Potential for Denmark as a circular economy A case study from: Delivering the circular economy a toolkit for policymakers

Transcription

1 Potential for Denmark as a circular economy A case study from: Delivering the circular economy a toolkit for policymakers November 25, 2015 NOT FOR EXTERNAL USE Global Partners of the Ellen MacArthur Foundation:

2 NOT FOR EXTERNAL USE THE CIRCULAR ECONOMY RESTORATIVE AND REGENERATIVE BY DESIGN RENEWABLES FINITE MATERIALS Renewables flow management Regenerate Substitute materials Virtualise Restore Stock management Farming/collection 1 Parts manufacturer Biosphere Biochemical feedstock Product manufacturer Recycle Regeneration Service provider Share Refurbish/ remanufacture Reuse/redistribute Cascades Maintain/prolong Biogas Consumer Collection User Collection Extraction of biochemical feedstock 2 MINIMISE SYSTEMIC LEAKAGE AND NEGATIVE EXTERNALITIES SOURCE: Ellen MacArthur Foundation; drawing from Braungart & McDonough Cradle to Cradle (C2C)

3 NOT FOR EXTERNAL USE THE TOOLKIT FOR POLICYMAKERS An ambitious project objective To develop a circular economy toolkit for policymakers, with Denmark as a case study, and disseminate this toolkit across the world giving policymakers who wish to embark on a circular economy transformation access to the tools and methods they need.

4 NOT FOR EXTERNAL USE A MULTI-STAKEHOLDER APPROACH PROJECT MEMBERS EXTERNAL STAKEHOLDERS Core project team Sponsor Key contributors International public bodies and academics Danish ministries Danish stakeholders incl. industry associations, unions Individual businesses

5 SCOPE RESOURCE PRODUCTIVITY CIRCULAR ACTIVITIES WASTE GENERATION ENERGY AND GREENHOUSE GAS EMISSIONS INDICATOR Resource productivity GDP EUR / kg domestic material consumption Recycling rate, excluding major mineral waste & adjusted for trade 2 tonnes recycled/tonnes treated (percent) Eco-innovation index Index with 16 indicators (e.g. green investments, employment, patents) Waste generated per GDP output, excluding major mineral waste tonnes recycled / ton treated (percent) Municipal waste generated per capita 3 kwh/kwh (percent) Share of renewable energy Percent of gross final energy consumption GHG emissions per GDP output tonnes CO2e/EUR million Basic metals and fabricated products Electronic products Water supply, sewerage Rubber and plastic products Mining and quarrying Agriculture, forestry and fishing Food and beverages Electricity, gas DENMARK 1 Construction Hospitals EU % 53% % 14% Machinery Pharmaceuticals ROLE IN NATIONAL ECONOMY +8% +14% +36% -42% +55% +84% -34% Packaging (not sized) Figure 13: Qualitative assessment of potential of opportunities for the Construction & Real Estate sector in the Denmark pilot XCHANGE SOURCE: Ellen MacArthur Foundation circular economy team 60 DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS Figure 14: Schematic overview of sector-specific impact quantification Capital intensive and/or uncertain payback times Externalities (true costs) not fully refletcted in market prices next step of arriving at targeted policy options. Insufficient public goods / infrastructure 2 provided by the market or the state The approach in this toolkit is to combine a standard analysis of market failures and Insufficient regulatory competition failures / markets leading with to social factors and the economic concerns of business. The lower quantity and higher prices than is socially desirable methodology refers to 15 types of barrier in four categories. It starts with the economic Imperfect information that negatively concerns of businesses that are assessing these opportunities: profitability, capital and affects market decisions, such as asymmetric information technology. It includes the two classic barrier categories from economic theory, market Split failures incentives and (agency regulatory problem) when two failures, split into ten types, drawing heavily on the EU Impact parties to a transaction have different goals Transaction costs such as the costs of finding and bargaining with customers or suppliers Inadequately defined legal frameworks that govern areas such as the use of new technologies Poorly defined targets and objectives which provide either insufficient or skewed direction to industry PT_new_19.indd 60 18/06/ :19 Implementation and enforcement failures leading to the effects of regulations being diluted or altered Unintended consequences of existing regulations that hamper circular practices Capabilities and skills lacking either in-house or in the market at reasonable cost Custom and habit: ingrained patterns of behaviour by consumers and businesses Not profitable 1 Capital Net value created in sector EUR million Technology Externalities Insufficient public goods / infrastructure 2 Insufficient competition / markets Imperfect information Split incentives (agency problem) Transaction costs Inadequately defined legal frameworks Poorly defined targets and objectives Implementation and enforcement failures Unintended consequences Capabilities and skills Custom and habit Net value created in deep-dive sub-sector EUR million Scale up factor to full sector % Adoption rate % Number of units in deep-dive sub-sector Net value created per unit in deepdive subsector EUR per unit Size of sector vs. deep-dive sub-sector % Scalability factor (between 0 and 1) SOURCE: Ellen MacArthur Foundation circular economy team Identify barriers Objective: A B QUALITATIVE ASSESSMENT OF POTENTIAL Circular scenario adoption rate, % Business as usual scenario adoption rate, % Additional revenues and cost savings per activity EUR per unit Additional costs per activity EUR per unit Sector size Deep-dive sub-sector Understand the barriers standing in the way of the identified circular economy opportunities, in order to render policy options (Section 2.2.5) more targeted. Use of biological elements in architecture (e.g. living roofs that purify water) Return of organic construction material to biosphere Sharing of floor space reducing demand for new buildings Shared residential floor space (e.g. Airbnb, Couchsurfing, Hoffice) Shared office space (e.g. Liquidspace) and increase of desk sharing policies Increased use of under-utilised buildings Multi-purposing of offices and public buildings for better utilisation Re-purposing of building interiors to increase lifetime of existing buildings Coordination of all stakeholders along value chain to reduce structural waste Energy use optimisation through low-energy houses and smart homes Increased reuse and high-value recycling of building components and materials, enabled by Designing buildings for disassembly New business models (e.g. other owner of materials than property owner) Building passports/signatures and reverse logistics ecosystems Increased teleworking to reduce need for office floor space Modular production off-site for rapid assembly on-site 3D printing of building components size Low potential High potential Additional sales Price / value increase Material / labour savings Labour Services Materials / components Energy Capital End product: Importance and description of barriers for each opportunity, Not profitable for businesses 1 even if other structured by 15 types of barriers in four categories (economic, market barriers are overcome failures, regulatory failures, social factors). Once the circular economy opportunities have been prioritised, it is time to look at the Technology not yet fully available at scale barriers that stand in their way. The toolkit provides a framework to categorise these barriers and analyse their severity. Careful analysis of barriers forms the basis for the Prioritised for further assessment Indirectly included as enabler of key sector opportunities Figure 22: Prioritisation of opportunities Stimulate the development of advanced, high-value bio-refining technologies by funding cross-institutional R&D clusters Reduce VAT on high value chemicals derived from waste feedstock Require municipalities to send organic waste for one round of processing to extract high value compounds before it could be incinerated / used as fertiliser Require municipalities to collect organic waste separately Form public private partnerships to finance the deployment of mature biorefining technologies Propose a minimum proportion of 2nd generation biofuels in the EU biofuel target Provide low-cost loans or loan guarantees for the deployment of mature biorefining technologies Provide a business advice service Incorporate bio-refining into the government s long-term strategic plans HIGH COST LOW SOURCE: Ellen MacArthur Foundation circular economy team; NERA Economic Consulting Identify and communicate necessary changes to EU policy (or its national implementation) to address unintended consequence NOT FOR EXTERNAL USE A STEP BY STEP METHODOLOGY 11 tools helping policymakers enable the circular economy transition Align on starting point, ambition and focus Assess sector opportunities Analyse economy-wide implications Baseline circularity level and policy landscape Map circular economy opportunities in each focus sector ReSOLVE Quantify economy-wide impact Set ambition level Prioritise and detail circular economy opportunities 58 DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS PT_new_19.indd 58 18/06/ :19 Map economy- wide policy options Select focus sectors CIRCULARITY POTENTIAL Quantify sector Impact Prioritise, package and sequence policy options 80 DELIVERING THE CIRCULAR ECONOMY A TOOLKIT FOR POLICYMAKERS LOW IMPACT HIGH PT_new_19.indd 80 18/06/ :19 Identify barriers ECONOMICS MARKET FAILURES REGULATORY FAILURES SOCIAL FACTORS Map sector-specific policy options ECONOMICS MARKET FAILURES REGULATORY FAILURES SOCIAL FACTORS Engage businesses and other stakeholders SOURCE: Ellen MacArthur Foundation, Delivering the circular economy a toolkit for policymakers (2015)

6 NOT FOR EXTERNAL USE POCKETS OF OPPORTUNITY EVEN IN A COUNTRY AS ADVANCED AS DENMARK SOURCE: Ellen MacArthur Foundation, Delivering the circular economy a toolkit for policymakers (2015)

7 NOT FOR EXTERNAL USE TEN OPPORTUNITIES IN FIVE SECTORS WERE IDENTIFIED Sector Food & Beverage Construction & Real estate Opportunity 1 Value capture in cascading bio-refineries 2 Reduction of avoidable food waste 3 Industrialised production and 3D printing of building modules 4 Reuse and high-value recycling of components and materials 5 Sharing and multi-purposing of buildings Machinery 6 Remanufacturing and new business models Plastic packaging Hospitals 7 Increased recycling of plastic packaging 8 Bio-based packaging where beneficial 9 Performance models in procurement 10 Waste reduction and recycling SOURCE: Ellen MacArthur Foundation, Delivering the circular economy a toolkit for policymakers (2015)

8 NOT FOR EXTERNAL USE OPPORTUNITIES IN CONSTRUCTION AND REAL ESTATE SOURCE: Ellen MacArthur Foundation, Delivering the circular economy a toolkit for policymakers (2015)

9 NOT FOR EXTERNAL USE OPPORTUNITIES HINDERED MAINLY BY NON-FINANCIAL BARRIERS Barriers Economics Not profitable Capital Technology 9 10 Externalities Market failures Imperfect information Split incentives (agency problem) Transaction costs Regulatory failures Social factors Inadequately defined legal frameworks Poorly defined targets and objectives Unintended consequences Capabilities and skills Custom and habit Critical barrier ( make or break ) Very important barrier (to scale-up/acceleration) Important barrier (to scale-up/acceleration) Limited or no barrier

10 NOT FOR EXTERNAL USE POLICYMAKERS CAN COMBINE A VARIETY OF INSTRUMENTS TO HELP OVERCOME THESE BARRIERS Sector-specific instruments Information & awareness Public procurement & infrastructure Collaboration platforms Regulatory frameworks Business support systems Fiscal frameworks Economy-wide instruments Clear direction Realigned incentives Education and knowledge building SOURCE: Ellen MacArthur Foundation, Delivering the circular economy a toolkit for policymakers (2015)

11 NOT FOR EXTERNAL USE THE PILOT CONFIRMED POSITIVE IMPACT ON GROWTH, EMPLOYMENT AND ENVIRONMENT Economy-wide impact by Absolute and percentage change relative to the business as usual scenario billion Annual GDP contribution, or % vs. baseline 7,300 11,300 Job equivalents, or % vs. baseline CO million Tonnes of CO 2 footprint reduction, or % vs. baseline 5 50% Resource savings for selected resources (iron/steel, plastics) SOURCE: Ellen MacArthur Foundation, Delivering the circular economy a toolkit for policymakers (2015)

12 THANK YOU