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The economy of the future is circular

The Business Times by DALSON CHUNG

BY 2050, there will be almost 10 billion humans on earth - and going on current consumption patterns, we will need three whole Planet Earths to supply our resources. Since the industrial revolution, manufacturing and consumption of goods has occurred mostly on a linear continuum; a "take-make-dispose" model where companies obtain natural resources and manufacture goods that are sold to consumers and later discarded.

However, in a circular economy, the industrial system is deliberately designed to be regenerative. Rather than goods reaching an end-of-life, they are restored or upgraded and waste is eliminated through consciously engineering products and materials to make them suitable for reuse.

A GLOBAL CHALLENGE

Climate change, resource scarcity and waste disposal issues are problems faced by all countries. For example, the United States faces the need to quickly upscale recycling facilities. Previously, the US shipped much of its recyclables to China. However, China has now banned the import of 24 types of recyclables (with a further 32 types to be banned by the end of 2019), labelling them as waste.

Closer to home, Asean also faces challenges. Worldwide, the middle class population is ballooning, from around 1.8 billion in 2010 to an estimated 4.8 billion by 2030, according to the McKinsey Global Institute. Around 88 per cent of the next billion entrants into the middle class will be from Asia, with implications for Asean's resource use and waste production.

Singapore has its own challenges, being a small island with limited land and essentially no natural resources. A growing population and economy means that without technological advancements, we face excessive waste issues.

IMPORTANCE OF THE CIRCULAR ECONOMY

The concept of a circular economy has been evolving for decades. However, its importance was elevated at the World Economic Forum in 2012, where it was reported that the business opportunities to the manufacturing industry in the European Union (EU) using a circular model was worth US$630 billion per annum.

Most recently, in 2018, the World Business Council on Sustainable Development (WBCSD) described the circular economy as a US$4.5 trillion global business opportunity. Accordingly, the WBCSD launched its project Factor 10, with 30 leading companies - collectively worth US$1.3 trillion - pledging to work together towards a circular economy.

More than just being financially beneficial, the circular economy is vital for our survival. Increased middle class consumption will accelerate the impact on the environment, and resource scarcity and price volatility would be inevitable. For example, scientists in the United Kingdom predict that we will be unable to source high quality stocks of gold, silver, indium, tungsten and other precious metals within the next five to 50 years.

Disturbingly, the World Circularity Gap Report of 2018 says that only 9 per cent of materials are reused in today's economy. However, it also pointed out that a circular economy could save an estimated 28 per cent of resources and 72 per cent of greenhouse gases worldwide, while still allowing economic growth.

CIRCULARITY IN ACTION

Globally, the circular economy is gaining traction. In 2008, China became the first country in the world to adopt a law for the implementation of the circular economy.

Japan has also made headway, with frameworks in place such as the Law for the Promotion of Efficient Utilisation of Resources, passed in 2000. This law treats materials as circular goods for their entire lifespan.

The EU is perhaps leading the world. In January 2018, it adopted the Strategy for Plastics in the Circular Economy to transform the way that plastics are designed, produced, used and recycled across the Union. By 2030, all plastic packaging should be recyclable in the EU.

Singapore too, has commenced its circular journey, with research and development being a key focus. In December 2017, the Singapore government announced a S$45 million funding support for the Closing the Waste Loop' research initiative, boosting our capabilities to extract resources from waste streams including plastics, food, electrical and incineration ash.

Numerous initiatives promote waste segregation, a key component of a circular economy that is needed to keep technical and biological materials separate. An example is the e-waste management system. By 2021, consumers will be provided with convenient means to recycle their e-waste, with producers ensuring that it reaches recycling facilities.

A CIRCULAR FUTURE

Commentators agree that the world economy needs to accelerate towards circularity. At the World Economic Forum (WEF) early this year, it was noted that unlike big businesses, small and medium-sized enterprises (SMEs) might lack the resources to adopt the circular approach. Hence, the Platform for Accelerating the Circular Economy was launched by the WEF, with practical and financial assistance available to SMEs.

Here in Singapore, companies partner public agencies to develop and commercialise circular economy solutions, such as the managing of e-waste and food waste sustainably. In the journey towards a circular economy, Singapore is well positioned to lead Asean into the future. In addition to promoting technical capabilities, the National Environment Agency (NEA) encourages communities to adopt more sustainable 3R (reduce, reuse and recycle) practices, such as avoiding the excessive use of disposables and adopting a "repair" culture to extend the lifespan of products.

The business-as-usual model will not sustain our planet. Accelerating the circular economy requires collaboration between suppliers, consumers and governments to help businesses develop products and services that improve our world.

Embracing this spirit of collaboration, the biennial CleanEnviro Summit Singapore (CESS), organised by NEA, attracts innovative businesses and governments from all over the world, eager to share their best practice innovations. The fourth CESS - with the theme Transforming Tomorrow's Cities with Clean Environment Solutions - is being held from July 8 to 12, in conjunction with the World Cities Summit and Singapore International Water Week.

  • The writer is director, Industry Development and Promotion Office, at the National Environment Agency, and managing director of CleanEnviro Summit Singapore