Study maps circular economy’s broader benefits

Study maps circular economy’s broader benefits

The Club of Rome think tank, which works on international political issues, published a study in October entitled “Circular economy and benefits for society”. The study models the broader economic and social benefits that could be provided if there was a move to a more circular economy in five case study countries: Finland, France, the Netherlands, Spain and Sweden. According to the scenarios in the study, a more circular economy can create significant numbers of jobs in those countries, while reducing greenhouse gas emissions.

Anders Wijkman, one of the study’s authors, discussed issues raised by the study. Wijkman is a co-president of the Club of Rome and a former member of the European Parliament and of the Swedish Parliament.

What were the objectives of the “Circular economy and benefits for society” study?               

Anders Wijkman: The Club of Rome has since its inception more than 40 years ago been very much concerned about the relationship between population and economic growth, and the planet in terms of its environment, its resources and its atmosphere. We pointed already in 1972 to the fact that infinite growth in terms of energy and material throughput is not possible. However, calls at that time were not listened to. Today, more than 40 years later, more and more people realise that we do have a problem and we cannot continue using resources, including energy, the way we have done. That is why we have focused very much on trying to decouple economic activity from use of energy and resources.

Recently the notion of a circular economy has been introduced. It is not the perfect term because nothing is 100% circular, but it is a good description of what we are aiming at, namely that materials should be used as long as possible, as long as there is a value in them, including products and components of products. In the present economy, we are discarding things very rapidly, particularly consumer products, such as electronic equipment. We have thrown away, without really thinking about it, computers that could be used for decades afterwards.

So that was the starting point. What we did was to produce a conventional input/output model for a number of national economies, simulating these economies, asking that if we were much more energy efficient, with a higher degree of renewables in the energy mix — and if materials were used much more efficiently and we used much more secondary materials and also prolonged the lifetime of products — and also moved from selling stuff to offering high-quality services, what would be the effects?

We focused on three things: carbon emissions, employment and the trade balance. Why did we choose employment? Simply, because there has been this perception that anything that smells of green policy is a threat, not only to business profits, but also to jobs. We wanted to show that the circular economy, or a more circular economy, would, in fact result in more jobs. What our studies show is that indeed that is the case. For the countries we have studied, we see significant improvements in employment: for Sweden, roughly 100,000 new jobs; in Finland 75,000; in France – a larger economy – about half a million jobs. That would reduce unemployment rates quite significantly.

Carbon emissions would also go down significantly. I am just now in a position to chair a climate taskforce for my country. We are looking into a climate strategy for Sweden to 2050 and I have studied every important climate strategy in Europe and there is not one that considers materials throughput. Every strategy has a sector perspective, looking only into energy use and how we can save energy. But materials are increasingly important because there is a very close link between material use and energy use. So, if you can use more secondary materials, you bring down the pressure on mining and then on nature, reduce your energy demand and reduce emissions, so it’s a win-win-win.

Do you think it is important to emphasise that the benefits of a more circular economy could spread widely, with more jobs in many different areas, for example?

Anders Wijkman: Yes, absolutely. We want to make the point that this is not only a green issue, it is as much a social issue, and sustainability should be much discussed in a much broader way than hitherto. The Ellen MacArthur Foundation, with whom we cooperate quite closely, have done several very convincing studies about the business case in the circular economy, showing that companies can save a lot of money and, in particular, they can control their cost base much better if they go from a linear to a circular model. So the business case has been quite well explained. But for all the rest of the economy this also looks very, very promising. I think we are providing somewhat of a missing link by doing this study.

Should business or politicians take a lead on highlighting the broader benefits of a more circular economy?

Anders Wijkman: It is not either/or, it is both. But I think that the louder the voice from business, the better, because centre-right politicians in particular have a tendency to listen more to business than to policy arguments. Here we have at least 100 very large companies that are going in this direction and that want legislation that steers the market in this direction. Philips is one, Unilever is another, Cisco is a third. Renault, Ikea, H&M – they all want support from the political system because it is still less expensive to use primary materials than secondary materials. The secondary materials market is not really working, especially with the low oil prices that we have right now.

For example, it is rather strange that so much of our tax revenue comes from taxing people and work, and so little from taxing the use of nature. You can use nature, often with rather negative results and a lot of degradation and pollution, without really paying the cost. We want more jobs and we want less pollution so we should turn the tax system around. One example of this is VAT. Why do we pay VAT for secondary raw materials? We already pay tax once.

Should such measures be taken at European Union level to ensure consistency within the single market, or should countries start to introduce their own initiatives?

Anders Wijkman: It is of course better [to act at EU level]. That is why I think the European Commission initiative [on the circular economy] in December is so important. I think most of the changes have to be at the European level because of this very global market, but of course Sweden, for example, already has higher CO2 taxes than any other country, so it is quite clear that within limits, individual countries can do a lot. But when it comes to deciding the criteria or requirements for new products, for example, the Ecodesign Directive (2009/125/EC) should be used. I was recently at the biggest smelter in Sweden, where they receive a lot of electronic waste, but they could only retrieve gold and copper, because of the design [of the waste devices]. If the design was different, we could retrieve a lot of components and other metals and that would be beneficial. Product design is going to be very critical.

For more information:

The Club of Rome circular economy study is available at: http://www.clubofrome.org/cms/wp-content/uploads/2015/10/The-Circular-Economy-and-Benefits-for-Society.pdf