DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

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30 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS Box 1: Natural systems degradation According to the United Nations Environment Programme (UNEP): “The currently observed changes to the Earth System are unprecedented in human history. Efforts to slow the rate or extent of change – including enhanced resource efficiency and mitigation measures – have resulted in moderate successes but have not succeeded in reversing adverse environmental changes. As human pressures on the Earth System accelerate, several critical global, regional and local thresholds are close or have been exceeded. Once these have been passed, abrupt and possibly irreversible changes to the life-support functions of the planet are likely to occur, with significant adverse implications for human well-being”. 20 A selection of four elements contributing to this environmental pressure are: • Climate change: GHG emission reduction plans to 2030 released by the G7 and the EU would leave the world on track for warming of 3–4°C by 2100 compared to pre-industrial levels, well above the 2°C limit agreed by the UNFCCC. 21 Risks of climate change to human livelihoods and health, agricultural productivity, access to freshwater and ecosystems include: increased storm surges, coastal flooding and sea level rise; inland flooding; extreme weather events; extreme heat; and the loss of marine, coastal, terrestrial and inland water ecosystems. 22 The economic cost of these effects could potentially by a reduction in GDP of 20% per annum in 2050. 23 • Loss of biodiversity and natural capital: At a global scale, without any additional policy action, losses in the value of ecosystem services due to biodiversity decline are estimated to reach EUR 14 trillion by 2050, 7% of projected global GDP. 24 • Land degradation: the productivity of over 20% of land globally – on which 1.5 billion people reside – has declined persistently between 1981 and 2003. 25 Land degradation costs an estimated USD 40 billion annually worldwide, without taking into account the hidden costs of increased fertiliser use, loss of biodiversity and loss of unique landscapes. Agricultural productivity growth has been steadily declining, from 2.2% per annum in the 1960s to 0.9% per annum in the 2010s, despite increases in the use of fertilisers, chemicals, fuels and other inputs. Today, more nitrogen is fixed synthetically in fertilisers than naturally in all terrestrial ecosystems combined. 26 • Ocean pollution: An estimated 8 million tonnes (Mt) of plastic waste enter the oceans every year, a figure predicted to rise to 17.5 Mt per annum by 2025. Since they are so long lived in the environment (it is estimated, for example, that PET takes 450 years to decay into unrecognisable fragments in the ocean), the stock is also rising – it is forecast to increase from 130–150 Mt in 2013 to 250 Mt by 2025 27 . While some of these plastics sink, others degrade into micro-particles that are absorbed into marine food chains. 20 United Nations Environment Programme (UNEP), Global Environment Outlook 5 (2012). 21 Climate Action Tracker, G7+EU INDCs: some improvement, but a large emissions gap remains (June 2015). 22 Intergovernmental Panel on Climate Change (IPCC), Climate Change 2014: Impacts, Adaptation and Vulnerability, Working Group II contribution to the fifth assessment report of the IPCC (2014). 23 N. Stern, The Economics of Climate Change: The Stern Review (Cambridge University Press, 2006). It should be noted that integrating into economic models an appropriate assessment of the impacts of climate risks presents challenges that include continued uncertainty regarding the magnitude and probability of such impacts and difficulties converting them into monetary values. For more detail see The Global Commission on the Economy and Climate, The New Climate Economy Report (2014). 24 European Commission, The Cost of Policy Inaction (COPI): The case of not meeting the 2010 biodiversity target (2008). 25 Bai, Z., Dent, D., Olsson L., and Schaepman, M. E., Soil Use and Management 24, pp.223–243, ‘Proxy global assessment of land degradation’, (September 2008). 26 European Environment Agency The European environment – state and outlook 2015: synthesis report (2015). 27 Jambeck et al, Science, Vol. 347 no. 6223, Plastic waste inputs from land into the ocean, (13 February 2015).
DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS • 31 For example, 66% of seabirds and 100% of sea turtles are affected in some way by marine debris 28 . As well as biodiversity loss, this waste reduces the viability of fisheries, impacts tourism and is a fundamental loss of valuable materials. OPPORTUNITIES TO GO CIRCULAR Advances in technology create ever greater opportunities to support circular economy business models. Information and industrial technologies are now coming online or being deployed at scale, which allow the creation of circular economy business approaches which were previously not possible. These advances allow more efficient collaboration and knowledge sharing, better tracking of materials, improved forward and reverse logistics set-ups, i.e. initial product design and material innovation seamlessly joined up with subsequent processing of secondary material streams, and increased use of renewable energy. Examples of emergent technologies in this area are: • Smartphones: mobile smartphone subscriptions have increased globally from 0.5 billion in 2009 to 2.6 billion in 2014 (500% increase), and are expected to more than double again by 2020. 29 This technology has been critical in some on-demand sharing services like Uber and product logging and re-sale platforms like Stuffstr. • The ‘Internet of things’: ABI Research says there are already more ‘things’ connected to the Internet than people – over 16 billion devices in 2014, a 20% increase from 2013. 30 According to the same source, this number is expected to grow to more than 40 billion by 2020. Connections today come in the form of home and office IT devices such as PCs and laptops, mobile smart devices and new connected business and manufacturing devices. In the future, everything is likely to be connected, from container ships and buildings to needles, books, cows, pens, trees and shoes. This interconnectedness enables tracking efficiency and predictive maintenance that was previously inconceivable. • Advanced manufacturing and processing technologies: these technologies open up completely new paradigms for adopting circular operations at lower cost. For example, 3D printing substantially reduces waste in the manufacturing process itself, allows the reduction of product inventory by moving to ‘make-toorder’ systems from what are often ‘make-to-stock’ systems, and is widely used in the reworking of spare parts. • Decreasing costs of renewable energy. Solar panel costs have fallen 80% since 2008 and wind turbine prices are down nearly a third. This is driving so much clean energy generation that more new renewable capacity has been added each year since 2013 than coal, natural gas and oil combined, according to the Bloomberg New Energy Finance research group. 31 Consumer acceptance of alternative business models has in some markets been demonstrated. Circular economy business models enabled by new technologies are finding ready customers. For instance Uber, the on-demand taxi service where drivers use their own cars, forecasts net revenue of more than USD 2 billion in 2015, five times as much as in 2014, which was itself about four times as much as in 2013, according to the Wall Street Journal. 32 This creates a level of certainty for new businesses extending these models, such as sharing, into other markets. This is important because young consumers’ lifestyle choices in this decade have the power to shift the economic model away from 28 Secretariat of the Convention on Biological Diversity, Impacts of Marine Debris on Biodiversity (2012). 29 Ericsson, Mobility Report (November 2013 and June 2015). 30 ABI Research, The Internet of Things Will Drive Wireless Connected Devices to 40.9 Billion in 2020 (2014). 31 Pilita Clark in the Financial Times, ‘Climate campaign wins over more senior executives’ (27 May 2015). 32 WSJ Technology, ‘Uber Expands Funding Round as Revenue Growth Accelerates’ (18 February 2015).
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