that where a scarcity arose, technology could fill the gap. Material growth, in other words, could be endless. For a number of reasons [5], including the high costs of labor and subsidies, the price for natural resources is such that any serious saving seems hardly worthwhile. In fact, it has been shown that in Germany 20% and more of the resource costs in the production sector could be saved without negatively affecting the output. This amounts to the staggering sum of more than 170 billion Euro per annum, or 5000 Euro yearly per household [6] in Germany, equivalent to more than 5 times the daily expenses of 20% of the world population. In addition, about one million new jobs could be created in Germany if these savings would be realized

Given the fact that Germany has to import most natural resources she consumes, and given the fact that the German economy depends to a high degree upon exporting finished goods, there seems little reason to believe in the seriousness of frequent pronouncements by decision makers in high places extolling their concerns about sustainability – until such time when convincing efforts are underway for no longer wasting resources.

From a natural science point of view the traditional "endless growth assumption" is astounding because the planet earth is a closed system, except for incoming solar radiation, which in fact is barely used to date as source for technical energy while massive material streams are burned up to drive the system. It has also been shown that if the material consumption per person in OECD countries would be globalized, more than two planets earth would be required as resource base. Already now the world prices of resources are rising.

The economic root cause for the continued destruction of the life-sustaining services of nature is the relatively low prices of natural resources that do not include the environmental consequences of their consumption.
FSB, 2007

From "environmental technology" to producing dematerialized goods and services

One of the consequences of the above scenario is that the European industry should undertake massive efforts to innovate processes, goods and services that consume as little natural resources as possible while yielding end-use satisfaction equal or better than is common today. Another consequence is that the future export power of the EU will critically depend upon her success in decreasing the resource consumption from cradle to grave per unit price [kg/Euro] [7].

Taking the above considerations into account, the EU Eco-Innovation Panel has adopted the following definition for eco-innovation in 2006 [8]:

"Eco-Innovation means the creation of novel and competitively priced goods, processes, systems, services, and procedures that can satisfy human needs and bring quality of life to all people with a life-cycle-wide minimal use of natural resources (material including energy, and surface area) per unit output, and a minimal release of toxic substances."
EU Eco-Innovation Panel

Factor 10 and More

Many experts now agree that at least a tenfold improvement of the resource productivity of present-day artifacts is both, ecologically necessary as well as technically feasible – without jeopardizing end-use satisfaction. Such an improvement will not only preserve natural resources for future generations, it will moreover have as a “side-effect” a ca. three- to fivefold decrease in energy demand [9].


1. The generation of wealth must be de-coupled from the use of natural resources (material and surface)
Because the globalization of western life styles demands the availability of at least two planets earth as resource base, and because the ecological risk-threshold has already been surpassed, the use of natural resources must be minimized (Factor 10 plus). Technically this is achievable without jeopardizing end-use satisfaction [10].

The key for improving the protection of the services of nature is increasing dramatically the production and consumption of dematerialized goods and services.
FSB, 2007

2. Incentives must be strengthened for consuming the most dematerialized foodstuff, industrial goods, and services.
The key driver for economic decision-making is the market price of products and services. Ecologically sensible consumption could best be achieved, if market prices would speak “the ecological truth”, that is if those functionally equivalent foodstuffs, industrial goods and services that require the lowest resource input of natural resources from cradle to grave would carry the lowest price tags [MIPS-labels [11]].

For this to come about, the prices of resources must be increased, e.g. by cost-neutrally shifting taxes and levies from labor to natural resources and let the market drive the competitive process of resources saving. Such a move requires adjusting the present economic framework conditions by governments.

Not only would resources become worth saving, but waste production would also be discouraged through the market, and labor would become less expensive, inviting the creation of new jobs.

There is a host of additional policy options to support the saving of natural resources: e.g. Reviewing all subsidies with respect to their support of resource consumption (including agricultural subsidies), reviewing the freedom of moving and investing capital world-wide at will, changing the short term planning of industrial management, scrutinizing EU technical safety standards and norms, considering the environmental implications of personal property and property use rights etc. ("Carnoules potentials" [12]).

The highway toward sustainability has been reached once consumer’s preferences turn to dematerialized goods and services because it is profitable to do so.
FSB, 20073.

Boosting Eco-Innovatio

Today, the intensity of consumption of natural resources is directly proportional to the innovation capacity in Member countries of the EU: The more per capita innovation in a country, the higher its per capita consumption of non- renewable natural resources [13].

With only few exceptions (e.g. mobile phone), pervasive technical and social changes require 10 to 20 years to develop and penetrate the market. For this reason, eco-innovation must be supported quickly and generously

Innovating for sustainability does not mean meeting present demands by "ecologizing" technical approaches (e.g. using "bio-diesel" instead of diesel derived from fossil energy carriers) but it requires creating prosperity, conveniences (like mobility) and safety for humankind on the system level with an overall minimum of natural resources – from cradle to grave (e. g. using enzymes that allow cleaning cloth at room temperature, or better still: making technical cleaning superfluous by creating self-cleaning surfaces).

Reaching sustainability requires the innovation of advanced technology and the creation of dematerialized processes, systems, services, and procedures as defined by the EU Eco-Innovation Panel.
FSB, 2007

4. Setting of Goals
Without setting goals on a time-line for the ecological, economic and social dimensions of sustainability, it would seem impossible to design approaches for reaching sustainability.

As for dematerialization in order to protect the services of nature, factor 10 within 30 to 40 years is believed to be a realistic goal.

Approaching sustainability requires knowing what goals to pursue. Society must therefore decide what it wishes to have achieved in 10, 20, and 50 years in the areas of environmental protection, social cohesion and economic achievements.
FSB, 2007

5. Indicators
The purpose of indicators is to guide developments without the need to continuously analyzing complex situations. They allow measuring progress toward agreed goals as well as comparing one’s performance with other countries, competitors or households.

A small set of directionally true, non-contradictory and practicable indicators must be available for the three dimensions of sustainability (economic, social and ecological). They should be internationally acknowledged.

For instance, it is ecologically counterproductive to demand increasing the domestic consumption for the sake of creating jobs as long as goods and services are as resource intensive as they are today

From a sustainability point of view, GNP has proven to be a rather misleading indicator for the wellbeing of an economy because it does not take into consideration the environmental costs of producing material wealth nor does it indicate the social reality within a society.

For the ecological dimension, the "Ecological rucksack of a good in kg per Euro price on the market [kg/Euro]", the "Material Input Pro unit extractable value (Service) – [MIPS]", and "Total material Requirement – [TMR]" are such "decoupling indicators".

In order to reliably protect the services of nature, a directionally true and non-contradictory set of key ecological, social and economic indicators must be agreed to.
FSB, 2007

6. Public Procurement Policies
Governments and public administrations in EU Member states typically acquire 20 % or more of the end market (products and services). However, at this time no procurement procedures are in place for the consumption of items with superior resource productivity. By giving preference to dematerialized goods and services, governments and administrations could serve as an example to all consumers and boost the manufacturing of “low-MIPS” goods and services for the domestic market.

Public procurement procedures giving preference to dematerialized goods and services can improve their widespread availability and consumption.
FSB, 2007


7. Information
It has been shown that in Germany some 20 % and more of the expenditures of SME’s for resources used as inputs could be saved on the average without negatively affecting outputs. This amounts to a potential total saving of more than 170 billion Euro per year. Additionally, 1 million new jobs could be created by this profitable development and moreover the income of governments could be increased by up to 40 billion Euro annually.

The savings of some 170 billion Euro (and more in the future due to increasing resource costs) can be realized on a permanent basis, whereas the necessary investments can be typically recovered in one to two years. In addition, Germany’s dependence on imports from potentially unfriendly countries could be lessened.

Consumers in the EU still spend more money on resources like water, electricity and fossil fuels than is necessary for maintaining their standard of living

Intensive public information campaigns and a requirement for installing automatic control features in equipment would therefore seem in order for realizing these potential net savings while additionally supporting the dematerialization of the economy as a whole.

Binding requirements for installing control functions in consumer goods and a sustained public campaigns to inform entrepreneurs and consumers about potential net savings of resources would seem to be an important investment for boosting sustainable consumption.
FSB, 2007

8. Education
At the time of finishing high school, young adults in the United States have been exposed to 350 000 advertisement spots extolling the virtue of consuming goods and services that in fact undermine a sustainable future because of their extreme resource intensity. It would seem a justifiable assumption that children in other countries are similarly exposed to excessive and ecologically damaging advertisement

Educating all citizens - starting at kindergarten age - about the meaning, the vital importance and the potential of everyone to support reaching sustainability is a key to a future with a future. This requires appropriate teaching materials explaining details from a systems point of view, including on the subject of eco-innovation. The Wuppertal Institute in Germany is currently generating such material for a movement called “Courage for Sustainability”, initiated by a former German CEO of a global enterprise [14].

Sustaining a sustainable move toward protecting the services of nature requires intensive education and training of all citizens for many years to come in order to change consumption habits and feelings about responsibilities, material wealth, happiness and prosperity.
FSB, 2007



[1] Schmidt-Bleek is called by colleagues “The father of dematerialization” because he translated the general idea of sustainability into practical advice for technical innovation and adjusting the economic framework to meet the needs of the future. This presentation is largely based on the content of Schmidt-Bleeks newest book entitled: ”Nutzen wir die Erde richtig?” (Do we use the earth wisely?), Fischer, 2006 as well as numerous books published by him since 1993 on the subject of approaching sustainability with profits.

[2] Schmidt-Bleek has been responsible for designing and applying laws in the Federal Republic of Germany and he has served as leader of the OECD Chemicals Division in Paris.

[3] F. Schmidt-Bleek, “Wieviel Umwelt braucht der Mensch ?, MIPS, das Mass fuer oekologisches Wirtschaften” Birkhaeuser, 1993. Available in Japanese, Chinese and Finnish editions. English version can be downloaded from

[4] F. Schmidt-Bleek, “Der oekologische Rucksack”, Hirzel 2004

[5] B. Meyer, “Wie muss die Wirtschaft umgebaut werden? Perspektiven einer nachhaltigen Entwicklung”, (How must we rebuild our economy? Perspectives of a sustainable development), Fischer, December 2007

[6] Hartmut Fischer et. al., “Wachstum und Beschäftigungsimpulse rentabler Materialeinsparungen”, Wirtschaftsdienst, Issue 4, April 2004.

[7] W. R. Stahel, “The Performance Economy”, palgrave Macmillan, 2006

[8] F. Schmidt-Bleek, “Nutzen wir die Erde richtig?”, Fischer, 2006

[9] F. Schmidt-Bleek, “Wieviel Umwelt braucht der Mensch ?, MIPS, das Mass fuer oekologisches Wirtschaften” Birkhaeuser, 1993.

[10] There is a wealth of published information on practical examples as well as descriptions of how to dematerialize products, based on industrial practice (Consult; see, for instance F. Schmidt-Bleek, “Eco-Innovation” Austrian Chamber of Commerce, WIFI 303, 1999)

[11] MIPS = Material Input (from cradle to grave) Per unit Service (or value)

[12] See literature quoted in ref. 1.

[13] See lit ref 1 quoted above