Among the copious reports and white papers released during the third week of September — a.k.a. Climate Week — (a good roundup can be found here) was one that didn’t get much notice, but should. It neatly and powerfully places the circular economy at the center of untapped solutions to limit the worst impacts of a changing climate.
The report, like so much groundbreaking research on the circular economy, came from the Ellen MacArthur Foundation, in partnership with Material Economics, a Stockholm-based management consultancy firm focusing on sustainability strategy, technology and policy. Titled Completing the Picture: How the Circular Economy Tackles Climate Change, it makes the case that shifting to renewable energy and energy efficiency in buildings and transport can meet only about 55 percent of greenhouse gas reductions needed to meet the 1.5°C cap in temperature rise set out by the 2015 Paris Agreement.
The other 45 percent? We’ll need to redesign and rethink how we manage land and other resources, and how we produce everything from cars to cauliflower. In short: the world will need to embrace a circular economy.
The new paper shows how applying circularity principles to just five key areas — cement, aluminum, steel, plastics and food — can eliminate substantial emissions while increasing resilience to the physical impacts of climate change.
For example, it says, by keeping materials in play, companies can decouple economic activity from the consumption of resources vulnerable to climate risks, and therefore build greater flexibility if supply chains are significantly disrupted. In the food system, regenerative agriculture improves the health of soil, which can increase its capacity to absorb and retain water, thereby reducing the devastating impacts of both floods and droughts.
Thinking about the means of production and consumption is a critical part of the climate solutions toolbox, even though it often gets short shrift in climate conferences and conversations, where the focus is often on energy-related issues. The rise of the global middle class, with roughly 3 billion new entrants between now and 2030, will lead to an explosion of demand for stuff. Most of that growth will come from the developing world — China, India, Nigeria, Indonesia, Bangladesh and a few other countries, mostly in Asia and Africa.
By 2050, global demand for industrial materials could quadruple, while demand for food is projected to increase by 42 percent. Both will have major implications for climate emissions, potentially increasing them at a time when the world needs to drastically reduce or even eliminate them.
Tomorrow’s middle class won’t just be buying more goods, they’ll also be eating higher on the food chain — more meat and dairy products, for example, along with a rise in processed and packaged foods. How those meals are produced and delivered will be as key to solving climate change as the shift away from fossil fuels.
And so, the circular economy. “To meet climate targets, a fundamental shift will be needed in the way the economy functions and creates value,” say the report’s authors. That means moving away from today’s linear, take-make-waste model “towards an economy that is regenerative by design.”
In such an economy, they explain, “Natural systems are regenerated, energy is from renewable sources, materials are safe and increasingly from renewable sources and waste is avoided through the superior design of materials, products and business models.”
That’s as good a definition of the circular economy as I’ve seen.
In addition to reducing greenhouse gas emissions, circularity offers other bene?ts, such as increased economic opportunity, better access to goods, increased mobility and connectivity, and lower air pollution.
Say EMF and Material Economics: “It therefore acts as a delivery mechanism for several UN Sustainable Development Goals. In fact, by contributing to responsible consumption and production (SDG12) and developing resource-smart food systems, a circular economy contributes to at least 12 of the 17 SDG goals outlined in the UN’s 2030 Agenda for Sustainable Development.”
Of course, turning the ginormous ship known as the global economy won’t be easy or fast. And the metrics for success remain nascent, so tracking progress may be challenging, especially when linking reduced materials flows to climate progress.
Still, the opportunities are vast. Consider, for example, the built environment. It uses almost half of the world’s materials extracted every year and current projections estimate that globally by 2060 the equivalent of Paris will be built every week. By then, carbon emissions from construction will be responsible for roughly half of total new building emissions, compared to 28 percent today.
So, how we design, construct and use buildings will matter greatly if we are to meet future climate targets. And, say EMF and Material Economics, “A circular scenario for the built environment could reduce global CO2 emissions from building materials by 38 percent by mid-century, thanks to a reduced demand for steel, aluminum, cement and plastic. And, along the way, it would “offer residents improved access to goods, services and housing, as well as improved outdoor air quality in which to live and work.”
Some of these solutions will require significant investments, including increased labor costs. For example, optimizing concrete elements or steel beams to reduce total materials use “often comes at the cost of increased complexity and coordination, and a need for increased prefabrication.” But technological advances — such as 3D printing, which can nearly eliminate production scrap — can also lower costs through reduced waste.
Not every loop in the material world can be closed through material productivity improvements and renewable energy technologies, at least not easily. There will always be materials — and their greenhouse gas emissions — that will require non-circular economy measures such as carbon capture and permanent storage to mitigate. Some of those emissions can be captured and turned into advanced materials, such as carbon nanomaterials, concrete or other physical materials, though those technologies and markets are still nascent.
Within food systems, significantly reducing emissions will require changing the consumption habits of billions of people — no small feat — along with changing the production habits of hundreds of millions of producers and decarbonizing long and complex food supply chains. “This makes industry and food system emissions the main roadblocks to reaching overall net-zero emissions,” says the report.
For a fully net-zero economy, circular economy opportunities will need to be complemented by a transition to clean production processes. However, there is a need for substantial innovation and investment before zero-carbon steel, aluminum, plastics and other materials can be made available.
As noted, there are potentially massive economic benefits. For example, implementing the circular strategies for food systems alone is estimated as $700 billion per year by 2050, according to EMF’s own estimate. Eight years ago, McKinsey estimated $2.9 trillion in savings in 2030 from capturing the full potential of resource productivity, rising to $3.7 trillion if carbon is priced at $30 per ton and subsidies and taxes on water, energy and agriculture are eliminated.
And that was well before the global war on plastic pollution created an urgent call for alternatives to disposable packaging and other plastic goods. That, no doubt, increased and accelerated the financial opportunity for alternative solutions.
As with so many things climate-related, the sky’s the limit.
Coming up next week: Join me on Oct. 15 for an hour-long webcast on the key accelerators organizations are employing to achieve carbon neutrality. We’ll cover finding options for innovative financing mechanisms, building your data strategy to enhance disclosure, accessing supply chain risk and other topics. To join in, register here.