Circularity in times of crises, an opportunity to seize

The circular economy is a powerful tool to increase material efficiency, decrease energy consumption and cut CO2 emissions. By fostering recycling and reuse, it promotes material sufficiency and allows for the shortening of production chains. This is particularly important now that a part of the political debate at the national and European level is the need to shorten value chains and bring back production to Europe.

Both the problems and the potential for solutions are staggering: as stated in the European Commission’s Circular Economy Action Plan (CEAP), half of the world’s carbon emissions are derived from the extraction and processing of resources. 

Moreover, in its “Roadmap 2050’, the European Commission forecasts that one-quarter of the CO2 emissions by the mid of the century will come from industry, mostly from heavy industry producing basic materials. However, the good news is that with a more circular economy in the industry sector alone Europe can cut 56% of its CO2 emissions by 2050. This will also contribute to creating 700.000 jobs by 2030 and to relaunching the economy by involving a large number of small and medium enterprises.

In the new CEAP, the  European Commission commits to better integrating the analysis and reporting on circularity and climate and thus promises to “improve modelling tools to capture the benefits of the circular economy on greenhouse gas emission reduction at EU and national levels”. The CEAP  also foresees the strengthening of the role of circularity in future revisions of the National Energy and Climate Plans: circular economy objectives will now be included in the NECPs. How and to what extent this will happen is yet to be defined but several models and studies offer plenty of suggestions.

However, the CEAP missed the opportunity to set sustainable sourcing and the carbon neutrality of materials as future conditions for market access. These provisions would give a clear outlook for investors in carbon-neutral technologies, would reinforce the links between circular economy and climate policy and would make it clear that we cannot decarbonize our economies without circular economy. 

The sector where the circular economy can bring the highest climate benefit is the heavy industry. Sectors such as the chemical, cement and steel, which are singled out in the Action Plan,  are the largest consumers of primary materials and some of the biggest carbon emitters (and it will most likely remain so after the COVID19 crisis). The heavy industry sector is responsible for 530 Mt/y of CO2 emissions and it is no wonder that the Industrial Strategy that the European Commission released in March points out the importance of circular economy as a tool to put the industry on a pathway towards climate neutrality, namely announcing measures to create markets for low carbon products and processes.

A good example of how to engage with the industrial sector with market-driven policies is in the building and construction sector. It is the largest market for steel, cement, PVC and other high-carbon products and building waste is the single largest waste stream in Europe. 

Two upcoming opportunities in this direction should not be missed. The first one is the Renovation Wave strategy that the European Commission is due to adopt in September aiming to drive Member States’ ambition in this field, also as a stimulus for post-COVID19 economic recovery. The second one is the Strategy for a Sustainable Built Environment which should deliver a proper framework to fully incorporate the embedded emissions of our buildings into the national emission schemes and set provisions on recycled content, recyclability and reusability in the built environment. 

Circular economy addresses the whole value chain and focuses on reducing emissions through cutting primary material consumption (mining, fuels), increasing sufficiency and efficiency in the processes (improved logistics and supply), promoting new models of ownership and use (sharing/leasing) and new business opportunities in the repair and reuse sector (repair cafes, urban miners). These new approaches will drive innovation and bring added value across different stakeholder groups while producing wider societal and environmental benefits, first and foremost the reduction of embedded emissions.