The in Yokohama last week offered some great ideas for Australia’s ”circular economy 2.0”, according to Open Cities chief executive officer Lisa McLean, but so far only the most forward-thinking companies have caught on, she says.
If you thought the circular economy was a hippie fad, it’s time to google the definition and get ready for the transition.
The circular economy is now valued at 1.8 trillion euros by 2030 in Europe alone. Millions of people and tens of thousands of businesses are now participating in this innovative circular economic approach.
Rapid advancements in technology and innovation are propelling this economic transition, along with the obvious fact that earth will run out of resources to meet the current needs of our growing human population – anticipated to exceed 9.8 billion by 2050.
While leading and innovative Australian businesses are part of this transition a lot more work needs to be done right now for us to secure our place in the global circular economy 2.0.
Resources are getting too expensive, and the products created are fast becoming waste items that are not good for us or the environment.
Just last week, we found out that plastics are now officially inside humans. Not such a surprise as they have been detected in fish, marine life and salt. But now we know for sure that if they are not already inside us, they will be soon, and they may also be the cause of illnesses and even infertility.
If we were ever going to transition away from our linear throw-away economy and rethink the products we manufacture and the way we use them, now would be a good time.
Circularity economics is about decoupling population growth from resource use – ensuring the wellbeing of people does not rely on how much of our natural resources we consume.
It provides a mechanism for resource efficiency, sustainable growth and carbon elimination by promoting new business models that give humans what we really need to survive and be happy. For example, I don’t really want a light bulb – what I need is light. I don’t always want a car, but I need mobility. I definitely don’t want plastic waste, but I need food and water.
Circular economy doesn’t only generate savings for the environment, it makes economic sense by increasing competitiveness. The savings of production have been estimated in the EU alone to be to 600 billion euros – a huge increase in competitiveness, with greenhouse gas savings of around 50 per cent. New sectors, jobs and businesses are being created like battery recycling worth 400 to 500 million euros annually -–a massive increase over the past five years.
Banks are now looking to invest in the circular economy because of the new revenue streams and long-term risk mitigation benefits of circular businesses. These businesses reflect the fact that consumer demand is changing from owning to using. New ownership models are now based on sharing and prosuming – the ability to both produce and consume services.
Europe (led by Finland), Japan, China and some Canadian and US cities are now leading the transition. They are catalysing new markets and allowing people to recycle their waste over and over again in a way that extends the value chain, giving more people and businesses a chance to participate.
Starting with waste recycling, these markets are extending to utility and mobility services, enabling people to generate their own renewable energy and sell spare capacity, recycle water, and share mobility to avoid the second largest household expense of a car. The mobility revolution is occurring rapidly and globally as more people chose mobility as a service over car ownership.
Maximising resource life span and use within the value chain to use resources for longer while minimising waste, is proving to be a successful way to drive job creation, productivity, higher efficiency and innovation.
Innovative businesses already understand the impact of resource consumption and their rising costs is a significant risk that cannot be ignored. So, they are responsibly and cleverly designing business models that both avoid these risks and redefine the benefit.
Australia needs to focus on transitioning and fast – new businesses can’t compete fairly without level playing fields, without better regulation. These new businesses, along with leading councils, are pushing for better regulation that will open markets to improved sustainable services and products based on circular economics.
There is no doubt policy targets and changes in regulation are the first requirements of this economic transition. Fair policies that are consistent and reliable will ensure we can realise the economic benefits. Tariff structures that recognise circularity and are not based on linear externalities need to be developed not just in the waste sectors, but in water, energy, mobility and telco.
All Australians need to be included. Businesses that have been good corporate citizens need to be supported in the transition, and new circular business models currently shut out need to be let into the market.
It’s great to see NSW moving forward with this critical economic policy thinking, this week releasing its first draft Circular Economy policy document. It’s a unique opportunity to bring together government with Circular Economy industry and consumer leaders in a coalition that informs Australia’s transition.
As we make this transition, one thing is certain: Circular economic thinking is here to stay and is already driving our markets, our products and services – that’s a significant opportunity for Australians.
Lisa McLean is chief executive officer of Open Cities. She attended the World Circular Economy Forum 2018 in Yokohama this week.