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Deloitte: Circular economy can reduce by almost one third the global resource and material consumption

7 March 2023
General Interest

Circular economy can reduce by almost one third the current global volume of resource and material consumption by extending the products’ lifespan and making sure they enter full life cycles, via recycling and re-entering into production, without affecting the supply and quality of goods and essential services (nutrition, mobility, housing, infrastructure or consumer goods), the quality of life or the social and economic progress, shows “The Circularity Gap” study, conducted by the international agency Circle Economy in collaboration with Deloitte.

The global material consumption has tripled over the last 50 years, the consumption per capita went almost twice over the security threshold, and over the last six years the global economy has extracted and used more than in the entire 20th century, thus creating major natural imbalances and unsustainable prospects for multiple regions, species and industries, the study also indicates.

However, the pace of the transition toward circular economy stays under-sized compared to the yearly volume of resource exploitation, including vulnerable or virgin ones. The global economy is currently only 7.2% circular, dropping since 2018, when the first edition of the study had assessed it at 9.1%. That is a percentage, not net-value decrease, showing that we extract and consume more, yet less responsibly, while the industries’ greening policies fail to keep up.

“The circular economy stands for more than recycling and greening, and its principles – use less, use longer, make clean, use again – provide answers to at least two of the great challenges the industries and economies are currently facing: resource accessibility and lowering the carbon footprint. A circularity of only 7.2% at present in the global economy and its constant decline in recent years show that industries stay ambitious and competitive, despite recent years’ difficulties, but they are not efficient in resource and material exploitation. The study suggests several solutions for lowering consumption, guided by three main principles: reducing, regenerating and redistributing, that apply to all industries and resource categories, based on the idea that every unused piece of waste is a missed opportunity for sustainability,” said Sorin Elisei, Director, Deloitte Romania, Leader of Sustainability and Energy Practices.

From an environmental perspective, the study points out alarming conclusions: over the last 30 years, over 420 million hectares were globally lost to deforestation, while close to half of the planet’s soil is seriously damaged, oceans acidity is at over 30% above permissible norms, 85% of global fish stocks are in collapse, and wildlife populations have plunged by 70%. Moreover, 70% of the global carbon emissions are coming from the extraction and processing of natural resources in classical processes of linear economy (take, make, waste).

The study also shows that giving up on fossil fuels and diminishing the demand for high volume minerals, such as sand and gravel, could immediately impact this state of things, and that industries with a high footprint on air, soil and water quality, such as food (producing almost one third of greenhouse gas emissions and the main cause for biodiversity losses), processing and manufacturing (the main source for chemical pollution and slowly degradable waste), construction (55% of the electricity consumption, responsible for one quarter of the degraded soils globally) and transport (almost half of carbon emissions, with prospects for overpassing 60% by 2050), need to be tackled with priority.

“Romania is making its first steps in the transition from a linear to a circular economy, a complex and long-running process. In 2021, the local economy was only 1.4% circular, compared to an EU average of 11.7%. The National Strategy on Circular Economy, adopted in September 2022, which is to be completed by an Action Plan due by the third quarter of this year, gives an important and opportune signal. It has identified the first seven economic sectors in terms of circularity potential for Romania – agriculture and forestry, automotive, construction, food and beverages, packaging, textiles, electric and electronic equipment – that will be targeted, just as the study recommends, by concrete and priority actions within the Action Plan. All these areas will basically bring up important business opportunities for companies, which will have access to new incentives and funding opportunities, both public and private,” added Adrian Teampau, Tax Director, Deloitte Romania.

The study also underlines the inequity of the economic benefits from the global resource exploitation. Over the last 50 years, the world population has doubled, but the resource consumption has increased more than three times, while the benefits clearly favored the strong North American and European economies. In 2015, only eight big economies (France, Germany, Italy, Japan, the UK, the US, Canada and the Russian Federation) were responsible for over 85% of the global greenhouse gas emissions. The numbers are currently increasing rampantly in countries with emerging economies, and for example China alone is believed to have been at the origin of 75% of the material consumption growth in the last 20 years.

The solutions recommended by the study target three categories of countries, depending on the dimensions and the footprint of their economies in the global equation of resource and material consumption. First, the Shift countries, with high income per capita and living standard, which consume the most resources and cause the main natural imbalances; European and North American countries, Australia, the Gulf and the Far East countries enter this category, and they need to reduce overconsumption and to accelerate their efforts for “greening” infrastructures, the study recommends. The next category, the Grow countries, include China, Eastern Europe and the Caucasus, Central Asia and Latin America, that are industrializing fast and whose middle class is growing; they have consumed significantly more in recent years and, according to the report, they need to focus on stabilizing the resource consumption. The last category, the Build countries, refers to countries and territories from Africa, South and South-East Asia, that, although are home to the biggest part of world population, consume less than 10% of what the Shift countries use and present major social and economic gaps. They need to take benefit from the consumption quotas that the other categories give up on, to develop infrastructure and to lead their living standard towards the Western level. The international cooperation and the public-private partnership are essential in putting together those objectives, in planning and implementing them, the study also underscores.

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