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9 ways the circular economy can help avert the climate crisis

Circular economy strategies can complement decarbonization measures and support scaling the clean energy transition.

Three columns (L to R): construction worker on wooden building; pizza going into trash bin, Citi bike parking

Images by Josh Olalde on Unsplash, Andrey Popov and Stas Walenga on Shutterstock

A new paper launched at COP27, Circular Economy as a Climate Strategy, outlines nine calls-to-action that decision makers and researchers must heed to maximize the potential of the circular economy to help limit warming to 1.5 degrees Celsius and avoid the worst impacts of climate breakdown. 

Even if all the existing pledges and national targets to reduce greenhouse gas emissions are fully achieved, by 2030 we will still not limit warming to 1.5 degrees Celsius — the threshold necessary to avoid irreversible climate breakdown. Additional strategies and actions are urgently needed to close the emissions gap. New research from PACE, WRI, Chatham House and NREL details current knowledge on the circular economy’s role in managing climate change. It finds that circular economy strategies can:

  • Complement decarbonization measures to further reduce emissions;
  • Support the sustainable scaling of the clean energy transition; and
  • Enhance adaptation to climate change.

What actions are needed to maximize circular economy climate benefits?

These nine calls-to-action are climate strategies that decision makers need to adopt to help accelerate a circular economy with the highest potential climate benefit, and for the research community to close critical knowledge gaps.

1. Shift consumption patterns

There is clear consensus that circular approaches with the highest emission reduction potential are those that shift consumption patterns in higher income populations: reducing floor space per capita; car-sharing; and keeping clothes in use for longer, for example. Achieving this at scale requires various levers, such as awareness raising and education, service-based business models and policies that encourage behavioral changes. One powerful example is urban planning, which can reduce the need for resources through better design. Many governments have started to co-develop policy roadmaps to design for city-level circularity; looking at minimizing unused buildings, rolling out green public active transport options and designing cities that can respond to shifting societal needs.

2. Stimulate product circularity from the design phase

More attention needs to be given to designing products, particularly as material-efficient design for the built environment and transport is forecasted to have high emission reduction potential. But product design also enables other circular economy strategies such as extending a product’s life and enabling its ability to be recycled. Since current market mechanisms often insufficiently incentivize product design, policy has a large role to play. The European Commission proposed the Ecodesign for Sustainable Products Regulation this year to reinforce design for durability, repairability and recyclability. Policies and tools such as building codes and standards, construction material passports and assessing building circularity can stimulate material-efficient design and the reuse of building components.

Bar chart shows materials-related and operational energy use emissions by sector
3. Incorporate circularity across clean energy value chains

A circular economy for clean energy value chains is a young yet increasingly active field. While encouraging progress has been made, a lot more still needs to be done. Current efforts are overwhelmingly focused on end-of-life recycling, which ignore environmental and social benefits in other circular economy strategies. Businesses, governments, NGOs and researchers need to come together to define a common vision and establish collective actions to embed circular economy strategies in clean energy value chains, to support their sustainable scale-up and to avoid having to repair any unintended environmental and social negative consequences.

4. Integrate circular economy strategies into national climate policies and plans

There has been increasing momentum to call on policy makers to include circular economy approaches in national climate plans. Germany, for instance, has integrated the circular economy along with other strategies in its national greenhouse gas neutrality scenario analysis. While the number of COP parties mentioning the circular economy or equivalent strategies has increased between 2015 and 2022, many focus only on waste management, while some of the largest emitters have not yet considered this approach. While waste management has an important role to play in emissions reduction, more systemic strategies are needed (to address the product's lifecycle) to deliver the highest impact.

Map shows COP parties with circular or equivalent strategies mentioned in national climate pledges
5. Incentivize cross-border greenhouse gas emission reduction

Existing policy mechanisms for greenhouse gas reduction usually only consider emissions within national or regional borders. This siloed focus has the unintended consequence of countries offshoring emissions by shifting carbon-intensive operations elsewhere. At the same time, a circular economy approach will frequently stretch across borders. Therefore, to better account for the emissions reduction impacts of a circular economy approach, it’s key to develop cross-border accountability mechanisms. While such mechanisms are already under development, their use is limited. Consumption-based accounting, which counts the life-cycle emissions of all products consumed in a country, could be adopted alongside production-based emissions accounting to inform cross-border reduction measures in climate plans.

6. Connect circular economy metrics with climate change impacts

In the last few years, the development of circular economy metrics and targets has boomed. While we need many metrics to capture the systemic nature of a circular economy, selecting the best ones and defining the right targets is crucial to maximize benefits for climate change, as well as other environmental and socioeconomic impacts, such as biodiversity, pollution and employment. This need has already drawn attention from various stakeholders and initiatives, including EUROSTAT, WBCSD, Circulytics and the Circular Economy Indicator Coalition. With progress in modeling and impact analyses, metrics developers and users will increasingly be able to work out a science-based approach to identify the most relevant circular economy metrics for climate change impact and set targets accordingly.

7. Increase transparency and comparability in modeling methodologies

Although there is qualitative agreement on the benefits of circular economy for emission reduction, the magnitude and timeframe of the benefits is debated due to differences in the scope of what is considered "circular," the scope of greenhouse gas savings included, and the assumptions and data used by research groups. Agreeing to the scope of the circular economy is an essential first step to reaching consensus on its environmental and socioeconomic impacts, with some progress being made, for example, by the EU Taxonomy and ISO Technical Committee 323. Collaboration is needed within the research community to work towards comparable modeling methodologies, including greater transparency on the assumptions made and data used.

8. Apply systemic and context-specific impact assessment to inform decision-making

Any complex, systemic change — such as the shift to a circular economy — has many interlinkages, leading to both trade-offs and synergies. These depend on many factors and are often context specific, where a "one size fits all" approach is often not suitable. To achieve net climate benefits and avoid problem shifting, it’s important to apply context-specific impact analysis (for example, making use of Life Cycle Assessment as a first step) to inform decision-making for policies and businesses. Take the food system, for example: the implementation of regenerative agriculture strategies is often debated, as their impact strongly depends on differing geographic, cultural, climate and economic contexts. We need to invest in context-specific research into regenerative agricultural practices, followed by effective policies to promote their implementation.

9. Investigate the role of the circular economy in climate change adaptation

Current studies have mostly focused on the role of circular economy strategies in climate change mitigation. Enhancing adaptation to climate change is equally urgent, and requires an even broader set of environmental, economic and social strategies. Ninety percent of terrestrial biodiversity loss and water stress are caused by material resource extraction and processing. Circular economy strategies could slow down nature degradation by reducing virgin material demand, while protecting natural habitats that protect against flooding and regulate temperatures. However, our knowledge of a circular economy’s impact on adaptation is in its infancy, and we need more studies to examine how circular strategies can best support adaptation, to benefit both people and nature.

Global collaboration and action are needed 

Building on a COP26 article last year "Want to fix the climate? Fix the economy," several organizations came together again to further unify in our global ambitions to make the best use of a circular economy together with other strategies to tackle the climate crisis. Building on the current landscape, we call for nine areas of action that can best capture the circular economy's potential to mitigate climate change, as well as bridge critical knowledge gaps. We invite governments, businesses, philanthropies, NGOs, multilateral organizations that bring together alliances of multiple countries, such as the United Nations, and researchers to join the discussion and act collaboratively towards these nine actions in order to globally accelerate a circular economy for widespread climate benefits. This will help get us on the path to limiting warming by 1.5C to help avert the climate crisis and avoid its most devastating impacts.

Read the full paper.

This year, the African Continent has answered this call, by hosting not only the current COP, but also the World Circular Economy Forum (WCEF2022), which will be Dec. 6-8 in Kigali, Rwanda, just a few weeks after COP27. Amongst the many themes, the WCEF2022 will dedicate an entire session to how the circular economy can help solve climate change and biodiversity loss, with a focus on some of COP27’s results.

This article and its calls-to-action to best use the circular economy as a tool to help avert the climate crisis is supported by some of the leading circular actors pictured.

Text reads 'Nine ways the circular economy can help avert the climate crisis' and article supporter logos

This article was written in collaboration with, and supported by, some of the world’s leading circular economy actors:  The African Circular Economy Network (ACEN) | Circle Economy | Ellen MacArthur Foundation | The Finnish Innovation Fund Sitra | Global Electronics Council (GEC) | Latin America and the Caribbean Circular Economy Coalition | Metabolic | Nordic Innovation | ReLondon | Platform for Accelerating the Circular Economy (PACE) |World Economic Forum

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