Faced with a wasteful economic model that leads to climate change, the circular economy offers a model that preserves nature and reduces greenhouse gas emissions.
Faced with a wasteful economic model that leads to climate change, the circular economy offers a model that preserves nature and reduces greenhouse gas emissions. Around the world, private banks, multilateral development banks and development finance institutions have stepped up investments in circular economy activities. At present, China and Europe are the world leaders in the transition to circularity. Manuel Albaladejo and Paula Mirazo from the United Nations Organization for Industrial Development analyze in this article, together with Laura Franco Henao from the Ellen MacArthur Foundation, the benefits of a change in the economic model that must be fulfilled as soon as possible. The current linear economic model based on “take-do-discard” is wasteful, extractive, and largely responsible for climate change and resource depletion. In this sense, if we want to achieve the Sustainable Development Goals and greenhouse gas emissions commitments under the Paris Agreement, we must adopt a new economic model. The circular economy proposes a completely different approach that allows stimulating economic growth and generating employment without compromising the environment, positioning itself as a cornerstone for a resilient and low-carbon economic recovery, after the COVID-19 pandemic. Circular economy, climate change, growth and employment The circular economy offers a framework of systemic solutions for economic development deeply addressing the cause of global challenges such as climate change, biodiversity loss, increased waste and pollution, while revealing great opportunities for growth. Driven by design and sustained by the use of renewable energy and materials, the circular economy revolutionizes the way we design, produce and consume. The model is based on three principles: eliminate waste and pollution; maintain products and materials in use, and regenerate natural systems. The opportunities for value creation in the framework of the circular economy are classified in the technical and biological cycles (of the economic system *). In the technical cycle, human-made materials and products remain in use for as long as possible. In this way, value is created through exchange, maintenance, reuse, remanufacturing and recycling. On the other hand, in the biological cycle, after having gone through multiple uses, the materials return to nature safely, thus returning the nutrients to the land and natural ecosystems. The graph shows how to achieve the transition to the circular economy UN Environment The graph shows how to achieve the transition to the circular economy. The application of the circular economy has a direct impact on the fight against climate change and the prevention of waste. As an example, changing the way we produce and use steel, cement, aluminum and plastic could reduce greenhouse gas emissions from these industries by as much as 40% by 2050. Economically, the use of recycled or reused steel for the construction of buildings could in turn generate up to 25% savings in material costs per ton of steel. Likewise, the application of the principles of circularity to the construction sector could mean a reduction of materials (and costs) through the use of modular production and 3D printing, the optimization of energy use and reuse or recycling of high-value materials in the deconstruction phase. For its part, reducing plastic production and consumption can avoid a third of the global generation of plastic waste by 2040. Given the current and projected increase in global waste generation, the transition to a circular economy becomes crucial . By addressing structural inefficiencies throughout supply chains, the circular economy offers abundant value creation opportunities at the industry level. For example, the returnable packaging market is expected to grow from $ 37 billion in 2018 to $ 59 billion in 2026. Likewise, the second-hand clothing market will double the size of that of fast fashion by 2029. Some studies suggest that the transition to a circular economy could generate a net economic benefit of 1.8 trillion euros for Europe in 2030, and an annual value of approximately 624,000 million dollars in India by the year 2050, compared to the current linear scenario. Recent studies in Latin America and the Caribbean also indicate that the adoption of the circular economy could create a net increase of 4.8 million jobs