The Covenant 2022 Circular Economy Secretariat had a discussion with Dr. Anders Wijkman – Co-President of the Club of Rome, Former Member of the European Parliament on the circular economy in Europe. You may find below a transcript of the interview.
- What should be the main chapters of any government policy to move towards a circular economy? What should be the EU narrative and how does it relate with a new growth model?
We have had for too long policies emphasizing growth without considering what kind of growth. It is too simplistic if one is obsessed only with volume and not with quality. If a growth policy should be meaningful, it needs to deal with a wider definition of growth. This is because today we have so many intertwined problems affecting our ecosystem, natural resources and climate change. We have been using too much energy and materials without thinking about the consequences.
Most of the products offered to consumers are designed for a short product life with little attempt for recycling and reuse and a market for secondary materials. McKinsey has calculated we use only 5-10 % of the value of residue materials. The rest goes to landfill or incineration, which is ridiculous. There is so much value in what we throw away: material value, energy value, labour value, finance value etc. The main reason why we did not bother about this in the past is that when the industrial society took off, the planet was considered infinitely large and both energy and materials were cheap. But over time pollution became an increasing problem and prices started to rise. The combination of pollution – not least carbon emissions – rising costs and security of supply tell us we must use resources much more carefully. A special problem concerns rare metals, the majority of which come from China. As a general rule, we need to make better use of the existing stocks of materials and draw example from the biological world which is largely circular.
- On the basis of the recent Club of Rome study that you co-authored, what are your main recommendations for an EU circular economy strategy?
My recommendation for the upcoming EU circular economy package is to lower taxation on labour and increase taxation on resources. Today it is most often less expensive to use virgin materials as compared to secondary materials. This has to change. One important action would be to exempt recycled materials from VAT, which is logical as people have already paid VAT once. In addition, we need to broaden the eco-design directive so as to cover not only energy aspects but, as well, how materials are used, in particular how products are designed in the first place. To reuse components the design must be such that products are easy to disassemble. Finally, we should also consider a tax on waste incineration.
- What are the success stories and core findings in the 5 countries of the Club of Rome study: Sweden, Spain, and the Netherlands, France and Finland?
In the report we have simulated the economies of these 5 countries – using a traditional Input/Output model – under the assumption they were more energy and material efficient and had replaced half of their fossil energy use with renewables. The outcome was that these countries would have reduced GHGs emissions significantly – between 60 and 70 % – and would have generated more jobs. Climate strategies in the past have primarily aimed at reducing energy consumption. Material use or throughput has not been a priority. Our study showed that by using materials more efficiently a lot of energy can be saved and thereby a lot of CO2 emissions.
The other significant outcome in the study is that a more circular economy is equal to more jobs. A service economy, based on offering products for rent rather than for sale – and giving prominence to reuse, recycling and remanufacturing – is by definition a more labour intensive economy.
- Circular economy implies to work with companies and large corporations that embrace this new agenda. How could we accelerate this paradigm shift?
Because of the digital economy, new leasing and renting business models are emerging. This is all going in the right direction and one that is interesting to companies since it fosters a closer relationship between businesses and their customers. There are several large companies which have started to go along this path such as: Renault, Philips, Michelin, Unilever, H&M etc. These companies demonstrate that by offering high-quality services rather than selling more stuff they can earn as much revenue and their business is just as profitable. By becoming service providers they can create jobs with less dependence on natural resources.
A good example is Philips that leases its lighting equipment and consumers paying a lease rather than owning the product themselves, or Michelin offering tires for lease and charging truck owners per kilometer or IKEA that is running a recycled furniture marketplace in some of their stores. These examples show companies have an interest to make products last longer and that the material value is not lost. And the customer relationship is as well developed as before, if not better.
- Which planning methods should be used for a new development model based on performance, collaboration and sharing?
By definition a circular or performance-based economy is more efficient the closer the material loops are, so eventually many global supply chains will be substituted by regional and local ones. This is of course not true for every product but for many products this will be the likely trend. For recycling and reuse to be effective it does not make sense to maintain supply chains that have to travel thousands of kilometers. For many products regional markets would be the optimal solution.
We are currently experiencing a whole variety of new initiatives, all of which are using materials more intelligently. My take on this is: let as many flowers bloom as possible. The north – south dimension of the issue is of course important to acknowledge. Many developing countries perceive that their main export revenue is from selling commodities. And that they fear they will lose business if we in the north use them more efficiently. So we need to help developing countries to develop intelligent business models. Ultimately it will be in their interest as well to use energy and materials more efficiently.