Five ambitious actions to transition to a circular economy in Australia

In an era marked by climate change, resource scarcity and environmental degradation, the circular economy has emerged as critical to a sustainable future. 

Europe, in particular, is making remarkable strides in transitioning towards a circular economy, with a substantial departure from the traditional linear model of ‘take, make, dispose’, towards a circular ‘design out, retain, regenerate’ system.

Company boards globally are increasingly demanding a comprehensive net-zero strategy, just as they require traditional growth, portfolio or investment strategies.

That's quite a shift from a few years ago, when action on decarbonisation was limited to reducing operational energy consumption and boosting renewables. Now, companies are looking at the impacts of their material consumption throughout the supply chain and the impacts of their products and services in the hands of clients and consumers through to end-of-life.

While the United Nations has revealed the world must  cut emissions by 45 per cent to avoid irreparable damage, only four to eight per cent of the UK’s total greenhouse gas emissions are generated from waste. Aurecon research on territorial emissions shows this figure is similar across most developed economies. 

But waste is a tiny part of the circular economy story, which looks at the way materials flow through our economy. The following figures show that materials-related emissions make up a considerable proportion of emissions budgets, around half in the UK, and almost two-thirds in export-rich Australia.

Figure 1: Materials management as a proportion of greenhouse gas emissions. Research conducted by Aurecon using UNFCCC data.  

Circularity explained

A circular economy is where products and materials are reused at their highest value after their first use. To do this, circular business models must become business-as-usual, where waste is designed out; recycled material is used in manufacturing; products are made to be easily recycled; underutilised items are more widely shared, leased or subscribed to; and they’re designed to be more durable and more easily repaired.

From Europe to Australia

One of the standout successes in Europe's circular economy journey is its Green Deal, which was ratified in 2015 by the European Commission with a goal to become  t he first climate-neutral continent by 2050. It also passed a Circular Economy Action Plan with targets on waste, reuse and recycling, and the identification of funding schemes for projects.

Many cities and countries have since developed their own action plans, including London. The city’s circular-economy route map provides guidance for local government and organisations to transition their business and operating models. London estimates its circular economy actions will contribute up to £2.8 billion (AU$5.4 billion) of net benefit for the city by 2036.

By adopting its own measures and pathways, Australia can also minimise the use of virgin materials, return resources back into consumption and production systems, and retain precious resources at their highest value.

Transitioning collectively 

In Australia’s case, these five ambitious actions will ensure a smooth transition across a product’s lifecycle:

1. Assess the impacts of the circular-economy transition with metrics including qualitative data on the macro-economic, societal, environmental and labour market impacts of the transition.
2. Change economic models to condense value chains and extend asset lifecycles; design-out materials; and combine materials use with fiscal tools to create resilient economies.  
3. Adopt a range of financially viable policies that have positive environmental implications. 
4. Provide cross-market, one-to-one business support so that organisations understand how to translate circular principles into opportunities. 
5. Foster collaboration across government departments. This includes setting up targeted circular-economy programmes, creating collaboration forums, communicating the benefits and inspiring policy development.

Cross-market, regionally based opportunities

In Europe, cross-market collaboration in the form of circular economy hubs has been successful. A similar mix of industries exists in Australia as Europe, so the idea is applicable here. 

These may be physical hubs, such as a co-processing facility located alongside a water treatment plant, or a commercial precinct where waste is produced by one business and used as an input by another. However, they can also be virtual, with forums, networks and partnerships sharing knowledge and experience across markets.

While Europe's progress in the circular economy is commendable, there will always be challenges, such as resistance to change and the need for substantial investment in infrastructure. Australia should be prepared to address similar challenges as it transitions.  

Developed the right way, the circular economy in Australia will help to spur organisations onwards by bringing into focus what is truly in their commercial interest. 

A well-developed approach makes for an easily understood incentive to cut emissions, while also ensuring equitable benefits for all segments of society.