Lisa McLean CEO

by Lisa McLean, Chief Executive Officer, NSW Circular

The circular economy represents a unique and significant opportunity; $210 billion to Australia’s GDP by 2050¹. It is capable of driving new efficiencies and productivity improvements unseen over past decades.

New circular businesses, products and services are emerging – such as fashion and white goods as-a-service, recycled water, local renewable energy generation and shared mobility. They are disrupting linear approaches that encourage us all to flush and throw away valuable resources.

What is circular economy?

Circular economy is an accelerator for a sustainable recovery. It aims to redefine growth, focusing on positive society-wide benefits, by gradually decoupling economic activity from the consumption of finite resources, and designing waste out of the system. It’s based on three principles:

  1. Design out waste and pollution
  2. Keep products and materials in use
  3. Regenerate natural systems

What does it mean for Australia?

NSW alone generates over 20 million tonnes of waste – enough to fill 8,000 olympic-sized pools, and 35 per cent of this waste goes to landfill, costing households and businesses over $750 million in waste levies every year.

But it’s not just the cost of the levies– what about the resources locked in landfilled materials?

If we look at a solar panel, for example, the silver, silicon and aluminium inside are a huge untapped resource.

Other precious metals can be found in e-waste and textiles, and smart organisations are beginning to mine this waste instead of virgin resources.

Metals are very recyclable and require less energy to produce than virgin products. For example, one tonne of recycled steel saves 1,131kg of iron ore, 633kg of coal and 54kg of limestone².

Copper can be recycled indefinitely, and recycled copper is worth up to 90 per cent of the cost of the original copper, with every tonne of recycled copper amounting to a saving of 3.4 tonnes of CO2 (equivalent to 16,602km driven), 36 GJ of energy (equivalent to 20 houses’ monthly energy consumption), 6kL water (34 bath tubs) and 1.1 tonnes of waste (equivalent to 20 wheelie bins).³

Australian business and finance sectors have an immediate opportunity to step up. They should not wait for policy, but need to get on with establishing new circular business models.

In Europe, banks are already providing new competitive financial leverage for companies choosing a circular economic production model, such as Intesa SanPaolo in Milan which has dedicated $6 billion Euro ($9.8 billion AUD) to innovative circular economy projects.

Image credit: Nick Jones

Circular sharing and reuse business models

Circular sharing and reuse business models and services are more sustainable and often highly profitable because they have multiple revenue streams.

They are paid to take away a resource which they re-purpose and sell again, extracting value by keeping it in the market for longer.

Circular economy principles are also proving cost-effective for utilities. Technological advancements are also converging traditional utility infrastructure. Water and organic waste is energy, solar is mobility.

This is disrupting traditional investment and revenue models. It’s not just solar panels and batteries that can store and trade excess energy, technologies can turn organic waste into fertiliser and energy, and autonomous vehicles are avoiding the need for every household to own a car.

Precinct and household recycled water systems are also reducing water demand by 50 per cent through products like Hydraloop, a box the size of a small fridge that can recycle 85 per cent of household water.

Circular utility solutions are also saving money on gold-plated infrastructure because they have skinny grid connections that avoid costly upstream and downstream infrastructure augmentation.

For example, local energy generation and microgrids reduce demand and enable renewable energy to be sold back to the grid, while recycled water can halve water demand and remove wastewater outflows harnessing them to recycle locally.

Circular infrastructure

As we enter the circular economy era, the way we think about infrastructure needs to change. To date, it has largely been dominated by siloed infrastructure  planning for water, energy, waste and mobility due, in part, to a construction-led approach.

The World Economy Forum has been emphasising the need to address the connections and interdependencies between our siloed infrastructure sectors and systems to give communities what they need to flourish.

In Australia, we need to make sure infrastructure is circular and interconnected, that it can leverage clearer insightful data and manage energy, water, waste and transport as a system of systems capable of tackling climate change and keeping us resilient and safe in pandemics.

Infrastructure Australia is already working to promote circular infrastructure in its Priority Infrastructure List.

Image credit: Benjamin Punzalan

Rethink and redesign for resilience

Companies and researchers are designing out waste by making products that last and can be repaired. Next-generation infrastructure and services are reducing costs and creating an abundance of sustainable resources that can be shared.

When we look at the benefit driven by a circular economic approach to externalities such as avoiding carbon emissions from landfill, or water resilience and productivity from water recycling, and cost savings of up to $6,000 annually achieved by sharing a car instead of owning one, the case for a circular economy is compelling.

The COVID-19 pandemic has revealed our current economic system’s vulnerability to risks, challenging us to rethink and redesign for resilience.

The circular economy is more relevant now than ever. It offers a solution to embrace innovation to build a more resilient zero-carbon economy by combining economic opportunities with benefits to society and the environment.

Ten per cent of our current global economic activity is circular but it’s growing and we need it to. By 2050 we will have ten billion people on the planet and not enough virgin resources to maintain anywhere near our current levels of consumption.

A circular transition is essential and inevitable, and those who are at the forefront of this change will be the successful businesses, places and economies of the future.

References: 

¹Centre for International Economics, Headline economic value for waste and materials efficiency in Australia, commissioned by the Department of the Environment and Energy, Oct 2017

²Suez Australia and New Zealand, https://www.suez.com.au/en-au/sustainability-tips/learn-about-waste-streams/general-waste-streams/metal-aluminium-and-steel-recycling

³Planet Ark, https://businessrecycling.com.au/recycle/copper (Accessed 13 Aug 2020)

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