Joint Committee on Environment and Climate Action debate -
Thursday, 21 Oct 2021

General Scheme of the Circular Economy Bill 2021: Discussion (Resumed)

Chairman

The purpose of this meeting is to continue with our pre-legislative scrutiny of the general scheme of the circular economy Bill. I welcome Dr. Geraldine Brennan, head of circular economy at Irish Manufacturing Research, who is contributing on behalf of CIRCULÉIRE, the National Platform for Circular Manufacturing. I thank her for appearing before the committee to discuss the general scheme of the circular economy Bill.

I remind witnesses of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that witnesses comply with any such direction.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I also remind members that they are only allowed to participate in this meeting if they are physically located on the Leinster House complex. In this regard, I ask all members, prior to making their contributions, to confirm that they are on the grounds of the Leinster House campus.

I invite Dr. Brennan to make her opening statement.

Dr. Geraldine Brennan

I thank the Chair and members for the opportunity to present evidence today on behalf of CIRCULÉIRE, the National Platform for Circular Manufacturing. It is the first national, industry-led public-private partnership dedicated to accelerating the transition to the net-zero carbon circular economy and also Ireland’s first dedicated EU circular economy hotspot. We have been in operation since 2020 and have a growing membership base. Starting with 25 founding members, we now have 37 industry partners. Through our network activities, from our innovation fund to our annual thematic working groups and new venture programme, we are currently supporting over 80 businesses and organisations in Ireland to work towards new circular models for their business, supply chain or wider society, and are continuing to grow the network. CIRCULÉIRE’s industry members welcome the placing of the circular economy strategy on a statutory footing through the circular economy Bill and the evolution of the environment fund into a circular economy fund.

The Government’s ambition to transition to a circular economy and become a leader in Europe by 2050 is matched by the willingness of industry to engage in this transformation journey. This is illustrated by CIRCULÉIRE’s network of cross-sectoral manufacturing companies and what we refer to as "second life enablers". These are microenterprise SMEs and multinationals alike ranging throughout the country. They include Novelplast and Gannon Eco in Meath, Automatic Plastics in Wicklow, Farrell Furniture in Louth; pharmaceutical companies like Hovione; ICT asset management companies; household names like Kerry Food and Coca-Cola Ireland; and extended producer responsibility schemes such as WEEE Ireland, the European Recycling Platform and Repak, which represent thousands of Irish businesses

All our members have committed to understanding what the circular economy means for their business and how to overcome key barriers to implementation to deliver significant reductions in both CO2 emissions and waste over the lifespan of this pilot initiative, which currently runs until the end of 2022. The diversity of our network highlights that no company can transition to the circular economy on its own. Embedding circularity in the Irish economy demands a collective effort by Irish society, industry, policymakers, academia, the third sector and citizens alike.

As the secretariat of CIRCULÉIRE, Irish Manufacturing Research, an Enterprise Ireland and IDA Ireland supported technology centre, commends the cross-departmental dialogues in recent years among the Departments of the Environment, Climate and Communications, Agriculture, Food and the Marine and Enterprise, Trade and Employment, which have laid the foundation for placing climate action, circular economy and the bioeconomy at the heart of Ireland’s economic development model. We also commend the Government on driving forward with a green recovery, with circular economy at its heart as we navigate the road out of the Covid-19 pandemic. This positive momentum is illustrated by the centrality of circular economy in the national climate action plan, the waste action plan for a circular economy in 2020, the all-of-government circular economy strategy with a commitment to develop key sectoral roadmaps, and the circular economy Bill that we are here to discuss.

It is notable that the circular economy is explicitly referenced 39 times in the recently published National Development Plan 2021-2030 and that €98 million was allocated to the 2022 budget of the Department of the Environment, Climate and Communications to support this transition. It is an exciting time in circular economy development in Ireland and the CIRCULÉIRE network is a positive example of moving circular economy ideation into reality. For example, we have supported founding members' internal capacity building on their journey from linear to circular business models, through knowledge sharing between our networks and a range of actors throughout the innovation ecosystem, from regional development to academia and third sector, through our annual thematic working groups, which have ranged from topics on circular bioeconomy to circular procurement to circular packaging and by de-risking circular economy models through supporting ideation and proposal development for multipartner innovation pilots funded through our fund.

Some examples we have funded to date are the circular economy skill set initiative, which is an industry-accredited and standards-based repair training programme led by WEEE Ireland in collaboration with IBEC’s White Goods Association and Fast-track into IT, FIT. We have also funded the #CEPowerofMany demonstrator that aims to create a closed-loop system in the construction sector led by Freefoam Plastics in collaboration with Mulligan Guttering, Glenveagh Homes and Shabra Recycling. There are others. Another key area of our work is piloting the first late-stage accelerator dedicated to supporting circular economy ventures to scale in collaboration with Tangent and a recent alumni The ZeroNet, which won the UK's top Circular Economy Project of the Year award in 2021.

CIRCULÉIRE’s members all agree that circular economy needs to be embraced and are committed to implementation, but there is a significant degree of complexity in implementing circularity at scale. This is relates to the vast regulatory landscape; redesigning products and business models without clear marketplaces existing; the need to establish enabling infrastructure both physical and digital; the requirement for internal capacity building to support the culture change and mindset change required to embrace this new model; and the need to expand capabilities and recruitment of new skills. The circular economy does not just sit with compliance and waste management; it is across the entire organisation and value chain. All of these activities require substantial upfront investment with medium- to longer-term returns.

Our members are committed to getting things done but equally fearful in the absence of clarity of what the regulatory environment will look like and what markets will exist in Ireland for circular product-service systems. One member brought this to life by describing the importance of “de-risking the initial toe-in-the water pilots”, stating further “... even if there is an opportunity related to circular economy in the absence of a defined market - particularly for SMEs - any investment is fundamentally a gamble...”. Our members are part of CIRCULÉIRE because it gives them confidence that they are heading in the right direction and this initiative is viewed as enabling and supporting the derisking of this transformation. In this context, CIRCULÉIRE’s members welcome a more hands-on regulatory approach, with flexibility for research and development and greater regulatory certainty via clearer regulatory frameworks, citing the success of extended producer responsibility, EPR, schemes for WEEE Ireland as replicable for other sectors. Members also welcome supports to create marketplaces, the embedding of circularity criteria into existing public funding calls and developing specific capital expenditure funds, and more dialogue between public bodies, third sector organisations, industry, and citizens.

Finally, in this context, it is worth highlighting comparative investment by other EU nation states, for example ZeroWaste Scotland, which has created a £18 million grant fund for SMEs. The Netherlands, which is regarded a leader in the EU for circularity, announced at our launch last year that it was committing €20 million for knowledge and capacity-building initiatives.

To conclude, circular economy is a key tool in the broader climate action, bio-economy and just transition agendas. Scaling up implementation of circularity in Ireland represents a significant economic opportunity, estimated at €2 billion annually. Capitalising on this requires closing the circular economy knowledge, capacity building and implementation gaps. We have started this journey with manufacturers and their supply chains with the objective of demystifying, derisking, and role modelling implementation of circular models, but there is much more work to be done. Our members have expressed the need for regulatory certainty for industry, sectoral roadmaps with clear targets and time lines, as well as a supportive enabling environment with training, guidance and funding supports that can leverage Ireland's ambition to engage in the circular economy and translate this into sustainable industrial action in Ireland.

I thank the committee again for the opportunity to provide evidence of what a public-private partnership pilot can deliver in capacity building and innovation demonstrations towards implementing a more circular economy in Ireland and I look forward to addressing the members' questions.

Chairman

I thank Dr. Brennan for her statement. Can I get agreement from members that we will limit questions to two minutes, and we will certainly come back for second or third rounds if there is time? Agreed.

I will go first. I happened to be speaking with some senior people in the J&J group this week on a different matter. They operate one of the largest contact lenses manufacturing facilities in the world, and it happens to be in my constituency in Limerick city. They said that they are a significant participant in the CIRCULÉIRE programme and detailed the many measures they are taking in the facility in Limerick to reduce waste flows and to close their systems. Is this an anomaly or is there generally good corporate participation in the programme? Are companies recognising the need to be leaders in the area?

Dr. Geraldine Brennan

With regard to our network and the journey we started to form CIRCULÉIRE, this activity started in 2019 when we ran stakeholder engagement events with industry, policymakers, the third sector, and academia. At the end of 2019 we started off with 20 companies. Then Covid hit. We had a big ambition to grow the network and double it every year. In answer to the Chairman's question on corporate engagement, the awareness about the circular economy is ever-growing in an Irish context. Irish manufacturing went about the stakeholder engagement process in 2019 to understand the need for a network such as CIRCULÉIRE because in some of our sustainability dialogues in 2018, Irish Manufacturing Research, IMR, members were asking "What is this circular economy and what does it mean for our business?" In a roundabout way I am trying to articulate that with corporate engagement we now have 37 members. They are a range of actors because a circular economy is not something that can be addressed just by manufacturers; they need to work in collaboration with their supply chains. Yes, there is corporate engagement. The chairman mentioned J&J Vision Care, which is in the medical-tech environment. We also have DePuy Synthes and we have actors from different sectors in the manufacturing and broader supply chains. The nature of CIRCULÉIRE is varied. That said, I can give examples of other entities such as Kingspan and Cisco which are not part of CIRCULÉIRE because they have already embraced this agenda and have said, "We understand what you are seeking to do and we can definitely feed insights into your members but we do not need you because we are already doing it." We have a mixed bag of actors at different levels of maturity with regard to their journey towards a circular business model and what role they will play. Many companies are starting to realise that they can get disrupted if they do not understand what this means for their business. All sites will engage with the Government signals and the momentum of the EU, especially from multinationals because this is not unique to Ireland it is a European issue. I am very positive about engagement, and around trying to grapple with what this means for business in the next five, ten, 15 or 20 years.

Chairman

With respect to the scheme before us, is Dr. Brennan seeing enough in there that will drive industry and manufacturing in that direction, or is that more for the action plan as opposed to the framework legislation?

Dr. Geraldine Brennan

Will the Chairman clarify if by "scheme" he means the plan ahead and the Bill that is coming?

Chairman

Yes.

Dr. Geraldine Brennan

We are working with some of those who are first movers. There are trying to get their heads around it at the moment. We have only been operational for 18 months and as an initiative we are still quite young. While this is driving momentum, we have also been having conversations such as network coffee meetings, thematic working groups, quarterly network meetings, conversations, dialogue, awareness and training, and webinar hosting, which is all raising awareness and fostering that internal dialogue for key champions initially, and then further into the business. The reason our members welcome the circular economy strategy and the Bill is they need regulatory certainty to fundamentally commit to the investment required. As I highlighted in my opening statement the quote from the member who said that “the initial toe-in-the water pilots” are challenging, even if they understand that in the medium to long term there is going to be benefits around resilience, resource price volatility, and better customer engagement because of the nature of the relationship changing from a single transaction to repeat business. They are not unaware that a circular economy will bring value to them in the future, but right now without a clearer literary framework there is a lot of risk. Things can also fail and go wrong. What we hear from them is that the CIRCULÉIRE fund, the economy innovation grant scheme and the EPA's green enterprise scheme, which is directed towards a circular economy, all help them to test and pilot models and learn from that process, and it gives them the confidence to go and roll it out.

Chairman

I thank Dr. Brennan for that.

Deputy Richard Bruton

I thank Dr. Brennan for her presentation and welcome what she is doing. In particular, I welcome her emphasis on the fact that the circular economy is not an offshoot or sideshoot of the waste debate. That is an important point and I would be interested to hear just how central she believes that should be. The circular economy embraces issues such as climate change and biodiversity, as well as end-of-life and other issues. It should be the central spine of a lot of our attempts to make our approaches more sustainable. In that context, what does she mean by "regulatory certainty"? Some people feel that, as regards regulating materials, repairability and end-of-life obligations, we do not know the regulatory impact yet. How can regulatory certainty be provided in a relatively underdeveloped world, particularly when getting into individual sectors? A lot of work has been done around food but maybe not in other sectors.

Does Dr. Brennan believe the Bill should go beyond just stating that we need a strategy for the circular economy? Should it put some sort of obligation on sectors to assess design principles and packaging principles and oblige the public sector to adopt and apply public procurement principles, or at this stage, as the Bill is now drafted, should it be left in general terms to evolve over time? I would also be interested in her comments on the issue of targets. The Bill makes provision for the introduction of reduce and repair targets. Does her organisation have views on what shape such targets should take? In respect of the use of a fund under this legislation, does she think the best way to proceed is by way of competitive calls and letting the best idea win, or should more structured grant schemes, sports schemes and so on be considered?

Chairman

There are quite a few questions there.

Dr. Geraldine Brennan

I will start at the beginning and work my way through. With regard to my positioning in the opening statement around the fact that the circular economy is a key tool in climate action, bioeconomy and the just transition, I need to be very mindful, while I am here, that I wear two hats. I have come here and given an opening statement on behalf of the industry members of CIRCULÉIRE but as the head of circular economy in IMR, I also have my own perspective. For clarity, I will try to indicate which perspective I am giving.

With regard to the broader umbrella of sustainability and seeking to achieve climate action, circularity, biodiversity, bioeconomy and just transition, from my perspective as someone who has worked in this field, I see them as being interconnected. However, when it comes to measurement, verification and reporting, there is the potential that if we try to make the circular economy do too much - meaning address biodiversity - we could make it difficult. The circular economy is hard to measure by just looking at resources and using carbon as another indicator to rectify its impacts. That said, I am not saying that we do not need to take care of biodiversity when it comes to looking at the bioeconomy. This is tricky stuff when it comes to setting targets and trying to make sure that this is operationable. If I put my industry member hat on, most organisations recognise that the circular economy is a piece of this climate action agenda, not a replacement for it.

At the same time, with regard to the Deputy's comment on making the circular economy a central spine, that is in the action plan. I agree that fundamental parts of this agenda are very important. In terms of regulatory certainty, I take his point that it is an ask of the industry in an area that it and policymakers are learning about and there is a lot of work still to do.

On whether the Bill should go beyond the need for a strategy and try to incorporate obligations for sectors and design principles, given the complexity, that may be very challenging to do. In light of trying to take the first step to keep evolving, in my personal capacity I would see including the strategy, with industry, citizens and public bodies learning as we go, as a more pragmatic approach. Following up on the Department's contributions at earlier committee meetings, we do not have a material flow analysis of the economy. We do not have all the baseline information and that means that setting targets that we are clear we are going to meet is challenging.

With regard to targets for reuse and repair, I would add the concept of remanufacturing, in light of CIRCULÉIRE's emphasis on manufacturers. While we have a small manufacturing base in Ireland and we import many products, there is an opportunity to effectively set up repair and remanufacturing. The distinction between repair and remanufacturing is that from a consumer perspective, remanufactured products are guaranteed as new with a warranty as a new product. There is a role for both repair warranties and remanufacturing warranties. Understanding what is possible based on the make-up of products are manufactured in Ireland versus those that are imported and the infrastructure set up to keep them in use in the economy is part of that conversation. That also involves looking at different sectors with those sectors and other actors to understand how we can set up ecosystems that include social enterprise and industry accredited repairers, remanufacturers and so on.

As to funding under this legislation and competitive calls or a structured grant scheme, ultimately it is about looking at the different needs of the sectors. I would not have the answer outright and I would not want to speak on behalf of my sector with regard to this. However, we have found through CIRCULÉIRE that there is a need for SMEs, and sometimes even multinationals, to get support to understand how to write a grant funding application. That is what IMR does for our bread and butter but we normally bring industry partners in. The point of CIRCULÉIRE's innovation fund is that we want industries to have skin in the game. We want this to be fundamental to their corporate strategy in order for them to lead this demonstration. I refer to industry members such as WEEE Ireland, the White Goods Association and FIT. WEEE Ireland and IBEC are leading that demonstration in the context of the circular economy power of many in the construction sector. The roofline manufacturer, Freefoam Plastics, is leading that demonstration and taking its entire supply chain with it. The support needed to do that versus be an industry partner in some sort of demonstration are very different in terms of the internal capacities and capabilities. The other piece is the need for regional demonstrators to understand and share learnings. One of the outcomes of the OECD's policy dialogue with the Department and other stakeholders over the past number of months was basically that while the circular economy is being implemented in Ireland, it is fragmented so it is difficult for insights to be shared among all these different projects and activities. If there is a way to put structure in to create regional activities, that would add value to the process. I hope I have addressed those points.

Chairman

Is Deputy Bruton happy with that?

Deputy Richard Bruton

I am very happy with that reply. The one thing I would press Dr. Brennan on is that if we do not start to institute some requirement on sectors to look at design principles or packaging principles or whatever, even if it is only on the very loose basis of comply or explain, that it is not a stringent regulatory obligation. CIRCULÉIRE has 25 members out of God knows how many enterprises in the country that presumably have not come up to the starting line on this. If we do not put something like that into the legislation how will the momentum be built to do the material flow analysis in order to do the exploration of the potential of different sectors and so on?

Dr. Geraldine Brennan

I take the Deputy's point.

With regard to those targets, it is again a matter of how they are framed. To go back to my opening statement, the industry members want a dialogue. As the Deputy says, it is a matter of complying or explaining but they want an environment where they are also supported to address those targets. I take the Deputy's point but it is fair to say that, with regard to driving momentum, targets that focus the mind can always help. Someone referred to the European Union's policy in an IBEC webinar with industry recently and said that a regulatory tsunami was coming down the tracks for industry. A lot of industry actors do not have regulatory departments. They do not have people to unpack the policies. With regard to engagement in the circular economy strategy, engaging with CIRCULÉIRE would have been the first time some of our members had engaged in a policy dialogue. Whichever way those carrots and sticks are used, there needs to be a supportive environment to incentivise and maintain that momentum.

Senator John McGahon

I thank Dr. Brennan for her engagement this morning. It has been excellent so far and it is clear that she has a very in-depth knowledge of this area. It is a pleasure to listen to her. I hear what she is saying about the lack of regulatory certainty. I understand the lack of clarity and I hear what she is saying. I also understand that hers is a very new organisation. This is a new concept and many people are finding their way for the first time.

In the conclusion of her opening statement, Dr. Brennan mentioned closing the knowledge gap as regards the circular economy for the public and for businesses. She mentioned that things like sharing insights could work. Are there any two or three big key things we could do to close that information gap about the circular economy for people in this country? I know it is a big question but does she have an answer off the top of her head?

Dr. Brennan mentioned some local jobs. I saw that County Louth, my part of the world, was mentioned. Could the transition to a circular economy aid with the creation of local employment in particular?

In Dr. Brennan's view, what is the current understanding of the circular economy in Ireland? To what extent are manufacturers and businesses willing to engage in it? Are many businesses still a bit wary and scared of getting involved because of the lack of experience Dr. Brennan mentioned or the lack of someone to come along to tell businesses exactly what they need to do and how to fill in these funding applications? Is it the case that people want to engage but are just fearful of the big unknown? What is the first piece of advice Dr. Brennan would give to a manufacturing company or other businesses coming to her today about trying to implement some form of circularity in their business structures?

Dr. Geraldine Brennan

I will start at the beginning. With regard to what I referred to as closing the knowledge and awareness gap in Ireland, the big things are starting to be done. For example, there are platforms like MyWaste.ie. I know we have discussed that the circular economy is about more than just waste but, at the same time, from a household perspective, that can be the entry point. Repair My Stuff is another example. This is a collaboration between actors such as extended producer responsibility schemes, local authorities, the Department of the Environment, Climate and Communications and the Environmental Protection Agency. Those kinds of knowledge portals help people who search for "circular economy", "repairing" or "Ireland" on Google. They come up and are a way to start investigating those things. That is really helpful. There are also campaigns on the radio or in other media. There is no silver bullet with regard to creating awareness about anything in society.

Again, embedding the idea of the circular economy in the curriculum is important. The Ellen MacArthur Foundation in the UK has a whole load of resources for teachers. There is an opportunity for teachers to embrace this. As part of CIRCULÉIRE's outreach activity, in November we are hosting transition year students at Irish Manufacturing Research's facility in Mullingar. The task they have been given is to communicate what the circular economy means for their schools. They will do a video. A multifaceted approach is needed rather than a single thing. It is about embedding this in a range of different ways.

In order to support industry, we have created Ireland's first open-access circular economy knowledge library. There is a great deal of information out there. If you put "circular economy" into Google, you will get 2 million hits. If you are new to the concept, it can be overwhelming to try to find the information that is relevant to you and that can help you. As we roll out our supports to industry, we are coming across case studies, sectoral reports and policy documents from other jurisdictions. They are there so that you know this is a good place to start if you are looking for the best - and I mean "best" in inverted commas - content.

With regard to local job creation, the circular economy can deliver in that space in two ways. One is that if you are ultimately trying to create material substitutes from production residues, you are creating the potential for more regionalised, localised supply chains. That, in turn, creates the potential for more jobs. The circular economy also creates the potential for jobs in tertiary services like repair services. The circular economy skill set initiative being piloted at the moment, which I highlighted in my opening statement, is about creating a training programme through the education and training boards to allow people to upskill with regard to repair. It also includes a work placement element. While this is being driven by industry and industry will want its own accredited repair technicians, there will ultimately be independent accredited technicians. This creates an opportunity for other people to access and be a part of this. As I highlighted in my earlier comments, it is about a multifaceted approach to how industry can work with social enterprise to deliver repair and manufacturing infrastructure to keep materials, components and products in use in the economy.

With regard to the current understanding of the circular economy within industry, IBEC and the EPA launched a survey of IBEC members at the end of 2019. I cannot remember the details but I can send them on to the committee afterwards. I will follow up with the statistics but there was still quite a low level of awareness among Irish CEOs. However, my experience through CIRCULÉIRE and its activities is that with the publication of the climate action plan in 2019, the waste action plan for a circular economy and the pre-consultation on the circular economy strategy and associated Bill, this conversation is proliferating everywhere. There are webinars. There is a great deal of activity. When I joined Irish Manufacturing Research, there was very little under way as regards the circular economy. There were no jobs in that area. From my perspective, this dialogue has exploded in Ireland over the last two or three years.

The Senator's last question was on the first piece of advice we give to businesses when they come through our doors. One of the things we do, and have done with our founding members, is to ask companies to assess their baseline impact. If you do not know and are not measuring your impact, how can you know if you have improved? There is a diversity with regard to what is measured and what is not, depending on existing regulatory requirements, whether an organisation is digital or still paper-based and whether information is available. It is a very poignant way to start this conversation. You need to know what your impact is if you do not know already. If you do know, are you really implementing the circular economy? Sometimes companies are but they are not used to some of the jargon. For example, they may do recycling, but that is recycling not the circular economy.

We take them on a journey. We tell them to start by measuring and ascertaining a baseline. We have developed a self-assessment capability toolkit which our members can use to reflect on their current capabilities and their target capabilities across a range of dimensions so that they can then start that internal dialogue. Ultimately, we recommend and undertake an in-depth circularity assessment on-site. With regard to the likes of Visioncare, which was mentioned, we walk the site and look for examples of structural waste. We then come back with a register of opportunities. We say that this is what can be done with the companies' waste. They might have to make an Article 27 or Article 28 application but there is value in the resource. When I refer to waste, I refer to it in the broadest sense. I mean underutilised capacity such as machines that are not being used. Again, this can be complicated when it comes to insurance, but can a computer numerical control, CNC, machine be rented out to another smaller enterprise for it to use?

It is very complicated when it comes to insurance but, effectively, that is an asset that is wasted even though it is not waste. Then we go on and develop that circular register of opportunities and action plan.

We emphasise the importance of collaborating with others. As I said in the opening statement, the circular economy is not something you can do by yourself. It is necessary to find parts of the supply chain that are willing to experiment with you to figure it out and, as in the examples of Freefoam Plastics, Glenveagh Homes, Mulligan Guttering Limited and Shabra Recycling, to try to create a take-back scheme for all the materials that go to six sites of Glenveagh Homes, which is packaging material and the plastics, and then see what the potential is for rolling that out across other materials or other practices. To wrap this piece up, one of the reasons and the business case for creating CIRCULÉIRE was that we needed examples of Irish-use cases and what worked and what did not. There is plenty of best practice but it does not always niche naturally or automatically replicate for different reasons. Until one tries, one does not know what those reasons are.

Chairman

They were comprehensive questions and very comprehensive answers. I look forward to reading the transcript of the meeting as there is so much interesting information being given to us.

Senator Pauline O'Reilly

I thank Dr. Brennan. She mentioned insurance, which is something we discussed last week. I am coming from the perspective of volunteers who organise things that require insurance. It is a real difficulty in respect of the circular economy, as I see it. Dr. Brennan might explain, from her point of view, what she believes are the financial barriers for companies and how we can overcome them. Is there something we could put into this Bill? Apart from the Bill, what do the Government and the country need to do to ensure all the financial barriers are overcome?

Dr. Brennan mentioned, either in her opening statement or in response to Deputy Bruton, the importance of regulatory certainty for companies. Will she expand on that? It is an important and interesting point when we are looking at new investment into Ireland. What does that mean for companies? Why is regulatory certainty so important? I can probably anticipate what the answer will be, but it is important to have it on the record. When it comes to maximising profit, as most companies are required to do, how does the circular economy fit into that? It becomes important to have things in legislation when companies are trying to overcome that necessity of maximising profit, and how does that fit into a circular economy for the country?

Dr. Geraldine Brennan

They are big questions. As I said earlier, I have to be mindful of when I am speaking on behalf of CIRCULÉIRE industry members, based on the dialogues we have had and their feeding into the opening statement that we developed for coming here today, and of when I am speaking based on my experience. The financial barriers will differ according to the different sectors. Even though ours is a manufacturing platform, we work across food and drinks, plastics, automotive, medical devices, chemicals, pharmaceuticals and the group that we cluster together as the second life enablers. They will have different pinch points with regard to what the financial barriers are, so it is challenging to speak about the financial barriers in a general sense.

One of the things that many small and medium enterprises, SMEs, say, and I am speaking about SMEs rather than a sector, is that the compliance burden, regardless of any new compliance, is already substantial. It means that when one asks them to comply and they do not have the reporting infrastructure set up - they are still paper based - that burden can make it challenging for them to innovate. They know they need to, they know there is a resiliency driver and they know there is the resource price volatility. Some of them have felt that during Covid. That is a very strong driver towards saying, "I have to get my head around this". Ultimately, in going towards action those financial barriers can be many because of the capacity of the companies themselves.

What we see as well is that this is a culture and mindset change for organisations. We have many of the champions in the network. Through our founding members, in particular, where we have gone and done assessments, we have been saying: "It is not going to work if it is just you. Everyone needs to understand what the circular economy means because it affects every aspect of your business". There is that piece of work to be done to embed this within an entire organisation, and that is a cultural transformation process. Anyone who has worked in change management knows that it takes time to create the space to have those conversations, and then there are the day jobs that people have. In terms of the financial barriers, there are the regulatory aspects where some companies have that competence and some of them do not. There are new competences required. There is the change process that is required.

In terms of trying to put this into the Bill, with the circular economy the devil is in the details. That is why in response to the other question from Deputy Bruton about whether we can put these targets in now and whether we can put more in the Bill now, I would be wary, as somebody who has worked in this space and not speaking for the industry members. There are so many nuances depending on the sectors, so trying to have a generic statement about these things could be very challenging. It is about how to find the balance between having a strong intent, then a review and ensuring there is holding to account but without trying to be so general that it is not serving the purpose and intent behind the specifics.

With regard to regulatory certainty and why it matters, it comes back to the idea of a level playing field, which Deputy Bruton highlighted. CIRCULÉIRE is 37 actors out of thousands of businesses. For some of those companies, going after the circular economy model ahead of others could sink their business if they fail. The Senator highlighted maximising profits. The circular economy will bring medium- to longer-term gains, but one has to navigate the bumps to get to those gains. That is the piece where there is this tension between how to support companies and support them to take those risks because that is a fear for businesses when they do it. Another piece that comes to mind is when somebody says: "I did it and I did it wrong. I did not understand Article 27 and Article 28 and now I am in trouble with the EPA and regulators". There is a genuine intent from our members to try to understand what this means and to put the best foot forward, but there is a fearfulness when it comes to engaging specifically with end-of-waste and by-product notifications that they will fall foul and then be in trouble. There is this dynamic in the process.

I will add a caveat to my statement about the EPA. All the industries know that there is a regulatory obligation and that Articles 27 and 28 are there to ensure there is no harm to human and ecosystem health. However, when I and the team in CIRCULÉIRE say to somebody, "Guess what? You can turn that production residue into a higher value application", the person just looks at me and says, "Oh great, where do I start? How do I do this?". I say, "You need to think about this and you need to speak to your enforcement officer". The nature of that relationship is changing with the circular economy programme in the EPA because the EPA is going to play a dual role, both as a regulator and also as a body to which industry can suggest an idea, ask whether it is good or bad, ask how to do it and how should it be done and so forth. My apologies for going off on a tangent, but one of the points in our submission to the Department of Environment, Climate and Communications consultation on the circular economy strategy and the commitment to streamline Articles 27 and 28 was that there is the example of other jurisdictions that have created help desks where, effectively, industry can come in free of charge, say it has this thing that it is trying to do and ask for some guidance. We do not have the full picture yet of how the Department and the EPA are proposing to streamline that process, but those types of supports which help business to meet the regulatory requirements and the targets can help to leverage the willingness that we see in CIRCULÉIRE with regard to embracing this model.

I apologise if I have not been able to address all the Senator's questions.

Senator Pauline O'Reilly

That is very helpful.

The importance of regulation to ensure a level playing field is key to whether this will be a success or failure. Companies have acted early in terms of energy. Even though there are no regulations, some companies do it well and become embedded in communities, showing this approach has value. Unless there is regulation, though, they will pay a higher cost. Regulation is key to getting the circular economy right.

A number of the more specific points I am interested in have to do with tax generally, VAT specifically, and reselling. There is a point for every company where it costs more to repurpose a machine than to send it to the dump. It is the same for me in my house. It costs me more to put ten buttons on an outfit than to dump it and buy another outfit. This should not be a lifestyle choice for individuals or companies. Instead, we as a Government should provide a means of making repurposing more viable financially than dumping it. Part of this has to do with tax, insurance and the likes. If Dr. Brennan has specifics to offer in this regard, it would be helpful.

Dr. Geraldine Brennan

Apologies that I went broader and more macro. Regarding tax, our members have highlighted that, if there were reduced VAT on repaired and remanufactured goods, it could create a level playing field. Actually, it would not be a level playing field, so that is not the right analogy to use. Rather, it could create an incentive for consumers. This is about creating the markets and what kind of financial incentives the Government can provide to support the marketplace for circular product service systems. I will emphasise the idea of a product service system. Ultimately, the circular economy is about trying to create the infrastructure around products so that, when the Senator or I no longer need a piece of equipment, phone or some other fast-moving consumer good, there is a way of getting it back to either the original manufacturer or a retailer who can put it back into the marketplace. Using VAT has been successful in other countries, for example, Sweden and France, specifically in respect of repairs.

Speaking in a personal capacity, there is an opportunity to gain understanding in this regard. Repair is often viewed as separate to manufacture and the manufacturer's supply chain, meaning it is happening outside the manufacturer's control and influence. Remanufacturing is about having a hybrid of accredited repair and independent repair. One of the reasons the circular economy skill set initiative has been set up is that, to repair white goods to a high level, certain skills are required so that the repair person does not get hurt and the product functions. From an EU and European Remanufacturing Council perspective, remanufacturing is a very specific thing. The product in question has a particular type of guarantee, it is like new, and the consumer would never know its parts had been reused. In my point, I was trying to say this was about trying to understand for which sectors and which types of product these different infrastructures could work together - social enterprise, independent repair versus manufacturer and its extended supply chain through an accredited repair process, and a hybrid of the two. I do not see this as either-or but as trying to find synergies between both. The tax aspect, including VAT, is important.

We have a number of actors from the waste electronic and ICT asset management sector in the CIRCULÉIRE network. They have highlighted that goods are sometimes essentially double taxed when putting them back onto the market. There is a disincentive in some respects because of the tax structure. I would like to follow up on this point and bring it to life with more details. I want to do it justice because it is sector specific. Reverting to the committee with those specifics might be helpful.

Senator Pauline O'Reilly

Having examples of where this has been done successfully and when it becomes financially unviable for companies despite their best intentions would be helpful, if Dr. Brennan has some.

Dr. Geraldine Brennan

Yes.

Senator Pauline O'Reilly

If Dr. Brennan does not, that is fine. She has made her point well in any case.

Chairman

I thank Senator O'Reilly for her questions and Dr. Brennan for her answers. If Dr. Brennan could get her supplementary information to us by Friday week, it would be fantastic, as we could then consider it in the drafting of our report.

Dr. Geraldine Brennan

Does the Chairman mean 29 October?

Chairman

Yes.

Dr. Geraldine Brennan

Perfect.

Deputy Réada Cronin

I thank Dr. Brennan for her presentation. I despair at the thought of what is ahead of us. Dr. Brennan spoke about the financial commitments made by Scotland and the Netherlands. I accept that has to be the case and that our commitment to the circular economy cannot be piecemeal. Does Dr. Brennan believe we are at the races at the moment? I am worried that so much financial assistance will be required to ensure that-----

(Interruptions).

Chairman

The audio dropped off for a second. Could the Deputy repeat her remark, please?

Deputy Réada Cronin

Certainly. It dropped on this end as well. I am getting a lot of feedback. Can the Chairman hear me now?

Chairman

Yes. Go ahead.

Deputy Réada Cronin

Despite the de-risking moves, we are still in uncharted waters and this legislation could create many unknown possibilities and challenges for industry. Given our current economic model, I worry about the degree to which this legislation will work and whether companies will look for a great deal of financial commitments to comply with it. How viable is that?

Has there been any kind of citizen engagement? What has happened to date and what does Dr. Brennan foresee happening? How can we communicate the necessity of the circular economy to citizens?

Dr. Geraldine Brennan

Might I ask for clarification?

Chairman

Go ahead.

Dr. Geraldine Brennan

I did not catch a word in the Deputy's last point. Did she say "systems"?

Deputy Réada Cronin

Citizen engagement.

Dr. Geraldine Brennan

I thank the Deputy. I just wanted to check.

Deputy Réada Cronin

Finance and business view citizens as consumers, but with climate change coming straight for us, there has to be considerable citizen engagement in this process.

Dr. Geraldine Brennan

The Deputy asked whether we were at the races. As I highlighted, over the past three years, 2019, 2020 and 2021, the momentum of the circular economy dialogue has blown up in Ireland. There are various programmes, training and webinars as well as great excitement about this opportunity to innovate. Yes, there is the question of how to get our heads around Articles 27 and 28, how to redesign our products and how to set up the infrastructure, but there is still a great deal of energy in favour of this idea. In terms of whether we are at the races, we are at the starting line and the starter gun is about to go off, but everyone is at the race, which is the first thing that is needed before there can even be a race. I hope this has not been too cheeky a response, but we are at the start. CIRCULÉIRE is 18 months old and there was nothing before it. There were examples, but nothing that industry could engage with fundamentally.

In terms of providing assistance to industry in light of these being uncharted waters and there being unknowns, there has sometimes been a perception among CIRCULÉIRE's membership that it is too difficult and not worth it to go after grant money because people do not get the funds. They put time and effort into doing 20- or 30-page applications and they do not get the money anyway.

I guess I am mindful that industry which gets this will invest the effort to apply. The application process is not that easy for industry just to go after it. The whole process is designed, I guess, to weed out people who are not serious about this. Again, I am speaking on behalf of myself. One must invest weeks to develop a proposal to go to CIRCULÉIRE's innovation fund, the green enterprise fund and the circular economy innovation grant fund, which was a little different because it was a smaller pot of money. It was targeting not-for-profit social enterprise and microenterprise.

Again, I come from an organisation where we bring industry into these funds to try to help them to de-risk. We then give them a case to scale it up. When I speak about grants, I am not looking to do everything but to do the test, prove the case and go to the board to say it has worked in a certain context and it can be rolled out. Those grants can be set up, separate to capital expenditure, where the payment is for the first de-risking and not everything. Industry does not expect public funds to pay for everything. Industry members in our dialogue are saying they need help to get out of the gates in this race.

There is the question around citizens and communicating the necessity for this. It is very important again to acknowledge entities, which may have been discussed before, such as the Rediscovery Centre - the national centre for the circular economy - as an exemplar of engagement with civil society and education around what the circular economy means. There are local repair groups and maker labs, so there is activity. I am speaking on my own behalf rather than on behalf of industry members, but this is about how we profile activities and get people engaged with them. If they do not exist, how can we support people in creating them? Websites like repairmystuff.ie helps people who are interested in this.

Again, the circular economy was not in the mainstream press two or three years ago. It was not in The Irish Times or the Business Post or different fashion magazines. It is now en vogue and it is trendy to have upcycled things. It is about tapping into that and creating ways to get the idea embedded more deeply. It need not be a luxury but it can instead be an opportunity.

It is tangential but there is a point relating to this conversation in general. The right to repair movement in Europe mandates that a company should effectively keep the components for goods in stock as inventory for ten years. That is huge from a policy perspective and it creates the opportunity to keep goods in use in the economy. I am mindful that, in previous meetings, the conversation indicated that Europe is driving this. Taking the legislation and embedding it into the Irish system is fundamental. It will all come in time. I apologise if I have not answered questions directly. I would be happy to elaborate further if members so wish.

Deputy Réada Cronin

The answer was interesting and I agree with the points. There is the idea we need to get a phone every 18 months and parts have become disposable because we are such a consumerist society. It seems everything must be disposed of to get a new version. I thank Dr. Brennan for her answer.

Chairman

Before starting the second round of questions, I have a question that might be related more to implementation than the proposed Bill. The witness might tell me if it is relevant to the Bill. It relates to the analysis of waste and material flows in our economy and society. Have we confidence in it and is it granular enough? Can we measure those flows so we know exactly what is happening? If that is not possible or the process must be improved, is there any element of the Bill that could be strengthened?

Dr. Geraldine Brennan

Speaking from my perspective, the area of material flow analysis is a particular field in and of itself. It is not my main area of expertise, although I am very aware of it. We have done it. For example, we have worked with WEEE Ireland to map the flows of waste electronics through its system to bring this to life.

Fundamentally, a material flow analysis helps us to see the magnitude of flows. It is almost like a hotspot analysis. The Chairman is correct in asking whether the process is detailed enough. Different tools, like material flow analysis and others, give a view of a system in the economy and give insights into leakage and loss, indicating how much is coming in and how much is leaving. These insights are valuable, but once we have them, we will probably have more questions and need to do other things to get more answers. That is again a bit of a roundabout response.

This is something other countries have looked at. I do not know if the committee is aware of it but there is an effort in the Netherlands led by the circular economy to develop circular gap reports. One was done based again on a material flow analysis of global inputs and outputs in the economy, and they are being done for different countries, such as the Netherlands and Norway. They are looking to see what the results mean. This is where tapping into the statistics and data from the Central Statistics Office and other entities can help us understand those flows. It is not something a sector can do by itself because it will only have a partial view.

I hope I am not speaking out of turn on behalf of extended producer responsibility schemes like the European Recycling Platform and WEEE Ireland but, between those two, they should have the data. They go through a process of reporting to get that data. It is a unique case. In other sectors of the economy, there is the question of how to compile the data and it may require dialogue with the Environmental Protection Agency, the Central Statistics Office and other actors - they may be missing currently - in trying to paint this picture in a meaningful way.

We can see with what other actors in Europe are doing that this is a worthwhile endeavour to visualise the economy and get insights into those flows. It is not the full picture at the material level.

Chairman

I take that point. Dr. Brennan might indicate in supplementary information what happens in those other countries. She might indicate where this level of auditing is perhaps more exact and breeds more confidence. That would be fantastic.

Deputy Richard Bruton

I have a quick follow-up on the question of measuring. I have seen people quoted as saying Ireland has the lowest level of circularity at something less than 2%. Is that a meaningful performance indicator or a robust statistic to track?

Deputy Cronin touched on another question, which is who pays in this context and how does the concept of sharing the cost of change pan out? How should we approach this? At one level, we have introduced a price for carbon and anybody who uses carbon pays a price, which relieves the State from funding it. It does not relieve the consumer, who can choose products with a high carbon content but will pay more. People choosing the circular economy may avoid carbon and their products will come to the shelves cheaper.

In trying to enable progress, where does the price of what economists might call externalities - bad practice - fit into this?

Underlining what Deputy Cronin asked is whether the taxpayer will be asked to pay for all business to do the right thing in this area. I am interested in Dr. Brennan's insight into that.

Dr. Geraldine Brennan

In response to the first question about the circular material reuse rates, Ireland is, as has been flagged, based on that metric perceived as a laggard in Europe. This is in some ways related to the Chairperson's question about material flow analysis. It is a matter of looking at the material flow and the recycling rate in an economy. There is one view and one metric in the circular economy. However, the complexity in measuring circularity is why it is the existing metric. It is complex to measure.

If the Chairman will allow me to go on a little tangent to answer this question, a lot of data are needed to develop the carbon footprint of a product based on virgin material but the point is that it can be mapped out. As soon as that product is brought back in, some parts are taken away, new parts are brought in, some of them are used and extra labour, energy, materials and capital are added, the way in which the footprint is measured becomes more complex. If that product goes back out into the market and comes back for a second time, the capturing of the carbon footprint and the impact of the product become more and more complex if you are not set up from the beginning to measure them. The measurement is complex and is being tackled by experts. For example, there is one International Organization for Standardization, ISO, technical standard specifically on circular economy performance and metrics. There are 120 people from around the world who are experts in this space and are trying to grapple with this.

My point as to whether it is a worthwhile metric is that it is not necessarily the best metric but that, right now, it is the metric for which the data are available. It is a crude metric but at least there are data to say something when it comes to benchmarking. The Netherlands, for example, is at the top of this ranking in Europe. It is saying it still needs to invest all this money to become circular because it has invested in the recycling infrastructure, it has been doing this for ten to 15 years and its material reuse rate is only 30% because its focus has been predominantly on recycling and it is investing in all these other activities. When it comes to other metrics - and this is something the CIRCULÉIRE members support - there need to be metrics for reuse, repair and remanufacturing, but when it comes to trying to roll this out to the level of the economy it becomes complex. That is my position.

To respond to Deputy Bruton's point about who pays, sharing the cost of the change and the carbon tax, again, it would be prudent of me to speak to my expertise rather than that of the CIRCULÉIRE members because there will be differing views on this within different sectors and among the membership. What we see in Irish Manufacturing Research when we are asked to do feasibility studies on material substitutes or business cases for different aspects of implementation of circularity is that carbon tax comes into it because it means that by 2050 people will pay €100 per tonne. I completely concur with the Deputy that that is a driver for boards and their finance directors to say, "I do not understand what this means for my business but I better figure it out." Those taxes definitely have a role to play, but that consultation with industry to understand the scale of the tax and what other things will enable them to still operate while they are on this transition is important.

Have I addressed the Deputy's questions sufficiently?

Deputy Richard Bruton

Yes, but, presumably, the rest of this Bill looks at new things that should be levied. There is, if you like, the grant approach, whereby the taxpayer foots the bill, or the identification of sources of damage and the placing of levies on them so they are internalised to the business. I am seeking an understanding of the balance between the two. Obviously, to the finance director of Ireland Inc., it makes a big difference whether all that money falls on the Exchequer to fund or whether it is shared in that way through well-designed levies and so on. It seems to me that if this is to happen, we must have the stick as well as the carrot or it will become subject to the annual Estimates battle, whereby this will fight with the needs of our health service or our education system for funds and is likely to lose out in that battle. Certainly, it would be a challenging battle to win.

Dr. Geraldine Brennan

If I might come back to that, again, in my professional capacity, I agree with the Deputy that there is a balance between, as he said, carrots and sticks. The view, I think, in industry is that the stick is coming but is not here yet and that the carrots are there to help with driving the momentum. Then, when the stick comes, if you have not figured this out from a competitive advantage perspective, there will be people who will be liable for those taxes and who will suffer and go out of business as a result.

One of the things that I think has been mooted for a very long time in academia is a shifting of taxes away from labour towards raw materials. Again, I am not an economist so I will proceed down this line with caution, but it is a matter of understanding in what ways we can incentivise through taxes the use of perhaps secondary raw materials versus virgin raw materials and understanding how we can create incentives to utilise and reduce the taxes on labour if we are trying to incentivise repair in particular. Those are ways to do this. Again, I am happy to send on some examples of these ideas in the circular economy discourse within the academic area. I refer to people such as Walter Stahel, who has spoken on RTÉ's circular economy hub.

Where this becomes challenging is always in implementation. Conceptually, it is intuitive to say we should move taxes away from labour and put them on raw materials. However, as to how that is done in the economy and the ramifications for those operators as to how those taxes are implemented, we do not want to put those businesses out of business automatically in the process. Again, this is beyond my core area of expertise, so I am just flagging it. Absolutely, there are areas that can be explored but with caution, given the fact that this is a transition.

Chairman

I thank Dr. Brennan. Before I bring in Senator O'Reilly again, I will make a related point. We spoke about carrots and sticks. I acknowledge that this may not be Dr. Brennan's area, so she should feel free not to go down this road, but she might have something to say about the carbon border adjustment mechanism, which the European Union is talking about. It seems to me that this is an effort essentially to shift levies onto materials and should favour more locally produced materials versus those that are carbon-intensive and that originate outside the European Union. I would be interested to hear any thoughts Dr. Brennan may have, perhaps speaking in a personal capacity. Would she like to say anything about that?

Dr. Geraldine Brennan

I will be honest. It is not an area I am familiar with, but I can look into it and come back to the committee with a position. Again, the idea is to try to incentivise the use of secondary raw materials, meaning those materials that either have been through the economy once or are production residues from a process involving material substitutes. Deputy Bruton spoke about internalising those externalities. I think there will be a response from the markets because that is fundamentally how markets work. As for the cross-border adjustment, I would need to come back to the committee.

Chairman

It is an interesting area and another thing coming down the tracks.

Senator Pauline O'Reilly

My comments will be similar to those made by the Chairman. We are not just talking about the taxpayer picking up the tab for things; we are probably talking about financial disincentives rather than incentives for which the taxpayer will have to foot the bill.

That is a better financial model. On a related matter, the reason that is important is that companies are legally obliged to maximise profit for their shareholders. That is where we are at the moment, whereas Ireland Inc. is not obliged to do that. That is the difference and we must take it into account to ensure everything companies are being asked to do will drive profit, which means we can put in place a stick to respond to the bad behaviour we do not want to see.

I was interested in Dr. Brennan's comment that this not just about upcycling and so on but also the whole area of reuse of machinery. We have spoken a little about obsolescence, especially in the previous session. Does Dr. Brennan have any insight into obsolescence in companies with respect, for instance, to the kind of machinery they are using? Has she seen a shortening of the lifespan of some of that machinery or is there something in the background ensuring companies are not seeing the same level of obsolescence that we as end-users and consumers see?

Dr. Geraldine Brennan

The point the Senator makes about financial disincentives is a really important one. Again, in terms of the dialogue we have had this morning, it is fair to say on behalf of CIRCULÉIRE's members that they do not expect government to pay them to do this. There are drivers, as I said, like resource-price volatility and like the resilience they have seen through Covid with supply chain shocks. The price of logistics to import goods to Ireland has gone through the roof. One company told us the price per container has increased from in the order of €2,000 to €10,000. Multiple things are happening which make utilisation of locally or regionally produced goods - maybe not locally produced in Ireland but at least in Europe - much more viable and an option to consider financially than if those drivers had not been there.

The Senator is right about the legal obligation on companies to maximise profit. As part of the broader shift towards corporate governance, there is a recognition of corporate citizenship. I am more speaking from my own experience in saying there is an awareness for those companies. If we look at front runners in Europe and around the globe, they know that in order to retain staff, have good relations and do innovative things, it is not all purely about short-term profit. There is a really good quote from a management guru whose name escapes. Basically, it is that profit is like air; it is something we need to live but not the reason for living. Enlightened organisations have at a senior level the understanding that they cannot afford not to make profit as they would otherwise go out of business but making profit is not all of what they are doing. The circular economy represents an opportunity to look at themselves differently and to look at their supply chains and products and innovate. That is another driver to why they will do this. Some companies are doing this without government investment but, again, it is very different depending on their starting point, what they have and who they have in the organisations. There are all these different contingencies as to why some companies just do it and others do not. I emphasise that this is the start of a transition and it is about a cultural and mind-shift change.

On the Senator's point about reuse of machinery and obsolescence for companies, when it comes to the capex-intensiveness of certain machinery, manufacturers are in a different headspace. They understand the concept of keeping machines in use for as long as possible because of the nature of the investment. This resonates with them. If their machinery goes down, they cannot effectively produce. Therefore, they have an incentive in the way their production lines work to try to keep these things functioning as best as possible. From the perspective of the actual operations and production sites, this concept is not foreign.

The circular economy is intuitive for most people but actually implementing it is the problem. It is not that they do not understand. Keeping things in use makes sense. As I heard when listening back to recordings of previous meetings, everyone says this is not a new idea. Everyone gets that. If everyone knows intuitively that we should do this, why do people not just do it? The reason is that there are barriers in place, for example, certain material prices mean it is very difficult to substitute. The cost of virgin new materials is still very cheap which means that if a company does the right thing, that will affect the cost of its fundamental products and supply chain. Whether the end customer is willing to pay more is debatable. Some customers are. In business-to-business arrangements, we are seeing science-based targets. COP26 is coming up. That whole debate means companies want suppliers that are not necessarily giving them the cheapest component but something that allows them to say they are addressing their scope 3 emissions. I apologise if that response was a little fragmented.

Senator Pauline O'Reilly

No, that is fine. I was interested in the fact that one individual cannot put pressure on an industry to supply white goods, for instance, that have a long life. I wondered if companies can do that more effectively because the legislation around obsolescence is, as we have seen, complex and difficult to implement. Is there something in industry that makes this happen a little more easily than it would for an individual consumer? Perhaps we do not know the answer to that.

Dr. Geraldine Brennan

If I could come back to that using the example of a washing machine, it is what is referred to as a medium-lived complexity good. This means it is something that already has an average life of between five and ten years depending on the nature of the product. It is not a fast-moving consumer good, which is much harder to tackle. Again, the white goods sector, the electronics sector, is probably a front runner when it comes to the circular economy. The circular economy skills initiative to which I referred is the result of the White Goods Association, WGA, and WEEE Ireland, one of the two extended producer responsibility, EPR, schemes, basically saying they recognise that the Government will bring in reuse targets. Reusing goods requires technicians who know how to repair them. It is not that there is not a willingness but the sector does not have enough trained repair technicians. That was the case that was made for the funding. The industry said we needed a scheme developed to develop the skills needed to support us to keep things in reuse. Again, that is driven by a number of factors across Europe and the European circular economy action plan, the ecodesign directive, the extension away from electrical goods, etc.

To respond to the Senator's point, this is definitely about sectors finding what the barriers to implementation are and then the Government working with sectors to help them unlock those barriers. Again, CIRCULÉIRE has given a relatively nominal amount, in the grand scheme of things, to WEEE Ireland, the WGA and Fastrack into IT to develop this curriculum in a year and a half and put people through it. They have not even kicked off the pilot programme with the first cohort of students and already the education and training boards want to roll it out next year across three more ETBs. I caveat this with all respect to the public investment. The ETB will take this and roll it out across the country but it is the initial funding, which was almost seed funding in this case, to get out the gates, as it were, that is where the barriers lie. The other thing to say about the likes of CIRCULÉIRE's innovation fund is that like all funding, it is subject to state aid in de minimis. It is not that this is just public money. Industry in kind is bringing huge amounts of resources to get these things out of the gates. That partnership between industry and government is important to emphasise and is what we see as the success to date of CIRCULÉIRE given we are a relatively young initiative.

Deputy Cormac Devlin

I apologise for my late arrival. I was next door at another committee meeting.

I will not go into other matters because I do not want to go over ground I presume my colleagues have covered. However, I wish to ask about the connection between ETBs and the need to train technicians in order that we can facilitate people who, as Senator Pauline O'Reilly said, want to reuse more and extend the lifelines of products. There is a willingness across the country to do that. If we could supply technicians to help with that, it would be important. Dr. Brennan referred to the WEEE scheme and the White Goods Association working together on how best to efficiently recycle goods, where necessary, and support those who want to extend the lifetime of products. We had a great discussion last week about innovative ways to support communities which do that.

My local repair shop is, I think, busier now because people are thinking like that and looking at the volume of items disposed of unnecessarily. The next generation may believe that the previous one was crazy to think of everything as being disposable. Maybe that was a marketing ploy over the past decade or so. Hopefully, this legislation will encourage industry and, more importantly, the public to think and act differently. Dr. Brennan said it is about encouragement if nothing else. The legislation is necessary but it is also about a bit of carrot and less stick. I thank Dr. Brennan and offer my apologies for not being here from the start.

Dr. Geraldine Brennan

Speaking in a personal capacity rather than on behalf of my members, the balance between carrot and stick is important. I commend the Department of Environment, Climate and Communications and the EPA on engaging with Climate-KIC and CIRCULÉIRE. This is the first public private partnership where they sit on the steering group with industry members who reflect back the challenges they are facing with a view to creating dialogue so it becomes a collaborative approach to navigating the unknowns and the challenges that come ahead. Our industry members, if I can speak on their behalf, understand that regulatory obligations serve a purpose to ensure good practice in industry. I do not think there is a problem with that per se. It is about having that constructive dialogue.

Something we included in our submission to the Department of Environment, Climate and Communications was around more anticipatory regulatory approaches which involve help desks. In Denmark, for example, they have a business desk that is a free service which allows companies to say there is a regulatory thing they are unclear about, ask for help and find out if they are falling foul of it before they set foot. There are ways public money can be used to support. For our industry members, it is about de-risking that initial toe in the water, not necessarily the scale-up. When it comes to capex infrastructure of the order of tens of millions, it is a different story, but when we are talking about piloting a take-back scheme, we are not talking about millions. CIRCULÉIRE's innovation fund for three years is €1.5 million. Regarding the numbers needed to accelerate and get people out the gates, I in my professional capacity think they are worth the investment.

Chairman

I draw members' attention to the material that has been provided, which is very extensive. There is the public consultation that CIRCULÉIRE submitted to the Department in June. It has been circulated to members. It is very thorough and interesting. Section 1.2 refers to Slovenia's journey from circular economy laggard to leader. I suspect that might be an example we could look to. If Dr. Brennan wants to speak about the Slovenian case study, I would be happy to hear about that if it is relevant to the challenge we have. Generally, I point members to the information CIRCULÉIRE has sent in. It is extensive and there are many references and links to further information. I thank Dr. Brennan for that. Would she like to speak on the Slovenian case study?

Dr. Geraldine Brennan

I would be happy to. I do not think I said in my opening statement, which largely sought to reflect industry members, that I came here on their behalf and to make their perspective heard. CIRCULÉIRE is funded by the Department of Environment, Climate and Communications, the EPA and EIT Climate-KIC. Climate-KIC is one of about ten knowledge innovation communities funded by the European Institute of Innovation and Technology to try to accelerate the transition to a zero carbon economy and spur climate innovation. It came on board CIRCULÉIRE and profiled the Slovenian case study to us saying that everyone looks at the Netherlands but the latter country is ten or 15 years out the gates and has sector-specific green deals. This is a slight tangent but the green deals help create a forum for policymakers and sectors to go on a journey to look at and unpack the regulatory barriers. They are two to three years long and they have done thousands of them over the past 20 years. As Leslie Carberry said, they are best in class. They are still doing it and their ambition is to be circular by 2050. They know it is a long-term game but they are investing heavily in it.

Slovenia is an important case study for Ireland because it is not the Netherlands and has not been doing it for 20 years. It has a smaller economy, close in size to that of Ireland. It is also deemed to be a laggard but it has decided that there is an opportunity, with the right interventions, to learn from the leaders and embed this into the heart of economic policy development and, over a short period, progress. The Slovenians have done it, much like Ireland is seeking to do with the circular economy Bill, by putting it on a statutory footing and looking at how to go on this journey over the coming years. The case study outlined there is still high level because the process has started relatively recently. It is an interesting one.

I went off on a slight tangent about Climate-KIC because it is working with the Slovenian Government and has, over a number of years, set up ways and what it calls deep demonstrators to have these dialogues. It is different to the green deal which is a voluntary mechanism but it is about creating dialogues and demonstrator environments where you can pilot and test things and there is learning across sectors. Climate-KIC has been fundamental to that activity in Slovenia. Its interest in investing in CIRCULÉIRE was to leverage those insights and bring them to bear in conversations with the Government of Ireland.

Senator Pauline O'Reilly

I thank Dr. Brennan. That was very interesting.

Chairman

We have got a huge amount of information from Dr. Brennan. We appreciate her taking the time to come in and help us in drafting our pre-legislative scrutiny report. If she would like to come back with supplementary information, 29 October, which is Friday week, is the deadline. We will try to get the report out this side of Christmas. I am looking sideways at the secretariat here. I hope that will be possible.

Once again, I thank our witnesses.

The joint committee adjourned at 11.10 a.m until 12 p.m. on Tuesday, 2 November 2021.