Last month, the annual integrated circular economy report 2021 was published. In this report the Dutch national government outlines a pathway towards a circular economy in 2050. The report is monitored and evaluated by a consortium of knowledge institutions, led by the Netherlands Environmental Assessment Agency (PBL). The 258-page document describes the current state, possible ways forward, and proposes policy changes.
Key policy recommendations
- Environmental impact must be included in the price of products and services, and legislation and regulations may no longer put circular initiatives behind linear ones.
- Start early on with ‘compulsion and coercion’, such as levies and regulation, including setting standards.
- Increased circularity requirements for procurement and tendering by the national and local governments, as well as those in the context of producer responsibility. Higher R strategies than recycling must be pursued here.
- An elaborated and widely supported vision of the circular economy, with concrete goals that are specific to each transition theme, value chain or product group (a differentiated approach).
- A clear division of roles should be defined between the various parties involved in the implementation of the circular economy policies, such as between different levels of government and the transition teams.
Insights from the report
Based on current policy, the use of raw materials will double from 89 gigatonnes in 2017 to 167 (OECD), or even 190 gigatonnes (IRP) by 2060, with an associated increase of 50% of GHG emissions. This is despite the fact that we are increasingly efficient with materials in our production processes. However, the increasing efficiency is dwarfed by population growth (based on current trends, we will be 9 billion people in 2060) and the increasing prosperity of the growing global population. Furthermore, efficiency also appears to have side effects such as cheaper production processes and consumption of other products, so that efficiency does not have to lead to a net reduction in raw materials.
An additional problem for Europe is the dependence on countries such as Russia, China, Brazil, Turkey and the US for important and in some cases scarce raw materials. For example, 70% of all critical materials in the world (needed for products such as LCD screens, mobile phones, solar panels, chips, batteries) are extracted in China. This poses supply chain risks for Europe.
The current phase of the transition
Can the principles of the circular economy offer a solution? That has yet to become clear. The transition to a circular economy is currently in its initial phase. This phase is characterized by knowledge sharing, experimenting with circular innovations, an increase in academic publications on the circular economy and a growing educational offer on circularity. Policy aimed at stimulating a circular economy is in many respects also a young and dynamic policy field. For example, a large part (over 40 percent) of the approximately 500 policy elaborations in NL can be characterized as a ‘policy intention in the ideas phase’. Regional governments support acceleration of early stage CE initiatives in their region, mainly by facilitating in new collaborations, involving external expertise, subsidy schemes, and collaborating with other regional governments in procurements. It is key to exchange knowledge and best practices, so that smaller regions will not stay behind.
A circular economy is about the total use of raw materials in society, with the often mentioned ‘R strategies’ such as refuse, reuse and recycling, offering different ways to reduce the use of raw materials. With an economy that uses three times as many raw materials as it needs for its own use and that requires a land area that is three times as large as the Netherlands itself (82% of which is located abroad), the CE principles are of great importance for the Dutch economy. If it is to maintain or even grow this scale of production, renewable materials and production processes must be developed. The material use of the Dutch economy consists for 14% of secondary material (NL is therefore the leader in Europe), and we have a recycling rate of 80% (excluding incineration), which is also considered high. Nevertheless, despite increased efficiency, the total use of raw materials in the Netherlands has hardly changed since 2010, and only 6% of the companies in the Netherlands are categorized as circular, most of which have been around for a long time, such as bicycle repairshops and electronic device repairshops. The innovative CE projects mainly focus on the R for recycling, the same also applies to a certain extent for the focus of government policy.
Because not enough secondary material is released, recycling is not always economically feasible, and recycling does not always lead to resource reduction, it is important to focus more on other circularity strategies than recycling in the remainder of the transition process in the Netherlands. The sharing economy, for example, is currently estimated at 0.01% of the entire Dutch economy. Potential gains loom here.
The circular economy is not a goal in itself, but a means to achieve underlying goals. The European Commission envisions the circular economy as a means of modernizing the European economy as a whole, creating new jobs and limiting emissions along the entire industrial value chain. Environmental protection, economic growth and security of supply are the main drivers of the circular economy for the EU. The EU is positioned to make an important contribution to the cross-border CE transition, waste policy and hazardous substances are already embedded at EU level (with strict requirements). The Green Deal has laid the foundation for new CE policy improvements in the coming years:
- Setting requirements for producers and products, including the degree of recyclability and mandatory product guarantees.
- Actively stimulate CE policy among member states by setting procurement standards and monitoring progress at EU level.
- 30% expenditure of the European recovery fund must benefit climate measures, including CE.
- Legislative initiatives and policy strategies are being developed under the umbrella of the Green Deal.
Accelerating the transition
With increasing urgency and the 50% reduction target of 2030 approaching, it is important that the transition enters the next phase, in which circular experiments are scaled up, market demand for circular products increases and linear companies come under pressure, which may be accompanied by increased resistance to circular regulation and initiatives. A view of what a fully circular economy is can help as an engaging perspective and can provide more guidance to parties to invest in circular production processes and products. Such a final image also makes it possible to clarify which innovations fit in with the transition to a circular economy, and which innovations do not contribute or even slow down the transition.
The NL circular program focuses on 5 transition themes (biomass & food, construction, consumer goods, manufacturing industry, plastics), with 10 different policy instruments available to achieve circularity in these domains.
Determining the desired direction and pace of the transition to a circular economy requires a broadly supported vision among the various parties in Dutch society that are working on a circular economy – such as the various ministries, companies, regional governments and other social actors. What it means for the Netherlands to be fully circular by 2050 should be a joint investigation by all stakeholders. Wat images belong to this vision? Are the guiding principles and sustainable preconditions of the final image clear and are they shared? As this becomes more clear, it will also be possible to assess whether the actions and projects that are now being undertaken are moving in the right direction and at the appropriate pace. However, both the environmental and the socio-economic effects of CE policy, differ per transition theme. It is therefore desirable to differentiate the circular economy policy and to develop concrete goals for individual themes and specific product groups, which are established in consultation with the respective business communities and social parties.
In order to take the next step in the transition to a circular economy, it is also necessary for policy to add more ‘urge and coercion’ to the instruments used in the short term, such as regulatory levies, standards and conditions in permits. The legitimacy for this is that environmental damage has not yet been sufficiently included in the prices and the current rules of the game favor linear practices over circular initiatives. The five main recommendations of the PBL to move the transition forward are summarized at the top of this article.
A reflection on the report
Many institutes, including the Dutch government and the EU, envision the decoupling of economic growth and environmental impact as the holy grail (Green Growth). Research by The European Environmental Bureau (2019) states that there is no evidence that it is possible to combine economic growth as we know it with a reduction in, among other things, material footprint, and that actually the opposite appears to be the case. The bureau provides seven reasons why we should be skeptical about the decoupling vision. This surfaces another prominent question, namely whether we should measure our prosperity and growth differently than we currently do on the basis of gross national product, our reflection of economic growth. Rutger Hoekstra writes about this in his book ‘Replacing GDP by 2030’ (2020). He states that it would be desirable to use a variety of metrics instead of just one to measure prosperity across the globe. In short, his book proposes to unite the ‘beyond GDP movements’ into a global system of four ‘system accounts’: an environmental account, a societal account, an economic account, a distribution account and potentially a fifth quality account. Perhaps, we are not using the right indicators to realize a circular economy.
Read the full report here.