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Report: World economy is getting less circular

The world is getting less circular, relying more on virgin materials in than it did in 2018.

In the sixth Circularity Gap Report from the group Circle Economy with support from the consulting group Deloitte, presented at the World Economic Forum in Davos, Switzerland, on Jan. 17, experts from the Amsterdam-based group measured the world’s circularity at 7.2 percent, down from 8.6 percent in 2020 and 9.1 percent in 2018. The reason for the lower performance is the rise of raw material extraction and use.

“We can assert that circularity goes down as the general rate of global material extraction rises,” they write. “With a circular economy, we can fulfill people’s needs with just 70 percent of the materials we currently use — within the safe limits of the planet. Our current economic model is smashing through the planet’s safe limits.”

The report mentions plastics specifically only once, but says plastics are part of the detrimental impact of an industrial system that stems from “the scale of production (and consumption) and production processes themselves.”

The study finds that adopting a circular economy could both reverse what it calls the “overshoot of planetary boundaries”and shrink the global need for material extraction by about one-third. This would require fossil fuels to be eliminated from the global equation — especially coal — and demand for high volume minerals, such as sand and gravel, largely for housing and infrastructure, to be lowered.

The report also points to the fact that more and more materials are going into infrastructure and long-term investment such as roads, homes and durable goods, leaving fewer materials to recycle back into the economy. Noting that “we cannot recycle our way out of this one,” it calls attention to four other key circular economy principles: Use less, use longer, use again and make clean.

Acknowledging that there are no one-size-fits-all solutions for the circular transition, the report also groups the different countries of the world into three different categories to better determine which circular solutions will have the most impact where.

Each country has a different starting point and will progress at a different pace towards the shared global goal of reversing environmental overshoot, while fulfilling people’s needs.

Briefly, the report explains that the world’s highest-income countries — termed “shift” — can deliver high standards of living, but consume the majority of the world’s materials and massively overuse the amount of materials the planet can support.

Those countries must focus on reducing overconsumption and reducing their impact on the environment.

Middle-income, or “grow” countries that are rapidly industrializing and have a growing middle-class need to explore on new ways to stabilize and optimize their material consumption to maximize societal well-being.

“Build” countries, where the majority of the world’s population lives but which use less than a 10th of the materials of shift countries, must focus on building up infrastructure and the provision of wellbeing, even if this requires that they increase their material footprint — because only when a better balance in wellbeing is achieved, can we scale the transition to a circular economy, write the authors of the report.

“The linear economy has a number of detrimental effects on the environment that significantly affect peoples’ wellbeing. Our research shows that by adopting circular economy practices, we can cut material extraction, continue to prosper, and return to living within the safe limits of this planet,” commented Martijn Lopes Cardozo, CEO at Circle Economy.

Today, five of the nine key “planetary boundaries” that measure environmental health across land, water and air have been broken. ‍As the report argues, this can be reversed, but to do so, “policy, along with the entire economic system, needs to shed business-as-usual: embracing long-term vision and interests over short-term rewards.”

“These findings reinforce that we have reached a point where the planet cannot keep up with the human demand for material goods,” said Dieuwertje Ewalts, Circular economy and sustainability director at Deloitte. “Circularity offers us the opportunity to reduce planetary pressures. Involvement from business and the creation of more circular products going forward will be key in creating a positive impact for both the planet and society.”

Publication date: 17/01/2023

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This project has been co-funded with the support of the LIFE financial instrument of the European Union [LIFE17 ENV/ES/000438] Life programme

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Last update: 2022-01-31