Lastly, we need to reduce the water we use in our economy so that we can lower the amount pumped from rivers and aquifers. Water is a renewable resource, but it is very unequally distributed and is subject to problems of increasingly acute scarcity due to greater volumes taken, increasing urbanization and climate change. This includes in parts of Europe previously considered unaffected, such as the United Kingdom and some German Länder. Various solutions exist to meet this challenge, including cutting losses from leaks in public water distribution networks, aquifer recharging and, most critically, recycling treated wastewater. This is a technology that is hardly used in Europe at present, despite the fact that it opens the door to an alternative resource that is available in large quantities in exactly the place where it is needed.

Optimize management of complex major urban services

Many European cities are pursuing policies designed to turn them into smart cities, and new technologies are going to have far-reaching effects on urban services. Powerful data acquisition and processing systems are being developed that are able to handle so-called big data—colossal data sets—about citizens, such as their energy and water consumption, transport and leisure choices, waste volumes produced, and so on. These systems will pave the way for the appearance of new local services that will transform, or even revolutionize, the way that people behave: alerts to signal electricity over-use, CO2 emission calculations, and more.

In 2011, Veolia partnered with Orange in a joint venture called m2ocity. The company aims to install and run 5 million smart meters for water, gas or any other type of flow. These new generation meters will make it possible to optimize management of energy use in commercial buildings as well as in the home. A further advantage is that individual real-time consumption tracking makes it simpler to apply preferential social and green tariffs.

Meeting these challenges: innovation and the adoption of new economic models

No ecological transition without innovation

In the future, there will be less demarcation between different environmental services, something still seen all too often in many municipalities where you have energy on one side, waste on the other, water somewhere else entirely. We are already seeing more and more blurring of the lines between urban services. This convergence is at work wherever waste generates electricity, fuel or compost. Or when wastewater from a treatment plant becomes a source of organic material used for the production of bioplastics. This is happening right now at the North Brussels treatment plant, which serves over 1 million people and is running a unique prototype installation unlike anything else in the world. With the pilot phase successfully completed, we now have to work on the business conditions needed to move to full-scale production.

The need for new economic models

In the past the "common good" required networks to be extended, thus increasing the volumes of drinking water or energy distributed to households in order to improve people's health and living conditions. Today, it requires us to cut the amount of resources that we consume. The original economic rationale is thus turned on its head while still remaining the prevalent model. Rather than trying to sell more, water and energy services must now focus on selling less, despite the fact that they are generally financed via sales!

This forces operators to seek new economic models: for example, remuneration based on performance rather than volume. In this model, operators are incentivized to increase their income by meeting targets set by local authorities rather than by trying to sell more kilowatt hours or cubic meters. In some cases, it is possible to switch from a volume model to a non-volume one, where remuneration is based on the volumes not consumed. Another approach is to cut the ties between volumes sold and volumes taken from nature, achieved by the recycling of materials or wastewater.

The need for a renewed territorial approach

Environmental services provide local governments with invaluable assets they can use to their advantage to meet the ongoing challenge of urban competition: more precisely, these assets enhance the attractiveness of Europe's cities and regions. The overall quality of life in an area depends to a large extent on the quality of its basic services, which embody everything that help make life easier for residents and businesses, helping to secure the wellbeing of the local economy. In Val d'Europe, close to Disneyland Paris, we are recovering the byproduct heat from a bank's data center—heat previously lost—and feeding it into a district heating network serving 600,000 square meters of office, hotel and accommodation space, all without emitting any CO2. We have recently opened the first integrated energy efficiency management platform in Paris's La Défense business district. It handles all energy management functions at 1,100 separate installations, using closely integrated human and digital networks across the entire area to make energy savings.

The key role played by public authorities in paving the way for the ecological transition

EU institutions, member states and local public authorities have a variety of mechanisms at their disposal to promote an economy that is greener, cleaner and more efficient. Most of these levers center on their roles in strategic decision-making, regulation and public procurement, as well as backing for long-term financing operations.

Setting ambitious strategic targets

The overriding duty of any public authority is to set out a clear and credible course of action. This is what the EU has done with the three key objectives of its Energy Climate Package (the 20-20-20), seeking to cut greenhouse gas emissions, raise the share of renewable energies and improve energy efficiency. The package has already made a positive impact in the way that we manage our environment. But the course of action needs also to include specific provisions for certain types of energy that are highly advantageous in terms of their cost-efficiency ratio: one of these is heat, which is all too often overshadowed in EU legislation in favor of electricity, even though buildings, the number one users of energy, consume twice as much heat as electricity.

The recent EU directive on energy efficiency[4] requires member states to adopt a long-term strategy for renovating private and public buildings, and imposes an obligation to renovate 3 percent of the floor area occupied by central government each year. Meeting these obligations will certainly require public authorities to make a major push in favor of energy performance contracting, a mechanism encouraged in the directive. These contracts feature measureable performance commitments that the private partners must guarantee. Contracts of this type can generate significant, achievable energy savings over time, with investments amortized over 10 years at most. In France, the city of Montluçon has signed a 10-year energy performance contract with our Dalkia subsidiary that will see a raft of energy reduction strategies put in place in approximately a hundred public buildings. The actions taken include rationalizing building heating systems, switching to renewable sources and the fitting of building management systems. In the first three years, our teams have achieved a cut in energy consumption of 21.5 percent in comparison with the position at the start of the contract term. Similar contractual arrangements, based on energy savings, are in place elsewhere in Europe, for example in Slovakia and Horby, Sweden.

More generally, the EU, where heating accounts for 46 percent of energy consumption, needs a roadmap for heat. There are no specific targets for district heating networks, despite these being far more efficient than individual installations. There is real scope in Europe for growing this method as well as for updating existing networks.

Regarding renewable energies, it is important to make sure that the growth in intermittent sources (wind and solar) is matched by an increase in flexibly sourced generation, which is deemed to be more cost-effective for the public purse: biomass, which also creates local jobs, geothermal, and energy recovery from waste are all under-exploited techniques.[5]

Lastly, any worthwhile objective must improve business competitiveness. When realistic and properly targeted, it can encourage an industrial sector to become more organized and developed, helping to boost the attractiveness of the regions involved and contributintg to Europe's ability to develop the know-how and infrastructure that will be one of the motors for tomorrow's growth. As far as the waste management sector is concerned, there remains a pressing need for EU legislation to set targets for recycling and reusing priority waste sectors and streams, such as electronic waste and electric vehicle batteries.

Adopting rules and standards to hasten the energy transition

This applies, for example, to shale gas and coal gas. Europe has its share of recoverable volumes and their possible exploration and exploitation is a subject of impassioned debate between member states. Commissioner Janez Potocnik has already stated[6] that the techniques and best practices to prevent, reduce and manage the risks already exist, that best practices must be followed scrupulously and that the regulatory framework has to ensure real and effective protection of health and the environment. A further example of an area where there is a need for the clear and predictable rules that are vital for new practices is recycling treated wastewater, a promising practice from the environmental standpoint, but one that will only gain acceptance when backed by an EU directive with common standards to be applied throughout Europe. In its Blueprint to Safeguard Europe's Water Resources,[7] the Commission proposes setting standards in this area. Any future standards should concentrate on setting quality thresholds that depend on the use made of the recycled wastewater, starting with irrigation for agriculture, Europe's largest water user. 

Encouraging social excellence in public procurement contracts

It must be made easier and less troublesome for all public procurers in Europe to favor bids that offer the best environmental value. Every project for an environmental service should entail wide-ranging assessments, looking at the economic and social realities of existing activities as well as the implementation costs and expected gains in public health and environmental protection. This in turn presupposes that public procurers benefit from legal, economic and political safeguards—something that is currently lacking. Legal safeguards mean that a public procurer should not see its choices systematically challenged, even cancelled, if the lowest bid is not preferred. In terms of economic safeguards, methods such as life cycle analysis must take environmental factors into account when identifying the most cost-effective bid. And to ensure political safeguards, public procurers must be capable of proving to users that the best value bid provides the best service at the lowest cost.

Long-term financing

We cannot ask everybody to bear the entire cost of the ecological transition. With over 150 million Europeans affected by fuel poverty,[8] the question of funding for basic public services is vital as a means to strengthen social cohesion. In many regions of the EU, users are no longer able to afford the full cost of public environmental services: households in some cities in central Europe have cut their connection to the district heating network and begun using individual heaters, which pollute and are inefficient, as their low incomes mean that they can no longer afford to pay for collective heating.

Against such a background, there is a role for public financing of those general interest investments that Europe needs if it is to meet its energy and climate change targets and to ensure that all its citizens enjoy access to good quality basic services. It should be easier for public authorities that are committed to backing this type of investments to use the available EU funding for the period 2014-2020. In this respect some environmental projects should be more easily eligible for a combination of structural funds and public-private partnerships.

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The urgent need to accelerate the speed of the ecological transition is evidenced by the series of major environmental challenges we have to meet, a list headed by the combat against resource scarcity, treating the most difficult forms of pollution and the development of complex urban services. These are issues that are already being faced by a growing number of European companies, households and local authorities.

Businesses sometimes start out thinking of these challenges as constraints that will have a negative impact on their competitiveness; however, they are also opportunities for developing new markets and creating value, and are increasingly seen as such. Local authorities across Europe are seeking answers to these challenges on a case-by-case basis, while at the same time retaining their powers to roll out ambitious environmental policies across the territories they administer, whether in terms of targets, management models or tariffs.

In such a context, environmental services have to offer exemplary operational solutions to every single participant in the economy, helping to drive the move to an economy that is cleaner, greener and more efficient. This can only come about through technology innovations and the creation of new business models. Public authorities have the capacity and the duty to help these new models to emerge, using the powerful levers they control in a balanced manner, all the way from local environmental policies to public procurement and funding.

We are witnessing a new page in the story of Europe as we experience this unsettling yet fascinating period of change at first hand: all across our continent, states, cities and companies are attempting to reinvent themselves for the era of sustainability. In truth, we are living though the very earliest days of the ecological transition, a process that surely has a bright future all across Europe. Our mission is to make it a reality.