Technical Assistance Consultant’s Report

Project Number: 50158-001 February 2020 Technical Assistance Number: 9245

Regional: Supporting Implementation of Environment- Related Sustainable Development Goals in Asia and the Pacific (Philippine Subproject)

Circular Economy in the Philippines

Prepared by: Patrick Schroeder

Asian Development Bank is the executing and implementing agency.

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.

ADB-NEDA Circular Economy Report Philippines (TA9245)

Author: Patrick Schröder (International Expert)

Final Version

5 February 2020

Circular Economy in the Philippines

An assessment of existing initiatives, policies and identification of potentials to support the Philippine Action Plan for Sustainable Consumption and Production (PAP4SCP) Objective and structure of the Circular Economy in the Philippines report:

This report has the objective to provide recommendations to the Philippines government for designing and implementing circular economy (CE) policies and initiatives in support of the Philippine Action Plan for SCP (PAP4SCP) and the Philippines Development Plan (PDP).

The report provides overview of international circular economy developments, including the conceptual foundations of the CE, current approaches and applications by businesses, international experiences in CE policy design and implementation, and their relevance to the Philippines development objectives and SCP Action Plan. The report reviews international and national best practice examples, how they can be localized and implemented in the Philippines to help accelerate action on SCP and to implement targets of SDG 12. The report also reviews existing CE related policies and examples from the Philippines, to identify specific policy interventions that can facilitate upscaling of best practices and support the transition towards a CE. It provides recommendations how the promotion of CE practices across sectors can be achieved and which stakeholders need to be involved. Institutional arrangements and policies involving economic planning, target setting for economic sectors, urban planning and other mechanisms, through the use of identified tools, can promote an integrated approach towards a more circular economy.

The methods for this study include an in-depth literature review of key documents, international circular economy reports and grey literature, and semi-structured interviews with key stakeholders from the Philippines from government, business, NGOs and academia which were conducted in Manila in January 2019.

Acknowledgements I would like to thank the ADB project team, especially Emma Marsden, Tanya Concepcion and Dianne April Delfino, the NEDA team, especially Undersecretary Rosemary G. Edillon, Jane DeLa Rosa, and Joy B. Bongcac. Many thanks also to the other members and consultants of the SCP Action Plan project team including Lisa Inez Antonio, Amelia Supetran, Augustin Arcenas and Alan Cuyno for their reviews, comments and support in completing this project and the report.

Disclaimer This report and the assessment was prepared as part of the development of the Philippine Action Plan for SCP (PAP4SCP) with inputs from concerned government agencies, particularly the National and Economic Development Agency (NEDA).

2 Table of Contents

Abbreviations ...... 6 Summary ...... 7 Recommendations for immediate action ...... 8 Medium term recommendations (2020-2025) ...... 8 Long-term recommendations (2025-2030) ...... 9 1 Background and Introduction to the circular economy (CE) ...... 10 1.1 Circular Economy (CE): conceptual foundations, definitions and approaches ...... 10 1.1.1 Circular economy (CE) and sustainable consumption and production (SCP) ...... 12 1.1.2 Circular economy (CE) indicators and assessment criteria ...... 13 1.2 Circular economy (CE), Sustainable Consumption and Production (SCP) and the Sustainable Development Goals (SDGs) ...... 16 2 International examples of circular economy (CE) policy frameworks ...... 21 2.1 The European Union (EU) ...... 21 2.2 Japan ...... 22 2.3 China ...... 22 2.4 Other Asian countries (South Korea, Singapore, Malaysia, Indonesia) ...... 23 2.5 The circular economy (CE) opportunities for low and middle income countries ...... 24 2.6 Employment opportunities in the circular economy (CE) ...... 27 2.7 Financing the transition to a circular economy ...... 28 3 Aligning circular economy (CE) strategies and needs for sustainable development pathways for the Philippines ...... 28 3.1 Sustainable development priorities of the Philippines ...... 28 3.2 Philippines development priorities and needs which require CE practices to be addressed 29 3.3 Material composition and footprints of the Philippine economy ...... 30 3.4 Current circular economy related policies and frameworks in the Philippines ...... 32 3.4.1 Solid management policies ...... 32 3.4.2 Sustainable public procurement (SPP) to stimulate circular economy (CE) ...... 33 3.4.3 Housing and construction policies for climate resilient housing in informal settlements 33 3.4.4 Renewable energy and rural electrification policy frameworks ...... 34 3.4.5 Green job creation policies ...... 34 3.4.6 The role of national standards for circular economy ...... 35 3.5 Key stakeholders and their initiatives relating to CE ...... 35 3.5.1 National government agencies ...... 35

3 3.5.2 Local government approaches to circular economy ...... 37 3.5.3 Private sector industry and business approaches...... 37 3.5.4 Civil society initiatives ...... 39 3.5.5 Academic research and science approaches ...... 40 3.5.6 International organisations and development cooperation programmes ...... 40 UNIDO ...... 40 German Agency for International Cooperation (GIZ) ...... 40 Global Green Growth Institute ...... 41 EU SWITCH-Asia ...... 41 4 Outlook and potentials of CE in the Philippines in socio-economic priority sectors ...... 42 4.1 Municipal waste and plastics - upgrading and formalising plastic collection systems, improving junk shops and modernising recycling facilities ...... 42 4.2 Organic and food waste/biological fraction of MSW and biogas generation ...... 43 4.3 Circular economy (CE) in agriculture and food systems – agroecology, food processing MSMEs, agricultural residues for energy and precision agriculture ...... 45 4.3.1 Agroecology and regenerative farming practices ...... 45 4.3.2 Energy from sugarcane residues and other bioenergy options ...... 46 4.4 Energy and appliances sector - recovery and recycling of Waste Electrical and Electronic Equipment (WEEE), future solar PV waste in rural areas ...... 47 4.4.1 Electrical equipment, second-hand appliances and Waste Electrical and Electronic Equipment WEEE (e-waste) ...... 47 4.4.2 Recovery and recycling of energy storage batteries of off-grid PV programmes ...... 47 4.5 Buildings, infrastructure and construction - and recycling of construction and , circular building solutions low-cost housing and improving informal settlements 48 4.6 Circular smart cities and urban mobility - car sharing, bike sharing, walkable cities concepts 49 4.6.1 Automotive repair, remanufacturing and jeepney modernisation ...... 49 4.7 Circularity in the textile industry of the Philippines ...... 50 4.8 Circular Economy (CE) in Philippine manufacturing sector and circular supply chain management ...... 50 4.9 SWOT Analysis for circular economy in the Philippines ...... 51 5 Summary and conclusions ...... 52 5.1 Defining the degree of circularity of the Philippine economy ...... 52 5.2 Summary of CE potentials and opportunities ...... 54 6 Recommendations for integration of CE into SCP Action Plan and PDP) ...... 55 6.1 Recommendations for immediate action ...... 55 6.2 Medium term recommendations (2020-2025) ...... 56

4 6.3 Long-term recommendations (2025-2030) ...... 57 References ...... 59

5 Abbreviations

ADB – Asian Development Bank CCC – Climate Change Commission CDW – Construction and demolition waste CE – Circular economy CSO – Civil society organisation DENR – Department of Environment and Natural Resources DHSUD – Department of Human Settlements and Urban Development DILG – Department of Interior and Local Government DMB – Department of Budget and Management DMC – Domestic material consumption DOE – Department of Energy DOST – Department of Science and Technology DTI – Department of Trade and Industry EPR – Extended producer responsibility GGGI – The Global Green Growth Institute GIZ – Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH GPP – Green Public Procurement GRI – Global Reporting Initiative EIB – European Investment Bank EU – European Union LCA – Life cycle analysis LGU – Local government unit MCI – Material Circularity Indicator MEF – Mother Earth Foundation MRF – Materials recovery facilities MSMEs – Micro, small, and medium enterprises MSW – NEDA – National and Economic Development Authority NSWMC – National Solid Commission ILO – International Labour Organisation IPBES – Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services IoT – Internet of Things PAP4SCP – Philippine Action Plan for SCP PBE – Philippine Business for the Environment PDP – Philippine Development Plan 2017 – 2022 PEZA – Philippine Economic Zone Authority PRO – Producer Responsibility Organization PSA – Philippines Statistics Authority SCP – Sustainable consumption and production SDGs – Sustainable Development Goals WEEE – Waste Electrical and Electronic Equipment

6 Summary

This introduction section includes a summary of the main findings and key messages of the CE report.

SDG 12 on Sustainable Consumption and Production (SCP) has been identified as one of the most interconnected goals among the SDGs. The attainment of SDG 12 is of strategic importance and can create synergies in relation to other goals including SDGs 4, 6, 7, 8, 9, 11 and the environmental targets 13, 14, 15. The circular economy is integral part of SCP, several targets of the SDG 12 are directly related to the CE.

Currently, no integrated CE strategy or policy framework exists in the Philippines. Nevertheless, a number of national policies and initiatives link directly and indirectly to circular economy approaches in a number of different industry sectors, including food processing, building and construction.

An increased focus on circular economy and SCP as a strategy towards sustainable development would be aligned with the Philippine Development Plan (PDP) 2017-2022, which sets overall PDP goal of laying a strong foundation for inclusive growth, a high-trust society, and a globally competitive knowledge economy (NEDA, 2017). Circular economy can help achieve the Strategy Framework to Ensure Ecological Integrity, Clean and Healthy Environment. The following goals relating to the economy and environment:

 Address climate change and human-induced risks to the environment through mechanisms to mitigate their impact on communities, tangible heritage, and biodiversity  Increased access to economic opportunities for micro, small, and medium enterprises (MSMEs)  Achieving balance between population, available resources, and sustainable patterns of consumption and production  Address the countries’ municipal waste management and water pollution crisis  Support protection of ecosystems, biodiversity and improve the country’s overall environmental quality

The circular economy also offers opportunities to improve living conditions of the 21.6 percent of Filipino people living under the below the national poverty line (ABD, 2019), through implementation of CE solutions to mismanaged waste and open burning, improved water and sanitation, building solutions for low-cost construction in informal settlements, and new income generating activities in regenerative agriculture, food processing and biogas generation to support rural livelihoods. There is much untapped potential to increase the circularity of major material categories. Waste management and increasing the recovery rates of materials like plastic need to become a priority area for the CE in the Philippines. This can contribute to increasing circularity, reducing environmental impacts and contributing to human development objectives.

In addition to national policy frameworks, there are many small-scale, unconnected CE initiatives are taking place in the economy and society. Despite these multiple initiatives, the overall degree of circularity of the Philippine economy is still low – as in most other countries. Although specific data were not available to conduct a quantitative analysis, it is estimated that the degree of circularity is below the global average of 8.6 percent (Circle Economy, 2020). This is due to the large primary resource extraction sector, stock-build up through fast growing construction in Philippine cities and infrastructure development, and weak waste management capacity for municipal solid waste. Significant amounts of materials and resources are either accumulated as stock in buildings (which can be re-used in the future) or leak into the environment, especially plastic waste. Despite the low

7 circularity and a growing biocapacity deficit (Global Footprint Network, 2013), the Philippines environmental footprint is still relatively low compared to other middle income countries. Application of CE practices as part of the implementation of the SCP Action Plan will be a necessary approach to keep environmental footprints small while addressing the SDGs and achieving human development objectives.

The report provides a number of recommendations on how the CE can be included in the SCP Action Plan of the Philippines. It also provides other policy recommendations what can be used to stimulate the development of a circular economy that contributes to the PDP. The recommendations are clustered according to short-term (immediate) actions, medium (5 years, 2020-2025) and long-term (10 years from now, period 2025-2030).

Recommendations for immediate action

 Updating and implementing the Ecological Solid Waste Management Act of 2000 (RA 9003). Enhancing the scope and scale of waste management and increasing the recycling rate will require a range of policies, including the RA 9003.  Support Barangays, LGUs and local material recovery facilities (MRF). To solve mismanagement of waste on local levels and increase the rates will require support from central government to tackle plastic waste leaking into the marine environment, this is a primary concern that requires CE approaches to be solved.  Design and apply Extended Producer Responsibility (EPR) policies and the Polluter Pays Principle to tackle issues of single use plastic packaging and plastic waste.  Inclusion and support policies for informal waste sector. The informal sector plays an important role in the Philippines , separation and recycling sectors. The participation of the informal sector and community “” initiatives are essential.  Revise and update existing Green Public Procurement Roadmap and guidelines to include CE criteria (e.g. recycled content requirements) for sustainable public procurement (SPP) of goods and services used by public sector institutions.  Promote sustainable lifestyles and diets of urban population through ongoing public education initiatives. Especially the large Manila metropolitan area needs to become more circular and consumer behaviour to reduce food waste is a decisive factor.  Use of nudge approaches to encourage government and business to become more circular. These “soft” nudging policy approaches can include recognizing best practices and business awards, e.g., of circular LGUs or barangays awards, and circular economy business awards for sustainability reporting practices.  Upgrading of the current public transport system, and promote vehicle electrification. Building on Philippines’ Transportation Department's Public Utility Vehicle Modernization Program launched in 2017, CE and remanufacturing in the automotive sector can be further promoted, including for heavy machinery and other transport equipment.

Medium term recommendations (2020-2025)

 Development of an operational CE framework for the Philippines (e.g., based on the OECD framework and definitions), with CE metrics and indicators, (e.g., based on the EU’s ‘CE monitoring framework’ and the ‘circular material use rate’), needs to be the first step.  Development of specific CE indicators, benchmarking and assessment for the Philippine context should be undertaken with consideration of institutional nuances. CE indicators

8 would essentially build on monitoring the implementation of strategies and the framework through statistical indicators.  Update of Toxic Substances and Hazardous and Nuclear Control Act of 1990. The current act regulates materials with hazardous components, but there is no explicit provision for e-waste.  Include CE criteria into mandatory sustainability reporting guidelines. Building on the developments of the Securities and Exchange Commission (SEC) preparing draft guidelines for mandatory sustainability reporting, specific CE criteria such as waste reduction, use of recycled content materials and resource efficiency should be included in corporate sustainability reporting.  Undertake feasibility study and development joint programmes and financial mechanisms for large-scale systems. It is recommended to undertake an in-depth study to ascertain the suitable feedstock requirements, potential biogas generation rates, and digestate storage be undertaken prior to its inclusion in the SCP Action Plan.  Create blended finance mechanisms and provide CE credit lines for SMEs. Government and private investors should develop cooperative and blended finance mechanisms to support and de-risk early investment in CE value chains.

Long-term recommendations (2025-2030)

 Applying circular economy approaches in National Informal Settlement Upgrading Strategy (NISUS). CE approaches and innovative building solutions such as modular building design and 3D printing which save resources should be supported by the NISUS to provide low-cost and resilient housing solutions.  Make use of the numerous opportunities to include CE practices in the Philippine agriculture and food processing sectors. Agriculture policymakers should support the mainstreaming and scaling-up of regenerative agroecology, promote CE practices in food processing SMEs, apply precision agriculture to reduce pesticide usage and food losses, support anaerobic digestion and briquette programmes.  Promote use of digital technologies to facilitate efficient use of transport assets and sustainable consumption. Digital technologies are enablers for the sharing economy and smart cities. Mobility sharing systems enabled by digital technologies can facilitate more efficient use of transport assets in large urban centres of Metro Manila.  Initiate new industrial programmes as national industrial innovation policy. Philippine policymakers with remits for business, innovation and economic growth should develop national and regional programmes for scaling up industrial symbiosis approaches, building on the experiences on the previous exchange programme.  Develop long-term strategies for the country’s mining sector to enable a just and smooth transition to help the sector adjust to a CE system both on national and international level.

9 1 Background and Introduction to the circular economy (CE)

This introductory section provides an overview of the current state of the circular economy including the concept of circular economy (CE), the current state of academic CE discussions, the link between the CE and the Sustainbale Development Goals (SDGs), and sustainable consumption and production (SCP), and CE policies and institutional frameworks in the EU, China and other Asian neighbouring countries.

1.1 Circular Economy (CE): conceptual foundations, definitions and approaches

The concept of circular economy (CE) focuses on a set of principles that offer an operational vision of concrete pathways to sustainable production and consumption (SCP) patterns and thus to a sustainable economy. The CE approach highlights the importance of changing the current linear model “take – make – waste” into a circular system that is regenerative and restorative by design (Ellen MacArthur Foundation, 2015).

This can be achieved by redirecting energy and material flows from a linear to a circular direction, transforming waste into productive inputs, reducing pollution, greenhouse gases and their impacts on health and environment. This involves systems thinking approaches that include changes in value systems, ambitious policies to internalise externalized costs and new approaches to production, distribution, consumption and investment within each sector of the economy (Stahel, 2016).

There is no single definition of the CE, it is a term that means different things to different people. There are a wide range of CE thought-schools including those who associate the term with cradle-to- cradle design, , performance economy, regenerative design, and even biomimicry. Kenneth Boulding’s 1966 paper “The economics of the coming spaceship earth” is often referred to as the origins of the term. Moving beyond strict adherence to neoclassical economic precepts, CE has been described as a framework for re-designing the economy by the Ellen MacArthur Foundation that has been championing the concept globally since 2010 (Ellen MacArthur Foundation, 2015).

The concept of CE focuses on a set of principles that offer an operational vision of concrete paths to sustainable production and consumption systems, and thus to an economy which operates within the biophysical boundaries of the planet (Rockström et al., 2009). The CE approach highlights the importance of changing the current linear model into a system that is regenerative and restorative by design (Ellen MacArthur Foundation, 2015). This can be achieved by redirecting energy and material flows from a linear to a circular direction, transforming waste into productive inputs, reducing pollution, greenhouse gases and their impacts on health and environment. This involves systems thinking approaches that include changes in value systems, ambitious policies to internalise externalized costs and new approaches to production, distribution, consumption and investment within each sector of the economy (Stahel, 2016).

According to the contemporary school of thought, the CE concept is grounded in the study of non- linear, particularly living systems (Webster, 2016), and refers to an industrial economy that is restorative by design, and relies on renewable energy; minimises, tracks, and hopefully eliminates the use of toxic chemicals, and eradicates waste through careful design. Imitating living systems, the CE approach works to optimize systems rather than components. This is done through attention to material and energy flows, which can be classified into two kinds: biological nutrients, useful to the biosphere, and technical nutrients, useful to the so-called ‘technosphere’, i.e., the systems of industrial production. These definitions of a CE are based on a synthesis of ideas and concepts such

10 as ‘cradle to cradle’ (McDonough and Braungart, 2002) and the performance/sharing economy (Stahel, 2016), and include insights from industrial ecology.

In a nutshell, the CE is a systemic approach to economic development designed to benefit businesses, society, and the environment. In contrast to the extractive ‘take-make-dispose’ linear economy, a circular economy aims to be restorative and regenerative by design. Furthermore, it aims to decouple growth from the consumption of finite resources. It is based on three principles: Design out waste and pollution, keep products and materials in use, and regenerate natural systems. The Ellen MacArthur Foundation’s ‘butterfly diagram’ has emerged as the most commonly used representation of the circular economy (see Figure 1).

Figure 1: The circular economy ‘butterfly diagram’ (source: Ellen MacArthur Foundation, 2012)

As argued by the Ellen MacArthur Foundation (2015), “In a circular economy, improving the value captured from existing products and materials, not just increasing their flow, would increasingly drive economic growth”. This is to be achieved by:

 Preserving and enhancing natural capital by controlling finite stocks, and balancing renewable resource flows;  Optimising resource yields by circulating products, components, and materials at the highest utility;  Fostering system effectiveness by revealing and designing out negative externalities.

Despite the different views and definitions, there at least three commonly recognised features of the CE - slowing, closing and narrowing resource loops. The definitions and the related CE features and key effects have been summarised in Figure 2 (McCarthy, Dellink and Bibas, 2018). Although each

11 definition involves different processes and actors, they share a similar outcome: increased resource efficiency, and aim the decoupling of natural resource extraction and use from economic output.

Figure 2: Definitions, features and key effects of the circular economy (source: McCarthy, Dellink and Bibas, 2018)

Similarly, the definition by Geissdoerfer et al. (2017), who view the circular economy as a potential new sustainability paradigm, summarises the main elements of the circular economy as:

“a regenerative system in which resource input and waste, emission, and energy leakage are minimised by slowing, closing, and narrowing material and energy loops. This can be achieved through long-lasting design, maintenance, repair, reuse, remanufacturing, refurbishing, and recycling.” For the context of the Philippines SCP Action Plan (PAP4SCP), we propose to apply the combination of the three definitions, the three CE features and related CE practices (design, maintenance, repair etc.) as framework to describe and analyse the CE in the Philippine context. We apply this framework to describe and locate existing policies and initiatives of the Philippines in relation to the CE and to identify further potentials for circularity (see chapter 3).

1.1.1 Circular economy (CE) and sustainable consumption and production (SCP)

The concepts and approaches of sustainable consumption and production (SCP) and circular economy (CE) overlap, and there are many synergies between the two, especially relating to sustainable consumption and lifestyles, circular business models, sharing economy, collaborative consumption and waste management. The agendas of SCP and CE are closely intertwined in practice

12 and conceptually. Both concepts are based on life cycle thinking, aimed at systemic changes in the current linear production and consumption patterns. Most initiatives on local or national level are a combination of both SCP and CE approaches.

One important difference is that the CE has more of a focus on technology and business solutions to achieve circularity of materials and resources, whereas SCP tends to focus more on issues of social norms, culture and affluence, aiming to change consumption patterns including both the magnitude of material consumption and shifting of preferences toward green goods and services.

Sustainable lifestyles, especially of urban consumers, are important in shifting to both a CE and SCP. Sharing models that provide access to services instead of products, such as mobility instead of car ownership, require shifts in consumption behaviour. A key approach here is collaborative consumption1 which also offers new business models. Many of these approaches are emerging, including in Asian countries. For example, research by Retamal (2019) has analysed established and relatively new shared-access and service businesses in Manila and other Asian cities, including in key sectors such as transport, housing, recreation, laundering and clothing.

1.1.2 Circular economy (CE) indicators and assessment criteria

Monitoring progress towards a circular economy (CE) is a new and challenging task for companies and governments alike, but it is key to understand where potentials lie, and how to measure progress towards circularity of the economy. In a CE, materials embedded in products and components are reused, repaired or recycled when they reach their end-of-life, and are then injected back into the economy as second hand products, or secondary raw materials. This reduces not only the environmental footprint of production and consumption, but also increases the security of supply of raw materials for national economies.

On a micro-level, indicators and criteria to estimate how effective a product or company is in making the transition from a linear to a circular mode of operation, and practical tools supporting such measurement, are still being developed. For example, the Circularity Indicators Project by the Ellen MacArthur Foundation2 has developed indicators at product and company level, and a tool at product level. It looks specifically at material flows taken into account to arrive at the Material Circularity Indicator (MCI) of a product. The indicators focus exclusively on technical cycles and materials from non-renewable sources (the right side of the CE butterfly diagram), as their circularity strategies and associated business benefits are better understood. The indicators enable companies to assess how well their products or the company as a whole performs in the context of a CE.

There are significant potentials across many economic sectors to increase circularity. According to the 2020 Circularity Gap Report (Circle Economy, 2020), which applies a Global Circularity Metric, the total amount of resources entering the global economy accounted for more than 100.6 billion tonnes in 2017. These annual material inputs into our global economy are composed of extracted resources, complemented by cycled resources. In 2017, 8.65 billion tonnes of cycled resources were reused by the global economy which brought the total for extracted material inputs up to 84.4 billion tonnes. Applying the definition to these numbers results in a global circularity metric of only 8.6% for 2017.

1 Collaborative consumption is the shared use of a good or service by a group. Collaborative consumption differs from standard commercial consumption in that the cost of purchasing the good or service is not borne by one individual. https://www.investopedia.com/terms/c/collaborative-consumption.asp 2 Circularity Indicators Project: https://www.ellenmacarthurfoundation.org/assets/downloads/insight/Circularity-Indicators_Project- Overview_May2015.pdf

13 Relevant for governments are Indicators for measure progress towards a more circular economy on a national or regional level. A ‘CE monitoring framework’ has recently been developed by the European Union (EC, 2018). A total of 10 indicators in four categories (production and consumption, waste management, secondary raw materials, competitiveness and innovation) were selected for the EU context to capture the main elements of a CE (see Table 1).

In relation to the CE monitoring framework, as there was no single summary indicator for the circularity of our economies at macroeconomic level, Eurostat (2019) developed a new indicator for the EU monitoring framework for the circular economy. This new indicator is called the 'circular material use rate' —referred to as the circularity rate — and it measures the contribution of recycled materials towards the overall use of materials. The EU’s circularity rate is much lower than other indicators of circularity, such as recycling rates, because the circularity rate has a much wider material scope: it takes account of all the materials that are fed into economy, whereas the recycling rates only take account of waste. The EU’s circularity rate in 2016 was, on average, only 12 %. This is the share of material resources used in the EU which came from recycled products and recovered materials. The 12 % circularity rate in 2016 is an improvement from around 8 % in 2004. However, progress is slow: it would take the EU a century to reach a circularity rate of 40 % with the current trend. There are big differences in the circularity rates across countries: they ranged from 1.3 % in Greece to 29 % in the Netherlands in 2016 (Eurostat, 2019).

14 Table 1: EU Monitoring Framework for CE (EC, 2018)

Many of the indicators in this ‘CE monitoring framework’ are not new or unique to the CE. Eight indicators are present in other European frameworks, including the Waste Framework Directive, the Resource Efficiency Scoreboard and Raw Materials Scoreboard. The other indicators ‘Food Waste’

15 and ‘Green Public Procurement’ (GPP) are still under development. It is important to note that the indicators from the ‘CE monitoring framework’ focus mainly on measuring material and waste production and strategies to preserve materials (Moraga et al. 2019), which shows that material resources and waste are considered the primary focus of the European policy on CE. Several of the CE indicators are also in the scope of the Sustainable Development Goals (SDG) for SDG 12 Responsible Consumption and Production.

We propose to use selected indicators from the EU’s ‘CE monitoring framework’, and adapt the framework to assess the current state of circularity in the Philippines based on the 'circular material use rate', and to track progress towards more circularity in the future. There are overlaps with SCP indicators for the SDG 12 and other SDGs, which means that measuring the CE is synergistic to measuring progress of the PAP4SCP, and will provide information and data relevant to SDG implementation reporting.

1.2 Circular economy (CE), Sustainable Consumption and Production (SCP) and the Sustainable Development Goals (SDGs)

This section summarises the link between circular economy (CE), sustainable consumption and production (SCP) and the Sustainable Development Goals (SDGs) and highlights which CE approaches can be applied to address specific SDG targets. Overall, there is much scope for aligning CE strategies with sustainable development commitments at the national and international level.

SDG 12 on Responsible Consumption and Production has been identified as one of the most interconnected among the goals. It is directly linked to SGD 8 through the target relating to the 10 YFP on SCP, but also to SDGs 4, 6, 7, 9, 11, and the environmental targets 13, 14, 153 (Bengtsson, Alfredsson, Cohen et al. 2018). Thus, the attainment of SDG 12 is of strategic importance and can create synergies in relation to other goals.

The circular economy is an integral aspect of SCP 12. According to the UN (2018) the CE holds promise for achieving multiple SDGs, including SDGs 6 on water, 8 on economic growth, 11 on sustainable cities, 13 on climate change, 14 on oceans, and 15 on life on land. For example, regarding the environmental targets, the CE has significant potentials to address climate change by reducing up to 3.6 billion tonnes of global CO2 emissions per year (Enkvist and Klevnäs, 2018). The CE is recommended by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES, 2019) as a way to achieve sustainable consumption and production, and improve sustainability of economic and financial systems. Its application is considered as crucial in efforts to address current challenges to the global environment, such as marine plastic pollution (Mendenhall, 2018).

The study by Schroeder, Anggraeni and Weber (2018) analysed a wide range of circular economy practices and their potential application to achieve specific SDG targets. Whilst the CE will not be able to address and solve all of the SDG related challenges, the overall findings of the analysis show that CE practices can directly contribute to achieving 21 of the SDG targets and indirectly contribute to achieving an additional 28 targets (see Figure 3).

3 SDGs 4 (Quality Education), SDG 6 (Clean Water and Sanitation), SDG 7 (Affordable and Clean Energy), SGD 8 (Decent Work and Economic Growth), SDG 9 (Industry, Innovation and Infrastructure), SDG 11 (Sustainable Cities and Communities), SDG 13 (Climate Action), SDG 14 (Life Below Water), and SDG 15 (Life on Land)

16

Figure 3: Direct and indirect contributions of the circular economy to the 169 SDG targets (source: Schroeder, Anggraeni and Weber, 2018)

The strongest relationships and synergies between CE practices and SDG targets lie within SDG 6 (Clean Water and Sanitation), SDG 7 (Affordable and Clean Energy), SDG 8 (Decent Work and Economic Growth), SDG 12 (Responsible Consumption and Production), and SDG 15 (Life on Land) having high scores both for direct and indirect contributions. SDG 1 (No Poverty) and SDG 2 (Zero Hunger) and SDG 14 (Life Below Water) are impacted by CE practices mostly indirectly. Furthermore, the CE is important to achieve other SDGs (Schroeder, Anggraeni and Weber, 2018). CE approaches applied in various industry sectors including agriculture, manufacturing, water and sanitation, energy and transport would contribute to many of the SDGs, including those on water, energy, economic growth, climate change, life below water and life on land (SDGs 6, 7, 8, 13, 14 and 15) (see Figure 4).

17 Figure 4: Circular economy practices for the SDGs (source: Schroeder, Anggraeni and Weber, 2018)

CE practices can help to address targets of SDG 12 Responsible Consumption and Production. In particular, SDG target 12.2 focuses on the sustainable use of natural resources. SDG target 12.5 for waste reduction is also relevant in this context. Implementing circular economy practices such as 3Rs (reduce, reuse, recycle) can achieve smaller material throughput, and will also contribute to reduced waste and emissions. In the following Table 2 the specific SDG 12 targets, indicators and related CE approaches and practices are presented, in view of the potential applications for the Philippines context and to show the relevance for the SCP Action Plan (PAP4SCP).

Table 2: Link between SDG 12 Targets on Sustainable Consumption and Production and Circular Economy Approaches SDG 12 Targets Indicators Circular economy approaches 12.1 12.1.1 National SCP action plans can Implement the 10 YFP on SCP, all Number of countries with SCP include specific references to countries taking action, with national action plans or circular economy approaches developed countries taking the mainstreamed as a priority or a linked to 10 YFP programmatic lead, taking into account the target into national policies areas; development and capabilities of developing countries

18 12.2 12.2.1 Circular economy practices to slow By 2030, achieve the sustainable Material footprint, material the growth of domestic material management and efficient use of footprint per capita, and material consumption and improve natural resources footprint per GDP material efficiency in primary and 12.2.2 secondary processing of resources; Domestic material consumption, Substitution of non-renewable domestic material consumption with renewable (indigenous) per capita, and domestic material resources for small scale consumption per GDP industries, such as natural fibers to replace synthetic fibers, (specific opportunities in the Philippines could be abaca fiber for the upholstery industry (in lieu of synthetic fiber), bamboo for flooring tiles and panelling 12.3 12.3.1 Reduced food waste and losses By 2030, halve per capita global Global food loss index through behavioural changes; soil food waste at the retail and restoration of land through food consumer levels and reduce food waste utilisation for organic losses along production and fertilisers; improving of supply chains, including post- agricultural supply chains to harvest losses reduce food losses 12.4 12.4.1 CE approaches such as industrial By 2020, achieve the Number of parties to symbiosis to reduce industrial and environmentally sound international multilateral ; management of chemicals and all environmental agreements on Industrial wastewater treatment wastes throughout their life hazardous waste, and other to recover chemicals from cycle, in accordance with agreed chemicals that meet their wastewater, grey water recycling; international frameworks, and commitments and obligations in Agro-ecology to reduce waste and significantly reduce their release transmitting information as careful management of agro- to air, water and soil in order to required by each relevant chemicals in food production; minimize their adverse impacts agreement Formalise and upgrade e-waste on human health and the 12.4.2 recycling facilities to deal with old environment Hazardous waste generated per electronics and appliances capita and proportion of hazardous waste treated, by type of treatment

12.5 12.5.1 Enhanced recycling of paper, By 2030, substantially reduce National recycling rate, tons of plastic and other secondary waste generation through material recycled resources to reduce waste; prevention, reduction, recycling Product design for reuse and and reuse repair; Wastewater treatment and grey water re-use and recycling; Support community based recycling initiatives in cities, towns and informal settlements; Integration of the informal recycling sector in the national waste management programs 12.6 12.6.1 Circular economy practices in Encourage companies, especially Number of companies publishing manufacturing and supply chains, large and transnational sustainability reports reported by companies through companies, to adopt sustainable their sustainability reports practices and to integrate

19 sustainability information into their reporting cycle 12.7 12.7.1 Certification schemes for use of Promote public procurement Number of countries secondary raw materials (e.g. practices that are sustainable, in implementing SPP policies and recycled plastic contents) in accordance with national policies action plans government SPP policies and and priorities related initiatives and practices;

12.8 12.8.1 Information campaigns and By 2030, ensure that people Extent to which (i) global environmental education about everywhere have the relevant citizenship education and (ii) circular lifestyles, especially waste information and awareness for education for sustainable prevention and plastic use sustainable development and development (including climate reduction; lifestyles in harmony with nature change education) are life-cycle assessments (LCA) of mainstreamed in (a) national goods and services in tertiary education policies; (b) curricula; education (c) teacher education; and (d) student assessment 12.A 12.A.1 Improved technological Support developing countries to Amount of support to developing capabilities to implement circular strengthen their scientific and countries on research and economy approaches in industrial technological capacity to move development for sustainable development through Life Cycle towards more sustainable consumption and production and Assessments (LCA), and patterns of consumption and environmentally sound municipal waste management, and production technologies transfer of technologies with improved materials efficiency 12.B 12.B.1 Nature-based solutions using Develop and implement tools to Number of sustainable tourism natural resources and circular monitor sustainable development strategies or policies and design approaches in tourism impacts for sustainable tourism implemented action plans with destinations as part of tourism that creates jobs and promotes agreed monitoring and strategies; tools to monitor the local culture and products evaluation tools impact of tourism on natural resources and ecosystems (e.g. coral reefs) and tourism-related local jobs and employment 12.C 12.C.1 Linked to subsidies for bioenergy, Rationalise inefficient fossil-fuel Amount of fossil-fuel subsidies potentials for promotion of subsidies that encourage per unit of GDP (production and anaerobic digestion and bioenergy wasteful consumption by consumption) and as a from agricultural waste; reducing removing market distortions, in proportion of total national reliance on imported fossil fuels accordance with national expenditure on fossil fuels circumstances, including by restructuring taxation and phasing out those harmful subsidies, where they exist, to reflect their environmental impacts, taking fully into account the specific needs and conditions of developing countries and minimising the possible adverse impacts on their development in a manner that protects the poor and the affected communities

20 2 International examples of circular economy (CE) policy frameworks

Most circular economy (CE) research to date has focused on European countries, China and Japan. In particular, macroeconomic country models which estimate the economic benefits and potentials for national economies are unequally distributed. In the ASEAN region, so far only one macroeconomic model has been conducted, focusing on the country of Indonesia (see Figure 5).

Figure 5: Number of macroeconomic models on circular economy per country (Source: Preston, Lehne and Wellesley, 2019, based on data from McCarthy et al. 2018)

2.1 The European Union (EU)

The European Commission (EC) initiated a Circular Economy Action Plan in 2015 which consisted of the 54 actions which were delivered in March 2019, even if the work on some of them continues beyond 2019 (EC, 2019). The action plan included measures that aim to stimulate 's transition towards a CE, boost global competitiveness, foster sustainable economic growth and generate new jobs. The EU Action Plan for the Circular Economy also established a concrete programme of action, with measures covering the whole life cycle: from production and consumption to waste management, and the market for secondary raw materials, and a revised legislative proposal on waste.

The EU Action Plan for the Circular Economy emphasises that the maintenance of value of products, materials and resources in the economy for as long as possible is “an essential contribution to the EU's efforts to develop a sustainable, low carbon, resource efficient and competitive economy” (EC, 2019). Thus, the CE is usually understood in terms of enhancing resource productivity, i.e., the economic value created per unit of resource use, and decoupling economic growth from resource use and environmental impacts.

In 2018 the EU Strategy for Plastic in the Circular Economy was launched. It has the goal to create a ‘smart, innovative and sustainable plastics industry’ (EC, 2018) that aims to ensure that all plastic packagings that are produced and used is recyclable by 2030. The plastics strategy also

21 encourages voluntary action by stakeholders to boost the uptake of recycled plastics. The objective is to ensure that by 2025, ten million tonnes of recycled plastics find their way into new products on the EU market.

In December 2019, the incoming European Commission announced a European Green Deal, including the commitment to net zero carbon for 2050. The CE is expected to be a key approach in the European Green Deal, which will include new waste and recycling laws, and represent about 50 percent of the EU’s effort to achieve net-zero carbon emissions by 2050, and will be erected as “the number one priority” (Simon, 2019).

2.2 Japan

Japan has a range of policies and laws aimed at reducing waste and increasing circularity. Japan has been promoting a CE since 1991 with the Law for Promotion of Effective Utilization of Recyclables. In 2000, Japan passed the Basic Law for Establishing a Sound Material Cycle Society.

At a national level, Japan’s policy approach to the CE includes a set of indicators to measure progress towards more circularity of the economy:

 A resource productivity indicator measuring material use as a proportion of GDP;

 An indicator for cyclical use rate of materials in the economy, measured by the material reused as a proportion of total material used by the economy; and

 An output indicator, measuring how much waste is ultimately landfilled. These indicators have associated targets. Japan supplements these with a of sector-specific measurements, for which there are sometimes industry-specific targets. Finally, it also measures indicators of societal efforts toward a circular economy, looking at the size of the market for rental and leasing of goods, the amount of reusable packaging sold, the number of local authorities that charge for residual waste collection (Benton and Hazell, 2015).

2.3 China

Another major player in the CE is China, which has been implementing a Circular Economy Promotion Law since 2008. It has been estimated that advancing and adopting the circular economy as main development pathways could save Chinese businesses and households approximately CNY 32 trillion (USD 5.1 trillion) in 2030, and CNY 70 trillion (USD 11.2 trillion) in 2040 in spending on high-quality products and services. These savings would be equivalent to around 14% and 16% of China’s projected GDP in 2030 and 2040 respectively (Ellen MacArthur Foundation, 2018). In terms of living standards, this CE pathway could enable more Chinese urban dwellers to enjoy a middle- class lifestyle while at the same time reduce the environmental impacts of current urban consumer lifestyles.

China’s CE approach has focused on eco-industrial development and promotes approaches such as industrial symbiosis, a CE approach for green industry by which increased sustainability (e.g., lower carbon emissions, lower resource consumption) can be achieved through the establishment of symbiosis networks between different industrial facilities, which results in more efficient material and energy use. Industrial symbiosis networks are generally formed through a long process of planning wherein potential synergies between different plants are identified and evaluated (Bacudio et al., 2016)

22 2.4 Other Asian countries (South Korea, Singapore, Malaysia, Indonesia)

Other Asian countries, including neighbours and trading partners of the Philippines, also have passed policy frameworks supporting CE developments. South Korea has initiated a number of policies, including resource efficiency programmes and recycling technology programmes, in order to change the linear industrial development model the country has followed over the last decades, but which is facing difficulties to achieve the country’s environmental objectives (Jin, 2016). Specific examples are South Korea’s Wastes Control Act (2007) and South Korea’s Law on Recycling Resources (2008).

In 2017, Singapore’s National Environment Agency (NEA) announced its Closing the Waste Loop Initiative, a programme that funds collaborations between industry and research institutes to develop waste management solutions. In 2018, Singapore’s Ministry of the Environment and Water Resources initiated a new waste infrastructure plan based on the principles of zero waste and circular economy. To this end, the Ministry, in collaboration with NEA, released a “Zero Waste Masterplan”, calling on all sectors and stakeholders to contribute innovative solutions to the plan. One of the drivers for this shift towards CE is that Singapore’s will run out of room by 2035, 10 years earlier than expected, and that there are no plans to replace it. The masterplan phases in new regulations and governing bodies for food, e-waste, and over the next five years. Singapore generates 60,000 tonnes of e-waste a year of which currently only 6 percent is recycled. E-waste in Singapore comprise products under 10 years old, many devices often contain gold, silver, rare earths and other valuable recyclable materials. Upgrading Singapore’s ability to capture e-waste through urban mining is the masterplan’s main priority. Starting 2021 producers of e-waste will be responsible for end-of-life collection and treatment as supervised by a Producer Responsibility Organization (PRO). The Extended Producer Responsibility (EPR) system will cover end-of-life information and communications technology equipment, solar photovoltaic panels, batteries and lamps, and certain household appliances (NEA, 2018).

In the case of Malaysia, the CE is an important element of Malaysia’s National SCP Blueprint from 2016. Table 3 summarises the key CE features of the SCP Blueprint.

Table 3: CE strategies in Malaysia’s SCP Blueprint (Source: Ngan et al., 2019, based on information from Malaysia’s Economic Planning Unit (EPU)

23 The main lessons from these various country experiences for the Philippines are:

1. It is important to have national policy frameworks for a circular economy to address waste management challenges, and improving resource efficiency of the economy more generally.

2. All countries serious about improving competitiveness of their industries, reducing environmental impacts from production and consumption systems is part of the process of developing or advancing relevant policy frameworks.

2.5 The circular economy (CE) opportunities for low and middle income countries

Most attention has focused on the gains that developed countries and multinational companies can make from the circular economy by creating value through producing more from less. It is equally if not more important for small companies in developed countries and people living in poverty to have the opportunity to create value from the circular economy.

Several research reports have identified the options for adopting the circular economy in low and middle income countries (e.g. Gower and Schröder, 2016; Williams et al. 2018). The circular economy offers opportunities to reduce pollution, improve people’s health, create new jobs and provide new business opportunities. Williams et al. (2018) have divided the circular economy practices frequently used in developing countries into three broad categories: proven, evolving and speculative. Proven approaches are practices with strong evidence base across different regional and country contexts (See Table 5 below). The proven approaches have the potential to be implemented in a way that empowers marginalised and poor communities. Evolving practices are those where the evidence base is patchier. The speculative category includes practices such as e-waste, an area of major concern in many developing countries, but so far relying on unsustainable practices with negative environmental and health outcomes and as-yet-unproven technology.

Circular economy practices in the waste management sector can contribute to reducing the public health impacts of mismanaged waste. Open burning of waste releases pollutants that increase the risk of diseases such as heart disease and cancer, respiratory ailments, nausea and headaches, and damage to the reproductive and nervous systems. Outdoor air pollution is responsible for 3.7 million deaths a year, and estimates suggest that open burning of waste could be responsible for as much as a fifth of this death toll (Williams et al., 2019). Waste reduction, improved waste management in communities affected, better waste separation, collection and recycling systems can contribute to reducing open burning and improving public health.

CE concepts are also being used in the water and sanitation sector. It includes, for example, the capture and reuse of slightly used ‘greywater’ for non-potable purposes within cities. In agriculture, CE water practices include capture and treatment of livestock farm effluent to ensure water quality. In industry, industrial wastewater can be treated to use sludge to form biogas which, compared to other methods, offers a significantly smaller carbon footprint (Tahir et al., 2018). In the sanitation sector, human waste can feed into a circular system which replaces traditional waste management. This connects the biological cycle, recovering nutrients and water, creating value-adding products such as biogas, organic fertilisers, proteins and more, and catering for multiple forms of biological waste. The circular economy approaches to sanitation can have positive impact for the urban poor by focusing on waste processing at the municipal level (Toilet Board Coalition, 2017).

24 Many of these CE approaches to reduce waste and sanitation solutions for communities are already being practiced in the Philippines, but need to be up-scaled and replicated to achieve wider environmental, social and economic benefits for the whole society.

25 Table 4: Proven and evolving circular economy approaches in developing country contexts (source: Williams et al. 2018)

26 2.6 Employment opportunities in the circular economy (CE)

The transition to a circular economy to reduce material extraction and waste generation is expected to also result in net job gains. According to the ILO (2018), embracing a circular economy that emphasizes the reuse, recycling, remanufacture and repair of goods will create around 6 million new employment opportunities across the world as such actions replace the traditional model of “extract, make, use and dispose”. The industries expected to see the highest growth in employment by 2030 are reprocessing of various secondary metals and steel, retail trade and repair sectors. Not all sectors will be winning, some will see decline in employment such as manufacture of basic iron and steel, and the mining sector for ores and concentrates, and the manufacturing sectors (see Figure 6).

Figure 6: Job gains and job losses in the circular economy by 2030 (ILO, 2018)

Although no detailed figures or specific assessment exists for the Philippines, it can be expected that this global employment assessment will be applicable for relevant sectors in the country including the mining sector.

27 2.7 Financing the transition to a circular economy

Finance and investment is a crucial component to facilitate the transition to a CE. It will require public sector resource allocations in the form of grants and loans to support research, development, innovation and public procurement. There is a growing movement showing that private sector capital is also becoming relevant for CE investment. In response, current emergent innovative banking and insurance products for circular economy initiatives, such as sharing and leasing business models, continue to emerge. Banks and the financial industry are encouraged by this green opportunity.

In 2019, substantial activity in this realm could be observed. Governments have committed to support circular economy projects. The European Investment Bank (EIB) is offering EUR10 billion over the next five years. This capital is allocated in the form of loans, equity investments, guarantees and advisory services as part of ‘The Joint Initiative on Circular Economy’ between EIB and other European banks. This flagship partnership will target at least EUR10 billion of investments over a five year period (2019 – 2023). The aim is to prevent and eliminate waste, increase resource efficiency and foster innovation by promoting circularity in all sectors of the economy (EIB, 2019).

New privately-driven investment funds have emerged. BlackRock, the world’s largest asset manager, launched a Circular Economy Fund of USD20 million seed capital.4 BNP Paribas one of the largest European banks announced its first Circular Economy Exchange Traded Fund. A group of European banks ABN AMRO, ING, Rabobank and MVO Nederland, the Dutch association for corporate social responsibility, are partnering to accelerate the transition to a CE. To promote and provide better insight into CE funding across the world, the banks launched joint circular economy finance guidelines in 2018, inspired by the ambition to create a joint framework for financing the CE.5 These efforts are real, present, and growing.

Greater focus is still needed on circularity in international value chains, and on the governance and investment frameworks required to enable a global CE. For developed and developing countries alike, it is necessary to catalyse increased public and private investment in the roll-out and scale-up of CE solutions.

3 Aligning circular economy (CE) strategies and needs for sustainable development pathways for the Philippines

3.1 Sustainable development priorities of the Philippines

Is it possible to align the circular economy (CE) with existing sustainable development policy priorities in the Philippines? Generally speaking, CE approaches are consistent with most sustainable development objectives, including driving resilient economic growth, and reducing impacts on environment and resources. If implemented in an inclusive way, CE can provide opportunities for the most vulnerable people, including workers in the informal waste management sector. In the following chapter, we aim to identify synergies between the CE and existing national development plans and policies in the Philippines, and undertake an assessment of the scale of opportunity in transitioning to a CE across key sectors of the economy.

4 BlackRock website: ]https://www.blackrock.com/ch/individual/en/products/310165/blackrock-circular-economy-fund 5 ABN AMRO website: https://www.abnamro.com/en/newsroom/press-releases/2018/abn-amro-ing-and-rabobank-launch-finance- guidelines-for-circular-economy.html

28 By promoting innovation, resource efficiency and new business models, the CE can support the Philippine economy which is poised to grow at 6.4 percent in 2019, and 6.5 percent in 2020 and 2021, according to the Philippines Economic Update (World Bank, 2019). In addition to supporting economic development, the CE concept and approach can be contextualized in the Philippines to address some of the country’s most pressing development needs. The PDP 2017-2022 and the Ambisyon Natin 2040, with the 2030 Agenda and the principle of “leaving no one behind” involves three key pillars namely, 1. People: the most marginalized, vulnerable, and at risk; 2. Planet and Prosperity: urbanization, economic growth, and climate change actions; and 3. Peace: more inclusive and responsive governance systems, and sustainable and equitable development, for just and lasting peace in conflict-affected areas. The CE would mostly contribute to the second pillar on Planet and Prosperity, but implemented in an inclusive way it can also contribute to pillar 1 People. Pillar 3 Peace and inclusive governance systems will be required to implement a CE successfully.

3.2 Philippines development priorities and needs which require CE practices to be addressed

1. Municipal waste management, reduction of unmanaged waste and wastewater treatment, improve OHS and working conditions of informal sector and promote healthy communities

Waste management is a development priority for the Philippines and CE practices are essential to solve the waste crisis. The PDP aims to increase the solid waste diversion rate to 80% by 2022. Although a national waste management framework exists, the required action for solid waste management at the local government level is not fully implemented given the inadequate materials recovery facilities (MRFs) and sanitary available. Even the 10-year solid waste management plan required by law is only at 51 percent compliance as of 2016 (833 approved out of 1,631 cities and municipalities). In Metro Manila, only 41 percent of wastes in are diverted for reuse and recycling. A comprehensive CE approach can help to address this challenging task of reusing, recovering and recycling more non-renewable materials, such as plastics, and reducing the amount of materials entering the environment as waste. The CE can potentially help to contribute to a strategy for integrating the informal waste sector in the solid waste management plans at both national and local level. CE needs to address working conditions for those handling hazardous waste, e.g., e-waste or used lead-acid batteries, which are a very common occurrence in the Philippines.

2. Inclusive urbanisation, climate-resilient housing, and disaster risk management in informal settlements.

Inclusive urbanisation and the construction of affordable, climate-resilient housing is an urgent development priority of the Philippines. In 2012, 5.4 percent of the urban population, about 2.2 million people, lived in informal settlements in the Philippines. In Metro Manila alone, an estimated 1.3 million people, or close to 11 percent of the population, lived in informal settlements (World Bank, 2017). An estimated 4.5 million Filipinos are homeless, with around 3 million homeless in Manila (Torregoza, 2019). If left unaddressed, the housing shortage could affect as many as 12 million people by 2030. Informal settlements are particularly vulnerable to climate change related disasters such as typhoons and flooding where resilient and cost efficient housing is the most urgent need. With 10 percent of the population of 100 million living below the poverty line, climate resilient housing solutions for the poor is an urgent challenge. CE solutions for sustainable low-cost buildings include modular architectural systems from renewable materials that reduce the number of different building parts and reduce waste material.

29 3. Clean and affordable energy, access to electricity and climate change mitigation

Another priority is to enable inclusive growth through access to sustainable energy. Moreover, promotion of renewable energy in the Philippines is crucial to jointly address the global challenge of climate change. Ensuring reliable and affordable access to energy is a key priority of the Philippine Development Plan (PDP, 2017-2022) and Energy Plan (2016-2030), in addition to issues like health, education, rural development and gender equality, it is essential for the improvement of the welfare of the poor. The circular economy supports the achievement of ambitious electrification targets for poor areas. Specific CE practices in this area include solar PV mini-grids and bioenergy, e.g., biogas in rural areas using agricultural waste (see e.g. Williams et al., 2018).

4. Green job creation, innovation & technology and MSME development

In April 2016, the Philippine Government adopted the Green Jobs Act (Republic Act No 10771). The aim is to leverage the process of structural change towards a sustainable, low-carbon, climate- resilient economy that creates decent jobs on a significant scale. Current efforts aim to build capacity and advocacy will develop ways to enable the creation of sustainable enterprises and decent work opportunities, and to ensure social well-being (ILO, 2018). There are opportunities to include the CE concept into the planning and these capacity building activities.

Furthermore, The PDP aims to advance science, technology and Innovation, and expand opportunities in industry and services, especially through increased access to economic opportunities for micro, small, and medium enterprises (MSMEs). According to the ILO, in a circular economy, almost 6 million jobs can be created by moving away from an extract-manufacture-use- discard model and embracing the recycling, reuse, remanufacture, rental and longer durability of goods (ILO, 2018).

The circular economy offers innovation and employment opportunities for a range of different industry sectors ranging from reprocessing of metals and materials, services and (automotive) repair services, (re-)manufacturing, agriculture and forestry, food processing, construction and recycling and waste management. According to the Philippines Statistics Authority (PSA, 2019), in 2018, employment in the wholesale and retail trade. and repair of motor vehicles was 19.4 percent, manufacturing 8.8 percent, agriculture and forestry 21.6 percent, and construction 9.4 percent. Employment in all these sectors will be impacted by the circular economy. Furthermore, water supply, sewerage and waste management sectors accounted for only 0.1 percent of total employment in the Philippines, these sectors can expect growth in employment in the transition to a circular economy.

5. Improving access to clean water and sanitation in informal settlements

There are various circular economy approaches to sanitation and access to clean water which can have positive impact for the urban poor by focusing on waste processing at the municipal level (Toilet Board Coalition, 2017). There are still a large number of Filipino people without access to sanitation. According to figures cited by the National Statistical Coordination Board (NSCB) in July 2012, 92.5% of households had access to basic sanitation (i.e., sanitary toilets) in 2011, up from 76.0% in 2008, though the figure was projected to decrease to 83.8% by 2016 (ABD, 2013).

3.3 Material composition and footprints of the Philippine economy

Over the last three decades, the Philippines has shifted from a renewable resource based to a non- renewable material-based economy. The Philippines also shifted from being net resource

30 dependent in 1980 to being a net resource provider in 2014, as shown by negative physical trade balance due to the increased export of metal ores. The shift from biomass (51 percent in 1980) to non-metallic minerals-based consumption (51 percent in 2014) shows that the transition from an agrarian towards an industrial metabolic profile is well underway (see Figure 7).

Figure 7: Material Footprint/capita (by main categories) and Direct Material Consumption/capita (total) in the Philippines (source: Martinico-Perez et al. 2018a)

The overall level of resource consumption and domestic material consumption (DMC) of the Philippines is still medium in size, compared to other countries. The DMC (domestic extraction+imports−exports) increased from 282 Mt (6.0 t per capita) in 1980 to 581 Mt (5.9 t per capita) in 2014, with a compounding annual growth rate of 2.2%. At the same time, the total material footprint of the Philippines increased from 198 Mt in 1990 to 364 Mt in 2010.

The DMC of the Philippines was 5.9 t/capita in 2014, fluctuating between 3.9 and 6.0 t per capita over the past three decades. The MF has been dominated by biomass, but with a declining share from 55% (109 Mt) in 1990 to 44% (159 Mt) in 2010. Non-metallic minerals increased from 32% (63 Mt) in 1980 to 42% (155 Mt) in 2010. Similarly, fossil fuels increased from 10 Mt (5%) to 33 Mt (9%) (Martinico-Perez et al. 2018a).

The lower MF (consumption indicator) than DMC (production indicator) suggests that the average amount of materials embodied in imports is lower than the average amount of materials embodied in exports. This trend has been heavily influenced by the growing consumption of construction minerals in the period since 2014. Biomass and metal ores are now the country's main material exports, also accounting for a large share of the country’s material footprint. As the Philippines economic structure changes, waste composition is shifting from biodegradable to non-biodegradable materials like plastics, metals and non-metallic minerals. Disposal of these materials poses challenges in terms of quantity, handling and treatment. Martinico-Perez et al. (2018b) find that materials consumed are released to the environment at a fast rate, the increased output to the environment signifies inefficient allocation and use of resources as well as low levels of circularity which keep resources in use for longer. Direct material inputs in the Philippines have grown at 2.4% yearly, from 293 million tonnes in 1980 to 661 million tonnes in 2014. Domestic processed output, or materials released to environment, has tripled from 96 million tonnes in 1980 to 260 million tonnes in 2014, with 89% as emission to air (Martinico-Perez et al., 2018b).

31 According to the Asia Pacific Energy Research Centre (APERC, 2019) Energy and Demand Outlook, the share of coal in the country’s Total Primary Energy Supply (TPES) will increase significantly (in the Business –as –Usual /BAU scenario), from 26% in 2016 to 39% in 2050, to meet surging electricity demand with domestic resources. Renewable energy accounts for 20% of energy supply, down from 24 percent in 2016. Even with a doubling of renewable generation, large increases in fossil fuel generation are expected.

A policy approach should be adopting additional policies to mitigate environmental concerns associated with coal use, and take measures to address its increasingly vulnerable energy security.

3.4 Current circular economy related policies and frameworks in the Philippines

3.4.1 Solid waste management policies

The current main policy which links directly to the circular economy is the national policy on solid waste management (Republic Act 9003), Republic Act 9003, also known as the ‘Ecological Solid Waste Management Act 2000.’ It provides the legal framework for the country’s systematic, comprehensive, and ecological solid waste management program that shall ensure protection of public health and the environment. It also provides for the necessary institutional mechanisms with the creation of the National Solid Waste Management Commission (NSWMC) which shall oversee the implementation of solid waste management plans and prescribe policies as well as incentives to achieve objectives of the Act. It mandates solid waste segregation at source, it also mandates the local government units (LGUs) to create their respective Solid Waste Management Boards, formulate their ten-year Solid Waste Management Plans, building of materials recovery facilities (MRFs) and final disposal facilities such as sanitary landfills.

RA 9003 was signed into law in 2001, but in practice there has been very little change in solid waste management. A significant percentage of the population are still unfamiliar about the law, about the need for solid waste segregation, and do not understand the fact that mismanagement of solid waste contributes to a lot of environmental degradation, and is a significant factor in street flooding during the monsoon rains through blocked drains and water ways. According to the NSWMC, waste generation increased from 37,427.46 tons per day in 2012 to 40,087.45 tons in 2016.

The PDP highlights that the waste management problem has persisted despite 38 percent compliance of local government units (LGU) RA 9003. The greater majority have yet to comply and the reason cited is the lack of funds among LGUs to put up the waste collection and management infrastructure facilities required by RA 9003. As of September 2017, local governments have submitted 1,460 solid waste management plans to the NSWMC Secretariat but unfortunately, only 318 solid waste management plans have been approved so far (Senate of the Philippines, 2017). In addition, only few households practice 3Rs (reduce, reuse, and recycle) in waste management (NEDA, 2017).

Regarding the issue of e-waste, the Philippines currently does not have a specific regulation covering this growing waste stream. E-waste is classified as hazardous waste, and the Republic Act No. 6969, or the ‘Toxic Substances and Hazardous and Nuclear Wastes Control Act of 1990,’ regulates materials with hazardous components, but there is no explicit provision for e-waste. A set of guidelines, ‘Guidelines on the Environmentally Sound Management of Waste Electrical and Electronic Equipment (WEEE)’ was issued by DENR.6

6 DENR guidelines: http://119.92.161.2/portal/Portals/9/Draft%20TechGuidelines%20on%20ESM%20of%20WEEE.pdf

32 3.4.2 Sustainable public procurement (SPP) to stimulate circular economy (CE)

Sustainable public procurement (SPP) policies can contribute to the development of the CE. In the EU monitoring framework for the CE, SPP is included as one of the indicators. The rationale is that public procurement accounts for a large share of consumption, and can drive the CE (EC, 2018). Through leading by example, governments can encourage businesses and households to follow similar purchasing policies.

The Government of the Philippines has passed the “The Philippine Green Public Procurement Roadmap: Advancing GPP until 2022 and beyond” in 2017 (see also the SWITCH-Asia Policy Support Component). This Green Public Procurement Roadmap integrates green practices into the existing procurement process as covered by the Government Procurement Reform Act (Republic Act (RA) 9184, GPRA 2003,) ‘An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and for Other Purposes’. The Roadmap embodies the government’s commitment towards transforming the market, as well as reflects the strategies for green procurement of commonly used and non-commonly used supplies and equipment. This existing Roadmap could be directly aligned with a CE strategy and indicator systems to measure circularity of the Philippines.

In the specific case of plastic waste, SPP can stimulate the use and consumption of post- consumer recyclates by reducing primary resource consumption through commitment to procurement of products which have embedded recycled content (Hogg, et al, 2018). Such initiatives can be applied at national and local levels of government, and could set purchasing guidelines requiring particular products to contain a minimum amount of recycled content. SPP is appealing as it couples increased concern about environmental quality with governments leading the way by improving their own purchasing habits. However, the influence that a SPP policy will have, depends on the sector. When applied to an area where the government sector is a large co-ordinated purchaser of relevant products or services, the influence can be significant.

3.4.3 Housing and construction policies for climate resilient housing in informal settlements

A number of policies and plans relating to housing and construction are relevant for both the context of SDG 12 and SDG 11 which aims to “make cities and human settlements inclusive, safe, resilient, and sustainable.” To mention are the 2017-2022 National Urban Development and Housing Framework (NUDHF), and the Department of Human Settlements and Urban Development Act (RA 11201). The strategies for housing under the NUDHF and RA 11201 include the promotion of resilient and affordable housing.

Furthermore, the National Informal Settlement Upgrading Strategy (NISUS) is the main policy relating to informal settlements, formulated by the Housing and Urban Development Coordinating Council (HUDCC). The NISUS 2014-2024 institutionalized major shifts in the government’s housing programme for Informal Settler Families (ISFs). With the NISUS, the government encourages the creation of an enabling policy environment that allows people the opportunity to transform from informal settlers to active participants of the urban economy, and for the potential beneficiaries to fully accept and assume responsibilities that go with the transformation. The NISUS adopts a community-driven development approach, which would aid ISFs in planning the upgrading of their settlements according to their needs and priorities within the constraints of their affordable limits, through a community action planning process. The NISUS targeted to assist one million ISFs over a period of ten years.

33 Concrete actions using circular economy principles to benefit ISFs could include improved sanitation and access to clean water, modular low-cost construction, and job opportunities in a formalised repair and recycling sectors.

3.4.4 Renewable energy and rural electrification policy frameworks

Promotion and diffusion of renewable energy sources are part of the CE. In addition, the CE emphasises the need to ensure that solar panels, wind turbines, and batteries are accounted for at the end of their product life. Globally, it is estimated that by 2050, 78 million tonnes of decommissioned equipment are estimated to arise from solar panels alone (IRENA and IEA-PVPS, 2016)

The Philippine government has promoted rural electrification as early as 1999 through the Accelerated Barangay Electrification Program (ABEP) which was launched with the initial partnership of several energy agencies lead by the Department of Energy (DOE). The subsequent Rural Electrification program (REP) of the Philippines, and the Expanded Rural (ER) Electrification Program envisaged to achieve 100% barangays electrification by 2008, and 90% household electrification by 2017. One of the main thrusts of the ER Electrification Program was to formulate and recommend policies and guidelines to implement rural/missionary electrification with greater private sector participation in a holistic and sustainable manner. Many of the previously electrified barangays particularly those of solar projects were found to be short lived due to absence of a strong sustainable mechanism (DOE, no date).

Furthermore, to facilitate the transition from fossil fuel-based electricity generation to renewable energy-based electricity generation, and make renewable energy investments competitive in the country, the Philippine government introduced Renewable Energy Act of 2008. The Act set out a policy framework for net-metering, in an aim to incentivize small-scale renewable energy generation (up to 100 kW). A feed-in tariff scheme for wind, solar, biomass and hydro was introduced in 2012. A high feed-in tariff is offered to solar project developers, and a strong project pipeline resulted in a vast capacity growth in 2016. Additionally, the government aims to increase the solar PV installations to reach 3 GW of utility solar in 2022, with the cumulative solar installation is predicted to reach 8.7 GW by the end of 2030. Solar rooftops are expected to constitute 35% of the total solar installations (Mordor Intelligence, 2018). These government initiatives are likely to drive the growth of the Philippine solar energy market.

The circular economy is linked to the renewable energy development and will become increasingly important as both roof top installations and off-grid energy equipment (solar PV panels, inverters and battery storage systems) reach their end-of-life, some of them often earlier than anticipated. This end-of-life solar energy equipment requires appropriate collection, recycling and disposal systems to prevent pollution from heavy metals and toxins contained in the equipment.

3.4.5 Green job creation policies

The Philippine Green Jobs Act of 2016 (RA 10771) which fosters a competitive, low-carbon, and environmentally sustainable economy, through the promotion of green jobs is relevant for the circular economy. The law mandates the development of a National Green Jobs Human Resource Development Plan which lays down strategies to support the development of green skills and competencies required in a green economy. It mandates the just transition of work by providing adequate and sustainable social protection for job losses and displacement, and ensuring skills development and social dialogue. Further development of the Green Jobs Act could include the

34 inclusion of considerations how the circular economy will affect jobs, both positively and negatively, and policy measures to support the development and skills need in the circular economy.

3.4.6 The role of national standards for circular economy

On international level, a number of standards relating to the circular economy are being developed, lead by the International Standardisation Organisation (ISO). In the UK, BSI Group has developed a framework standard for ‘implementing the principles of the circular economy in organizations’. Published in May 2017, BS 8001 is a practical framework and guidance for organizations to implement the principles of the CE, it has been written in way so that it can be used wherever they are in the world. It is intended to apply to any organization, regardless of location, size, sector and type.7 In the Philippines, the Department of Industry (DTI) has already established a specific working group on circular economy standards – following similar initiatives on international level that were started by the ISO and BSI.

3.5 Key stakeholders and their initiatives relating to CE

This section provides an overview and analysis of the key stakeholders who will be important to facilitate the transition to a more circular economy. It provides an outline of what is currently practiced in terms of CE in the Philippines (answering the question of “Who is doing what?”). It will include the various sub-sections below based on five main stakeholder groups including national government agencies, municipal governments, private sector, civil society and international organisations.

3.5.1 National government agencies

The National Economic and Development Authority (NEDA) as the country’s premier socioeconomic planning body, and the authority in macroeconomic forecasting and policy analysis and research, leads the work on macro-level policies such as the SCP Action Plan and the PDP. NEDA is well placed to lead the design and coordination of public and private stakeholder, and initiative activities such as the formulation of policies, plans, and programmes to promote circular economy on national and sub-national levels.

The Department of Energy (DOE) is mandated by RA 7638 (Department of Energy Act of 1992) to prepare, integrate, coordinate, supervise and control all plans, programmes, projects and activities relative to energy exploration, development, utilization, distribution and conservation. The development and implementation of the Philippine Energy Plan 2017-2040 falls under the remit of the DOE. There are a number of linkages between sustainable energy development and the circular economy which can help to achieve a shift from fossil fuels to renewable energies. Specific areas are solar PV development, including the recovery and recycling of end-of-life equipment such as panels and battery storage systems, anaerobic digestion and bioenergy utilisation from agricultural waste and by-products.

Department of Environment and Natural Resources (DENR) is the main national government agency for all concerns regarding the environment. Under the DENR, the Environmental Management Bureau (EMB) provides technical and financial assistance to local government units (LGUs) to assist them in the implementation of the RA 9003. DENR will play a major role in waste reduction strategies, the improvement of municipal waste management and promotion of CE as an

7 BSI Circular Economy website: https://www.bsigroup.com/en-GB/standards/benefits-of-using- standards/becoming-more-sustainable-with-standards/BS8001-Circular-Economy/

35 approach to tackle other environmental issues. In 2018, the DENR earmarked PhP1.25 billion (USD23 million) out of a national budget of PhP27.1 billion (USD499 million) for the environmental protection programme for clean water, air and solid waste management. The DENR issued a set of Guidelines on the Environmentally Sound Management of Waste Electrical and Electronic Equipment (WEEE) which requires further details and implementation.

Department of Human Settlements and Urban Development (DHSUD): The recent Act creating the DHSUD, Republic Act No. 11201, was signed into law on February 14, 2019. Creating the DHSUD was a merger of the Housing and Urban Development Coordinating Council, and the Housing and Land Use Regulatory Board, with the later becoming defunct and reorganized as the Human Settlements Adjudication Commission. DHSUD will play a role in providing specific regulations and building codes to enable the development and uptake of modular building design which can be applied to upgrading informal settlements, and for the use of recycled contents from construction and demolition waste in building materials.

Department of Trade and Industry (DTI) has initiated various green growth policies which link to CE, and there are overlaps of DTI’s work on greening MSMEs in the food processing industry and other sectors. DTI is involved in developing standards for the CE. In the Philippines, the DTI is supporting greening and MSMEs. The DTI has ongoing cooperation with the Global Green Growth Institute (GGGI) to promote sustainability in the food processing sector. Issues that are addressed in circular ways are waste from processing of agricultural commodities. There are a number of excellent examples how circular economy approaches are applied by MSMEs in the food processing sector.

Department of Science and Technology (DOST) is the executive department of the Philippine Government responsible for the coordination of science and technology-related projects in the Philippines, and to formulate policies and projects in the fields of science and technology in support of national development. The CE requires advancing digital applications and technology innovation as enabler to drive resource efficiency, therefore DOST will need to play an important role in the CE. The existing programs such as Science and Technology Innovations for Micro, Small and Medium Enterprises (SETUP) can be used to include CE approaches.

Department of Agriculture (DA) is the executive department of the Philippine government responsible for the promotion of agricultural and fisheries development, and growth. In pursuit of this, the DA provides the policy framework, helps direct public investments, and, in partnership with the LGUs, provides the support services necessary to make agriculture and agri-based enterprises profitable with the aim to spread the benefits of agricultural development to the rural poor. The application of circular economy practices in agriculture, for example use of agricultural waste products for new income generating activities, biogas generation, reuse of waste products from food processing, and promotion of agroecology and organic farming are promising approaches that can be promoted through policy frameworks.

Philippine Statistics Authority (PSA) has developed the Philippine Statistical Development Program (PSDP) 2018-2023 which contains relevant information and statistical data for various sectors of the economy. In order to establish a material circularity indicator for the Philippines, the contents of the proposed indicators need to be consistent with the inputs and recommendations of line agencies in the PSDP, and consultations with the Philippine Statistics Authority with regard to the proposed framework should be conducted, as their commitment to the undertaking will be necessary.

Overall, it can be said that the Philippine national government agencies are familiar with sustainable consumption and production (SCP), and already involved in CE-related activities.

36 Successful policies and implementation to promote CE and make use of the opportunities the CE for the Philippines will require further coordination and collaboration between the different national government departments.

3.5.2 Local government approaches to circular economy

Cities play a key role in the transition to a circular economy as they with have a high concentration of resources, capital, data, and skills over a small geographical territory. Urban planners, policymakers, and local governmental organisations are beginning to apply the principles of a CE to guide innovation and create prosperous, liveable cities. In contrast to most current urban systems which depend on a linear urban metabolism, a circular city embeds the principles of a CE across all its functions, establishing an urban system that is regenerative, accessible, and abundant by design. There are numerous opportunities to include circular design in many ongoing green city initiatives in the Philippines.

Box 1: Circular opportunities for cities in the Philippines – Pasig city Pasig City has the potential to be a frontrunner in the development of smart and circular cities in the Philippines. The city started in 2005 to implement policies for mandatory segregation of municipal waste. It was named as the Philippine National Capital of the 2017-2018 edition of World Wide Fund for Nature’s (WWF) One Planet City Challenge (OPCC). The city is ICLEI member since 2016, Pasig City also serves as the model city of the ICLEI-led project, Ambitious City Promises, to develop ambitious climate action plan that mainstreams low emission development, and is driven by citizen engagement. New circular economy initiatives on city level that address issues like waste reduction and recycling, reducing and utilising food waste from large food malls and sharing economy models enabled through digital platforms, and modular building solutions and circular design in urban planning can create further synergies between these ongoing efforts and initiatives.

3.5.3 Private sector industry and business approaches

Advancing circular economy in the Philippines requires the participation and contribution of micro, small and medium enterprises (MSMEs). They account for over 99 percent of all businesses and are the backbone of the Philippines economy. Adopting circular economy practices can be seen in the larger context of “greening” MSMEs. In the Philippines, an important actor promoting CE is the organisation Philippine Business for the Environment (PBE) which “facilitates multi-stakeholder collaboration to implement transformational business solutions in Circular Economy, Mobility, and Agriculture and Ecosystems” (PBE, 2018). One important approach for circular economy in industry is industrial symbiosis which can reduce environmental impacts from industrial waste disposal while generating economic returns through the promotion of resource recovery from industrial wastes. The Industrial Waste Exchange Program (IWEP) in the Philippines was designed towards creating linkages between different industries. It included establishing an inventory of industries with particular emphasis on processes and waste generated; conducting detailed physical, chemical characterization of waste samples where necessary; setting up an information center to serve as clearing house for inventory update and maintenance of wastes available and wasted materials in the Philippines; and conduct pilot studies for selected industries. It was set up by Department of Environment and Natural Resources (DENR- EMB) with the Geo-Technical Research Center of McGill University, Canada.

37 A study by Bacudio et al., (2016) analysed the industrial park in Laguna in the Philippines. Laguna is located in the outskirts of the National Capital Region (NCR), where most of the country’s economic activity takes place. The emergence of industrial parks in neighbouring regions of the NCR has prompted the establishment of the Philippine Economic Zone Authority (PEZA). The study aimed to identify options and barriers to establish industrial symbiosis at Laguna. The results showed a number of barriers that can be classified as cause or effect factors. Based on this case study, actors within the industrial park should implement strategies which address the following barriers: lack of awareness of industrial symbiosis, lack of willingness to collaborate, lack of an institutional support for integration, coordination and communication.

Regarding the issue of plastic packaging waste, a number of private sector stakeholders have pledged to curb packaging waste through their corporate social responsibility (CSR) activities. For example, the Polystyrene Packaging Council of the Philippines, a group of 21 foam polystyrene producers, has set up a recycling plant. The Philippine Alliance for Recycling and Materials Sustainability (PARMS), a partnership supported by the NSWMC, is a multi-sectoral coalition composed of top consumer goods companies. PARMS plans to build a PhP25 million (USD0.46 million) recycling facility for sachets in Metro Manila (GIZ, 2018). Coca Cola Beverages Philippines, Inc. plans to invest PhP1 billion for a food grade facility (BusinessMirror, 2019). It also aims to involve local companies in this project as well as an internationally-recognized green technology partner in recycling. Anchored on the circular economy concept, the recycling facility will collect, sort, clean and wash post-consumer PET (polyethylene terephthalate) plastic bottles. and turn them into new bottles using advanced technology. It is expected that the facility will contribute to the improvement of PET collection and recycling rates in the Philippines, and create employment, especially help uplifting the livelihood of workers across the waste materials value chain, including that of waste-pickers and waste-collectors. The project links to the overall objective of Coca Cola Beverages Philippines, Inc. to achieve a global goal to produce packaging that is 100% recyclable by 2030.

Finally, there are opportunities to use the CE concept to develop new approaches in the social enterprises space. Testing new circular ideas is suitable for business operations which have social or environmental objectives or are mission-driven, which significantly modify the primary commercial orientation. In 2007, an estimated 30,000 social enterprises were operating in the Philippines, of which the vast majority were cooperatives and associations of some form (British Council Philippines and ODI, 2015). At the time of writing, this number can be expected to have increased.

Box 2: Social enterprises as innovators in circular economy - Rags2Riches8

It is one of the best-known social enterprises in the Philippines operating in Payatas, an area of Metro Manila, one of the poorest communities in Metro Manila, and contains large dumpsites. It is also home to many mothers looking after their children, and weaving rugs and clothing out of of cloth, relying on middlemen who take a large cut to sell their products. A group of young professionals teamed up with these women, and designed an enterprise model to improve the quality and style of rugs, and sell them providing a much more substantial return to the women producers. The long term goal has been empowering the community to own the production side of the enterprise. In the first four years of operations, Rags2Riches was able to train over 800 artisans across 21 communities in Metro Manila, and collaborate with big names in the fashion industry in the Philippines and globally, for example in London and New York. It has now become a well-known

8 https://www.rags2riches.ph/

38 fashion and design house empowering community artisans, and creating eco-ethical fashion and home accessories out of upcycled, overstock cloth and indigenous fabrics. Rags2Riches demonstrates that style, circularity, social engagement and sustainability can coexist (British Council Philippines and ODI, 2015).

3.5.4 Civil society initiatives

Civil society organisations and environmental groups like Mother Earth Foundation (MEF) have played an important role in the current circular economy initiatives on-the-ground in many communities. They have been instrumental in promoting concepts and approaches such as 3Rs and Zero Waste.

To mention are CE-related initiatives of the Philippine Center for Environmental Protection and Sustainable Development, Inc. (PCEPSDI), such as Sustainable Diner Project in partnership with WWF to reduce food waste (Adobo Magazine, 2019), the Natural Fiber Plan, the National Ecolabeling Program – Green Choice Philippines and initiatives on the application of life cycle assessment trainings/curriculum in partnership with the academe.

Civil society plays an important role in promoting CE initiatives that are rooted in traditional social and cultural practices on household level, as these may influence the way CE takes root in a developing country such as the Philippines. Examples here can include the following practices: (1) preference for air drying clothes rather than machine–drying, even for urban households; (2) extensive reuse of textile waste for making floor rugs, kitchen rags; (3) strong hand–me–down culture for clothes, furniture, appliances, gadgets, etc.. (4) “ukay – ukay” industry feeding on public penchant for cheap, imported, second hand clothes, (5) used cooking oil retrieval from restaurants, and (6) “Angkas” App for motorcycle ride- sharing. Many CSOs are implementing CE-related projects in partnership with national and local government agencies. These initiatives and success stories should be mainstreamed in the regular programs and projects of the partner government agencies to ensure long-term sustainability of these initiatives.

Box 3: Civil society and barangay cooperation on municipal waste and recycling

Mother Earth Foundation is widely known for its successful training of barangays (villages), cities, municipalities, schools, church organizations, government and private offices, civic organizations, and business establishments all over the Philippines on how to properly plan and implement ecological waste management programs. MEF provides local, low-cost, and low-technology approaches and solutions that can be widely adopted and replicated. In the city of San Fernando in the country’s northern province of Pampanga, in 2012. The Mother Earth Foundation worked with schools on waste reduction that resulted in an estimated 70 per cent of the city’s waste being recycled that would otherwise have ended up in a local dump site. Today, the city is regarded as a model for decentralised waste management and has been labelled one of the best zero-waste models in Asia-Pacific (Vila, 2018).

39 3.5.5 Academic research and science approaches

The research and expert community in the Philippines has successfully promoted life cycle analysis (LCA) as a tool for sustainable consumption and production. LCA is also relevant for CE, through LCA is possible to test impacts of the circular business models, validate their assumptions and get feedback for improvement of goods and services. LCA can also help define targets and indicators to measure and foster circularity of product systems over time. Leading national universities like De La Salle University already have specialised courses on LCA. The wider adoption of CE practices among industry players and companies will be needed to wider use and improved competencies on LCA.

3.5.6 International organisations and development cooperation programmes

A number of international organisations and development cooperation programmes have been funding and implementing various programmes on green growth or sustainable consumption and production which can serve as stepping stones towards new CE approaches. The following provides a brief overview of the relevant actors and initiatives.

UNIDO

The United Nations Industrial Development Organization (UNIDO) in partnership with the Environmental Management Bureau-Department of Environment and Natural Resources (EMB- DENR), and with funding from the Global Environment Facility (GEF), is implementing an e-waste project focusing on the segregation of plastic components of e-wastes possibly contaminated with Polybrominated diphenyl ethers (PBDEs) titled “Implementation of PCB Management Programmes for Electric Cooperatives and Safe e-waste Management” (UNIDO, 2018). Plastic components of e- wastes such as TV sets and computer monitors are potentially contaminated with Polybrominated diphenyl ethers (PBDEs); they therefore need waste segregation for proper disposal. In the project, PBDE-contaminated plastics will be disposed through co-processing in cement kilns to prevent them from re-entering the recycling stream, thus averting secondary contamination. PBDEs were once widely used as flame retardants for plastic casings of electrical and electronic equipment but were found to be persistent organic pollutants (POPs), thus listed under the Stockholm Convention on POPs for elimination.

German Agency for International Cooperation (GIZ)

To address the issue of marine plastic pollution, the German Federal Ministry for Economic Cooperation and Development is funding a multi-country strategic alliance between LafargeHolcim (LH)/Geocycle and GIZ, called “Reducing Plastic Leakage into the Ocean” (GIZ, 2018). The alliance aims to utilize waste to come up with useful outputs that prevent plastic from reaching the coastal and marine environments. The project encourages communities to implement environmentally sound and socially acceptable waste reduction and management programs, and uses co-processing as a viable and sustainable option for local plastic waste management. In co- processing, the energy and mineral content of waste is recovered for beneficial re-use as fuel for energy generation and product additives for manufacturing. The strategic alliance forged an agreement with Mother Earth Foundation (MEF) to implement activities in the City of Malabon as the pilot area, with the main goal of establishing a Zero Waste City in Metro Manila that will serve as model for the implementation of a holistic solid waste management programme. Learnings from this model will be used to advocate for the review, enhancement, and development of local and national policies on waste management. These learnings will be very relevant to develop and implement a CE strategy.

40

Box 4: CE solutions for low cost housing – Climate Change Resilient Pilot House GIZ has been involved in the application of CE practices in the building sector, an example is the Climate Change Resilient Pilot House, in cooperation with the City of Naga in the Bicol Region as well as in the Philippines (GIZ, 2016). Although not specifically named as a CE project, the pilot housing project consists of the application of CE principles for low-cost housing including climate- adapted and energy-efficient devices, environmentally friendly construction technologies (prefabricated beams and hollow blocks), modular architectural systems that reduce the number of different building parts and the reduction of waste material and waste water on site by up to 30 percent. Approximately 50 percent reduction of mortar due to the hollow concrete blocks (HCB) concept of “closed bottom” and a reduction of 40 percent of concrete and 30 percent of steel works for slab construction due to HCB-slab system were achieved. These and similar modular housing applications can be applied for low-cost and climate-resilient construction to support SDG 11 (Sustainable Cities and Inclusive Communities).

Global Green Growth Institute

The Global Green Growth Institute (GGGI) has partnered with the Climate Change Commission of the Philippines on the Ecotown project to incorporate green growth action plans into municipalities and provinces located within and around high-risk biodiversity areas, such as coastal regions. The Ecotown Scale-Up project included Climate Resilient Green Growth planning at the provincial level, and draws upon the lessons learned from green growth activities in the pilot of San Vicente in order to enhance climate resilience and green growth in the provinces of Palawan and Oriental Mindoro (GGGI Philippines, 2015).

Furthermore, GGGI collaborated with the Philippines’ DTI to promote green business practices among MSMEs in the food processing industry. Many green business practices in the food processing industry of the Philippines includes CE approaches such as rain water harvesting, wastewater reuse, use of fruit peels and other organic waste for organic fertiliser, use of biomass energy for stoves to substitute for LPG, use of rice husks as fuel for burners, reuse of packaging and use of biodegradable bags, and use of systems. Often the companies use custom-made machines based on their own innovations. Through these practices many businesses in the food processing industry have managed to reduce their environmental footprints, generate social benefits through greening local jobs, and enter fair trade supply chains (DTI and GGGI, 2017).

EU SWITCH-Asia

The EU SWITCH-Asia Programme9 promoted CE approaches in the Philippines. In total nine projects were implemented in various sectors including the service industry, textile and leather industry, electrical equipment and chemical sector. In the tourism sector CE principles were introduced through the concept of Zero-Carbon Resorts. The project applied a 3R strategy: Reduce-Replace- Redesign in line with CE principles. By providing MSMEs in Palawan and other parts of the Philippines with the access to energy-saving measures and new green technologies, the dependence on fossil fuels could be lessened. The measures helped to reduce the energy consumption in hotels and resorts. In the Replace phase, inefficient fossil fuel-based devices were replaced with better,

9 https://www.switch-asia.eu/countries/philippines/

41 greener technologies. In the Redesign stage, a showcase "Zero Carbon Cottage" was built in Palawan, which operates using solar- and biomass-based energy generation systems.

Under the SWITCH-Asia Programme, the Philippines was selected as one of the pilot countries to further strengthen the development and implementation of national SCP policies. Specifically, SWITCH Philippines focused on three core areas: Clean Energy, Green Procurement and Eco- Labelling, Cross Cutting SCP matters with focus on Clean Air legislation. The SWITCH-Asia Policy Support Component supported policy development of the Philippines Green Public Procurement Roadmap. The following Philippine government agencies were involved in the implementation: Department of Environment and Natural Resources (DENR), Department of Energy (DOE), Department of Trade and Industry (DTI), National Economic Development Authority (NEDA), Climate Change Commission (CCC), Department of Interior and Local Government (DILG) and Department of Budget and Management (DBM).10

4 Outlook and potentials of CE in the Philippines in socio-economic priority sectors

This section will analyse eight priority sectors for the circular economy in the Philippines. Each sector analysis will include the current state of the sector, best practice examples of circular practices, potentials for the sector to adopt circular practices, main barriers for scaling-up and replicating best practices, possible (policy) solutions how to facilitate the transition to circular practices in these sectors.

4.1 Municipal waste and plastics recycling - upgrading and formalising plastic collection systems, improving junk shops and modernising recycling facilities

Municipal solid waste (MSW) management needs to become a priority sector for the CE in the Philippines and other ASEAN countries. It is necessary to improve the country’s recycling systems, and ensure implementation and enforcement of policies related to solid waste management. According to estimates the four ASEAN countries (Indonesia, the Philippines, Thailand, and Viet Nam) and China contribute to about half of the world’s marine plastic litter generation. From coastal regions in these five countries, around between 2.5 to 6.7 million tonnes of plastic waste entered into the ocean in 2010 (Jambeck et al., 2015). Waste generation in the Philippines averages 0.5kg waste per person per day, 15% of which is plastic waste and 1.88 million tonnes of plastic waste is mismanaged per year. The Philippines generates 2.7 million tonnes of plastic waste annually and 20 percent of that leak into the marine environment.

In 2000 a solution was presented in the form of the Republic Act 9003, also known as the Ecological Solid Waste Management Act of 2000, but local governments in the Philippines have struggled to implement its directives - there are still more than 900 open dump sites across the country (Vila, 2018) and many secondary cities do not have waste collection at all. The absence of waste collection services in most secondary cities, towns and many of the country’s smaller islands is largely to blame for the overwhelming amount of marine plastic generated by the Philippines.

The current numbers of recycling facilities are also not sufficient to address the growing amounts of waste. The DENR, through the Environmental Management Bureau (EMB), which also implements a hazardous waste management programme, maintains a list of recycling facilities in the Philippines. The list includes 23 plastic-recycling facilities, 14 paper-recycling facilities; one facility specializing in

10 SWITCH-Asia website: https://www.switch-asia.eu/policy-support-component/psc-philippines/

42 car batteries; one for computer electronics; one for tin cans; two for metals; six for container glass; one for flat grass; one for tetrapak and six for car tires (Mayuga, 2017).

The current plastic recycling industry in the Philippines only has limited capacity and geographical scope. Although there are many plastic recycling industries in the Metro Manila area, the coverage of the plastic recycling industry in the other areas of the country is still limited (JICA, 2008). Since plastic recycling industry does not required large-scale facilities, the expansion of the plastic recycling industry will be necessary to create a circular plastics economy in the Philippines. Furthermore, the plastic recycling industry in the Philippines focuses the production of pre-products (JICA, 2008). There is a significant room to develop and expand demand for final products made from recycled plastics, which should be promoted for the mid to long term.

The informal sector plays an important role in waste management and recycling in many communities. It is important to improve working conditions and improve socio-economic situation of informal sector workers. Furthermore, local government and barangay level activity requires attention through financial support and upgrades of equipment for collection, separation, transport, storage and recycling.

There are also opportunities to get large multinationals involved in the CE to upgrade and improve of current plastic recycling systems. As large consumer-facing companies like Coca Cola, Nestle and Unilever are under pressure from consumers and government policies to reduce their plastic waste footprint, they are beginning to invest in recycling facilities in developing countries.

11 Box 5: CE solutions to marine pollution from fishing nets – Net-Works project The UN Food and Agriculture Organization estimates that 640,000 tonnes of fishing gear are discarded annually. The carpet tile manufacturer Interface has cooperated since 2012 with communities in Danajon Bank in central Philippines, one of only six double barrier reefs in the world, and is right in the middle of the cradle of global marine biodiversity.

The 40 island communities in Danajon Bank are entirely dependent upon the ocean for survival. Overfishing and pollution have led to severe ecological damage to the reef, resulting in far less fish for the community, whose typical family income is only $6.50 per day. Discarded nets exacerbate this problem as they continue to catch and kill fish, damaging the habitat the fish depend on. Prior to Net-Works, local residents had no means of sustainable waste disposal for used nets.

Participating villages have been collecting roughly 200kg of nets per month, and participants are paid in pesos for every 2.5kg they collect. The amount of pesos changes due to exchange fluctuations, but the company has pegged the payment to the value of rice. 1kg of nets earns the peso equivalent of 1/2 kg of rice. The Net-Works project has also set up community banking systems, which allow villagers access to micro-insurance, loan and savings programmes.

4.2 Organic and food waste/biological fraction of MSW and biogas generation

Proper segregation of biodegradable and non- is pre-condition for a CE and making use of the biodegradable fraction of MSW. In the Philippines, biodegradable waste is the largest share of MSW with 52 percent, followed by recyclable waste which accounts for 28 percent

11 http://net-works.com/about-net-works/locations/philippines/

43 and residuals at 18 percent. Biodegradable wastes come mostly from food waste generated in urban areas (Senate Economic Planning Office, 2017). Food waste is a growing share of waste worldwide. Global food loss and food waste is estimated at 1.3 billion tonnes annually across the food supply, equalling one third of global food production which amounts to roughly US$ 680 billion in industrialized countries and US$ 310 billion in developing countries (FAO, 2019).

In the Philippines, post-consumer food waste has become an issue for policy and civil society, especially in new urban centres such as Metro Manila. According to the Food and Nutrition Research Institute of the DOST, each Filipino wastes an average of 3.29 kg of rice per year (WWF, 2019). Reducing food waste is closely linked patterns of consumer behaviour and choice (Bond et al. 2013). Much of the 50 percent of organic waste is food waste generated in the homes, restaurants, hotels and wet markets that are scattered throughout the city. The portion of generated waste could be converted into alternative value chains that would reduce it so that it is both manageable and adds value.

The disposal of large amounts of food waste through land filling or is causing significant environmental pollution and financial costs. An alternative solution is anaerobic digestion, a promising CE technology to turn food waste into biogas, but which has not yet been fully applied due to a technical and social challenges (Xu et al., 2018). The recent advances in organic waste recycling with value addition (e.g. through biogas) have generated opportunities to move toward closing parts of the nutrient loop, however, this is an area that still needs further financial and legislative support to be scaled-up. In addition to absent legal frameworks, the transition from traditional to modern bioenergy production from organic waste is often constrained by, for instance, shortages of technical skill and market constraints, lack of transportation and infrastructural facilities to handle organic waste.

Other CE options of dealing with organic MSW from households, hotels, restaurants and wet markets can be used to produce the larvae of the black soldier ( illucens). represent good candidates as aquafeed ingredients since they can be cultured through environmental-friendly, cost-effective farming processes, on by-products/wastes. The waste is converted into a quality protein source that provides a valuable alternative to conventional feed concentrates often used in intensive production systems, and many studies have recently been published about their inclusion in fish feed (e.g. Zarantoniello et al. 2019). The black soldier fly is an effective CE approach to addressing organic waste challenges whilst generating a range of lucrative income generating streams in the Philippines. Furthermore, the use of microbes and indigenous microorganism, as well as other microbiological solutions, can be used to address biodegradable wastes and produce high quality and organic fertiliser (Guazon and Holmer, 2003).

The Land Bank of the Philippines initiated a methane recovery from livestock wastewater treatment and municipal solid waste management projects under their Carbon Finance Support Facility (CFSF). This initiative is also supportive of clean development mechanism with the World Bank as their designated carbon buyer. The CE concept applied to agriculture is concerned with returning nutrients to the agricultural system. Not all biological nutrients that reach their place of consumption are actually used. Some end up as household or industrial food waste; others are consumed but not absorbed by the human body and discharged in human excreta. Processes like composting and anaerobic digestion can recover these nutrients for return to the agricultural system and, in the case of anaerobic digestion, produce energy.

44 Overall, the appropriateness and applicability of large-scale anaerobic digestion systems for the Philippines still requires further review and better data, to reduce implementation risks and improve economic viability associated with large-scale anaerobic digestion projects. Thus, it is recommended that an in-depth study to ascertain the suitable feedstock requirements, biogas generation rates, and digestate storage be undertaken prior to its inclusion in the SCP Action Plan.

4.3 Circular economy (CE) in agriculture and food systems – agroecology, food processing MSMEs, agricultural residues for energy and precision agriculture

Significant potential exists for circular economy approaches to be applied to improve the sustainability and security of food supply. The circular economy concept can be applied at multiple levels in agro-industrial systems to reduce food losses and reduce environmental impacts through precision agriculture (Tseng et al. 2019) as well as small-scale farming, and is therefore relevant for ensuring food security and nutrition goals of the Philippines.

4.3.1 Agroecology and regenerative farming practices

The agricultural sector contributed to 8.1% of the country's real GDP in 2018. There are several options for applying CE approaches to the Philippines’ agriculture sector. Agroecology offers additional opportunities to combine CE concepts with the agriculture sector of the Philippines. Agroecology can be defined as ‘the application of ecological concepts and principles to the design and management of sustainable agro-ecosystems’. With an agro-ecological approach, ‘the agro- ecosystem is regarded as one and its health as a whole is valued more than the productivity of single crops’. Other regenerative farming practices include no tillage, cover crop integration, and valorising agricultural waste, have been shown to build soil fertility and improve the functioning of water cycles (Williams et al., 2018).

Such regenerative agriculture systems often recycle farm wastes as nutrient sources, leaving most of the crop residues on or close to the soil surface rather than removing or burning them. The permanent crop and weed residue mulch protects the soil, mineralisation is reduced, and soil organic matter is built up and maintained. Agro-ecology uses ecological concepts and principles to design and manage sustainable agro-ecosystems, offering benefits for productivity; food security; environmental sustainability; and important ecosystem services, such as climate-change mitigation.

To some extent, small-scale and family farmers have been practicing agro-ecology without them knowing about the science behind it. But now, with the increased interest in and attention given to agro-ecology, people have become more aware of it.

CE practices in agriculture are in line with the National Organic Agriculture Program (NOAP) of the Philippines. It envisions the organic-agriculture sector contributing to the overall agricultural growth and development of the country in terms of sustainability, competitiveness and food security, where at least 5 percent of Philippine farms will be converted into organic ones by 2016 (Villar, 2014).

Agricultural policies that incentivize recycling of biomass within the agro-ecosystem are in line with the CE concept. The experience leading to the enactment of Republic Act 1006812 offers a concrete example of the political and substantive factors involved in advocacy for agroecology. The law provides for the promotion, propagation and further development of the practice of organic farming in the Philippines. It establishes a comprehensive National Organized Agricultural Program (NOAP) which will

12 Republic Act 10068 or ‘An Act Providing for the Development and Promotion of Organic Agriculture in the Philippines and for Other Purposes’

45 promote, commercialize, and cultivate organic farming methods through farmers’ and consumers’ education.

4.3.2 Energy from sugarcane residues and other bioenergy options

About 24% of the Philippines’ available land area being used for agricultural activities and over 90% of which is allocated for growing various crops, one of the main crops being sugarcane. There are options to apply CE practices to the agricultural waste generated from sugarcane, the top produced agricultural crop in the Philippines. According to the Philippine Statistics Authority database (PSA, 2018), taking into account data for the last five years (2014-2018), the average volume of production for sugarcane is 24,868,915.34 MT. During its harvesting, sugarcane leaves behind residues composed of sugarcane leaves and straws. These residues can be utilized for production of biofuels. It is estimated that harvesting of sugarcane produces large quantities (2.3 ± 0.7 Mt) of leaves and straws annually in the Visayas Region alone. Utilizing this residue for energy generation is possible either as solid biofuel (40.2 ± 2.4 PJ/year), bioethanol (0.99 ± 0.40Mm3), or bio-methane (250.3 ± 11.3Mm3 to 802.9 ± 36.1Mm3) (Go and Conag, 2018). The utilization of sugarcane leaves/straws alone could displace up to 75% of the coal currently used in electricity generation for the Visayas Region. Other sugarcane growing regions can be expected to have similar potentials.

The sugarcane residues may be utilized for production of biofuels, there are also other potential crops, for example biofuels from seaweed. It is also deemed important to discuss the production of biofuels within the context of the Biofuels Act of 2006 (Republic Act 9367) and its implementation, especially challenges relating to the sustainability of biofuels.

13 Box 6: Agricultural waste products as new resources – Piñatex ®

Piñatex™ is a natural leather alternative made from fibres extracted from pineapple leaves. Piñatex™ utilises waste taken from pineapple plantations in the Philippines, with local factories separating the strands and felting them together into a non-woven fabric that can be used for clothes, footwear or furniture. The founder, Carmen Hijosa, after 15 years of working in the design and manufacturing of leather goods, went to the Philippines to conduct research on pineapple fibres led to the development of the new material, Piñatex™, and the creation of the company Ananas Anam. Produced through an environment-friendly process and inspired by the use of plant fibres in traditional weaving such as the delicate Barong Tagalog garments, Piñatex™ has become a versatile textile that can be used for fashion, accessories and upholstery. The company has established partnerships with factories in the Philippines and Spain. In 2019, the fashion company H&M launched a Conscious Exclusive high-end line that is part of the Conscious Collection, and included footwear products made from Piñatex™, the pineapple leaf waste fabric.

13 Piñatex™ website: https://www.ananas-anam.com/about-us/

46 4.4 Energy and appliances sector - recovery and recycling of Waste Electrical and Electronic Equipment (WEEE), future solar PV waste in rural areas

4.4.1 Electrical equipment, second-hand appliances and Waste Electrical and Electronic Equipment WEEE (e-waste)

The Philippines import statistics reveal that electrical machinery, equipment and related products are the major import category of the country. These commodities recorded more than 25% share in value in 2018, mainly from China, South Korea and Japan (Philippines Trade Data, 2018). E-waste is the world’s fastest growing waste stream, and in most developing countries, no sustainable practices for e-waste handling, dismantling and recycling exist at this point. E-waste is also a growing concern in the Philippines. In the 10-year period from 1995 to 2005, approximately 25 million units of electrical appliances became obsolete (Peralta and Fontanos, 2006). According to the Global E-waste Monitor, in 2016, the Philippines generated 290,000 tonnes of e-waste, or 2.8 kg per inhabitant (Baldé, 2017).

Imports of second hand electronic equipment from countries like Japan, Korea or Hong Kong have contributed to the current e-waste issue. Although the importation of second-hand electric products for reuse requires a permit or importation clearance from DENR and the Philippines require pre- shipment procedures for the trade of used electronics, accepting imports for reuse purposes, however, the imports of second-hand electronic goods is in practice were insufficiently regulated under legislation (Kojima and Rebullida, 2008). The amounts of regulated imports are quite limited and it can be assumed that most imported second-hand electric products is either for reuse or is not regulated by the government. Proper collection system and treatment methods are needed for e- waste to increase formal waste collection rates. The Philippines already has a small, formalised e- waste recycling industry. However, it is fraught with challenges along the value chain. A significant part of the collection and dismantling effort still occurs in informal channels.

4.4.2 Recovery and recycling of energy storage batteries of off-grid PV programmes

The Expanded Rural Electrification Program (ER Program) of the Department of Energy (DOE)14 envisaged to achieve 100% barangays electrification by 2008 and 90% household electrification by 2017. One of the main thrusts of the ER Program is to support previously electrified barangays particularly those of solar projects were found to be short lived due to absence of a strong sustainable mechanism. Many solar PV microgrids use batteries as storage technology. Energy storage systems are an emerging future technology with disruptive potentials. Especially renewable energy technologies like solar PV require storage technologies to store energy before releasing it to supply energy or power services. The advances in storage technologies are important to optimize energy systems and allow the integration of renewable energy systems. Lithium ion batteries are one of the important storage technologies which are becoming mature and reaching economies of scale. It is crucial to consider the end-of-life stage of these batteries, and create circular systems to ensure appropriate take-back schemes and recycling facilities are in place to prevent environmental and health impacts. As the Philippines are implementing several rural electrification programmes to bring electricity to remote rural population, take-back schemes for the battery storage systems need to be put in place at the same time as roll-out of minigrid systems.

14 https://www.doe.gov.ph/expanded-rural-electrification

47 4.5 Buildings, infrastructure and construction - reuse and recycling of construction and demolition waste, circular building solutions low-cost housing and improving informal settlements

The construction sector should become a priority sector for the CE in the Philippines as many resources are accumulating in the country’s growing building stock. The Philippine construction industry registered a growth of 15.1% in real terms in 2018, the governments total spending on infrastructure grew by 49.7% in the first eleven months of 2018 (GII Research 2019). A large share of mineral resources are currently going into infrastructure where they are important stocks which can be “mined” in the future. The growth in mining of non-metallic minerals is directly related to growth in infrastructure and construction. Philippines construction industry is very active and establishing infrastructure will increase demand for materials but in the short to medium term. With consideration of CE principles, infrastructure can enhance connectivity and mobility, provide employment, and boost economic growth. Improved infrastructure is also necessary for improved waste management and recovery of materials.

There are significant untapped opportunities to scale-up reuse and recycling of construction and demolition waste (CDW), not only to reduce environmental impacts, but also to address resource shortages. In the Metro Manila area aggregate sources are almost depleted, aggregates for construction have to be brought from far away quarries. Other provinces of the Philippines, which do not produce crushed stone also have a need for aggregates that could be replaced by recycled concrete (Ganiron, 2015). Consequently, reclaiming aggregates from concrete debris would lead to environmental and economic benefits. An example is concrete, a durable building material that is also recoverable. Recovered concrete from CDW can be crushed and used as aggregate for mortar, gravel or road building material. It can also be recycled and reused in producing new concrete, thereby reducing the need for virgin material use in the built urban environment.

Box 7: Modular buildings and 3D printed homes for informal settlements

Modular and pre-fabricated building solutions is not a new concept in the Philippines, but wider application of the idea as the construction sector grows could meet building demand in both the commercial and the residential sectors, especially for informal settlements and climate-resilient housing. An example is the home grown start-up CUBO15 which is looking to address this issue with modular homes made from bamboo. These modular houses are inspired from the Philippines’ native bahay kubo, a hut-like structure typically found in rural areas and small towns. The houses lend themselves to rapid construction, taking only a week to manufacture off-site and just four hours to assemble on-site (Caballar, 2019).

Furthermore, new 3D printing solutions for affordable homes to upgrade sub-standard housing and provide safe shelter are becoming available. 3D printing for construction can provide low cost solutions, reduce resources and service more people in need of housing. The costs for some 3D printed buildings can be as low as US$4,000 (O'Brien, 2018). In this context the CE can help address SDG 11: Make cities and human settlements inclusive, safe, resilient and sustainable

15 Cubo website: https://www.cubo.ph/

48 4.6 Circular smart cities and urban mobility - car sharing, bike sharing, walkable cities concepts

The emerging concept of circular cities is closely related to existing smart city concepts and sharing economy. Liveability and human space are the key elements in building "smart cities". The serious congestion and overcrowded public transport in the cities of the Philippines, especially Metro Manila area, and the increasing demand for urban mobility, call for innovative mass transit solutions. For services delivered to meet societal needs as people flock to the Philippines metropolis areas, CE concepts can be applied not just for the company level, but also to provide mobility services and living spaces where they value proximity, convenience, clean urban environment and a workplace conducive to productivity and cost-efficient space.

Transformations toward forms of collaborative consumption in cities become more complex and locally embedded. Ridesharing facilitated through digital devices is a common practice in settings of densely populated cities marked by chronic gridlock problems, especially Metro Manila. Often the main motivation of ridesharing is the utilization of informal transport as gap-fillers, sustainability concerns are secondary considerations of users.

The Philippines has been the first country to create a national dedicated framework for ridesharing with digital services such as Uber and Grab. The Philippine government has already established a new legal category for ridesharing. In 2015, the government announced the Memorandum Circular No.2015 (11e15) as a legal umbrella for the operation of app-based ridesharing. This regulation categorized an app-based ridesharing firm like Uber or Grab as a Transport Network Company (TNC) rather than a transport provider company. In the longer term the legal enforcement remains a challenge. The government is attempting to discipline the ridesharing companies and drivers by suspending their operation and by imposing financial sanctions (Yuana et al., 2019).

Quezon City was highlighted as a case study in the C40 circular cities report. Quezon’s city-wide regulation on plastic bags has raised at least PHP285 million (€4.8 million) in fees for plastic bag use for Green Funds held by the retailers that must be put towards community environmental initiatives in the city (C40, 2018).

A multimodal, on-demand mobility system, embracing vehicle-sharing trends and leveraging digital innovation, could provide efficient and effective transportation with high vehicle usage and occupancy rates to reduce structural waste of parked vehicles taking up space in already dense urban settings. Mass transit as the backbone combined with other forms of transport – including vehicle as a service – for convenient last-mile connectivity can create convenient door-to-door journeys. Technological innovation can help plan these journeys and make travelling safer and faster.

4.6.1 Automotive repair, remanufacturing and jeepney modernisation

Scaling up the remanufacturing of vehicle components, and using recycled materials to produce new vehicles has the potential to close material loops and reduce upstream demand for raw materials and energy. Remanufacturing vehicle parts could be particularly promising in combination with leasing or vehicle-as-a-service models as they prolong the use of assets (Ellen MacArthur Foundation, 2018). A more integrated approach to the design of vehicles and vehicle-sharing systems could enable a systemic shift in the mobility sector. For example, sharing systems could add flexibility into a designed-for-purpose system.

These approaches can be linked to the current and future Philippines’ Transportation Department's Public Utility Vehicle Modernization Program launched in 2017. Under the programme, the

49 estimated 180,000 jeepneys must be brought into compliance with new design standards within three years. The aim is to phase out old and inefficient ones, and remanufacture and upgrade existing ones to reduce emissions and improve urban air quality. The new standards include a low carbon-emitting engine or an engine running on alternative fuel, such as electricity and solar power. The programme also supports the introduction of new electric jeepney models, such as those produced by Francisco Motor Corp., one of the pioneers of the industry in the Philippines, which can run 100 kilometers in a single charge with fast-charging lithium ion batteries (Kalunsod, 2018). The programme also requires re-designing vehicles to fit new urban realities and transport patterns.

4.7 Circularity in the textile industry of the Philippines

Like other textile industries across the world, the Philippine textile industry is in need of new approaches in which its economic, environmental, and social footprints are managed sustainable. Circular fashion concepts and circular economy approaches for textile production are promising emerging solutions to address issues of waste and pollution in this sector. For the Philippine textile industry, the adoption of a circular economy framework based on LCA would require new competencies to go about it. These competencies are aligned to concepts advocated in industrial ecology for CE wherein life cycle thinking, systems thinking, and strategies for sustainable production and consumption practices are at the core (Balanay and Halog, 2019). There are also new opportunities to focus on the garments and woven textile industries which emphasize sustainability approaches, indigenous renewable materials & community/ women empowerment in the supply chain.16

4.8 Circular Economy (CE) in Philippine manufacturing sector and circular supply chain management

Many multinational companies, by their own account, are integrating sustainable procurement in their operations, as part of greening their supply chains. It refers to the integration of a company’s environmental policies and goals into its supply chain, and by involving its suppliers and business partners in efforts to modify products and processes that create waste and cause pollution. It entails “a variety of approaches through which companies work with their suppliers to improve the environmental performance of the products or manufacturing processes of the supplier, customer or both”.

Through green supply chain programs, companies ensure that their suppliers meet their own environmental standards, are able to operate more efficiently, are in compliance with environmental laws and, in some cases, are even able to pass on their cost savings to their employees. Many MSME suppliers in the Philippines are benefitting from such initiatives of large company clients, who regard them as genuine business partners with shared stakes in the satisfaction of customers and the public image, and impact of their final products and services. Some of these companies provide their business partners with guidance and technical assistance for the adoption of environmental management systems as a strategy for strengthening their own operations through improved efficiency, cost savings (e.g., from energy efficiency, water efficiency and waste reduction; and environmental compliance). At the same time, this generates more secure employment for the employees of suppliers and retailers.

The Global Reporting Initiative (GRI) recorded that, in 2017, some 7% of publicly-listed companies or 23 of the 263 listed companies in the Philippines, which comprise at least 35% of the market

16 For an example, see GREATWomenGlobal.com

50 capitalization in the Philippine Stock Exchange, have issued sustainability reports.17 Corporate sustainability reporting in the Philippines is voluntary. However, in July 2018, the Securities and Exchange Commission (SEC) prepared draft guidelines for mandatory sustainability reporting for publicly listed companies in fulfilment of Principle 10 of the Code of Corporate Governance which requires that “companies should ensure that the material and reportable non–financial and sustainability issues are disclosed. Recommendation 10.1 further asserts that “the Board should have a clear and focused policy on the disclosure of non-financial information, with emphasis on the management of economic, environmental, social and governance (EESG) issues of its business, which underpin sustainability. Companies should adopt a globally recognized standard/framework in reporting sustainability and non-financial issues.” 18 In April 2019, the Securities and Exchange Commission (SEC) issued the Sustainability Reporting Guidelines for Publicly-Listed Companies (PLCs) that provides a set of rules to help corporations manage their long-term economic, environmental, moral, and social responsibilities to their stakeholders and society.

4.9 SWOT Analysis for circular economy in the Philippines

Based on sections 3 and 4, this section will provide a detailed SWOT analysis of the circular economy in the Philippines. An initial SWOT is provided in Table 5 below:

Table 5: SWOT Analysis of CE in the Philippines Strengths Weaknesses

 Some initial awareness about CE among national  Currently no comprehensive policy level policymakers and local governments about framework for CE development circular economy  Lack of data to establish economy wide  Existing Green Public Procurement Roadmap which material circularity rate can include CE criteria  Lack of capacity and resources on local  Government policies and programs that encourage level to implement CE solutions to plastic CE (e.g,. Agricultural policies that incentivize waste recycling of biomass; Public Utility Vehicle  Policies that run counter to CE (e.g. coal Modernization Program) based energy generation)  Innovative businesses are aware of CE and see it as  MSMEs require green finance support to opportunity for new business models and upgrade facilities, technologies and sustainable value chains implement circular practices, but often lack  Strong civil society familiar with zero waste concepts ability to access loans and green finance and approaches Majority of Filipino households do not  Although unconnected, there are many small-scale practice 3Rs nor have they adopt CE initiatives already taking place, e.g., in the sustainable lifestyles and consumption context of social enterprises practices  Availability of various green financing schemes for SMEs

Opportunities Threats

 Use CE as approach to tackle multiple development  Policymakers prioritise other issues challenges including environmental and economic and do not develop integrative policy SDGs approach to support the circular  Strong political will to address environmental economy pollution and resource degradation can be leveraged  Business leaders do not recognise the to advance CE potentials of the CE for economic

17 GRI Sustainability Summit - Together towards a Sustainable Philippines, 8 October 2018, Conrad Manila, Pasay City, Philippines. Accessed Dec 3,2018. https://www.globalreporting.org/information/events/philippines/Pages/default.aspx 18 Code of Corporate Governance (2016). Principle 1. Recommendation 10.

51  Build on existing experiences of industry and civil development and continue their linear society around zero waste and 3Rs business models  Potentials to develop inclusive CE approaches linked  Without increased capacity for local to poverty reduction initiatives governments and access to finance for  Use sharing economy approaches and models to MSMEs, CE cannot be mainstreamed create circular lifestyles in cities, especially the across the economy Manila Metropolitan area  Linear consumption patterns of urban  Build on international organisations and consumers and their lifestyle habits development cooperation programmes which have become locked-in and hinder circular been funding and implementing various Green economy Growth / SCP – related programmes  Make use of current momentum of multinationals to act on plastic waste and pollution

5 Summary and conclusions

This section provides a summary of main findings and conclusion for CE policy opportunities.

5.1 Defining the degree of circularity of the Philippine economy

To quantify the exact degree of circularity of the Philippines is difficult because of limited data availability, and it is also beyond the scope of this report. What can be said with some degree of confidence is that the Philippines’ economy will be less than 9 percent circular, which is less than the average of the global economy. This is due to the large share of primary materials and minerals used in the construction sector, for infrastructure development and for exports. Furthermore, fast urbanisation leads to accumulation of stock of materials in buildings (which can be re-used and circulated in the future). Finally, the limited municipal waste management capacity and large amounts of waste leaking into the environment is another indicator for low circularity.

Applying the EU’s circularity indicator and monitoring framework to the Philippines could be helpful to establish a baseline. This will help to monitor future developments and inform policy making processes towards increased circularity of the Philippine economy. It can provide a broad picture of the key leverage points to increase the circularity of the Philippines’ economy. The indicator on self-sufficiency in the supply of raw materials shows that the Philippines are largely self-sufficient for most non-metallic minerals such as construction materials and industrial minerals. The Philippines also has shifted from being net resource dependent in the 1980s to being a net resource provider, as shown by the increased export of metal ores. However, the indicator also confirms that the Philippines is not self-sufficient regarding the increased fossil fuels component in Domestic Material Consumption. The Philippines is relying on imports to a large extent, accounting for 21 percent in 2018 (Trading Economics, 2019), which highlights the need for secure access and diversification of supply. A shift to renewable forms of energy is needed to achieve the Philippines’ objective of a sustainable and low-carbon economy.

Public procurement represents a large share of GDP in the Philippines and hence sustainable public procurement (SPP) can be a driver for the CE and for innovation. The Philippines’ government is increasing its total public spending on infrastructure - it grew by about 50% in 2018 (GII Research, 2019). There are opportunities to apply CE principles in infrastructure and construction projects funded through public funds. The existing Philippine Green Public Procurement Roadmap offers opportunities to promote CE by including criteria for recycled content of products or procure product-service systems for public administrations.

52 The Philippines’ municipal waste generation, according to the NSWMC, increased from 37,427.46 tons per day in 2012 to 40,087.45 tons in 2016. The waste management indicator is a clear example of an area where each municipality and each citizen can make a positive contribution. There are large variations among the different regions in the Philippines are observed, especially between urban and rural areas. Overall, municipal waste generation is still growing. The quantity of waste generated correlates to a certain degree with growth GDP per capita. It can therefore be expected that waste generation continues to increase in the Philippines as living standards and incomes continue to grow alongside the Philippine economy.

Reducing food waste, Target 12.3 (halve per capita food waste), one of the SDG 12 targets for sustainable consumption and production, has a significant potential to save resources used to produce the food. It can also help to address the issue of child under nutrition, a pressing issue in the Philippines. Food waste takes place all along the value chain: during production and distribution, in shops, restaurants, catering facilities, and at home, which makes it particularly hard to quantify. Data on food waste in the Philippines is available from the Philippine Center for Postharvest Development and Mechanization (PhilMech), the Food and Nutrition Research Institute, and the Philippine Statistics Authority (PSA). However, the data is limited in scope and varies. For example, according to PSA data, a Filipino household wastes 1.676 kg of rice annually, translating to a total country loss of 38.507 million kg, valued at P1.617 billion (Business Mirror, 2018). More reliable data are needed to design effective food waste policy measures.

As of 2015, solid waste diversion rate in Metro Manila is 48 percent while outside Metro Manila the rate is 46 percent (Senate of the Philippines, 2017). More specific data on the Philippines recycling rates for municipal waste, paper and plastics are not available. The recycling rates for packaging waste and paper have constantly increased in the Philippines over the last decade. For plastic packaging, the average recycling rate in the Philippines is significantly lower than for paper, even though there have been improvements in recent years.

For the recycling of e-waste, according to estimates of the Global E-waste Monitor, in 2016, the Philippines generated 290,000 tonnes of e-waste, or 2.8 kg per inhabitant (Baldé, 2017). The limited data availability show that the level of collection and recycling varies considerably across the country, the data also indicate that there is great potential to improve resource efficiency. Furthermore, there is need to work with the informal sector to improve collection, and environmentally sound recycling and disposal of e-waste.

Regarding construction and demolition waste (CDW), there are no national data available, but given that by weight this is the largest resource consuming sector in the Philippine economy, it is necessary to monitor the construction sector and identify CE opportunities.

In terms of secondary raw materials, as in most other countries, there is far too little exploitation of the opportunities for reusing the secondary raw materials produced in the Philippines. On average, recycled materials only satisfy a small percentage of the Philippines demand for materials. As the mining sector plays an important role in the Philippines, in particular nickel, copper, gold and other metallic mining, there is little focus on secondary raw materials. E-waste recycling generates secondary raw materials, however, the contribution of recycled raw materials to the economy is still negligible.

More research and data is needed to estimate the private investments in a subset of economic sectors relevant to the CE in the Philippines. No data were found on patents in recycling technologies and CE innovations in the Philippines.

53 5.2 Summary of CE potentials and opportunities

This section attempts an outlook of what a circular economy for the Philippines could look like by 2030.

Overall, a target could be set for achieving a certain circular material use rate for the resource use of the Philippine economy for 2030. The circular material use rate has been adopted in the EU and measures the share of material recovered and fed back into the economy - thus saving extraction of primary raw materials - in overall material use.19 A similar macro-level target and indicator could be adopted for the Philippines.

In addition, specific potential targets and indicators for certain key industry sectors could be established (see Table 6)

Table 6: Potential CE targets for selected sectors and issues Sector and/or issue Current CE situation (2019) Potential CE targets and indicators for 2030 Municipal waste 51 % compliance of LGUs Achieve X % compliance (e.g. 90 percent) of management implementing solid waste LGUs implementing national waste policy management act Food waste 3.29 kg of rice wasted per capita Halving per capita food waste at consumer reduction and each year. and retail level (as per SDG target 12.3) utilisation Currently no data on composting % of food waste recycled and used, e.g. as sites and facilities biogas or compost (number of biogas generators and/or composting sites and facilities) CE in public Existing green public procurement e.g. XX number of government agencies with procurement policies focusing on energy green public procurement programs; and efficiency, but not including circular corresponding increase in volume and economy aspects amount of public procurement of certified products and services (e.g. products with recycled contents). CE in agriculture & About 5 percent of farms apply e.g. XX percent of farms are organic and agroecology circular agro-ecology and organic apply circular agro-ecology and organic practices practices, including re-use of agricultural waste products New circular plastic % of plastic waste currently Increase to X % of plastic waste recycled economy recovered and recycled

23 plastic-recycling facilities in X number of new plastic recycling facilities operation New circular paper % of paper waste currently Increase to X % of paper waste recycled economy recovered and recycled

14 paper-recycling facilities in X number of facilities operation CE in tourism % of tourism facilities and locations X % of tourism facilities and locations apply facilities apply CE principles and zero waste CE principles and zero waste Sharing economy Current number of ride sharing X number of ride sharing services and collaborative services consumption % of current overall traffic % of overall traffic Manufacturing Number of Industrial Waste exchange program extended to X % sectors (industrial symbiosis/waste exchange of industrial facilities

19 https://ec.europa.eu/eurostat/web/products-manuals-and-guidelines/-/KS-GQ-18-013

54 symbiosis) programmes;

Number of corporate sustainability Mandatory publication of sustainability reports published reports and environmental information by corporations CE practices in Number of MSMEs with certified Increase of number of MSMEs with certified MSMEs through the EMS (or ISO certified – available EMS or ISO certification. supply chain from DTI database). Waste electronic % of WEEE currently recovered and % of e-waste recovered and recycled equipment (e- recycled according to environmental according to environmental standards waste) standards

Number of e-waste recycling X number of new e-waste recycling facilities facilities

6 Recommendations for integration of CE into SCP Action Plan and PDP)

This section provides a list of specific recommendations on how the CE can be included in the SCP Action Plan of the Philippines. It also provides other policy recommendations what can be used to stimulate the development of a circular economy that contributes to the PDP. The recommendations are clustered according to short-term (immediate) actions, medium (5 years, 2020-2025) and long- term (10 years from now, period 2025-2030).

6.1 Recommendations for immediate action

 Updating and implementing the Ecological Solid Waste Management Act of 2000 (RA 9003). Enhancing the scope and scale of waste management and increasing the recycling rate will require a range of policies, including the RA 9003. Policies to create a more CE of municipal waste are needed to overcome technical as well as financial constraints. In this regard, policy support by national government for LGUs is required for all levels of recycling activities at regional and local level. This will direct support implementation of SDG targets 12.3, 12.4 and 12.5.  Support Barangays, LGUs and local material recovery facilities (MRF). To solve mismanagement of waste on local levels and increase the resource recovery rates will require support from central government to tackle plastic waste leaking into the marine environment, this is a primary concern that requires CE approaches to be solved. Local governments units (LGUs) need to be provided with more technical and financing assistance to transition into circular towns and cities. Demonstration through government-supported pilots can show how this can deliver opportunities for resource savings, while addressing environmental problems of waste and improving quality of living. Financial resources for LGUs to tackle plastic pollution can be generated through the implementation of EPR policies (see below).  Design and apply Extended Producer Responsibility (EPR) policies and the Polluter Pays Principle to tackle issues of single use plastic packaging and plastic waste. EPR can involve the consumer goods industry and packaging producers, including global brands and multinational organisations, to co-finance and organise packaging waste management, encourage recycling and better packaging design to reduce waste. The EPR policy can also be applied to other products, including e-waste. This will direct support implementation of SDG targets 12.3, 12.4 and 12.5.

55  Inclusion and support policies for informal waste sector. The informal sector plays an important role in the Philippines waste collection, separation and recycling sectors. The participation of the informal sector and community “zero waste” initiatives are essential to promote and support a ‘circular’ approach to waste, but there is need to address the social and health issues, and find ways to turn this into a development opportunity for communities. Policies that support the formalization and improving working conditions of informal sector workers are required to improve the efficiency, create decent work and reduce poverty. This will contribute to SDG target 12.5 and other social objectives on reducing inequality (SDG10), decent work (SDG 8) and improved health and wellbeing (SDG 5).  Revise and update existing Green Public Procurement Roadmap and guidelines to include CE criteria (e.g., recycled content requirements) for sustainable public procurement (SPP) of goods and services used by public sector institutions. This will support implementation of SDG target 12.1 and 12.7.  Promote sustainable lifestyles and diets of urban population through ongoing public education initiatives. Especially the large Manila metropolitan area needs to become more circular and consumer behaviour plays a decisive factor. Public education for sustainable diets and food consumption will be crucial to reduce food waste. Especially the sharing economy concept as part of the CE offers many opportunities to make urban lifestyles more circular. This will support implementation of SDG targets 12.1, 12.3 and 12.8.  Use of nudge approaches to encourage government and business to become more circular. These “soft” nudging policy approaches can include recognizing best practices and business awards, e.g., of circular LGUs or barangays awards, and circular economy business awards for sustainability reporting practices. This will support implementation of SDG targets 12.1, 12.6 and 12.7.  Upgrading of the current public transport system and promote vehicle electrification. The current public transport system heavily relies on jeepneys with inefficient and polluting diesel engines. Building on Philippines’ Transportation Department's Public Utility Vehicle Modernization Program launched in 2017, CE and remanufacturing in the automotive sector can be further promoted, including for heavy machinery and other transport equipment. This will support the implementation of SDG 12.4 and 12.C.

6.2 Medium term recommendations (2020-2025)

 Development of an operational CE framework for the Philippines (e.g., based on the OECD framework and definitions), with CE metrics and indicators, (e.g., based on the EU’s ‘CE monitoring framework’ and the ‘circular material use rate’), needs to be the first step. National and local authorities can then adopt the framework to design circular industrial policy beyond municipal waste management, and provide incentives that encourage the adoption of CE practices in industry operations. Such a systematic framework will also support addressing waste as an industrial and innovation strategy. This will support implementation of SDG targets 12.2, 12.4 and 12.5.  Development of specific CE indicators, benchmarking and assessment for the Philippine context should be undertaken with consideration of institutional nuances. CE indicators would essentially build on monitoring the implementation of strategies and the framework through statistical indicators. Currently many of the statistical data necessary to monitor performance have not been established yet, or are not yet being regularly monitored by appropriate agencies. The Philippine Statistical Development Program (PSDP) 2018-2023

56 contains relevant information and statistical data for various sectors of the economy. In this regard, the content of the indicators should be consistent with the inputs and recommendations of line agencies in the PSDP. This will support reporting and monitoring of progress towards multiple SDG 12 targets.  Update of Toxic Substances and Hazardous and Nuclear Wastes Control Act of 1990. The current act regulates materials with hazardous components, but there is no explicit provision for e-waste. It is recommended to make specific provisions and take measures to enable a CE for e-waste, including the trade aspects of second hand electronic equipment. This will support implementation of SDG target 12.4 and 12.5  Include CE criteria into mandatory sustainability reporting guidelines. Corporate sustainability reporting in the Philippines is voluntary. Building on the developments of the Securities and Exchange Commission (SEC) preparing draft guidelines for mandatory sustainability reporting, specific CE criteria such as waste reduction, use of recycled content materials and resource efficiency should be included in corporate sustainability reporting. This will support implementation of SDG target 12.5 and 12.6.  Undertake feasibility study and development joint-programmes and financial mechanisms for large-scale anaerobic digestion systems. It is recommended to undertake an in-depth study to ascertain the suitable feedstock requirements, potential biogas generation rates, and digestate storage be undertaken prior to its inclusion in the SCP Action Plan. Following the study, policymakers with remits for waste management, sustainable energy and climate change should develop joint-programmes for large-scale anaerobic digestion systems to deal with organic fraction of MSW and food waste from large urban centers such as Metro Manila to decrease waste and greenhouse gas emissions while creating jobs and green energy. This will support implementation of SDG targets 12.3 and 12.5.  Create blended finance mechanisms and provide CE credit lines for SMEs. Government and private investors should develop cooperative and blended finance mechanisms to support and de-risk early investment in CE value chains. The Central Bank of the Philippines together with commercial banks need to provide the necessary capital and credit lines for entrepreneurs and start-ups to scale up existing CE business models, develop and commercialise new innovations.

6.3 Long-term recommendations (2025-2030)

 Applying circular economy approaches in National Informal Settlement Upgrading Strategy (NISUS). CE approaches and innovative building solutions such as modular building design and 3D printing which save resources should be supported by the NISUS to provide low-cost and resilient housing solutions. For policymakers with remits in construction, social housing and climate-resilient settlements, the CE offers opportunities for low-cost construction to upgrade informal settlements. Data regarding construction and demolition waste need to be generated to identify CE opportunities in the construction sector. This will support implementation of SDG 11 and SDG target 12.  Make use of the numerous opportunities to include CE practices in the Philippine agriculture and food processing sectors. Agriculture policymakers should support the mainstreaming and scaling-up of regenerative agroecology, promote CE practices in food processing SMEs, apply precision agriculture to reduce pesticide usage and food losses, support anaerobic digestion and briquette programmes, and explore further how to overcome the barriers of composting and biochar.

57  Promote use of digital technologies to facilitate efficient use of transport assets and sustainable consumption. Digital technologies are enablers for the sharing economy and smart cities. Mobility sharing systems enabled by digital technologies can facilitate more efficient use of transport assets. Digital technologies, aside from facilitating more efficient use of mobility, can also be tapped to reduce net resource consumption. Internet of Things (IoT) and Big Data analysis, when properly utilized, yield changes in producer and consumer behaviour and mobility patterns. Information derived from these technologies can be used to support evidence-based policies that specifically target value retention processes aimed at reducing net consumption and production with minimal resources.  Initiate new industrial symbiosis programmes as national industrial innovation policy. Philippine policymakers with remits for business, innovation and economic growth should develop national and regional programmes for scaling up industrial symbiosis approaches, building on the experiences on the previous industrial waste exchange programme. Special attention should be given the MSMEs and local job creation opportunities.  Develop long-term strategies for the country’s mining sector to enable a just and smooth transition to help the sector adjust to a CE system both on national and international level. This will be necessary to avoid negative impacts on jobs in the sector. New technology trends for valorisation of mining should be explored to reduce environmental risks of tailings dams.

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