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- Does the report provide concrete policy recommendations?
No. The report presents a methodology to assess circular economy opportunities and identify policy options that could help to realise them. Making final recommendations and decisions on policymaking rests with legislators in each relevant administration.
- Denmark has a long-standing reputation as an advanced country in terms of sustainability and green innovation. How well does the toolkit work for developing countries, or those that have historically enjoyed less ambitious sustainability/environmental policies?
The toolkit is designed to be applicable to a wide variety of regions, but the starting point inevitably limits the applicability of such a policy project. Since Denmark has a strong momentum in resource management and low-carbon innovation, it was possible to set a high ambition level. In a country with less advanced circular economy policies the ambition level might have to be lower, at least initially. Developing countries certainly have the option of leapfrogging to circular economy opportunities without inducing a so-called ‘linear lock-in’. At the same time, these countries might experience low levels of political stability and also a lack of high quality economic data. Chapter 2.4 in the report discusses further these and other considerations about regional differences. The Ellen MacArthur Foundation seeks to further understand specific challenges faced by developing markets when shaping circular economy strategies and implementation pathways, and would welcome entering a dialogue around this topic with interested parties.
- Is the toolkit applicable to any country in the world?
This is the principal aim and the toolkit is designed to be adaptive to different circumstances. However, we find that one of the most critical prerequisites for governments to take action is the presence among businesses of momentum towards the circular economy. A key success factor for a national circular economy strategy is therefore a close exchange with an active business community.
- Are the opportunities identified for Denmark applicable to any region or country?
In principle, the most promising circular economy opportunities should be identified based on each region’s key industries and specific environmental, economic, and societal conditions. The opportunities identified in the Denmark case study can of course be used for inspiration, but they should not be taken as directly applicable to any other region.
- My municipality has been given support for a pilot project to make it a circular economy hotbed. Can I use this toolkit to identify policies at a municipal level?
The toolkit is mainly designed with national policymakers in mind, but we have received initial feedback that regional or municipal governments have found the toolkit to be an inspiration for their circular economy programmes. However, it should be borne in mind that several new challenges arise when working at sub-national level. One of these is a potential lack of availability of economic data with sufficient granularity. Another is the limited reach of regional or municipal policy interventions, and the interfaces they might create between regions. For cities it needs to be considered that they have significantly different production and consumption patterns than a nation as a whole.
- I am surprised to see that profitability is so seldom a large barrier for the circular economy opportunities described. I would have thought that the key challenge for new business models around circular economy is profit margins?
In the Denmark case study, we found that an underlying fundamental profitability was rarely the critical barrier for the success of circular economy opportunities. Key barriers instead include immature technologies, lack of capital, or one or several market failures (such as unaccounted externalities or split incentives), regulatory failures (such as inadequately defined legal frameworks) or social factors (such as consumer custom and habits or lack of necessary capabilities and skills). For example, in the case of increasing the use of bio-based plastic packaging, two key identified barriers in the Denmark pilot are unavailable technology, and the competitiveness of petro-based plastics due to un-priced externalities.
- It says in the report that 25% of the total Danish economy was addressed in the impact assessment. Will the impact modelled in the macro-economic assessment simply become larger if you just increase the scope?
The circular economy is indeed not limited to specific industries or business sectors. Since the impact is calculated individually per sector and then used as input to a macro-economic model, alterations to that input will affect the outcome of the model. However, the model also includes effects that are not necessarily proportional to the amount of impact identified in the individual sectors. The size and nature of the impact will inevitably depend on in which sectors and what part of the value chain circular economy opportunities are identified. Ultimately, it is recommended that users are transparent with how large a share of the economy they have ‘altered’ in the quantification effort in order to put the calculated impact into context. To get a perspective on the economic impact from a broader, more advanced transition scenario, we recommend the report Growth within: a circular economy vision for a competitive Europe.
- It is stated in the report and elsewhere that a circular economy is good for growth, good for jobs, and good for the environment. Is this always true? Are there any known cases where circular economy initiatives have not led to the desired outcomes in one of these areas?
To the best of our knowledge there are no studies concluding a negative impact on any of these areas. For example, some reports have claimed that the employment effect is small, while others say it is very significant. Similarly, the exact nature of a sometimes observed “rebound effect”, where an increased growth induced by a more circular economy leads to increased resource consumption and greenhouse gas emissions, has not yet been fully investigated. While the overall impact in an economy is likely to be positive, it is also to be expected that some sectorial shifts will take place: certain businesses might decline, while others (some of which are completely new) will thrive.
- This and most other studies on circular economy use GDP as a measure of a positive impact on the economy. I thought GDP is a metric that fails to capture the true value created by several circular economy activities (such as reducing the number of cars but increasing the usage of cars through sharing schemes)
GDP is an imperfect measure of value creation in both a linear and a circular economy. One key reason is that GDP is not usually adjusted downwards for externalities. Still, GDP is one of the most widespread and accepted measures of economic progress. It is no surprise that it is used in many recent reports on circular economy. Thus it was reasonable to employ GDP as a metric to compare the Denmark case study to similar studies. The report Growth within: a circular economy vision for a competitive Europe presents a comparison of the benefits of a circular economy when excluding and including externalities (page 11 of Growth Within), and lays out suggested new metrics that aim to capture the three principles of circular economy (also summarised in Figure 10 of Delivering the circular economy). The interested reader is encouraged to look at existing initiatives on the topic, for example the Human Development Index (HDI), the Global Reporting initiative (GRI), The Economics of Ecosystems and Biodiversity (TEEB), the Genuine Progress Indicator, the OECD’s Better Life Index, or The Prosperity Index. A useful summary for the EU is presented here.
- Is the Computable General Equilibrium (CGE) model used in the report an adequate model to represent circular economy impact?
There is no ‘one size fits all’ approach to macro-economic modelling, and there are some limitations to the CGE model used in the study. One is that the economy is made to always be in equilibrium and lead to ‘zero profit’, i.e. all additional efficiency gets translated into further investments and growth. Therefore, additional ‘efficiency’ in a sector leads to growth in the economy. See Section 2.3.1 and the Appendix of the report for a more comprehensive discussion of this subject.
- Many of the policy interventions discussed seem difficult to implement from a political point of view. How can one make sure that relevant stakeholders buy in to these interventions and build consensus?
There is no simple answer to this question. As with any policy intervention, efforts to promote a circular economy might create strain elsewhere. We think that a multi-stakeholder approach, that engages especially businesses early in the process, is crucial due to the following three reasons: (i) derive insights and knowledge to identify the most relevant circular economy opportunities and barriers in each focus sector; (ii) create early alignment on common direction for the country and the focus sectors; (iii) further demonstrate circular economy benefits to businesses and build skills as well as capacity.
Resources and feasibility
- How much time do you estimate it takes to use the toolkit to drive through a new policymaking effort end-to-end?
The straightforward answer to the question is that no two cases are alike - they differ according to ambition level, available resources and capabilities, and conditions within the region in question. As described in section 2.4.3 of the report, the Denmark pilot was characterised by a very intense analytical effort, with a total resource demand of about 40 man-months. The pilot led to a set of 10 circular economy opportunities with identified barriers and shortlisted policy options. Subsequent packaging of these policy options, and submitting them to the legislative process, will be up to the relevant agencies and decision makers, and were therefore not included in the scope.