Circular Economy – what is in the way?

Public forum 5th April 2016, Brussels. Hosted by QED* policy platform and moderated by OSMOS’ Stephan Kampelmann.

With the Circular Economy on many people’s lips yet with few concrete urban/regional-scale examples, we ask ourselves: what is getting in the way of a circular economy? 

Over the last five years, the Circular Economy has become common vocabulary – for anyone working in industry (with an interest in environmental impact), in public government (with an interest in waste and jobs), in the environment (with an interest in the economy), public policy and research institutions of many stripes. However until now the Circular Economy has been a concept spearheaded by consultants and non-government institutions (particularly the Ellen MacArthur Foundation) and embraced by a number of large private organisations worldwide. The result in many cases is ‘circular business’ where the business model changes to replace material consumption with value added services however the business itself has little impact on the industrial ecology surrounding it.

The adoption of the European Commission of an ambitious Circular Economy Package* in December 2015 means that ideas related to circular economy will feed into an array of regulations and policies in different areas, including waste, ecodesign, fertilisers, energy and many others.

The circular economy has a lot going for it. Some €1.8 trillion by 2030 according to some estimates – that is twice the current economy (EMF, McKinsey & SUN*). Circular economy could be giving Europe a great boost to both skilled labour and tech jobs, it could be saving a lot of money through better valuing existing materials while replacing imports with what is available, it could be improving exportable innovation and knowledge and it certainly can bring about great improvements for the environment.

Figure-2-Urban-metabolism-BrusselsDuvigneaud and Denaeyer-De Smet’s revolutionary 1977 map of resource flows in Brussels. Full sized image here.
Between the industry-driven, privately focused initiatives and larger scale policy agenda at EU level, we feel a gap is emerging in terms of the systemic application of the circular economy. While certain cities and regions have began to dive into the topic (namely Amsterdam*, Paris*, Brussels* and Genk*) there certainly remain a number of red flags that force us to question how prepared the existing policy/regulatory landscape is for a circular economy. The following are a number of themes that Stephan will be discussing with policy experts at the QED event on the 5th of April. 


Why do we need regulation to boost the circular economy? Do we need to loosen regulation to allow industry to drive innovation?

Prior to the adoption of the Circular Economy Package there has been some debate about overregulation of what is currently an industry-driven phenomenon. If, as advocates such as Ellen MacArthur believe, there is a solid business case for circular economy, is there really a need to regulate waste, fertilizers, the building sector, ecodesign etc? This is a crucial question because regulation can hamper the development of circular economy in at least two ways: first, regulation could make it more difficult for private initiatives to be creative and experiment with new solutions to render material flows more circular. An attempt to regulate these experiments from the top could kill creativity and risk taking. Second, regulating circular economy initiatives could, as most regulations, systematically play in favour of big incumbent companies who have the resources and scale to comply to bureaucratic demands. Again, this could be counterproductive if circular economy is to be implemented from the bottom-up, through experimentations by pioneers and new actors. While some form of regulation is clearly necessary, the question of how exactly EU policy can boost instead of hamper its development is still open.


How can we define targets and indicators that are holistic and qualitative, i.e. reflect healthy ecosystems rather than uni-dimensional performance? To what extent do we need new types of systemic policies beyond quantitative targets?

One of the advantages of the circular economy is a systemic approach that thinks about economic activity in terms of “industrial ecosystems” rather than isolated firms. An indicator system such as the building sector’s BREEAM or DGNB may not offer the answer. While quantitative indicators have the advantage of being “objective” goalposts, they also have the huge disadvantage of reducing complexity. The boost that nuclear energy has received in some countries from an excessive focus on the quantitative objective of emission reduction is a case in point. This raises the question how policy makers can fix tangible and verifiable targets without reducing the complexity of a systematic and holistic approach that forms the very essence of circular economy.


How can we avoid that the interest for circular economy is misused for greenwashing?

There is currently no label for circular economy and many alternative principles and definitions of circular economy co-exist. Some companies are practicing ‘circular economy’ within their business yet their business itself remains focused on the linear economy (for example Caterpillar). This creates the risk that circular economy will turn from a promising and ambitious concept to a useless and empty shell. In order to prolong the half-life, especially public policies about circular economy should be very clear about what constitutes circular economy and what does not. So far, many plans, including the EC Circular Economy Package, does not clearly distinguish between resource efficiency and circular flows*. This raises the issue of how a clear and robust definition of circular economy can be promoted.


To what extent should the circular economy be local? In other words: to what extent should scale, geography and location matter? Is there a tension between globalised trade and the regional circulation of biophysical inputs? A related question is if there is a tension between policies in favour of circular economy and European and international competition law?

One of the arguments for circular economy is import substitution (witness the EC argumentation for substituting phosphorus rock through recycling of biowaste in its proposal regarding the revised fertilizer regulation). Another argument associates circular economy with short-circuit economies. The “local” element of circular economy sits, at least to some extent, uneasy with the current economic paradigm of globalization and free trade across large distances. Many circular initiatives, in particular in the realm of public procurement, run into legal difficulties whenever they want to ensure that materials are sourced or reused locally. This is a questionable result of EU and WTO rules that should be re-examined.

The event on the 5th April 2016 is at the Renaissance Hotel, Rue du Parnasse 19, 1050 Brussels at hosted by policy platform QED.  Registrations through QED, here.
Dr Constantin Ciupagea – Head of Unit H8 – Institute for Environment and Sustainability, Joint Research Centre, European Commission
Sirpa Pietikäinen – Member of the European Parliament
Pierre Henry – Policy Officer, Unit A1 – Eco-Innovation and Circular Economy, DG ENV, European Commission
Juan José Freijo – Global Head of Sustainability, Brambles
Beata Guzik – Director of EU Public Affairs, Pharuslegal
Stephane Arditi – Products & Waste Policy Manager, EEB, European Environmental Bureau