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Opportunities for the Circular Economy to Strengthen NDCs: Ghana

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Many African countries have developmental challenges and need to raise their populations from poverty. They will also be disproportionately affected by the adverse effects of climate change so they stress adaptation actions and strengthening resilience building. In 2020, countries will revise their NDCs as part of the Paris Agreement. Circular economy methods will be integral to reducing GHG emissions and therefore are valuable to be incorporated into NDCs.

In this blog series, we look how CE strategies can be used to increase ambition level of African NDCs. Many circular efforts are present already in Ghana, making it ideal to add these measures to national emissions-reduction strategies. Ghana’s NDCs consist of twenty mitigation actions and eleven adaptation actions in seven priority sectors. Its unconditional emissions reduction goal is to lower its GHG emissions by 15% by 2030.

For developing countries such as Ghana, the circular economy can be an economic growth strategy that both protects development gains and aids measures to reduce GHG emissions. Many circular economy principles such as recycling and reuse of materials are already in place, some out of necessity. Even so, they present opportunities for innovation and development, and additionally can aid in its NDC goals of reducing GHG emissions in both mitigation actions such as waste management and increasing energy efficiency and adaptation actions such as resilient infrastructure planning.

For 2020, we take particular note of the industry sector, as it is considered for additional inclusion this in UNDP support of Ghana’s NDC enhancement. As a result, resource efficiency solutions in this sector would be the focus of the work this year.

Along with the e-waste hub in Agbogbloshie, the scrap metal industry in the Sunyani Municipality and the automotive re-manufacturing and repair Kumashi industrial cluster are centers of a booming secondhand industry. Opportunities exist here in both job creation and economic output as well as GHG reduction possibilities.

Like other developing countries, Ghana has had difficulties in municipal solid waste management with regards to infrastructural and technical inefficiencies. Its rapid urbanization must be matched with solutions. It is home to one of the world’s largest e-waste hubs in Agbogbloshie, Accra, and imports about 150,000 tons of second-hand electronics a year. (The real figure is probably higher due to a lucrative trade in digital dumping.)

Finally, there are many SMEs that are providing circular services. We take a look at some of them in the table below.

SectorProposed Activities in the NDCCurrent CE Actions Taken in the SectorCE Opportunities to Reduce Sector Emissions
Energy

Scale up renewable energy penetration by 10% by 2030

Promote clean rural households lighting

Expand the adoption of market-based cleaner 
cooking solutions

Double energy efficiency improvement to 20% in 
power plants

Power stations and large-scale heating systems often generate residual heat that can be captured and used for other purposes. For example, a gas-fired power plant under expansion in Ghana will use heat recovery technology to generate 50 per cent more electricity without increasing greenhouse gas emissions.

The first renewable energy industrial park in Africa will be built in Takoradi, Western Ghana. It will be wholly powered by renewable energy.

Shift fuel to alternative sources of energy. For example, switch from oil to natural gas to renewable energy to power an on-campus plant, or switch from ethanol to gasoline or from diesel to biodiesel to power a fleet of vehicles.

Improve the production and efficient use of biomass in the short term and increase regeneration

Engage with experts to improve technology and bring down the cost of renewable energy, creating fiscal pricing incentives.

Decrease fossil fuel subsidies gradually that continue to form an important part of the country’s budget expenditure

TransportScale up sustainable mass transportation Mobile payments for mass transportation.
Agriculture, Forestry, and Other Land UsePromote sustainable utilization of forest resources through REDD+The Netherlands based company Safi Sana collects fecal and organic waste from urban slums. This waste is treated in a digester to create organic fertilizer, irrigation water and biogas. The biogas is used to produce electricity and the irrigation water and part of the organic fertilizer are used to grow seedlings.Remove subsidies on inorganic fertilizers and instead direct subsidies to organic farming practices.
WasteAdopt alternative urban solid waste management

The Waste Recovery Platform, facilitated by UNDP, connects stakeholders in productive partnerships with regards to waste management data and addressing policy implementation gaps

Many people have become engaged in the collection and washing of recyclable plastics waste in Ghana. These activities are often community based where waste pickers are organized into cooperatives. After collection and cleaning, the recycled plastics are transported to a growing number of recycling plants of various capacities.

Ghana plans to develop a national roadmap for plastic waste management. The goal is to “to achieve zero leakage of plastic waste into our oceans and waterways”.

The European Union is launching the program “E-waste Management in Ghana: From Grave to Cradle“. The objective is to effectively implement the Ghanaian Hazardous and Electronic Waste Control and Management Act and formalises sector-related SMEs and MSMEs.

The German GIZ is planning to invest EUR 10 million in policy making regarding e-waste, developing new business models for e-waste, and involvement of the informal sector. A further EUR 20 million will be invested in an EPR scheme for e-waste; fee collection by the company SGS; and setting up a recycling factory for e-waste.

Closing the Loop is a Dutch company with an innovative business model that facilitates the recycling of mobile phones in Ghana. When governmental organizations and private companies in the Netherlands purchase new mobile phones for their employees, they also pay Closing the Loop to collect an equal amount of discarded mobile phones in Ghana. The precious metals in the phones add to the business model.

Ghana-based City Waste Recycling recycles waste ranging from e-waste and batteries to sawdust and plastic. Its materials are sourced from local industries and waste collectors in the city of Ho. From this waste, CWR generates products such as plastic pellets, printed circuit boards and biogas (compost). It exports recycled e-waste products.

The e-waste hub in Agbogbloshie is one of the largest in the world. However, under current practices, e-waste is also a far from perfect solution to the lack of access – as the fastest-growing waste stream in the world, it presents serious health and environmental risks, often for the most vulnerable groups.

COLIBA is a waste management app. It consists of a mobile application and a messaging system to facilitate the collection of recyclables. The user receives points which can be transformed into phone credit, vouchers, meal tickets etc. In 2016 COLIBA carried out a pilot in five Ghanaian schools.

Set a plastic recycling target. Current levels of PET bottle production in Ghana are 68,000 metric tons a year. Together with imported PET bottles, 73 million kilos of PET bottle waste is released into the environment each year. Only 2% of PET bottle waste is recycled because there is virtually no difference between the cost of recycled PET and the cost of virgin material. Recycling plastics, especially PET and HDPE, result in significant reduction of GHG emissions.

Improve technical e-waste processing facilities. Ghana needs practical and maintainable electronic waste policies, which recognize the importance of the informal repair and recycling sector. E-waste from landfills produce methane emissions, which are 25 times more potent than carbon dioxide at keeping heat in the atmosphere. Improved recycling rates will also reduce overall energy consumption which removes direct GHG emissions.

Increase capacity of landfills. A much-needed second phase to the landfill is currently planned. As of April 2019, both the Kpone and the Nsumia landfill were turning away waste vehicles due to capacity problems and technical challenges.

Create targets for the amount of recycled e-waste that goes back into the production of new electronics systems. Ghana’s second-hand electronics market is growing rapidly.

Industry

Double energy efficiency to 20% in industrial facilities

Green Cooling Africa Initiative

Suame Magazine in Kumasi, an artisan engineering cluster in sub-Saharan Africa, is the largest industrialized zone in Ghana. Its working population of over 200,000 is primarily engaged in vehicle repairs and refurbishment and metal works, such as automotive remanufacturing and repair.

The Ghana Recycling Initiative by Private Enterprises (GRIPE), an industry coalition of eight major manufacturing companies, piloted a five-seater toilet facility in Kumasi built from the first plastic modified concrete.

Switch Africa’s industrial symbiosis program for three regions in Ghana (Ashanti, Greater Accra and Western Region) enables waste of one company to be used as a resource by another.

The scrap metal industry is growing in the Sunyani Municipality. However, much of the scrap was dumped and further education and facilities are needed to fully realise its potential.

Nelplast is turning plastic garbage into stone-like pavement blocks, using almost any form of plastic waste to create a material like asphalt. This is then used to built new roads.

Define circularity strategy for new industrial parks built for Ghana Economic Transformation Project (GETP)

Reuse and recycle scrap metal as a resource recovery measure.

Establish targets for a certain % of recycled content in all new products.

Build infrastructure for remanufacturing, recycling, and repair. Transfer, recycling, and foundry stations are needed to transfer and move metals and other materials to destinations for sales and recycling.

International Collaboration After COP25

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COP25, held in Madrid under the presidency of Chile, concluded this past Sunday with disappointing results. Negotiations did not live up to the expectations, finishing with a weak agreement and without the operationalization of Article 6. COP25 was an unique opportunity to align government action with what is an increasing demand by people around the world to boost climate action. However, it is promising to see some governments taking the lead in measures such as the EU Green Deal and the San Jose Principles, which 31 countries have already endorsed. As a result, we remain convinced that the results of COP25 will not stop international collaboration towards climate action.

We are only partway through the implementation of the first NDCs. It has become increasingly evident that current pledges are not enough to limit temperature increase by 2o C, much less 1.5o C. Additionally, many of these NDCs, especially in developing countries, include a high percentage of conditional targets. International cooperation for financing, including cooperation through carbon markets, is essential to advance the implementation of mitigation actions to curve climate change and adaptation measures to limit its impact. It is equally critical to reduce the cost of implementation. Carbon markets, and more specifically internationally linked carbon markets, are an opportunity to reduce global costs of implementation of the NDCs by a third in 2030 and halve the costs of the world’s decarbonization efforts by 2050. Realizing these costs savings would allow both public and private sectors to focus more resources on improving prosperity. Requiring countries to achieve carbon neutrality in isolation by 2050 will be practically impossible, as the global distribution of sinks is skewed towards certain countries. This has been repeatedly confirmed by the annual World Bank State and Trends of Carbon Pricing reports. This evidence only serves to support the strong commitment voiced by several Parties during the COP25 closing plenary to continue their engagement in cooperative approaches under Art. 6.2.

Article 6.2 establishes a bottom up mechanism, under the guidance though not the control of the COP/CMA, in which Parties involved in cooperative approaches are to agree on the governance aspects and ensure environmental integrity avoiding double counting. This bottom up approach explains why countries are already engaging in pilots to make it a reality. The Katowice decisions laid out specify the requirements for the reporting and accounting of NDCs, along with the Transparency Framework, and they already have provisions related to reporting and accounting of internationally transferred units from these collaborative approaches. While the specifics still need to be defined, what we currently have, in addition to multilateral cooperative agreements with strong provisions on environmental integrity and avoidance of double counting, can form the basis of increased cooperation for future transfers of mitigation outcomes. Participation contracts will need to refer to and recognize they will be obliged by future decisions for the operationalization of Article 6.

In the closing plenary, countries reiterated their intention to keep going in this direction, e.g. Switzerland in reference to their existing 6.2 pilots. Initiatives such as the Climate Warehouse Initiative of the World Bank can strongly support this process by providing participants with a meta registry that facilitates the process of implementing carbon markets and assists the process of avoiding double counting. Furthermore, the San Jose Principles can form the basis for a Carbon Club, a concept for which several studies have been done, including some with the participation of Neyen partners.

In our opinion, these climate action drivers are indicators that we are currently experiencing a watershed moment. Multilateral Development Banks have dramatically increased their efforts to boost and quantify climate-related investments, with some of them committed already to walking away from fossil fuels. Private sector financial institutions are under close scrutiny to follow suit and decrease their links to fossil fuels investment finance and lending operations with companies. Financial sector stakeholders are making sure climate risk is internalized in their operations and investments are analyzed through the lens of ESG ratings.

Multiple innovative initiatives, accelerators, incubators for climate-related innovative finance and mitigation and adaptation technologies are seeing increasing amounts of success. In addition to the previously mentioned Climate Warehouse, we see another example in the 2 billion USD mobilized in the Climate Finance Lab. Consumers are demanding new greener products and increasing the pressure for not only climate action but also ocean friendly and nature-based solutions, as recognized in the Chile Madrid Time for Action decision made in the final moments of the COP.

All this shows that we must continue to work towards achieving Article 6 for 2020. In our opinion, we have seen a majority of institutions around the world moving towards this direction, with or without governmental involvement. Instead of being discouraged by the results of COP25, we can use this drawback to boost international collaboration.

For 2020, We Need to Think Bigger on the Paris Agreement

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The Paris Agreement defines climate actions in the context of the SDGs, and climate change is seen as the single biggest threat to sustainable development. In most cases, countries have focused their Nationally Determined Contributions (NDCs) on project level mitigation actions, following the same approach as it was done under the Kyoto Protocol. However, the Paris Agreement was developed with a broader, more ambitious scope in mind to limit the temperature increase to 2o C, and even a more ambitious 1.5o C goal. Achieving the Paris Agreement in the context of the SDGs requires a transformational change that moves away from incremental actions and relates to the economy and society as a whole.

Disrupting current high-carbon production and consumption cycles and instead turning towards zero-carbon economies by 2050 will require a rigorous approach, involving multiple actors at multiple levels through long-term processes that reinforce zero-carbon practices. Different analysis agree that as designed, the current NDCs, even if fully implemented, will only reach half the target needed to achieve the Paris Agreement goal[1]. Without rethinking some fundamental shifts in how we approach growth and development, we will not be able to meet the goal.

The IPCC estimates a remaining carbon budget for this century of 800 billion tons of CO2[2]. While energy efficiency and transitioning to low carbon energy can reduce this figure, it is still not enough to lower emissions sufficiently to meet the 1.5o C goal. The CO2 budget covers all major emissions from energy and industry, including materials production, power generation, transport, heating, appliances, and manufacturing. Focusing solely on emissions reduction in the energy sector does not take into account all these other opportunities.

The scope of the actions proposed to achieve the goal of the Paris Agreement requires a dual focus, on curbing emissions and promoting overall sustainable development.

“In order to achieve the long-term temperature goal set out in Article 2, Parties aim to reach global peaking of greenhouse gas emissions as soon as possible … in the context of sustainable development and efforts to eradicate poverty.” – Article 4.1

Industrial growth is a key development factor and a major source of GHG emissions. Between 1970 and 2010, global materials extraction tripled, and it is still continuing to grow[3]. Estimates suggest that up to two thirds of global greenhouse gas emissions are related to materials[4]. With current trends, materials production alone would result in more than 900 Gt of emissions, far greater than the total allocated “budget” of 600 Gt and greater still than the 300 Gt allocated to materials[5].

By implementing strategies to reduce materials demand, we can make deep cuts to emissions. As an example, demand-side opportunities could reduce EU industrial emissions by almost 300 Mt/yr by 2050[6]. However, this should not replace supply-side measures.

Within industrial processes, opportunities exist for material recirculation, which cuts CO2 emissions since it requires less energy than new production processes. According to the Circularity Gap report[7], only 9% of materials are currently recycled, which means that 90% of used materials have direct carbon emissions associated with extraction, production, consumption and disposal. Moving further up the value chain, product design and end-of-life disassembly need to enable high-value recovery.

Equally important is to reduce materials input to key production processes. For example, half the aluminium produced each year becomes scrap. Around 15% of total building materials are unsustainably used and consequently wasted in the construction process. Technology solutions through high-tech materials and improved building techniques can greatly increase efficiency in the construction industry.

 “Parties share a long-term vision on the importance of fully realizing technology development and transfer in order to improve resilience to climate change and to reduce greenhouse gas emissions.” – Article 10.1

Technological innovation is essential in achieving transformational change. Currently, we see examples of innovation such as 3D prints eliminating scrap metal and digitalization of construction processes eliminating excess products and waste. Other innovations include improved waste management through new sensor and sorting technologies, chemical marking of plastic types for easier sorting, advanced automation of construction processes, new methods to separate copper from steel, and chemical recycling technologies. Advancing innovation and technological processes has also significant co-benefits, such as local job creation and reduced air pollution.

Innovation is linked circular business models, particularly the sharing economy. This enables us to make more efficient use of products such as vehicles or buildings. Shared car fleets mean higher utilization per car and lower cost per kilometer, and fewer cars on the road result in improved air quality. City planning can promote utilization of buildings for several different uses throughout their lifetimes.

“Parties shall cooperate in taking measures, as appropriate, to enhance climate change education, training, public awareness, public participation and public access to information, recognizing the importance of these steps with respect to enhancing actions under this Agreement.” – Article 12

Amongst other strategies, these four examples of circular economy strategies linked to materials use–reducing demand, material recirculation, material efficiency and new business models–must be considered in a country’s revised NDCs, the instrument of achieving Paris-aligned goals, to increase the level of ambition and get closer to 1.5o C. By rethinking materials use, technological innovation, new circular business models, we can move beyond Kyoto-aligned goals and meet the ambitious Paris-aligned goals. As we approach the 2020 process for updating NDCs, countries will have the opportunity to consider these fundamental and systemic changes in the next iteration of their NDCs and find more comprehensive solutions to meet the Paris Agreement goal of 1.5o C while developing their economies and achieving sustainable growth.

[1] UNEP Emissions Gap Report [link]

[2] IPCC Fifth Assessment Report [link]

[3] UNEP Global Resource Outlook 2019 [link]

[4] Hoogzaad J.A., Bardout, M., , Stanley Foundation – Looking Beyond Borders: The CE Pathway for Pursuing 1.5°C – Policy Analysis Brief., available from: [link]

[5] The Circular Economy: A Powerful Force for Climate Mitigation [link]

[6] The Circular Economy: A Powerful Force for Climate Mitigation, [link]

[7] The Circularity Gap Report, [link]

Circular Economy Principles for NDCs and Long-term Strategies

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See post at UNDP here.

Key Messages

  • Building on circular economy approaches when designing long-term climate strategies could promote the dual objectives of sustainable economic development and climate neutrality.
  • NDC targets and Circular Economy Strategies are complementary. Circular economy strategies can reduce the current emissions gap by half and should thus be included in the NDC revisions.
  • Incorporating circular economy strategies in the NDC revision process can increase the level of ambition of national climate action by looking beyond the classical mitigation sectors.
  • Circular economy strategies are about more than just recycling. They look at the policies on material management at a holistic level, thinking about the fundamental way we interact with these materials
  • Countries should start developing a strategy for economic diversification, taking advantage of new job opportunities and entrepreneurial possibilities through a circular economy approach. Circularity would enable nations to close material loops through increased reuse of materials.
  • Circularity principles are not only for industrialised countries; they benefit developing countries as well. By implementing circular principles, they can organise their national goals to have both sustainability and economic growth.

Introduction

As part of the 2019 World Bank Innovate4Climate (I4C) conference in Singapore in June 2019, the United Nations Development Programme (UNDP) and NEYEN.IO organised a workshop exploring the benefits and challenges of incorporating circular economy principles in the Nationally Determined Contributions (NDCs) during the 2020 revision process and in the 2050 strategies.

Two fundamental aspects were discussed:

  1. Increasing the level of ambition of NDCs and better alignment with SDGs,
  2. How a circular economy approach can support comprehensive mid-century, long-term strategies in the context of the Paris Agreement.

Background

The Paris Agreement aims at “strengthening the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty” (PA art. 2). While the landmark Agreement defines climate action in the context of sustainable development, countries have focused their NDCs climate actions mostly on project level mitigation actions, targeting a handful of sectors, which were also addressed as classical mitigation sectors under the Kyoto Protocol. However, with this narrow sectoral focus and lack of ambition, the current NDC commitments are not enough to ensure the long-term goal of decarbonisation of the Paris Agreement. According to the latest IPCC report, we must bend the curve before 2030 to stabilise global temperature increase to 1.5C.

During the Innovate4Climate workshop, panelists discussed the need to mobilise a more comprehensive approach to climate action that focuses on transformational change and moves away from incremental actions. NDCs today include a discrete number of individual actions, focused mainly on the energy sector without looking at the entire value chain and the circularity of the economy. In the words of Massamba Thioye, Manager of the Sustainable Development Mechanism at UNFCCC, “This transformational change needs to relate to the economy and society as a whole”.

Miguel Rescalvo, partner at Neyen.io, facilitated the panel, opening the discussion with an overview of the regional efforts proposed in NDCs and a parallelism with what is being done in different circular economy initiatives. The challenge was proposed then on how to integrate those efforts towards a more comprehensive approach to climate action and sustainable development.

Currently, the global economy is only 9% circular[1], but climate change is closely linked with material use: over 50-65% of total GHGs globally are related to materials management processes[2]. Global use of materials is increasing, having more than tripled since 1970. Without any action being taken, it could double again by 2050. High material consumption continues to be an important factor in energy demand, and therefore in GHG emissions. Framing the climate problem as a materials problem offers a new way of looking at the issue, bringing new solutions to the table. Few governments consider circularity measures in climate policies, despite the synergy between the two. Circularity also enables NDCs to better align with SDG 12: ensure sustainable consumption and production patterns.

Daniel Calleja Crespo, Director-General, Directorate-General for Environment, European Commission, provided an overview on how Europe is working to integrate circular economy principles across sectors and emphasised how this must be an inclusive effort of all society. Circular economy is shifting paradigms in the way we produce and consume, shifting emphasis to the recirculation and reuse of materials. Encouraging member states to develop more circular actions in their national plans leads to greater overall coherence in national policies. Furthermore, the buy-in from stakeholders is also important. He explained how a circular economy platform brings together companies, academia and stakeholders, cities and regions across Europe.

Bradley Busetto, Director, Global Centre for Technology, Innovation and Sustainable Development, UNDP, highlighted the importance of finding economic opportunities and encouraging private sector funding in circular economy-related sectors. This requires targeted support by the government. Identifying the right incentives to spur radical transformation is also central to this process.

Discussion Highlights

NDC targets and Circular Economy Strategies are complementary with the ultimate objective to achieve Long-Term Low Carbon Strategies. Circular economy strategies can help countries achieve their NDC targets. The trend in developing countries is an inverse relationship between economic growth and resource efficiency. As over half of total greenhouse gases (GHGs) are related to material usage, we must consider how we can structure production and consumption to emit less carbon dioxide (CO2), and how we shift from a quantitative consumption to a qualitative one, i.e. producing less but of higher quality or service based business models. Income is earned from service, maintenance and recycling. Circular economy measures can reduce the current emissions gap by half and should therefore be included in the next revision of NDCs.

Building on circular economy approaches when designing long-term climate strategies could promote the dual objectives of sustainable economic development and climate neutrality. In the context of NDC revisions for 2020, the Paris Agreement is not only about reducing emissions but also about sustainable development impacts at the national level. Along these lines, circular economy strategies take sustainable economic development into account. Material flows and the promotion of internal use of resources add to a country’s internal economic development.

Circular economy strategies are about more than just recycling. They look at the policies on material management at a holistic level, thinking about the fundamental way we interact with these materials. A large part of energy consumption and related GHG emissions are linked to the material supply chain–extraction, processing, transportation, use and discarding of materials. Carefully managed material flows and the promotion of internal recirculation of resources can strengthen the development of the economy of a country.

Along with their NDCs, countries should start developing a strategy for economic diversification, taking advantage of new job opportunities and entrepreneurial possibilities through a circular economy approach. Seumkham Thoummavongsa, Deputy Director General Institute of Renewable Energy Promotion, Ministry of Energy and Mines, Lao PDR, provided examples from Lao PDR. The case of Laos is one of an early mover. With the support of UNDP, Laos developed a strategic position to linking circularity with its overarching national plan, for example, using natural and recycled materials in the development of new facilities in its tourism sector.

Ousmane Fall Sarr, Coordinator, West African Alliance on Carbon Markets and Climate Finance, provided examples from West Africa. Ghana, for instance, has seen plastic waste recycled into building materials with strong engagement of the private sector. Ghana also uses blockchain technologies for the management of building materials. These circular economy strategies could well be replicated in other countries in the region such as Senegal.

Incorporating circular economy strategies in the NDC revision process can increase the level of ambition of national climate action. As we approach the next round of NDC revisions, many countries will decide how to make their NDCs more ambitious. NDCs do not necessarily need to focus only on the classical mitigation sectors but could also consider circular economy strategies and enablers such as (i) sustaining and preserving what is already there, (ii) using waste as a resource, (iii) prioritising regenerative resources, (iv) rethinking business models, (v) designing for the future, (vi) incorporating digital technologies to optimise resource use and strengthening connections between supply chains, and (vii) teaming up to create joint value throughout supply chains[3].

As highlighted by Koji Fukuda, Chief Advisor for the Technical Assistance for Capacity Development to Accelerate Low Carbon and Resilient Society Realization, JICA, we can see how circular economy strategies can increase a Party’s level of ambition based on the example of Japan. As the country’s work on a circular economy approach preceded the Paris Agreement, Japan’s action plan is updated every five years to include a cycle of more ambitious targets, including those for resource productivity, waste disposal, and cyclical material use, which links with its NDCs. These circular economy actions display mitigation ambition.

GHG emissions reached 51 billion tonnes of CO2e per year in 2017 and are forecasted to reach 60 billion tonnes by 2050, even if all current mitigation ambitions are implemented. Current commitments address only half the gap between BAU and 1.5C scenarios. A reduction of 15 billion tonnes is still required. The NDCs and new circular economy strategies can work in tandem to bridge the gap. To reach the Paris goals, annual emissions must stay below 39 billion tonnes CO2e per year by 2030.

Circularity would enable nations to close material loops through increased reuse of materials. In 2015, globally 84.4 billion tonnes of resources were extracted per year. 19.4 billion tonnes, or 30%, was collected as waste. Of this, only 9.1% was cycled, with the remainder incinerated, landfilled, or dumped into the environment[4].

Circularity principles are not only for industrialised countries; they benefit developing countries as well. Often developing countries are at a disadvantage because sustainability measures are at odds with their potential economic growth. By implementing circular principles, they can organise their national goals to have both sustainability and economic growth. Additionally, circular economy strategies support job creation and new industries involved in remanufacturing, technological transfer and in particular a shift to the service and maintenance sector.

Digital, physical and biological technology innovation linked to circularity will be paramount to the new circular economy model. Circular economy depends on new technological innovation, and newer technologies tend to be both more efficient and cost-effective, leading to further opportunities to close material loops. Digital services lead to a smarter use of resources and more sustainable consumption patterns. The process of technological transfer creates new jobs and the technical skills needed in refurbishing and remanufacturing equipment. Physical services are being replaced by online equivalents, and the economy could move from an ownership model to a shared-use one, effectively dematerialising services.

According to Daniel Calleja, technology and innovation are necessary instruments to build CE. There are a lot of opportunities for companies linked to reducing emissions. We need countries to step up their efforts and include circular strategies in their national plans.

Possibilities for entrepreneurship abound within the circular economy. Technological innovations will lead to new industries being set up. Digital technologies such as machine learning, and robotics have helped with waste collection processes. Physical technology such as 3D printing can minimise generation of waste. Biological technologies, while still in an early phase of development, can create minimally wasteful replacements for current products that produce inorganic waste. However, circular economy will also have a big impact on labor which requires some dramatic shifts. It’s therefore critical to look at impacts and mitigation measures, including social, educational and labor policies.

In an example given by Bradley Busetto, Singaporean government support is driving the private sector to take action, and circularity is evolving out of the notion of “smart cities”. This circular economy-friendly environment has led to various innovative startups, such as one that rethinks compostable food waste management by creating plastics that can be digested and turned into compost.

Challenges to a Circular Economy Transition

Transitioning to a circular system from a linear one is not without its challenges. According to Koji Fukuda, basic building blocks of infrastructure, legal systems and institutional frameworks need to be put in place before they can fully engage with circular approaches. Developing countries especially tend to be focused on economic growth at the expense of sustainability; however, introducing circular economy strategies into their NDCs would join climate action with economic development.

Ousmane Fall Sarr noted challenges specific to developing countries such as those in West Africa that export raw materials, as they would be impacted by a decrease in import demand from industrialised countries. When countries decrease their level of imports, exporting countries must make up the difference in their economy in other ways. Accounting for this at a national level would enable countries to make plans to use these materials internally. However, circularity would allow to plan for job creation and the need for developing skills for refurbishing and remanufacturing equipment, and the setting up the process of technological transfer to create new industries.

Some barriers are related to regulatory and institutional frameworks. Ministries tend to have a linear viewpoint and work in silos, which reduces the impacts of policy incentives. Miguel Rescalvo explained his experience when trying to fund a program for energy efficiency in appliances, specifically washing machines. These interventions have an energy-saving component and an equally relevant or even more important water-saving one. With energy and water controlled by different ministries, the program did not move forward as neither of the two ministries took a real leading position, each instead waiting for the other to lead. In West Africa, a lack of an appropriate regulatory framework for procurement of material leads to miscommunication between ministries despite attempts to be sustainable. This is evidenced by the example of plastic waste being used to manufacture bricks and the question of whether it falls under the departments–and thus regulations–of urban planning or waste. A comprehensive waste management strategy could curb this miscommunication.

These institutional barriers can be overcome by cooperation and collaboration between departments, as described by Daniel Calleja. Four years ago, the EU started a circular economy action plan using a strategy that covered all relevant departments, from agriculture to transport to energy to environment. This led to a 54-measure plan, which covered the basic elements of the economy, from production to consumption, to waste and recycling and raw materials, dealing with specific sectors like plastics and construction. All these have been delivered, not only by the commission but adopted at countries level.

Securing green finance remains crucial. Often countries lack the funds to overcome the initial hurdles of transitioning to a circular model. As the global discussion moves more and more towards circularity, more public and private funding opportunities should arise. Daniel Calleja further emphasised that we will not make the transition to circularity without the participation of the financial sector. In terms of the transition to circularity alone, 300 billion euros will need to be mobilised in Europe. Tax instruments and new regulations are needed as well. Examples in the EU include putting a tax on landfills to incentivise a reduction in pollution and an increase in recycling and banning single use plastics due to their role in marine pollution, among others.

As of now, there are not yet solid methodologies for measuring circularity impacts in national and international climate actions, and it’s specifically lacking in the UNFCCC reporting process. There is a need to develop decision metrics and a measurement framework to account for circularity, including GHG accounting methodologies so that circularity actions eventually incorporated into NDCs can be accounted for.

Conclusion

To reach the goals of the Paris Agreement, the global community must take actions to bridge the circularity gap using creative and innovative solutions. Global ideas can be translated into national, regional and commercial pathways, allowing downstream level to make strategies that are aligned with the local context. Actions taken at the national, NDC levels will undoubtedly propagate downstream.

We have seen examples from Europe, to West Africa, to Asia on how a transition to circular economy could work. While there are barriers to implementing circularity, we have no time to lose. Circularity at the NDC level can be the key to moving from incremental improvement to deep societal transformation.

[1] Circle Economy. (2019). The Circularity Gap Report – 2019.

[2] OECD (2012), Greenhouse gas emissions and the potential for mitigation from materials management within OECD countries.

[3] Shifting Paradigms. (2019). Metabolic analysis and circular economy strategies for Almaty Oblast, Kazakhstan

[4] Circle Economy. (2019). The Circularity Gap Report – 2019.

The Benefits and Challenges of Circular Economy Principles

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What are the benefits and challenges of circular economy principles in national climate change strategies?

Developing countries are working to lift their population out of poverty and to increase the access to material well-being. Increased extraction and exports of wood, fossil fuels, metal ores or refined metals and minerals are expected, and are both important drivers and consequences of economic growth. Some calculations conclude that CO2 embodied in materials represents around 67% of the total CO2 generated by the global economy. The amount of materials extracted each year is expected to more than double by 2050, yet only 9.1% are currently reused. The amount of middle class consumers, with demand for more material consumption will increase by three billion by 2030. These citizens in the developing world are starting to consume more and reuse less – heading in an unsustainable direction that wealthier countries are now trying to reverse.  Innovative ways to decouple progress and happiness from possession and consumption are needed.[1]

The challenge of economic growth as we know it today is that it creates a number of externalities that are affecting people and will continue to do so unless they are addressed. Some of these externalities include pollution, land degradation, waste generation and CO2 emissions. Climate change caused by CO2 emissions that will further exacerbate the impact of the other externalities. In the absence of new approaches to better manage natural resources and development, these negative externalities will only increase with population and economic growth.

Currently, collective climate action is not sufficient to address the climate change challenge. As part of the Paris Agreement in 2015, individual countries have put forward their commitments to reduce climate change and its impacts through the Nationally Determined Contributions (NDCs). But the sum of all current commitments address only a third the gap between business as usual and the 1.5°C pathway.[2] Furthermore, implementation of NDCs is lagging behind since they tend to be a second priority for developing countries, after economic growth. Hence, it is essential that additional innovative solutions are put in place to complement existing efforts.

Circular economy approaches can help curb climate change and other externalities while focusing on economic growth and competitiveness. Circular economy seeks to replace the current linear ‘take-make-dispose’ model by a cyclical, closed-loop approach focused in reducing, reusing, repairing, remanufacturing and recycling products and materials as much as possible. Circular economy goes way beyond waste management and focuses also on upstream phases such as  production and consumption phases, with the goal to further reduce the intake of new raw materials. Mainstreaming the use of renewable energies and energy efficiency in the processes are also key elements of the circular economy.

Material resource efficiency must be addressed in conjunction with low carbon development strategies to keep global warming within the targets of the Paris Agreement. Climate policies and projects tend to focus on the supply side and production efficiency. Circular economy strategies add a demand-side aspect: how to optimize material selection and use in order to reduce GHG emissions. During the COP23, it was recognized that “resource efficiency and circular economy actions can be integrated into the NDCs to enable countries to cost-effectively raise their ambitions to achieve Paris goals”. Aware of the relevance of incorporating circular economy to climate action, the UNFCCC Secretariat released at the end of 2018 the paper “Mitigation benefits and co-benefits of policies, practices and actions for enhancing mitigation ambition: implementation of circular economies with a focus on waste-to-energy technologies and on industrial waste reuse and prevention solutions”.

The integration of circular economy principles in climate change strategies, in particular in the NDCs, could unveil synergies not considered before. Ministries, regional authorities and municipalities usually face the challenge of incorporating the high-level NDC policy targets into their sectoral policies, while circular economy approaches may be more tangible since they are designed to directly contribute to increasing local competitiveness of a specific sector. Emissions reductions through resource efficient uses could be accounted for under the NDC target achievement. Resource productivity (energy, water, materials) can also contribute to increased economic competitiveness and security. There is an opportunity to seek climate finance for circular economy programs that build businesses competitiveness and increase resource efficiency while reducing emissions and enhancing climate resilience. Circular economy strategies represent a more optimistic view of sustainable economic progress of a country. Countries with neglectable current contributions to global emissions but growing economies, are not sufficiently encouraged to make low carbon choices. In these cases, the NDCs might be seen, outside the climate change inner circle, as a threat for their economic growth. Implementing circular economy strategies can also frame NDCs in a more economically viable light, instead of focusing on what a country has to hold back.

Exploring this approach will not be exempt of challenges. Understanding the circular economy concept can be confusing since it includes strategies that are not new to the development debate. For example, waste management strategies are not new and must be analyzed considering the entire resource life cycle. Most labor in recycling activities in developing countries is informal, and the impacts of a too rapid displacement of informal sectors without addressing short-term impacts must be carefully analyzed. Other trade-offs must be considered. For example, the impact on new jobs by creating a secondhand industry versus protecting a local industry for new products.[3] Finally, the accounting methodologies of emission reductions linked to resources (such as Life Cycle Analysis) can be complicated and may not have a level of accuracy acceptable for UN reporting.

[1] Hoogzaad, Jelmer; Bardout, Matthieu. 2017. Presentation: “Circular Economy, Pathway for Pursuing 1.5°C”

[2] Emissions Gap Report 2017. UN Environment.

[3] Preston, Felix; Lehne, Johanna. A Wider Circle? The Circular Economy in Developing Countries. Briefing 2017. Chatam House.