Matthieu Bardout (Circle Economy), Jelmer Hoogzaad (Shifting Paradigms)A transition to the circular economy requires significant investment into research, developing, piloting and scaling solutions. Given its potential to contribute to climate mitigation efforts, climate finance should be pursued to support the transition. This blog post, the last of the series, provides insights into the way forward.
Climate finance refers to local, national, or transnational financing for climate action, which may be drawn from public, private, and alternative sources of financing. It includes USD 100 billion per year pledged by developed countries under the Copenhagen Accords in 2009 and many other sources of funding that contribute to mitigating or adapting to climate change. Total climate finance was estimated to be approximately USD 927 in 2014.Ideally, climate finance flows would reflect the mitigation potential of available approaches, with some degree of correction for the ease of implementation. That, however, is not the case. Within the broader definition of climate finance, an estimated 31 percent is invested in renewable energy and 36 percent in energy efficiency (own analysis based on UNFCCC). While tackling fossil-based energy use is critical, this limits the funding directed to other promising mitigation approaches. For example, approximately 67 percent of global energy use is linked to material management*, whereas low-carbon materials and dematerialisation strategies are seldom looked at within climate finance.The significant mitigation potential of the circular economy is thus overlooked, despite ambitions to make climate finance more innovative and transformative. Institutional investors should therefore analyse their portfolios to understand how investments cover the circular economy and how these investments also relate to climate finance efforts. For example, the European Bank for Reconstruction and Development (EBRD) recently conducted an analysis of 368 investments made between 2014 and 2016 and found that 80 projects used circular economy measures and another 73 had potential to use circular economy measures. During the same period, 30 to 35 percent percent of the EBRD's investments were also accounted for as climate finance.Further reading: Circular Economy: A key lever in bridging the emissions gap to a 1.5 °C pathway
Risk management is critical to investors, and they cannot ignore the risks associated with climate change and the linear economy. For example, the carbon bubble suggests that fossil fuel companies valued based on the resources they plan to extract may be overvalued, as these resources would exceed the global carbon budget if burnt. This kind of risk is prompting regulators and institutional investors to mandate climate risk reporting, which exposes the vulnerability of fossil investments and can drive climate finance in the right direction.The risks associated with resource scarcity, access, and price volatility are also increasingly felt in a range of other industries such as agrifood or mining. The concept of linear risk, defined as the risk of operating with linear business practices, can also be extended beyond resource-related risks to include market, operational, business, legal, and reputational risks**. 'Linear' companies, for example, are less able to adapt to shifting supply chains, to meet extended producer responsibility requirements, and to connect with a new generation of consumers. As they offer solutions to both linear risks and climate change, circular economy strategies should make it to the front of climate finance pipelines.
We need to evaluate existing public policy and financial instruments to understand if and why they have been (un)successful at supporting the circular economy, and to develop new instruments that can effectively 'push the snowball down the hill'.Front-running countries such as The Netherlands have already demonstrated the importance for public actors to give clear signals in favour of the circular economy. The country’s ambition to become circular by 2050 has prompted a wide range of economic actors - industry, finance, research organisations, etc. - to engage with and rethink their position in a circular economy. This has boosted the country’s position in Europe and helped major companies such as Philips or DSM announce bold circular strategiesThe circular economy also requires continued public support for research and development in order for us to improve both our understanding of material flows and our consumption patterns, and to develop innovative technologies that can overcome the weaknesses of our linear economy. For example, the use of waste-as-a-resource is an important pillar of the circular economy, but behavioral changes and new technologies are still needed to increase recovery and recycling rates. Public support can catalyse both.Furthermore, the circular economy calls for a rethink of how business models respond to society’s functional needs. Product-service systems, for example, can reduce the need for physical assets and mitigate emissions, yet they have less of a track-record and are typically perceived to be riskier by investors. Public finance could therefore have a role in de-risking such investments.
The staggering gap between public and total climate finance, combined with the well-understood need to urgently scale climate finance, highlights the importance for public actors to leverage private sector finance. The circular economy is particularly promising in that respect as it promotes business approaches compatible with sustainable economic, social, and natural capital creation. New business models*** are being tested by front-running businesses of all shapes and sizes: disruptive startups (e.g. Bundles’ ‘washing machine as a service), SMES (e.g; Fairphone’s modular phone) and established multinationals (e.g. Philips’ remanufacturing plant in Best, NL). These new models are increasingly successful and front-running companies are demonstrating that they can add value by following circular principles.For example, many waste management companies seek to use waste as a resource, seeing an opportunity to diversify revenues by adding secondary material sales to conventional waste management activities. Considering that about 1.5 billion tonnes of carbon dioxide equivalent are emitted from wastewater treatment and municipal solid waste disposal annually, that only 20 percent of global municipal solid waste is recycled, and that 80 percent of wastewater is released untreated into the environment, there is both ample mitigation and commercial potential in avoiding waste and improving the recycling of valuable materials. 5. Implement new metricsSetting new carbon metrics will improve our understanding and measurement of the mitigation potential of the circular economy, and will help direct climate finance effectively. Using consumption-based rather than territorial accounting can broaden the scope of mitigation action and better reflect the actual contributions of different countries. Indeed, although territorial accounting is more straight-forward, the commitments under the Paris Agreement do not currently add up to a reduction level in line with the 2°C target.Governments, companies and investors need to broaden their perceived span of influence beyond factory gates and national borders, as our economies have become too integrated and supply chains too international for any other approach. This is something the green climate fund already recognises in its call for transformational impact, and this is where consolidating and implementing new metrics will prove critical, as climate finance turns to investing in low-carbon options rather than focusing on making traditional industries more efficient. Under a consumption-based accounting scheme, governments may understandably fear a dramatic increase in the scope of their responsibility. The voluntary nature of the Paris Agreement, however, is favourable in this respect as it promotes collaboration across value chains and serves as reassurance for signatories to safeguard their interests. *UNDP, "Circular economy strategies for Lao PDR - A metabolic approach to redefine resource efficient and low-carbon development" (forthcoming), a project with Shifting Paradigms, FABRICations and Circle Economy**Circle Economy and its partners will release a paper on linear risk during the course of 2017.*** See for example the five business models proposed by Peter Lacy and Jakob Rutqvist in 'Waste to wealth: the circular economy advantage' (2015): circular supply chains, recovery & recycling, product life extension, sharing platforms and product-as-a-service[hr]
The circular economy features high on public and private agendas and promises to help mitigate climate change. In the past weeks, we have explored how it can add to current climate policies, contribute to the the Paris Agreement and leverage climate finance. There is considerable scope for action and an urgent need to put the circular economy into action. Now is the time to make it a driving force for the ambitious climate action we need!
Thank you for reading! Please contact us for questions & follow-up.
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In a unique bundle of expertise, Fairphone, PGGM, ING, ABN AMRO, NBA, Allen & Overy, Circularise, MVO NL, Circle Economy and Sustainable Finance Lab will work together in the “Fairphone-as-a-Service Community of Practice” (CoP). The aim is to gain insights into the possibilities of and preconditions for a viable business model that no longer sells smartphones, but offers them as a service instead. The CoP is organized by the Sustainable Finance Lab and Circle Economy within the Netherlands Circulair programme and will run from June to October 2017.Fairphone aims to incentivise the industry to design and commercialise long-lasting, repairable smartphones. In order to accomplish this, product ownership needs to be left in the hands of the manufacturer rather than the customer. Manufacturers can then be responsible for the product, and customers can be assured that their device is both functional and durable.
Photo credit: FairphoneThe CoP is using Fairphone as a springboard to explore how contractual agreements between stakeholders, such as financiers, suppliers, insurers and customers, can enable product-as-a-service business models; what possibilities and opportunities these business models afford, and the scenarios where they are both achievable and financeable. The goal? To practically apply the service model to Fairphone business customers.Participating organisations bring together cross-disciplinary knowledge and expertise: from lawyers, insurers, bankers and accountants, to software developers, business economists, academics, and other experts in the field of the circular economy. Their combined efforts will be exploring the challenges, roadblocks and opportunities that lie ahead. The learnings will be documented and published in a white paper for other businesses, the financial sector, governments, and other interested parties to learn from. The ultimate goal is to practically apply the service model to Fairphone’s business to business customers.The CoP members actively contribute to the development of new business models that can bring the circular economy closer.Learn more about Fairphone's goals and ambitions here.
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Interested in learning more about the outcomes of this Community of Practice?
This is the third of four blogs in the Climate change and the circular economy series. Read part 1 and part 2 first.[hr]By Jelmer Hoogzaad (Shifting Paradigms) and Matthieu Bardout (Circle Economy)The Paris Agreement entered into force in November 2016, after receiving sufficient endorsement from national governments. Negotiators from 195 countries have since been defining rules and procedures, thereby shaping the way countries report on their emissions and mitigation ambitions, and agreeing on the modalities of international cooperation on greenhouse gas emissions mitigation.The latest UNEP gap report confirms that mitigation commitments submitted by the signatories do not add up to a decrease in greenhouse gas emissions that will secure a future without climate change exceeding 2°C, let alone 1.5°C. The circular economy can help do the extra heavy lifting to close this gap, but only if circular solutions are encouraged, recognised and facilitated by the Paris Agreement's implementation frameworks.Here’s how:1. Moving from offsetting to cooperation The Paris Agreement asks for voluntary climate action from all countries - industrialised and developing alike. That is unlike the Kyoto Protocol, which included emission targets for a selection of industrialised countries, who were allowed to use offsetting to invest in emission reductions in other countries and count these towards their own compliance. The Paris Agreement also relies on processes rather than strict mitigation goals.This makes the use of offset mechanisms complicated: although governments still welcome foreign investors to support domestic mitigation action, they also want to use 'low-hanging fruit' or low-cost mitigation options for their own mitigation ambitions. While offsetting under the Kyoto Protocol created an international competition for low-cost mitigation opportunities, the nature of the Paris Agreement calls for international cooperation, with all countries working together on low-carbon development and being able to exchange mitigation outcomes under Article 6 if investments made by one country lead to mitigation in another.Such cooperation makes sense since around 20% to 30%* of a nation’s carbon footprint typically lies in the embedded emissions of imported products. This means that a large share of global mitigation opportunities stretch beyond borders and across value chains. International cooperation is needed to tap into these opportunities. Since this is about the carbon footprint of the products and materials traded, circular economy principles point at mitigation options which have hardly been incentivised so far. Examples include: when the design of a product from one country helps reduce emissions in the use or end-of life phases in another country; when the substitution of carbon-intensive materials in one country reduces emissions related to their production in another country; or when a product can be completely replaced with a service.The Paris Agreement should make it easier for governments to take domestic and international action on extraterritorial emissions, seeking international cooperation to reduce emissions across value chains, and tapping into the collaborative principles of the circular economy.2. Collecting new data under the transparency frameworkThe Paris Agreement proposes a transparency framework for the disclosure and third-party review of national emissions and the implementation of climate action. This framework invites countries to report on their mitigation ambitions, using approaches from the Intergovernmental Panel on Climate Change (IPCC) that are based on sectoral and territorial accounting. Most activities under the Paris Agreement, such as policy support, climate finance, technology transfer and capacity building, rely on this data not only to track progress, but also to identify mitigation options.Unfortunately, territorial accounting does not show the potential for domestic actions and international cooperation to reduce emissions across borders through material substitution, circular design or replacing a product with a service. Likewise, presenting emission data per sector fails to reveal the potential for cross-sectoral mitigation action, while that is where the potential lies to use waste or underused assets from one sector as resource in another.These innovative and circular mitigation options tend to alter resource flows across borders and sectors. Consumption-based accounting - presenting emission data based on the service that an economic activity delivers to society - is better able to also disclose these mitigation perspectives.3. Elevating ambitionsIt is well understood that climate policies and national ambitions submitted to the UNFCCC to date fall short of reaching the 2°C or 1.5°C targets. More ambitious policies and new mitigation options are urgently needed. The Paris Agreement therefore includes a procedure for regular updates of national mitigation ambitions, inviting signatories to periodically increase the ambition of their emission reduction commitments or Nationally Determined Contributions (NDCs). This ratcheting mechanism provides an opportunity to introduce and encourage the use of circular economy strategies to bring emissions down even further. Since current NDCs make little use of these strategies, they enable governments to increase ambition. This does require a deeper understanding of the mitigation potential of a circular economy, and its possible rebound effects, such that governments can make optimum use of circular strategies and both reduce the greenhouse gas and resource footprint of their economies.4. Promoting structural change in low emission development strategiesNext to submitting Nationally Determined Contributions (NDCs), the Paris Agreement invites national governments to submit the Low Emission Development Strategies (LEDS) which will reduce their emissions by 2020. To date, these strategies hardly consider circular economy concepts.This provides an opportunity to make circular economy development a structural part of a country’s low-carbon development ambition, which is also where it belongs. A lot of the development challenges which countries face are related to the linear nature of their economy, whether it is the adverse landscape impact of resource extraction, deforestation, the use of fossil fuels and related greenhouse gas emissions or the massive waste disposal challenge that they face. A focus on greenhouse gas emissions alone only addresses part of the problem. By providing the holistic or systemic levers to truly transform our economies, circular economy offers a range of solutions which often address greenhouse gas emissions and unsustainable resource use jointly. 5. Introducing new approaches to capacity buildingInternational cooperation builds on three pillars: finance, technology transfer, and capacity-building. Moving away from a linear economic model requires systemic change and insights into the resource and energy metabolism of an economy. Systemic or metabolic approaches are common analytical tools to identify and assess circular economy options and should be applied more often to identify low-carbon development options. With the exception of India, Lao PDR** and a handful of OECD countries, they have hardly been used. Because of their potential to elevate the mitigation ambition of the Paris Agreement, metabolic approaches should become a cornerstone of capacity building on climate action.*This estimate varies between different sources. According to S. Paulik (2014) “emissions embodied in international trade change the footprint of many countries by 30% or more”. According to G.P.Peters (2008) “22% of global CO2 emissions are embodied in international trade”.**UNDP, "Circular economy strategies for Lao PDR - A metabolic approach to redefine resource efficient and low-carbon development" (forthcoming), a project with Shifting Paradigms, FABRICations and Circle Economy[hr]
A transition to the circular economy will require significant investment to research, develop, pilot and scale promising solutions. The final blog in our series will delve into specific steps to mobilise climate finance to support this transition.
This is the second of four blogs in the Climate change and the circular economy series. Read part 1 here.
[hr]By Jelmer Hoogzaad (Shifting Paradigms) and Matthieu Bardout (Circle Economy)Around 21 percent of the resources we extract* are fossil fuels that are used to extract, transport and process materials; as well as to deliver, use and dispose of products. As a result, 67 percent of global greenhouse gas emissions are related to material management**. Limiting global warming to well below 2°C or even 1.5°C by 2100 thus requires climate action to go far beyond incremental improvements to our economies. It requires profound changes in the way we produce, use, and consume products, materials and energy.The circular economy provides an attractive mitigation opportunity as it steps away from the negative and often punitive narrative of reducing emissions, and defines a more positive and inspiring vision of a circular future. It does not shy away from the systemic changes needed to get there and addresses both excessive resource use and greenhouse gas emissions in tandem.These key aspects of the circular economy can help in developing new mitigation options that combine effective climate action with the improved use of assets and resources, and give climate policies and strategies the ambition they currently lack. Here’s how:
The circular economy responds to a direct call from the climate community to address the fundamental issues behind our greenhouse gas emissions by promoting the collaborative, cross-sectoral approach we need to reduce greenhouse gas emissions and make more efficient use of available assets and resources. Moving away from the traditional 'take-make-waste' economic model that has prevailed since the industrial revolution requires systemic change. The Green Climate Fund, for example - the main vehicle for climate investments into developing countries - urges for paradigm shifts and calls on projects with transformational impact rather than the more incremental, single-installation investments that have been commonplace under current climate policy and project developments. Current efforts, such as renewable energy and energy efficiency measures, tend to focus on improving or developing individual assets. While they are important and should be pursued, the UNEP gap report confirms that there are clear limits to decarbonising current production systems. These measures only buy us more time, when we should be focusing on designing a low-carbon future.At industrial scale, this calls for industrial symbiosis, for example, in addition to merely improving the efficiency of individual factories. At national, regional, and urban scales, this means tapping into the many cross-sectoral opportunities that the complex metabolism of our economies and the ecosystems on which they rely have to offer.
Around 20% to 30% of a nation’s carbon footprint can lie in the emissions embedded in the products crossing its borders. Yet under the UNFCCC, national climate policies and voluntary commitments, governments account for greenhouse gas emissions demarcated by geographic borders. With this approach, national governments are not encouraged to take action on the mitigation potential that lies outside their national borders.This is why a collaborative, cross-sectoral, and cross-border approach is needed to develop the full mitigation potential of national action. This is what the circular economy does, all the while advocating for effective material use: it encourages economic agents to coordinate efforts across global value chains and to reduce emissions in all parts of the chain.Designing an economy that is smarter about materials use- an economy that looks beyond factory gates and country boundaries- extends our mitigation impact as far up as the mines, quarries, wells, fields, and forests where our products are born.
Addressing both greenhouse gas emissions and excessive resource use yields significantly deeper reductions in global emissions. Scientific models also indicate that the combination of resource efficiency and climate action delivers higher environmental and economic benefits. Combining low carbon development with improved use of material resources also makes economic sense: the long-term economic benefits of resource efficiency and low-carbon development exceed the short-term costs of shifting to a 2°C emissions pathway. For some sectors, effective decoupling of resource use from economic growth alone is enough to reach the 2°C benchmark.
The focus of mitigation efforts has traditionally been on the physical sources of greenhouse gas emissions: from energy efficiency of our boilers and engines, to capturing methane from landfills, coal mines and manure storages, mitigation efforts have often targeted the symptoms more so than the cause. However, many mitigation options do not require interventions at the emissions source at all, but rather an understanding of the societal need that underlying economic activities address in the first place. Only by understanding the needs that our products and materials satisfy can we explore new ways to address them. Substituting carbon-intensive materials with low-carbon alternatives, improving the use of existing assets, and providing products-as-a-service can then emerge as new mitigation options.
Policy makers with a climate mandate often try to choose between introducing a carbon tax or relying on emission trading schemes that cap industrial emissions. Both options aim to correct markets for the negative externalities of greenhouse gas emissions by encouraging energy efficiency and renewable energy. Both options, however, also disregard the potential of resource efficiency. Extraction taxation, on the other hand, aims to discourage resource extraction and encourage the use of a resource with less environmental externalities: labour. It proposes that we tax what we want less of, and lower taxes on what we want more of. As such, it takes the concept of carbon taxation a step further and encourages a circular economy where resources are effectively used and renewable energy sources are prioritised.A tax reform where the added tax burden on resource-intensive products is immediately compensated with reduced taxes on labour also allows for public opinion to work in favour of the initiating government body.* Own analysis based on UNEP IRP (2016) Global material flows and resource productivity.** UNDP, "Circular economy strategies for Lao PDR - A metabolic approach to redefine resource efficient and low-carbon development" (unpublished draft), a project with Shifting Paradigms, FABRICations and Circle Economy.[hr]
Translating the circular economy into actionable, ambitious climate policies and strategies requires collaboration by governments across borders. This is also an opportunity for climate finance and the architecture of the Paris Agreement. We’ll dig deeper into these topics in our upcoming blogs in this series.
Beyond Green, Circle Economy’s signature textiles event, held in collaboration with the Amsterdam Fashion Institute, is an annual symposium on the future of fashion that uses the collective power of students and industry to tackle critical issues throughout the fashion system. The next edition of Beyond Green will be held on the 20th of October 2017 and will build on the momentum of the initiatives and targets the circular textiles and fashion arena has launched and set over the past quarter. It will move beyond the 'why?' and set to work on answering the much needed question of 'how?’On the agenda? Our 5 step plan to circularity! To give you a preview of what’s to come, we will be releasing a series of blogs to individually introduce each of the 5 steps over the next few weeks. Sign up for updates on Beyond Green or keep an eye out on our website and social media accounts for upcoming blogs in this series![hr]The first step brands need to take on the way to circularity is to create demand for (and demand!) recycled fibres, and actively encourage a sourcing culture and buying standard that support recycled content. The good news is: they already can, and so can you.With a rising global population and decreasing availability of natural resources, curbing the demand for virgin fibres is more imperative than ever. Growing crops like cotton and flax are water and land-intensive, when both resources are set to become scarcer (and no less important for food security) in the future. In fact, raw material prices are already on the rise, and it makes little sense to increase our consumption of synthetics when that requires more oil extraction — another dwindling and volatile commodity… As the industry begins to revamp its current systems, brands can start weaning themselves off of virgin fibres and introducing recycled content into their modus operandi. Critics may argue that the supply is not there yet, but the supply/demand relationship is positively correlated: the more brands demand recycled material, the more widely available and affordable these fabrics will become. So what options do brands already have?Keeping it in the familyFibre-to-fibre recyclingSourcing fibres and fabrics made with recycled textile inputs reduces pressure on our natural environment by reprocessing the textiles that are already in the system. There already are innovations that allow brands to source recycled textiles without having to sacrifice quality or aesthetics. Mechanical recyclers, such as Brightloops, Recover, and Wolkat, continue to make great strides in creating yarns whose quality is comparable to virgin, and are moving toward a competitive price with a fraction of the environmental impact. Meanwhile, blossoming chemical recycling solutions, like the ones Worn Again, Ioniqa and EvRnu are developing will help to fast track the textile industry into the future.One’s waste is another’s treasureWaste-to-fibre recyclingA myriad of new materials are being pushed to the market, challenging the industry to rethink what fabric is and what it can be. Many innovations focus on capturing and converting natural (bi)products that are currently wasted into new pulps, yarns, and fabrics: cow manure to fabric, citrus fruit to garments,mushrooms to leather... the list goes on. Such new materials have the capacity to broaden and therefore diversify our materials library, decreasing our dependency on mega fibres such as cotton and polyester. Sound good? Here’s what you can do to get started:
Curious for more? Stay tuned for our next blog and make sure to sign up for updates on Beyond Green!
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Are you a brand sourcing recycled content? We’d love to hear from you!
Matthieu Bardout (Circle Economy), Jelmer Hoogzaad (Shifting Paradigms)In December 2015, 195 nations signed the Paris Agreement on reducing global greenhouse gas emissions, committing to keep global temperatures "well below 2°C above preindustrial levels and pursuing efforts to limit the temperature increase to 1.5°C". The Paris Agreement is a major accomplishment in itself. Meeting its targets will, however, be no easy feat, particularly in light of the recently expressed intention of the United States to withdraw. New and innovative climate change mitigation solutions are needed for public and private actors alike to step up their efforts and creativity in identifying mitigation options. The circular economy concept is promising to improve the way we meet the functional needs of society while using fewer materials and reducing negative impacts such as greenhouse gas emissions. This blog post, the first of four in this series, provides an overview of why the circular economy is a promising pathway to meet the Paris Climate Agreement.
Our dependence on fossil fuels is at the heart of the climate change challenge. Around 65 percent of greenhouse gas emissions are carbon dioxide (CO2) from the combustion of fossil fuels. The remainder are carbon dioxide from forestry and land use (11 percent), and methane (CH4) and nitrous oxide (N2O) emissions from agriculture (16 percent) and industry (6 percent).In this context, it is not surprising that a majority of climate mitigation policies focus on energy efficiency and renewable energy, as exemplified by the European Union's so-called 20-20-20 policy aiming for a 20 percent reduction in emissions relative to 1990 levels by 2020, based on a 20 percent share in renewables and a 20 percent increase in energy efficiency. Other policies and initiatives target emissions from Land Use, Land Use Change and Forestry (LULUCF), or focus on reducing methane and nitrous oxide emissions. These are also mitigation activities which tend to benefit from offsetting mechanisms where mitigation outcomes are quantified and traded.
The core of the Paris Climate Agreement are mitigation commitments from national governments but also numerous private and subnational actors have committed to doing their share. Despite this joint effort, current commitments fall far short of the 2°C target, let alone of the 1.5°C target. UNDP's latest 'Emissions Gap' report estimates a remaining gap of approximately 14 billion tonne of CO2 equivalents in 2030 between a scenario where all commitments are being achieve and keeping emissions at a level which limits global warming to 2°C by 2100.This gap was already well understood upon signature of the Paris Climate Agreement and a 'ratcheting mechanism' was included to encourage signatories to increase their ambitions every five years. Circular economy strategies can support countries with identifying and developing mitigation options which go beyond current pledges, both in scope and ambition.
The circular economy is a far-reaching concept at the forefront of sustainability thinking. The Ellen MacArthur Foundation, a leading think-tank on the topic, defines it as an "industrial system that is regenerative and restorative by design, rethinks products and services to design out waste and negative impacts, and builds economic, social and natural capital". Circle Economy's '7 elements of the circular economy' stress the combined material and systemic nature of the circular economy, identifying three material pillars:
And four systemic enablers:
Recognising its tremendous potential to create sustainable value, public and private stakeholders are adopting the circular economy: the Netherlands recently announced its ambitions to become the first circular country by 2050; the European Union released its circular economy package in 2015; many other countries such as France, China, Japan, Sweden and Finland are developing circular policy frameworks; and a growing number of front-running companies - small and large - are implementing the circular economy.
Ever since the industrial revolution, global economic growth has been fuelled by natural resource extraction. Today, we extract over 80 billion tonnes of materials per year, of which a mere 7% is reused or recycled by the global economy*. Material management through our economies is estimated to account for as much as two thirds of global emissions** and as much as 4.1 billion tonne of CO2 equivalents are associated with materials after the use stage (i.e. with waste management). Additionally, an estimated 3,928 cubic kilometres of freshwater are withdrawn annually, of which 56% is released into the environment as largely untreated wastewater, which results in considerable emissions and degradation of water resources.In this context, the circular economy promises to significantly contribute to climate change mitigation efforts through a combination of improved material management, dematerialisation and systemic change. Looking at materials, a wide array of opportunities to scale the use of low-carbon materials are overlooked and underfinanced. Wood, for example, has tremendous potential as a substitute for concrete in large-scale structures. The use of waste as a resource also holds considerable potential, as indicated by the Dutch government's recent allocation of 150 million euros for the construction of industrial-scale biodigesters to capture and valorize methane emissions from cow manure, which is expected to dent the country's agricultural emissions. The circular economy also calls for a critical re-examination of the way we meet our societies functional needs. In the digital age, numerous opportunities exist to dematerialise our economies, make more efficient use of assets or shift toward 'product-as-a-service' models. Terms like the 'sharing economy' and 'functional economy' are now mainstream and a growing number of companies and consumers are finding innovative ways to create value without owning new physical assets, or by offering more efficient services. In this context, the development of business models such as chemical leasing or ride-sharing are increasingly being considered as powerful means to decarbonize our economies. The circular economy thus offers the promise of transformational mitigation, complementing incremental improvements with e.g. energy efficiency that fail to tackle systemic flaws.
An estimated 67% of our greenhouse gas emissions are related to the management of materials, showing that progressing to a circular economy with a lower material footprint, is also a pathway for low-carbon development**.A growing body of evidence is emerging that demonstrates the circular economy's mitigation potential. In a White Paper published jointly with Ecofys in 2015, Circle Economy for example estimated that the circular economy has the potential to close approximately half of the emissions gap between current policies and the 1.5°C target. Engagement with climate policy experts at a policy dinner organised in Bonn in May 2017 by the Stanley Foundation, also yielded great excitement as to the circular economy's potential. Participants, for example, acknowledged the need for an increased focus on low-carbon materials, as well as the circular economy's potential to drive low-carbon behavioural change.It must, however, be acknowledged that the application of the circular economy concept is still in its infancy; robust and granular evidence is lacking to clearly delineate and quantify the circular economy's climate mitigation potential. Research is urgently needed to deepen our understanding of the mechanisms at play and enable the circular economy to realise its full potential.* Circle Economy team analysis based on Exiobase (2011); Tukker et al., EXIOPOL - Development and illustrative analyses of a detailed global MR EE SUT/IOT (2013) Economic Systems Research, 25 (1), pp. 50-70.; Wood et al., Global sustainability accounting-developing EXIOBASE for multi-regional footprint analysis (2015) Sustainability (Switzerland), 7 (1), pp. 138-163.** UNDP, "Circular economy strategies for Lao PDR - A metabolic approach to redefine resource efficient and low-carbon development" (unpublished draft), a project with Shifting Paradigms, FABRICations and Circle Economy
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The next blog posts will provide more information on the implications of the circular economy on climate policy, negotiations and finance.
[cta link="http://circle-economy.com/climatechangeseries"]Stay tuned[/cta][hr]
We are very proud to welcome Wolkat, a one-of-a-kind player in the circular textiles arena, to our Circle Membership! Wolkat is a family-owned, textile-to-textile recycling company, and they are passionate about creating a world where post-consumer textile waste is no longer seen as waste, but as the valuable, raw material it can be.Wolkat sorts and turns textiles into new textiles products for the fashion, car, and furniture industries — all under one roof. Their vertically-integrated process makes them a unique textile to textile recycling company in that they act across the entire supply chain, so that sorting, recycling, spinning, and weaving all happen inside their own factories.
To give them a proper welcome into the Circle Economy community, we asked them five questions on their experience in textile recycling and the role of brands in the future of circular textiles:What would your message to brands be? Under the right conditions, there is most definitely a commercial solution for all textile waste. This starts much earlier than when clothes, for example, have already been worn and turned into “waste”. From design to marketing to sales to the collection of used clothing- there are so many aspects where brands can have a lot of positive influence, starting with the image they give of textiles to their consumers. But finding solutions is a two-way street, so there needs to be an open conversation between brands and textile recyclers to adopt the most practical, feasible approach.Beyond using sustainability as a marketing tool, now’s the time for brands to start putting money where their mouth is.What’s next for Wolkat? Launching more products and getting involved in the market in order to really understand the needs and wishes of the various stakeholders in the textile market (e.g. brands, government, producers etc). We’re also constantly optimising our end-products and looking into which techniques and approaches will get everyone the best results.Any new and exciting projects in the near future? Yes! We have a lot of new projects coming up and our range of end-products is expanding every day. We are also generating a lot of data from the pilots and projects we work on, which is enabling us to build and offer a solid basis for (future) partners and collaborations. What makes Wolkat unique? Being the only company in the world that has the knowledge and actually does everything from sorting to producing end-products in-house. This way, we can offer both transparency and sustainable, quality results.What has been your biggest learning so far? That the possibilities are endless when it comes to textile recycling and making the textile industry more sustainable! But so are the challenges that need to be overcome. So you need to think outside the box and be extremely passionate, willing to take a leap of faith, and a little bit crazy in order to achieve hands-on results. Finding the right partner on the brand side of the story who shares these qualities is also key for further development.
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As of 22 June, Fiona van ‘t Hullenaar joined Circle Economy’s Cooperative Board. She brings with her over 20 years of corporate experience, an extensive network, and leadership experience and will work alongside our current board members, Robert-Jan van Ogtrop, Herman Wijffels, Dr. Louise Vet, and Martijn Lopes Cardozo.The expansion of Circle Economy’s Cooperative Board represents the maturing of Circle Economy as an organisation. Having now been in existence for 5 years, the Circle Economy team recognised the need for new expertise, experience, and outlook on the Board as a way to achieve the organisation’s ambitious goals. The member companies of the Circle Economy cooperative agree and recently voted to confirm Fiona’s appointment during the most recent annual meeting, held on 22 June.
“We are very happy to welcome Fiona to the Cooperative Board. She is a dedicated professional and a true ambassador advocating the circular agenda. Her latest project at a.s.r. shows her capacity to make circular ambitions a reality.”
- Robert-Jan van Ogtrop, Executive Chairman of Circle Economy’s Board
For the last six and a half years Fiona has been the Director of Business Support at a.s.r. Insurance during which, she was responsible for Sustainability, Facility Management, Operations and the Sustainable Renovation of the company’s 86.000m2 head office. Fiona was awarded the Bouwpluim 2015, the Nederlandse Bouwprijs 2017, and was nominated for the Duurzame 50 2017 for her work in the field of sustainable building. She also holds several advisory positions, including one on the International Advisory Board of Utrecht University on the subject of sustainability. Fiona’s extensive experience in corporate environments gives way to her strong focus on corporate responsibility and circularity. She has an MSc degree in geology and geophysics from Utrecht University and furthered her education at the London Business School. Recently Fiona received her certification as an Executive Coach, which she is now using to help business executives tap into their intrinsic motivations and develop themselves to their full potential.
"I strongly believe that there is simply no excuse to wait for holistic, integral solutions. There is simply no excuse anymore for focusing on the “Cannot” or “But what if”. The way forward is for each and every person to focus on the possibilities and opportunities that the circular economy provides, and apply that to their own circle of impact and influence. As a Circle Economy board member I am eager to contribute my enormous enthusiasm to the organisation and to inspire other companies to see the possibilities and concretely build on their efforts to achieve a more sustainable future."
- Fiona van ‘t Hullenaar, Member of Circle Economy’s Board
Alongside Robert-Jan van Ogtrop (chair), Herman Wijffels, Louise Vet, and Martijn Lopes Cardozo, Fiona van ‘t Hullenaar will focus her work on expanding Circle Economy’s network and supporting the organisation as it further develops new programs and digitises its tools.
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