The Role of Circular Economy in Mitigating Climate Change

From the disastrous Amazon rainforest fires (2024), California wildfires (2024), Indian heat waves (2024), and Pakistan floods (2022) to Black Summer (2020) in Australia, the earth is facing unprecedented threats due to climate change. The year 2023 in the world was recorded as the hottest year in at least 173 years. According to the Internal Displacement Monitoring Centre (IDMC) 40.5 million people were displaced due to natural disasters in 2020 due to the rise of climate-related occurrences. 

To assess the extent of the threat climate change poses, the World Economic Forum’s (WEF) Global Risks Report 2024 identified extreme weather occurrences and significant changes to Earth’s systems as the world’s top ten concerns. The World Bank warned that by 2030, due to climate change over 132 million people could face extreme poverty. World Bank estimates indicate that the total economic losses from natural catastrophes between 1998 and 2017 exceeded $3.5 trillion, both directly and indirectly.

In 2022, the United Nations predicted that developing countries will need $300 billion annually by 2030 to tackle climate change. Climate change and solid waste have increased as a result of global industrialisation and an over-reliance on nonrenewable energy sources. To mitigate the adverse impacts of climate change and prevent massive loss of resources, circular economy (CE) could play a transformative role. 

Contextualizing Circular Economy

The circular economy can play a crucial role in mitigating climate change by reducing greenhouse gas emissions by minimizing waste, conserving resources and promoting renewable energy. It also helps in adapting to climate change by contributing to the restoration and conservation of ecosystems which play an essential role in climate regulation. The debates and discussions about sustainability around the world are paying more and more attention to the relationship between the circular economy and climate change. A circular economy may be defined as a model of production and consumption that involves sharing, leasing, reusing, repairing, refurbishing, and recycling existing materials and products as long as possible. The aim is to produce zero waste and contamination at every stage of the material lifecycle, from extraction in the environment to industrial transformation and final consumers. This model is intended to address global issues like pollution, waste, biodiversity loss, and climate change. The three key tenets needed to transition to a circular economy are designing out waste and pollution, reusing resources and products, and renewing natural systems. The circular economy is emerging as a game-changing strategy to address the twin crises of resource depletion and climatic instability that nations are facing. Recycling produced goods following daily usage and consumption is a cornerstone of the circular economy. 

The necessity of a circular economy in the face of increasing climate change threat is more warranted now than before. The linear economic model is based on the cycle of extraction, production, consumption, and disposal which exacerbates environmental degradation and contributes significantly to greenhouse gas emissions. In fact, currently, 70% of greenhouse gas (GHG) emissions worldwide are caused by the extraction and use of materials. Shifting to a circular economy is indispensable to address these emerging challenges. The circular economy places more emphasis on resource efficiency, waste reduction, and ongoing material reuse than the conventional linear economy, which follows the “take-make-dispose” model. 

The Organization for Economic Co-operation and Development (OECD) reports that the output of plastic has doubled over the past 20 years, reaching 460 million tons in 2019 alone. Less than 10% of this gets recycled, and by 2040, the manufacture of plastic is predicted to contribute up to 20% of the world’s carbon budget. According to the International Labour Organization (ILO), around 6 million employments would be created worldwide by 2030 if more circular activities like recycling, repair, remanufacturing, and renting were adopted. Research indicates that by implementing circular economy strategies, global greenhouse gas emissions can be reduced by 40% by 2050 through the effective and more circular use of resources in just four essential industrial materials viz steel, plastic, aluminium and cement.

To achieve a circular economy, one of the key principles which must be implemented is “extended producer responsibility” (EPR). It mandates the financial and/or physical accountability of producers across various supply chains to ensure the sustainable treatment and disposal of post-consumer products, which are a crucial component of South Africa’s waste management framework. The intention is to reduce waste by holding people accountable for the effects these products have on the environment. South Africa has been quite successful in implementing a circular economy. In South Africa, there are several laws, regulations, and initiatives that support the growth of a circular economy. The National Environmental Management: Waste Act’s recognition of the waste management hierarchy, which is implemented through the National Waste Management Strategy (NWMS), lends credence to this. Recycling, reuse, and recovery have become more important than landfill management, as evidenced by the legal changes made to the South African waste management system. Netherlands, Rwanda, Denmark and Brazil are some of the notable examples of circular economy. 

By 2050, the Netherlands wants to have a completely circular economy. The nation has put policies in place to decrease waste, encourage recycling, and prolong product life spans through programs like the Circular Economy Action Plan. The Dutch P4G (Partnering for Green Growth and the Global Goals 2030) is a multi-country, multi-corporate partnership that aims to accelerate innovative market-based collaboration to construct resilient and sustainable economies. The construction industry is one noteworthy example of success, since circular building methods and materials have decreased resource use and emissions. Rwanda has become a leader in the management of e-waste by enacting laws that promote electronic device repair and recycling. Rwanda reduces resource extraction and the carbon footprint related to the production of new electronics by reclaiming important metals and components. It is important to note that Denmark has embraced circularity in its food systems by encouraging the creation of biogas from agricultural waste, minimizing food loss, and aiding urban farming projects. These actions have improved food security and reduced emissions. Brazil’s integrated farming systems demonstrate how circular principles can enhance agricultural productivity while reducing emissions. Techniques such as crop rotation, biofertilizers, and organic waste recycling are widely adopted.

The government of India has designated 11 focus areas for the circular economy transformation, and NITI Aayog is contributing significantly to this process. The nation’s transition from a linear to a circular economy is being facilitated by several inter-ministry and multi-stakeholder committees. The 2019 draft of India’s National Resource Policy (NREP) is based on the ideas of cooperation in lowering the use of important virgin resources to sustainable levels through resource efficiency and increasing value through circular approaches. Circularity will help “Atmanirbharata” for the nation and its companies by reducing reliance on imports of vital raw materials and commodities, in addition to reducing adverse environmental externalities. According to studies, by 2050, India might gain annually from a growth model driven by the circular economy to the tune of at least USD 624 billion. In comparison to the current linear growth paradigm, this cost-benefit would primarily be covered by the lower cost of providing inhabitants with the same levels of utilities. Climate change and circular economy synergies can no doubt help in mitigating resource overuse, reducing waste-related emissions, and promoting renewable energy but also create immense opportunities such as job creation and economic diversification, reducing import dependence, climate resilience and strengthening informal economies.

Challenges to Implementation 

According to Ellen Macarthur Foundation studies, implementing circular economy strategies in just five crucial sectors—food, steel, aluminium, cement, and plastics—can eliminate nearly half of the emissions from the production of goods, or 9.3 billion tonnes of CO2 by 2050. This is the same amount of emissions that would be eliminated from all forms of transportation today. Despite a significant level of awareness transition to a circular economy faces several challenges such as economic barriers, regulatory hurdles, consumer behaviour, technological gaps and global disparities. The important economic barriers include high initial costs for circular technologies and infrastructure which deters investment, especially in global southern countries. Regulatory impediments including inconsistent policies and lack of incentives for circular practices can slow down the process of adoption. Furthermore, consumer behaviour plays an important role in an effective circular economy. Changing consumer mindsets and habits also poses significant hurdles since societal norms have shaped them over some time in a linear economy. There also exist huge technological gaps. 

Global disparities also contribute their part. The Global South faces unique challenges due to limited financial resources and infrastructure for circular practices. Additionally, the Global South’s role as a supplier of raw materials to the Global North creates structural dependencies that may hinder circular transitions. For instance, countries reliant on extractive industries face economic risks in shifting away from resource exports. Therefore, addressing these challenges requires coordinated efforts from governments, businesses, and civil society.

Way Forward 

The circular economy presents a transformative pathway to achieving environmental sustainability and economic prosperity. A circular economy not only reduces the effects of climate change but also creates robust and sustainable systems. A multifaceted strategy is necessary to fully utilize the circular economy’s potential in combating climate change. To encourage sustainable production, waste management, and the utilization of renewable energy sources, policymakers must include circular ideas in their plans for addressing climate change. Companies should use circular models, emphasizing closed-loop systems, eco-design, and resource efficiency. Campaigns for public awareness have the power to influence consumers’ behaviour to become more sustainable. To scale circular practices, investments in green technologies and innovation will be essential. Incorporating circularity into climate initiatives and encouraging international cooperation can help societies cut emissions, improve resilience, and move toward a low-carbon, sustainable future. However, adopting circular ideas necessitates teamwork, including public involvement, corporate innovation, and policy reform.

References

1. https://www.ellenmacarthurfoundation.org/topics/finance/overview#:~:text=Studies%20have%20shown%20that%20applying,from%20all%20transport%20to%20zero. 

2. https://circulareconomy.europa.eu/platform/sites/default/files/2023-09/64ecce479e36018c09c5411c_CGR%20Denmark%20-%20Report.pdf 

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4. https://www.downtoearth.org.in/climate-change/black-summer-australian-wildfires-linked-to-la-ni-a-s-three-year-streak

5. worldbank.org/curated/en/706751601388457990/pdf/Revised-Estimates-of-the-Impact-of-Climate-Change-on-Extreme-Poverty-by-2030.pdf

6.  https://www.nortonrosefulbright.com/en-in/knowledge/publications/4a4078b8/how-the-circular-economy-can-help-tackle-climate-change

7.  https://climatepromise.undp.org/news-and-stories/what-is-circular-economy-and-how-it-helps-fight-climate-change

8. https://www.circularity-gap.world/2023

9.  https://www.fao.org/faolex/results/details/en/c/LEX-FAOC206183/

10.  https://www.un.org/sustainabledevelopment/sustainable-consumption-production/

11. https://www.ellenmacarthurfoundation.org/completing-the-picture 

12. https://link.springer.com/article/10.1007/s10311-022-01499-6#Sec6 

13.  https://www.mdpi.com/2071-1050/15/16/12271 

14. https://www.renewablematter.eu/en/africa-is-working-on-an-ultimate-producer-responsibility

15. https://www.pwc.in/transitioning-to-a-circular-economy-through-cross-sector-convergence.html#:~:text=Studies%20predict%20that%20a%20circular,billion%20by%20the%20year%202050.&text=This%20cost%20benefit%20would%20mostly,the%20current%20linear%20development%20model.