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The Circular Economy a Powerful Force for Climate Mitigation

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The Circular Economy a Powerful Force for Climate Mitigation REVIEW DRAFT – DO NOT DISTRIBUTE The Circular Economy a Powerful Force for Climate Mitigation Transformative innovation for a prosperous and low-carbon industry REVIEW DRAFT – DO NOT DISTRIBUTE TABLE OF CONTENT PREFACE EXECUTIVE SUMMARY Chapter 1. HOW THE CIRCULAR ECONOMY CAN STRENGTHEN INDUSTRY AND PROTECT THE CLIMATE Chapter 2. STEEL – TOWARDS A CIRCULAR STEEL SYSTEM Chapter 3. PLASTICS – FINDING A PLACE WITHIN A LOW-CARBON ECONOMY Chapter 4. ALUMINIUM – REALISING THE POTENTIAL FOR RECYCLING Chapter 5. MOBILITY – THE PROMISE OF A SHARED CAR SYSTEM Chapter 6. BUILDINGS AND CEMENT – MORE VALUE FROM LESS MATERIALS 2 REVIEW DRAFT – DO NOT DISTRIBUTE preface There is intense debate about how to close the gap To our knowledge, this is the first attempt to quanti- between current climate policy and the long-term goal tatively address this issue across materials and value of the Paris Agreement: an economy with net zero emis- chains, and for the entire EU economy. As with any first sions. Within Europe, policy discussions and proposed effort, there are many uncertainties, and further ana- ‘roadmaps’ to date have focused mainly on increasing lysis will be needed. Still, our analysis shows that the energy efficiency and deploying low-carbon energy potential for emissions abatement is substantial, and sources. Both are crucial, but when it comes to industry, in many cases can be economically attractive. Indeed, a major source of emissions, they offer only a partial so- we believe that ‘materials efficiency’ deserves to be a lution. Additional strategies are needed to address the priority in discussions of industrial decarbonisation, just substantial process emissions from the production of as energy efficiency is a priority in discussions of trans- materials such as steel, cement, plastics and aluminium. forming the energy system. A more circular economy can reduce CO2 emissions, reduce the scale of the Most discussion has focussed on the supply side: the challenge of decarbonising materials production, and need to develop and deploy new industrial production contain the cost of achieving an industrial base compa- processes, turn to non-fossil feedstock and fuels, and tible with a low-carbon economy. use carbon capture and storage to offset any remaining emissions. What is mostly missing from climate and This project has been carried out by Material Eco- industrial debates is a discussion of the demand side: nomics, with the support of Climate-KIC, ClimateWorks, Can we make better use of the materials already produ- Ellen McArthur Foundation, Energy Transitions Commis- ced, and so reduce our need for new production? sion, European Climate Foundation, MAVA Foundation, and SITRA. The Steering Group has comprised Mari The concept of the ‘circular economy’ offers preci- Pantsar (SITRA), Janez Potočnik (International Resource sely this opportunity, through strategies such as re- Panel), Martin Porter (European Climate Foundation), circulating a larger share of materials, reducing waste Adair Turner (Energy Transitions Commission), and An- in production, lightweighting products and structures, ders Wijkman (Climate-KIC). Research guidance have extending the lifetimes of products, and deploying new been provided by Dr Jonathan Cullen and Prof. Frank business models based around sharing of cars, buil- Geels. The project team has included Anna Teiwik, dings, and more. Cornelia Jönsson, Stina Klingvall, and Unn Hellberg. Ma- terial Economics is extremely grateful for all the contri- This report takes a first step towards quantifying the butions of these organisations and individuals, as well potential for circular economy opportunities to reduce as many other researchers, policymakers, and business greenhouse gas emissions. It examines the key mate- representatives who have contributed their knowledge rials flows and value chains, identifies relevant circular and insight to this project. Partner organisations and economy approaches, and explores their cost-effective- their constituencies do not necessarily endorse all fin- ness. It also considers barriers that might stand in the dings or conclusions in this report. All remaining errors way of achieving a more circular economy, and policies and omissions are of course the responsibility of the and initiatives that could overcome them. authors. Per-Anders Enkvist Per Klevnäs 3 REVIEW DRAFT – DO NOT DISTRIBUTE executive summary Industrial CO2 emissions are a major concern as Euro- The key conclusion is that a more circular economy pe tries to achieve the deep emission reductions required can make deep cuts to emissions from heavy industry: for its climate commitments. In the European Commis- in an ambitious scenario, as much as 296 million tonnes sion’s ‘Roadmap 2050’, one-quarter of the CO2 emis- CO2 per year in the EU by 2050, out of 530 in total – and sions remaining mid-century were from industry, especi- some 3.6 billion tonnes per year globally. Demand-side ally from heavy industry producing basic materials. With measures thus can take us more than halfway to net-zero more ambitious targets after the Paris Agreement, the EU emissions from EU industry, and hold as much promise must now articulate how to combine net-zero emissions as those on the supply side. Moreover, they are often with a prosperous industrial base. economically attractive. So far, discussions of industry emissions have focused Opportunities for more productive use of materials on the supply side: reducing the emissions from the produc- therefore deserve a central place in EU climate policy. tion of steel, cement, chemicals, etc. Far less attention has Much like improving energy efficiency is central to the been given to the demand side: how a more circular eco- EU’s efforts to achieve a low-carbon energy system, a nomy could reduce emissions through better use and reuse more circular economy will be key to developing Europe- of the materials that already exist in the economy. This study an industry while cutting its CO2 emissions. As industry aims to bridge that gap. It explores a broad range of opportu- associations and the European Commission consider nities for the four largest materials in terms of emissions (steel, new mid-century ‘roadmaps’ for industry, they should in- plastics, aluminium and cement) and two large use segments clude circular economy measures for cost-effective ways for these materials (passenger cars and buildings). to achieve deep emissions cuts. 4 REVIEW DRAFT – DO NOT DISTRIBUTE Demand-side measures thus can take us more than halfway to net-zero emissions from EU industry, and hold as much promise as those on the supply side. Moreover, they are often economically attractive. 5 REVIEW DRAFT – DO NOT DISTRIBUTE Demand-side opportunities could reduce EU industri- are wasted in construction. Another opportunity is to use al emissions by almost 300 Mt per year by 2050, or 56 more advanced materials and construction techniques, %, with attractive economics. These abatement oppor- such as high-strength steel that can cut materials use by tunities fall into three major categories: 30%. There also are opportunities to reduce over-speci- fication, such as the near 100% overuse of steel in buil- A. Materials recirculation opportunities (178 Mt per dings relative to what is strictly required to meet design year by 2050). The EU economy is accumulating large specifications. Further gains can be achieved by tailo- stocks of metals and plastics, and by 2050 could meet ring products better to specific uses; for example, to the a large share of its need for these materials by recircu- extent that fleets of shared cars can replace individual lating what has already been produced: 75% of steel, ownership (see below), many of the cars needed will be 50% of aluminium, and 56% of plastics (cement is less smaller, just big enough for a one- or two-passenger trip amenable to recycling, although it is possible to reuse in the city. Companies already have incentives to use the- some unreacted cement). Recirculating materials cuts se strategies to some extent, but some opportunities are CO2 emissions and requires much less energy than new missed through split incentives in complex supply cha- production does. However, current practice is not set up ins. Many measures will become much more economic to facilitate these high recycling rates. An influx of new with greater digitalisation in the mobility and buildings materials is required both to replace metals and plas- value chains and other technological development now tics that are lost, and to compensate for downgrading underway. of quality. In some cases, metals are mixed or downg- raded because materials specialisation requires it, but C. New circular business models in mobility and there also are many cases where this could be avoided buildings, notably through sharing (62 Mt per year by or much reduced. For steel, the key is to ensure much 2050). This opportunity pivots on making much greater cleaner scrap flows that allow for high-quality secon- use of vehicles and buildings, which together represent a dary steel, and less pollution of steel with copper; for majority of European demand for steel, cement and alu- aluminium, smaller losses and less mixing of different minium. Currently, the utilisation of many of these assets alloys will be crucial. Mixing and downgrading effects is very low: about 2% for the average European car, and are particularly serious problems for plastics, making about 40% for European offices, even during office hours. a large share of used plastics literally worthless. This Sharing enables much more intensive use. For vehicles, study shows how 56% of plastics could be mechanically this in turn means that higher upfront costs of electric dri- recycled, with a focus on the five main types of plastic vetrains, more advanced automation technology, or hig- that account for 70% of volumes. The aim must be to her-performance materials can be paid back over many move these to a tipping point where recycling is econo- more miles. In addition, professionally managed fleets of mically viable, driven by the inherent material value.
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