Circle Economy has released its latest Circularity Gap Report. This year, the report focuses on the link between the circular economy and climate change, exploring how circular strategies can reduce greenhouse gas (GHG) emissions and curb global temperature rise while also cutting material consumption.  

Here, we summarise the key findings of the report and reflect on the takeaways for the Australian context.  

The ‘Circularity Gap’, the ‘Emissions Gap’ and how they are related 

The Circularity Gap is a global metric that tracks how circular our world is, with the figure released yearly as part of Circle Economy’s annual Gap Report. In recent years, gap reports have shown that our world is getting less circular. In 2018, the Circularity Gap was 9.1 per cent but last year this figure dropped to just 8.6 per cent. The Circularity Gap has not been updated for 2021 due to data unavailability, but the global backslide on circularity acts as a reminder of the work required to close the gap.  

The Emissions Gap is the gap between where GHG emissions are heading under current Nationally Determined Contributions (NDCs) and where science indicates climate policies need to be to avoid 2 degrees of warming, widely regarded as the safe limit to avoid the worst impacts of climate change. Or, in simpler terms, between where we are going (3-degree plus warming) and where we need to be (well below 2 degrees).  

Temperatures are predicted to hit 3.2 degrees this century with a continuation of current policies. The Gap Report finds NDCs can close this gap by 15 per cent by 2044 (and keep global temperatures between 2-3 degrees) if countries achieve their emissions reduction targets. Circular economy strategies can help us get the rest of the way and keep warming under the Paris Agreement goal of keeping global warming to well below 2 degrees. An approach that combines NDCs with circular economy strategies could lower warming to 1.75 degrees.  

NDCs are not enough 

While NDCs are an important part of the global response to climate change, and have seen countries like Denmark, France, China and Japan commit to net-zero targets, we can’t tackle this challenge through energy targets alone. According to the Gap Report, 70 per cent of emissions are associated with materials handling and use. That’s where circular economy strategies come in — by changing the way we construct and use the built environment, the way we travel and how we grow and consume food among other measures we can cut GHG emissions by 39 per cent and virgin resource use by 28 per cent.  

What needs to change  

The report reveals three human needs account for almost 70 per cent of all GHG emissions: housing, mobility and nutrition. The remaining 30 per cent of global emissions come from communications, services, consumables and healthcare. From regenerative agriculture to ride-sharing, the report shows how each of these societal needs can adopt circular solutions and reduce their collective climate impact.  

Housing has the largest combined materials and emissions footprint and represents the biggest opportunity for implementing circularity. Housing (including commercial and industrial buildings) generates 13.5Gt of emissions a year, with the associated extraction, transport and construction activities responsible for its hefty impact. Circular approaches, like reusing building materials and using renewable energy to heat or cool buildings, could reduce the need for virgin materials by 13.6Gt and cut emissions by 11Gt.   

Mobility has a bigger emissions footprint than housing, emitting 17.1Gt of GHGs a year. The majority of these emissions are generated in the burning of fossil fuels for passenger and freight transport. Circular design approaches like designing for durability and repairability, and an increased use of public transport and car- and ride-sharing services could reduce materials use by 5.3Gt and cut emissions by 5.6Gt.   

Nutrition is the third-largest emitter, generating 10Gt of emissions a year from food production and land use, land-use change and forestry (LULUCF). Land use accounts for 4Gt of nutrition’s total yearly emissions. Reducing consumption, switching to plant-based diets and implementing circular farming practices such as regenerative agriculture could cut materials use by 4.5Gt and reduce emissions by 4.3Gt.   

Different paths for different countries 

With their power to legislate change, countries have a key role to play in the transition to circularity. A country’s circular economy approach will vary depending on its level of economic development, resource use and infrastructure. To ensure its strategies for implementing the circular economy are tailored to meet the specific needs of a nation, Circle Economy developed three country profiles — build, grow and shift.  

As a shift country, Australia has an enormous responsibility to reduce resource extraction, emissions and consumption. Shift countries produce the majority of global emissions (43%) and are responsible for a third (31%) of global resource extraction. Much of the effect of our outsized consumption is felt in other parts of the world, with lower-income nations the location of most primary resource extraction as well as being disproportionately affected by climate change.  

"In the high-impact areas of Nutrition, Mobility and Housing, Shift countries need to, first and foremost, take responsibility and reduce their consumption by integrating circular strategies across the board: from ownership to sharing models; to making the most of their goods—from buildings to vehicles—before, during and after their functional lifetimes and optimising how waste is valorised in the already mature waste management systems,” the report reads.  

“To get there, they must mobilise all the technologies and funds that they have at their disposal.” 

For a more detailed breakdown of the recommendations for shift countries, head here to read the full report.