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Circular Economy Creates Potential for Economic Growth and Decreased Emissions

Caitlin McHose
Jan 29, 2020

Circular Economy Potential

This blog was coauthored by Kaboo Leung, Elijah Innes-Wimsatt, and Preeti Srivastav.

The circular economy is gaining traction in North America, as businesses and governments are keen to understand its potential in their regions. Guidehouse, a Guidehouse company, worked with the US Chamber of Commerce to develop its report, Creating a Circular Economy in the Great Lakes Region. According to the report, circular economy measures create potential to decrease emissions and save money. In the Great Lakes region alone, the steel, plastic, and pulp and paper industries could reduce emissions by 120 million metric tons of CO2 and unlock $5 billion in savings by 2050. The question is, how can the region realize these benefits?

The Need for Circular Economy Measures

Raw material extraction and population growth trends show why the circular economy is gaining momentum globally and in North America. Companies extract more than 60 billion tons of raw materials per year (or 22 kg per person per day) globally to support economic activities. More than half of global greenhouse gas emissions come from material extraction and production; its contribution to climate change cannot be overstated. The world’s population is expected to reach 11 billion by 2100, but the climate science shows that global emissions need to reduce dramatically to prevent the worst effects of climate change. The key to a circular economy is to decouple economic growth from resource use.

How to Drive the Shift to Circularity

Although long-standing initiatives such as recycling continue to play a key role, we need deeper transformation to unlock the full potential of circularity, particularly in North America. For example, as discussed in the Great Lakes Region report, managing copper contamination in recycled steel could reduce virgin steel production by 13% by 2050, saving 7 million metric tons of CO2 in the Great Lakes region. Companies in the region, such as Kohler, are already producing cast iron products using 30%-35% recycled steel scrap from post-industrial waste. Post-consumer steel waste is also available in the market; unfortunately, the higher risk of contamination with elements such as copper makes it an unreliable raw material source for Kohler. Managing contaminants in post-consumer steel waste is a way to decouple economic growth from use of virgin steel.

As Kohler found, the quality and value of secondary steel on the market is a barrier to manufacturers. Effective policy can jump-start and unlock circular value creation. Great Lakes policymakers and businesses can drive the shift to a more circular economy by applying the four circular economy enablers identified by the World Business Council for Sustainable Development:

  1. Developing incentive mechanisms to improve steel recycling and lower copper contamination
  2. Aligning new circular economy policies with existing waste management policies
  3. Encouraging partnerships and collaboration by supporting sharing business models
  4. Developing traceable actions and targets such as goals to eliminate single-use plastics and incorporating bio-based materials into production

Taking these actions is expected to unlock significant CO2 emission reductions and economic savings for the region and mitigate climate change.

Additional Benefits
The circular economy has significant and important social benefits. A more circular economy leads to job creation through increased recycling, remanufacturing, and repair; a higher standard of living for low and middle income communities; cross-sector and public-private collaboration with new material networks; and gains in many of the United Nations (UN) Sustainable Development Goals (see the figure below).

Contributions from the Circular Economy to UN Sustainable Development Goals

  Circular Economy Applied to UN Sustainable Development Goals

Source: “Creating a Circular Economy in the Great Lakes Region,” US Chamber of Commerce Foundation and Guidehouse

To learn more about how companies in the Great Lakes region are incorporating circularity into their business models and lessons learned, join us in a webinar on Thursday, January 30 at 11:00 a.m. EST. You will hear insights from the US Chamber of Commerce Foundation and the coauthors of the Great Lakes Region report from Guidehouse, Kohler, and the American Forest and Paper Association.