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Eco-Innovation in Cyprus

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Eco-Innovation in Cyprus Eco-innovation in Cyprus EIO Country Profile 2018-2019 Eco-Innovation Observatory The Eco-Innovation Observatory functions as a platform for the structured collection and analysis of an extensive range of eco-innovation and circular economy information, gathered from across the European Union and key economic regions around the globe, providing a much-needed integrated information source on eco-innovation for companies and innovation service providers, as well as providing a solid decision-making basis for policy development. The Observatory approaches eco-innovation as a persuasive phenomenon present in all economic sectors and therefore relevant for all types of innovation, defining eco-innovation as: “Eco-innovation is any innovation that reduces the use of natural resources and decreases the release of harmful substances across the whole life-cycle”. To find out more, visit www.eco-innovation.eu and ec.europa.eu/environment/ecoap Any views or opinions expressed in this report are solely those of the authors and do not necessarily reflect the position of the European Commission. 1 Eco-Innovation Observatory Country Profile 2018-2019: Cyprus Author: Andreas Mitsios (Deloitte Développement Durable) Coordinator of the work package: Technopolis Group Belgium 1 Acknowledgments This document was prepared with significant support from: • Elina Lugbull (Deloitte Sustainability); • Fabio Matagnino (The Cyprus Institute), Anthi Charalambous (OEB). A note to Readers Any views or opinions expressed in this report are solely those of the authors and do not necessarily reflect the position of the European Union. A number of companies are presented as illustrative examples of eco-innovation in this report. The EIO does not endorse these companies and is not an exhaustive source of information on innovation at the company level. This brief is available for download from https://ec.europa.eu/environment/ecoap/country_profiles_en 2 Table of contents Summary 2 Introduction ............................................................................................................ 3 1 | Eco-innovation performance ................................................................. 4 2 | Selected circular economy and eco-innovation areas and new trends ... 8 3| Barriers and drivers to circular economy and eco-innovation in Cyprus ............ 12 4 | Policy landscape in Cyprus .................................................................. 15 REFERENCES .......................................................................................................... 19 ANNEX: Policy strategies and instruments .............................................................. 20 1 Summary Despite significant improvement, Cyprus continues to perform poorly in eco-innovation. The country scored only 62 in the 2018 assessment (EU average = 100). Cyprus is heavily behind the EU28 average in eco-innovation inputs and activities and socio-economic outputs. It performs close to the EU average in resource-efficiency outcomes and above the EU28 average in eco-innovation outputs. Eco-innovation in Cyprus is predominantly produced by individual actors – research institutes or enterprises – and there are no distinct and mature eco-innovation sectors. Given the country’s rich natural capital, new developments in renewable energies could also promote eco-innovation activities. Eco-innovation in the field of energy is also driven by efforts to increase energy efficiency; in fact, Cyprus is ranked first in solar DHW per capita1. The agricultural and food industries are also contributing to eco-innovative solutions. Additionally, a number of EC funded research and innovation projects in the field of eco-innovation are currently under implementation. In terms of eco-innovation drivers, there is a wide range of EC-supported funding opportunities for R&D which include eco-innovations. The country is successful in raising EU funds for research. Cyprus also benefits from its significant natural capital in renewable energies: solar and wind. Regarding barriers, the Cypriot economy is heavily dominated by SMEs; hence, it exhibits a lack of sectoral concentration and innovative businesses. Overall, the participation of firms in R&D activities is low. Furthermore, the research activity in Cyprus is often not related to the activity of local businesses. Regarding the environmental reform, despite the technical assistance has been provided to Cyprus on how to reform the civil service structure to improve and simplify environmental licensing and environmental inspections, little progress has been achieved in this direction 1 The Cyprus Institute, Climate Change and Impact, Available at https://www.cyi.ac.cy/index.php/eewrc/eewrc- research-projects/climate-change-and-impact.html 2 Introduction Anthropogenic activities, and more and more episodes of Sahara dust being transported to more northern parts of the region, are leading to increases in atmospheric mineral dust and aerosol concentrations. The resulting growth in cases of respiratory illnesses are increasingly seen as serious public health concerns in Cyprus2. Looking in more detail at model results for Cyprus, the projections for climate change show an increase in extremely hot summer days with maximum temperatures exceeding 38˚C for an additional two weeks per year compared to the familiar warm summers3. In addition, the country will experience warm 'tropical' nights with minimum temperatures above 25˚C for an additional one month compared to current conditions. The need for air-conditioning and space cooling, not only during the days but also at night, is likely to increase, causing higher consumption of electricity on the island. Besides, given the ongoing decrease in rainfall observed for the last three decades, climate change in Cyprus will result in additional reductions in rainfall of 10-15% over the 2020 to 2050 period. Thus, the need for both more drinking water and more water for irrigation will result in a growing demand for additional seawater desalination plants and an emphasis on enhancing water-use efficiencies. These climate pressures placed on the society and the well-being of its population can be counteracted with a systemic transformation of production models, implementing core principles of a circular economy. For Cyprus, circular economy is both a challenge and a solution as its island character can create difficulties but also give advantages. While enterprises have lacked the size and capacity to systematically develop innovative processes and new products, there has been a slight growth in eco-innovation efforts, in many cases due to EU financial tools and national investments. This increasing involvement in eco-innovation is due to the new position of Cyprus as a regional hub for climate change research. In June 2018, the government announced the creation of an initiative to coordinate action against global warming across the Mediterranean and support the creation of a EUR 30 million climate-change research centre at the Cyprus Institute in Nicosia4, the nation’s leading multidisciplinary research institution. This initiative will also create a comprehensive plan to reduce Cyprus’s greenhouse-gas emission in line with the 2015 Paris climate accord. A major initiative was established following the 1st International Conference “Climate Change in the Mediterranean and the Middle East: Challenges & Solutions”5, organised by the Cyprus Institute in 2018 in Nicosia and attended by eminent scientists and policy makers from 30 countries as well as leaders of global stature. The principal conclusion of the conference was that regional concerted climate action is urgently needed, leading to the Cyprus government’s Initiative for Coordinating Climate Change Actions in the Eastern Mediterranean and Middle East (EMME), which was launched by the government in March 20196. 2 https://www.cyi.ac.cy/index.php/eewrc/eewrc-research-projects/climate-change-and-impact.html 3 http://weather.cyi.ac.cy/en/climate/climate-change/ 4 https://www.nature.com/articles/d41586-018-05528-9 5 https://www.cyi.ac.cy/index.php/component/k2/international-conference-climate-change-in-the-mediterranean-and-the- middle-east-challenges-solutions.html 6 https://www.cyi.ac.cy/index.php/cyi/international-collaborations/cyprus-government-initiative-for-coordinating-climate- change-action-in-the-eastern-mediterranean-and-middle-east.html 3 1 | Eco-innovation performance The analysis in this section is based on the EU28 Eco-innovation Index (EcoI Index) for the year 2019. The Eco-innovation index demonstrates the eco-innovation performance of a country compared with the EU average and with the EU top performers. EcoI Index is a composite index that is based on 16 indicators which are aggregated into five components: eco-innovation inputs, eco-innovation activities and eco-innovation outputs as well as environmental outcomes and socio-economic outcomes Figure 1 EU28 Eco-innovation Index 2019, composite index Source: EIO, 2019 Cyprus continues to perform poorly in eco-innovation, as illustrated in Figure 1. The country scored 56 in 2019 compared to a score of 45 in the 2017 assessment (EU average = 100). This places the country third from the bottom in the EU28 eco-innovation ranking. This is an improved performance in comparison to the 2017 assessment when it was placed second from last position. Nevertheless, Cyprus remains below several Member States with a small population, such as Estonia, Latvia and Malta. Figure 2 below shows the performance
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