Since the Paris Agreement adopted the 1.5° C limit to global warming, policymakers and civil society have worked to identify the most important pathways to keeping this goal alive (UNEP, 2017). The major emissions reductions needed to achieve this heavy lift have been recognized, but there is a strong focus on the direct sources of emissions. While this is a reasonable approach, large mitigation opportunities exist beyond the point where emissions are created, according to a Policy Brief with Stanley Foundation.
Transformational ideas add new climate action possibilities to the table and increase the likelihood of staying under 1.5°C. One set of policy options in particular, known as the circular economy, offers promise for cutting the current emissions gap significantly. Circular economy policies go beyond the source of emissions to socioeconomic practices that create the demand for emissions in the first place.
This strategy involves moving beyond the current linear economic models, which extract materials, produce goods, sell them for consumption, and then discard them. Instead, the loop is closed and materials are reused, avoiding the environmentally harmful extraction and disposal of resources. Importantly, undertaking circular economy strategies can be accomplished while improving livelihoods and economies, and are often attractive from a business perspective.
Circular economy models have been embraced by some subnational actors, especially cities; however, they have not been examined in much detail by the international climate community.
This policy analysis brief lays out the global materials flows—including fossil fuels—and describes how a linear process of material extraction, use, and disposal drives GHG emissions. It explores examples of circular economy policies and technologies with high mitigation potential and shows the small extent to which these are considered in climate policy or international cooperation under the Paris Agreement. Tapping into this potential requires that circular economy concepts become an integral part of national policies, international cooperation, and metrics under the Paris Agreement. Finally, this brief makes key recommendations for national policies and action under the architecture of the Paris Agreement.
The majority of GHG emissions are related to material management
67% of global greenhouse gas emissions (GHG) are related to material management and the excessive use of primary resources. Compared with current linear economy models which extract material, utilize it, then dispose of it, circular economy models minimize the harmful human-nature interactions by minimizing the extraction of resources from the lithosphere and avoiding waste disposal. They do so by optimising the use of existing materials and assets which have accumulated since the industrial revolution, and by focussing on regenerative sources of materials and energy. Considering the large share of GHG emissions associated with material management, and that 20% of the materials extracted are fossil fuels (CE Gap report), circular economy strategies can deliver additional emission reductions by targeting the cause of emissions, rather than their source.
Developing countries have a beckoning opportunity to leapfrog toward societal models that are both circular and carbon neutral by design. Developing and emerging economies are currently creating the infrastructure and buildings to provide shelter, mobility, nutrition, communication and a range of other services to current and future generations. These assets represent large material stocks that drive GHG emissions during their own production, manufacturing and assembly, but also lock-in the carbon footprint of societies during their service life. In the case of buildings and transport infrastructure, this service life typically extends for several decades (PNAS, 2017).
Opportunities for international cooperation on mitigation action
International cooperation on climate change mitigation and national climate policies do not yet leverage circular economy strategies to their full potential. Under the Paris Agreement, there is an opportunity to raise the climate policy ambitions which countries expressed in their Nationally Determined Contributions (NDCs) and use the mechanisms under the Paris Agreement to facilitate international cooperation along international supply chains. By mapping material and energy flows using metabolic analysis (Krausmann, 2009), and developing an understanding of how these flows help meet societal needs, countries can identify additional circular mitigation opportunities. A metabolic analysis also helps identify opportunities to reduce GHG emissions which cut across sectors and national borders (UNDP, 2017).
Therefore, metabolic analysis should be a cornerstone of capacity building at the national level, and help countries create integrated development perspectives which enable them to advance on a broad set of sustainable development indicators (IRP, 2017). Governments should also be incentivised to take domestic action where they are well positioned to reduce emissions in other countries through higher levels of relevant value chains. This can be achieved by complementing the current climate toolbox to enhance transparency on emissions and policy ambition, with consumption-based accounting for national emissions. (SP/CE, 2017)
At the national policy level, this paper calls for tax reform that goes beyond the taxation of GHG emissions and abolishment of fossil fuel subsidies. Reforms should aim to reduce the tax burden on labour, while on the other hand increase public revenues from levies on resource and energy use, and waste disposal. This would make it more cost effective to repair something that would otherwise just be discarded and replaced with as a new product. Furthermore, policies like the European Unions’ (EU) Ecodesign directive—which aims to make products circular and low-carbon design—and the French experience with extended producer responsibility (EPR) lead the way on incentivizing the private sector to consider end-of-life stages beginning with the product design stage. (CE/SP, 2017)
At a business level there is untapped potential to develop circular economy investment opportunities with high mitigation potential. Where most climate policies and projects target the supply-side and efficient production of material products, circular economy strategies add a demand-side aspect to this. In addition to altering demand, circular economy strategies can help to optimize material selection and use to reduce GHG emissions. For example, the substitution of carbon intensive materials for low-carbon materials, or even materials that can create a net sequestration effect, offer significant GHG reductions when used in long-term applications like buildings and infrastructure. Similar opportunities exist for organic materials which offer mitigation through the closure of nutrient cycles.
Building on the growing interest in metabolic analysis (figure 2) here is already a call for an international coalition of governments, companies and academia with an understanding of the need to close material cycles and obtain higher value from the materials and products that already exist (CE, 2018). This coalition would consist of frontrunners which do not shy away from the systemic changes that are required, and which understand the merits of addressing both excessive resource use and GHG emissions in parallel. This policy paper suggests policy opportunities both at the national and international level on climate action. It also includes tangible examples of projects which can deliver on the promise of a circular economy and provides suggestions to use climate finance in a way which not only reduces GHG emissions, but also avoids locking in a linear future.
Client: Stanley Foundation
Partners: Circle Economy