DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS

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42 • DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS 2.1.1 Baseline circularity level and policy landscape Objective: Understand country starting point before deciding where to go. End product: Assessment of the country’s level of circularity compared to other countries. A broad understanding of the landscape of existing circular economy related policies. Level of circularity Assessing the current level of circularity provides useful guidance to set an appropriate national ambition level. The circularity baselining gives a first indication of the areas in which a country is more or less advanced compared to its peers, which provides useful input for setting the ambition level. It also provides initial high-level direction on the solution space. If a country performs very well on a certain metric, significant attention has probably been spent on it in the past, and it can be useful to consider whether significant progress is still possible on top of the expected impact from existing initiatives. An example from the Denmark pilot is energy efficiency and the adoption of renewable energy. Denmark is already one of the world leaders in these domains, and has even more ambitious targets in place. Therefore, these areas were deprioritised when assessing circular economy opportunities. If a country performs below average on a metric, it could be fruitful to use existing success formulas to quickly advance in that area, or to leapfrog the potentially suboptimal solutions that other countries have developed (e.g. a large incineration infrastructure to avoid landfilling). Existing metrics do not fully cover the circular economy. Some important metrics such as the level of sharing and the level of remanufacturing are simply not yet available at a national level, beyond anecdotal evidence in specific sectors or applications. To baseline a country’s level of circularity within reasonable limits of time and effort, using existing metrics is often however the only option. Figure 6 shows a set of such metrics for Denmark and the European Union. 42 Although this set is neither comprehensive nor a firm recommendation, it covers four key circularity areas, and balances completeness with more pragmatic objectives such as data availability and comparability over time and across countries. The four key areas and corresponding metrics are: • Resource productivity. The resource productivity metric is the lead indicator of the European Commission’s Resource Efficiency scoreboard, and consequently has high-quality data availability and transparency. A drawback is that domestic material consumption in the denominator is highly influenced by the industrial structure in each country, and that weight does not necessarily reflect environmental costs. • Circular activities. Ideally, a complete set of indicators including the adoption of remanufacturing and sharing would be measured. As this data is not readily available, recycling rate and eco-innovation indexes were selected as proxy indicators. • Waste generation. The two metrics shown have been selected to reflect that overall waste generation, often driven by industries, could be quite different from waste generated by consumers (a large contributor to municipal waste). As with resource productivity, there are caveats such as the influence of industrial structure on overall waste generation. • Energy and greenhouse gas emissions. Two straightforward metrics of renewable energy use and greenhouse gas emissions per GDP output were selected, recognising that again, industrial structure influences the outcome. 42 The level of circularity in the Denmark pilot primarily used the EU as the benchmark. While this was the natural choice due to data availability and similarities in legal framework, a more comprehensive comparison to international best performers could lead to interesting insights as well.
DELIVERING THE CIRCULAR ECONOMY – A TOOLKIT FOR POLICYMAKERS • 43 As part of a strategic circular economy initiative, a wider transparency and circularity measurement effort can be launched. To ensure comparability with other countries, such an effort would ideally happen in an international context, involving, for example the OECD, Eurostat, or the United Nations. There are currently a number of initiatives in progress to increase data transparency and/or further develop adequate metrics, to give just a few examples: • In Scotland, a carbon metric was developed to quantify the carbon impact of waste, assessing the emissions generated by producing and recycling materials as well as the emissions from the disposal process itself. 43 • In Europe, the EU Resource Efficiency scoreboard and the Raw Material Consumption (RMC) indicator illustrate the progress towards increased resource efficiency of individual member states and the European Union as a whole. 44 • In the UK, Sankey diagrams were developed to visualise and analyse material flows and circularity of the economy. 45 • In Denmark, Statistics Denmark is implementing a system of physical supply-use tables and physical input-output tables. The system aims at complementing the monetary supply-use and input-output tables with information on the quantities of materials (natural resources, products and residuals) flowing into, through and out of the economy. • The Ellen MacArthur Foundation and Granta with EU LIFE Funding, have developed Circularity Indicators for companies to assess how well a product or company performs in the context of the circular economy. The main indicator, the Material Circularity Indicator, measures how restorative the material flows of a product or company are, and complementary indicators measure additional impacts and risks 46 . • The German government’s goal to double raw material productivity by 2020 compared with 1994 (see Table 2 for more detail) is expressed using the ratio of GDP to Direct Material Input in tonnes of abiotic raw materials. The indicator Domestic Material Consumption in raw material equivalents is also used as it takes into account material flows caused by the production of imports. A third indicator, Total Material Consumption, will also be used in future – if data quality can be sufficiently increased – to cover extracted resources that are unused, such as mining spoils. 47 For a more detailed discussion of measuring national economic performance taking into account the three principles of the circular economy as laid out in Chapter 1.1, see Section 2.1.2. Standard setting organisations also have a role to play in providing measurement frameworks. Some examples of work in this area include: • The Association of German Engineers (VDI) provides a set of technical product standards on resource efficiency and on recycling, including on disposal logistics. It also provides services such as resource checks and regional events for a resource efficiency network to help link entrepreneurs and information and funding providers. 48 43 www.zerowastescotland.org.uk/category/subject/carbon-metric 44 http://ec.europa.eu/environment/resource_efficiency/targets_indicators/scoreboard/index_en.htm 45 www.wrap.org.uk/content/material-flows-uk 46 For more information see: www.ellenmacarthurfoundation.org/circular-economy/research-initiatives 47 German Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety (BMUB), German Resource Efficiency Programme (ProgRess) (2012). 48 See for example VDI Annual Report 2013/2014.
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