Circular economy could bring 70 percent cut in carbon emissions by 2030

Odds are, your mobile phone is less than two years old. Today’s economy is built on a “fast turnover” principle. The faster we replace our gadgets the better – not only our phones, but most items we consume.

This leads to a staggering inefficiency in the way we manage the Earth’s resources, with increased pollution, loss of ecosystems and substantial losses of value with each product disposed. A new study from The Club of Rome, a global thinktank, highlights that moving to a circular economy by using and re-using, rather than using up, would yield multiple benefits.

This Swedish case study, the first in a series of reports in 2015, suggests that 2015 is a key window of opportunity to start modernising the EU economy, while boosting jobs and tackling climate change ahead of the UN climate change conference, COP 21, in Paris in December.

It analyses the effects of three strategies underpinning a circular economy: renewable energy, energy efficiency and material efficiency. It concludes that by 2030, carbon emissions could be cut by almost 70% if a key set of circular economy policy measures were adopted.

In addition, caring for items through repair, maintenance, upgrading and remanufacturing is far more labour-intensive than mining and manufacturing in highly automated facilities. In moving to a more circular economy, the number of additional jobs would likely exceed 100,000 – cutting unemployment by more than a third.

Forty years after the 1972 Club of Rome report, Limits to Growth, we are at a crossroads. Wasteful lifestyles, primarily in the industrialised countries, have caused ecosystem decline, resource constraints and an increasingly unstable climate. Meanwhile, a growing population and much-needed increases of per-capita income in low-income countries are putting further pressure on resources.

The EU legislative proposal, The Circular Economy Package, presented in July 2014, was withdrawn by the Juncker Commission earlier this year under the pretext of deregulation. After heavy criticism and accusations of yielding to Confederation of European Business pressure, the commission has promised the package’s relaunch.

The business community has often seen environmental policymaking as a threat to competitiveness – but there are reasons to view resource efficiency, instead, as an opportunity. This new report considers a number of policy options and investments that would help advance a circular economy and benefit the climate and job market. These include:

  • Strengthening existing policies in renewable energy, eco-design and emissions trading.
  • Establishing specific resource efficiency targets for materials where scarcity looms or the environmental impact of extraction is serious – rare earth metals being a case in point.
  • Strengthening recycling and reuse targets to help reduce and process waste and residues, and putting limits on waste incineration. Reducing landfilling in Europe is a priority – but to swap this for rapidly expanding waste incineration is not a solution.
  • Using public procurement as an incentive for new business models, moving from selling products to selling performance.
  • Making the circular economy a core part of EU climate policies. Most climate change mitigation strategies are sector-based and focus primarily on energy use. But the Swedish study shows the climate benefits of using products for longer. It also shows that carbon emissions can be reduced significantly by clever design, reuse and recycling.
  • Launching investments to support the circular economy – both at EU and national level.
  • Rethinking taxation: lowering taxes on labour, increasing taxes on the consumption of non-renewable resources and removing VAT from recycled materials. Automation means manufacturing requires less manpower than before. On the other hand, all the services around a product in a circular economy – from sustainable design, to maintenance, upgrading, repair and reuse – require more, rather than less, labour. Shifting taxes would accelerate the transition to a circular economy and help balance the threat of losing jobs in a digitised economy.

Studies of the Dutch and Spanish economies later this year will complement the Swedish case study. Although it is premature to draw EU-wide conclusions based on one study alone, the Swedish findings indicate that a circular economy is not contrary to the Juncker Commission’s agenda for competitiveness and growth. Quite the opposite.




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