A review of new EU and UK ambitions for a circular economy
A version of this post was first published on BusinessGreen.
It’s only years after its 1970s inception that the circular economy concept is really beginning to gain traction. The publication this summer of a clutch of policy proposals and recommendations from governments, business organisations and NGOs alike show that the idea is really gaining momentum.
But the catch-all title ‘circular economy’ belies a diverse set of complementary but distinct processes and activities. Some of these, such as improved recycling, could be achieved through tweaks to current regulatory and financial systems. Others, such as the more ambitious and valuable ‘inner loops’ of a circular economy – reuse, remanufacturing and servitisation – require more fundamental changes in the frameworks that shape business strategies and investments.
So what are the recent reports and what do they mean for progressing a circular economy from a promising theory to reality?
The European Commission’s circular economy package is certainly the most significant as it has the potential to become law. Many of its proposals are about incremental improvements to the existing system, with recycling targets and landfill bans making the headlines.
But buried in its detail there are interventions aimed at fostering higher value systems. In particular, extending the ecodesign directive to encompass resource efficiency would set requirements for longer lasting, more easily repaired and refurbished products that are the foundation of the higher value reuse and refurbishment loops of the circular economy.
Intriguingly, these proposals have been criticised both for being too bland and too ambitious. Too ambitious because the proposals simultaneously change the definition of what counts as recycling (to just what comes out of a reprocessor rather than everything that gets collected), whilst raising the target for how much gets recycled.
There’s a valid concern that these definition changes mean targets will be set without really understanding the baseline; but any criticism should also acknowledge that these measures would deliver more high quality materials that better meet manufacturers’ needs. So the discussion should be about how far and how fast rather than whether these are the right changes to make.
As for whether the package is too bland, it’s true that there isn’t much detail about the most ambitious measure: using the ecodesign directive to deliver products better suited to the higher value applications of a circular economy. This is perhaps because there’s still a lot to be worked out. But the experience of energy saving shows that ecodesign is a powerful directive – it will save more carbon than all the rest of the UK’s energy saving policy combined – so the acid test of the Commission’s ambitions is how effectively ecodesign is used to deliver circular economy ready products.
The Environmental Audit Committee’s (EAC) Growing a circular economy report definitely can’t be accused of blandness. It sets out a comprehensive range of interventions, including both improvements to the current approach as well as proposals to incentivise product redesign and circular economy business models.
Framework changing recommendations include tax reform, such as charging less VAT on products designed to be easier to repair and reuse, and longer minimum warranty periods for consumer products. These moves should encourage businesses to adopt more resource-efficient business models. To reinforce this, the EAC echoes the European Commission’s proposals in calling for reform of producer responsibility schemes to encourage better design and the use of recycled materials, as well as urging the UK government to support the proposed changes to the ecodesign directive.
In terms of incremental improvements, the EAC’s recommendations echo those of the recent report I co-authored, the Circular Economy Task Force’s Wasted opportunities: smarter systems for resource recovery. The vision in this is to achieve higher quality recycling and more reuse of unwanted electronics through a more standardised approach to resource recovery. It demonstrates that the current patchwork approach to resource recovery across the UK, but especially in England, wastes £1.7 billion in resource value every year. Greater consistency would enable better engagement with householders and encourage investment in reprocessing infrastructure through greater quality, availability and consistency of feedstock.
Other analyses by the manufacturer’s association, EEF, and think tank the IPPR have focused on the importance of better data about materials quality and flows to help get reprocessing infrastructure built. This would increase financiers’ confidence that any plant they support would not end up redundant due to lack of feedstock. From a national perspective, this is also vital information for assessing the UK’s exposure to resource supply risks. Labour’s shadow Defra team are alive to these concerns, and have promised a review of resource risk if they come to power next year a commitment also made recently by the Lib Dems.
Small shifts can work alongside bigger ambitions
The most concrete proposals in these reports are for improvements within current business and regulatory frameworks. But these far-from-revolutionary proposals shouldn’t be dismissed: incremental improvements can lay the groundwork for improved product design or remanufacturing infrastructure; just having collection systems that don’t break reusable electronics, for example, could help businesses capture more value through remanufacturing, and underpin decisions to design products with remanufacturing in mind.
But, at the same time as tweaking the system, government needs to show it’s serious about the ‘inner loops’ by working with business to create an ambitious industrial strategy for a truly circular economy.