Navigant Research Blog

Working Together toward a Circular Economy in Europe

— October 19, 2017

The European Commission is taking the lead on circular economy strategies through the circular economy package. Thus, an increasing number of industry associations and companies in Europe are working toward a circular economy. They are devising ways to implement related measures to reap the benefits while also preparing for upcoming regulations and directives.

Earlier this year, Ecofys, a Navigant company, and Fipra organised a roundtable discussion with industry coalitions, private sector, and the European Commission on the circular economy package, with a focus on the upcoming Strategy on Plastics. The aim was to gain more clarity regarding the current direction and expected content of the strategy that the European Commission will publish by the end of 2017. Ecofys and Fipra are working together with complementary specialisations and a common goal of furthering the narrative about the circular economy. Ecofys specialises in strategic insights, research, and analysis while Fipra specialises in public affairs strategies. This combination of skills is critical to proactively developing substantiated, viable alternatives to the challenges presented by the circular economy.

Cooperation between Stakeholders

The key message of the roundtable discussion based on feedback from participants was the importance of cooperation between all stakeholders in the value chain to find creative solutions to making the plastics materials stream circular. According to the roadmap on the plastics strategy released by the European Commission in January 2017, the three challenges the Commission plans to tackle are the following:

  1. High dependence on virgin fossil feedstock
  2. Low rate of recycling and reuse of plastics
  3. Significant leakage of plastics into the environment

The European Commission plans to conduct a variety of actions, including studies and analyses on alternative feedstocks, reuse, recycling, marine litter, and micro-plastics. It also plans to develop standards for secondary raw materials and the biodegradability of plastics, as well as consider policy tools such as extended producer responsibility (EPR) aimed at increasing the recyclability of products.

Not a One-Size-Fits-All Approach

For a business, this transformation to a circular economy is about efficiency gains, both in terms of input and output, and ensuring each part of its value chain is being targeted. Factors such as shifting focus from product design to usage of recycled content, investing in recycling processes and technology, and creating a market for secondary raw materials based on competitive prices, quality, and quantity are all essential drivers in this transition.

Companies should emphasize all levels of the value chain, including all economic operators and the final customer. A more holistic lifecycle approach should be taken to evaluate where along the chain the most efficiency gains can be made. This transition to the circular economy will be a long one, and it can only be sustained if it is profitable for businesses. It’s also important to note that recycling cannot be a goal in and of itself. Rather, it should be seen as a means to an end.

The application of the waste hierarchy in the member states will also be heavily considered in all actions within the strategy by the European Commission. The main concern for the private sector is that the competitiveness of European businesses is ensured to encourage a successful transition to the circular economy.

The key positive takeaway from the discussion on the circular economy with multiple stakeholders is that there is great interest and belief in this important issue, as well as the desire to implement related measures. However, the motivation to act needs to be accompanied by specific implementation steps to accomplish the transition in companies and sectors.

 

Setting a Circular Blueprint for Business through Science

— May 23, 2017

The circular economy is a simple idea, but not a small one. It’s key for achieving sustainable development goals (SDGs) and addressing climate change, as it has the potential to close the greenhouse gas (GHG) emissions gap by half.

More than 400 participants at the WBCSD Liaison Delegate Meeting in Montreux, Switzerland on March 27-30 focused on the topic, “Roadmaps for Impact in Today’s Reality.” The discussions around circular economy were lively, enthusiastic, and most importantly, ambitious. In partnership with the World Business Council for Sustainable Development (WBCSD), Ecofys is working on a detailed assessment and analysis that identifies the points in the economy where circular economy measures can reduce environmental impact substantially, taking the value chain into account. This report aims to set the direction for circular economy efforts by businesses, and the analysis is one of the key elements of the circular economy approach of the WBCSD.

Preeti Srivastav at WBCSD Liaison Delegates Meeting 2017

(Source: World Business Council for Sustainable Development)

For the circular economy, the dam has burst. Now is the time to start implementing.

Ecofys’ analysis highlights the scientific perspective on the circular economy and how businesses can navigate and position themselves on related efforts. The implementation of circular economy measures can help companies and even countries reduce their GHG emissions and improve economic growth.

GHG Emissions Reduction

Let’s look at the GHG emissions reduction potential. A study done by Ecofys and Circle Economy in 2016 highlights the GHG impact of the circular economy. The emissions reduction commitments made by 195 countries at the Climate Change Conference in Paris are a leap forward, but are not yet sufficient to stay on a 2°C trajectory, let alone a 1.5°C pathway. Current commitments address only half the gap between business as usual and the 1.5°C pathway. There is still a reduction of about 15 billion tonnes CO2e needed to reach the 1.5°C target. Analysis by Ecofys and Circle Economy estimates that circular economy strategies can reduce the gap between current commitments and business as usual by about half.

Economic Growth

Moving on to the economic growth potential, there are various credible analysis and studies by organizations like the Ellen MacArthur Foundation that highlight the economic potential of the circular economy in terms of GDP growth, job creation for countries and cost benefits, competitive advantage, and the security of supply, etc. for companies.

Implementation

In terms of the implementation of circular economy strategies, most companies are starting with end-of-life management, recycling initiatives, etc. These are great initiatives, but unless the end of life is managed in combination with upstream material flows, the impact will be limited.

Why? Because materials-related emissions account for more than half of total GHG emissions. Unless we focus on the upstream material flows, companies will end up spinning their wheels without actual impact.

Ecofys is currently leading a study that looks at eight key materials that are the most intensive in water, land use, and GHG emissions. The goal is to understand which companies and sectors can do the most. Food and shelter (cement, steel, forestry, agriculture, etc.) are the biggest material users, which means circular solutions in these fields bring huge opportunities and huge risks. There is a lot of potential for the food and shelter consumption categories to tap into the potential of circular economy, but we cannot take shortcuts, as both are basic human needs and we need to tread carefully.

Circular economy solutions are central. Let’s work together to do more with less.

 

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