Asian Countries Can Be Global Leaders in Developing Circular Economies
By Venkatachalam Anbumozhi
Asian nations can be leaders in our global transition towards circular and sustainable economies and many of the region’s governments and companies are already demonstrating political consensus, economic dynamism, and industrial innovation as they move towards this goal.
In a circular economy, optimum use is made of our scarce resources through re-use, repair, and recycling, compared with the wasteful extractive linear system of manufacturing and consumption, in which products are disposed of quickly after use. In this sustainable model, the purchase of services, such as repair, drives growth, not the sale of new items.
Circular economies can clearly also deliver financial growth while being environmentally and socially responsible and dramatically cutting carbon emissions. ERIA has analysed circular opportunities in cities, manufacturing, and the agriculture and forestry sectors across Asia and calculated that adopting circular economy principles could lead to economic growth of USD 324 billion and create 1.5 million jobs in those sectors in Asia over the next 25 years.
Given the pattern of global economic growth, with India, China, ASEAN, and Central Asia driving the world, and of resource use as Asian nations turn from resource exporters into consumers, leadership should and can come from this region.
Globally, and here in Asia, we are making progress towards circular economies; countries with differing priorities are developing both unique and familiar solutions. Japan in particular has been innovating since the early 1990s, as it sought to minimise its dependence on imports, and already recycles an impressive 98% of metals. It now plans to make the 5,000 gold, silver, and bronze medals to be awarded at Tokyo’s 2020 Olympic and Paralympic Games from discarded electronic devices, including mobile phones.
Speaking at the first ever World Circular Economy Forum held in Helsinki in June, Japan’s State Minister of the environment Tadahiko Ito told delegates that as well as being a permanent reminder of the athletes’ sporting achievements, the medals were intended to ‘send a strong message of circular economy around the world.’
Elsewhere in Asia, China, Korea, and Thailand are demonstrating pragmatic approaches towards the transition. China, which struggles with high levels of pollution as a result of its rapid industrialisation and immense manufacturing sector, has introduced national fiscal, financial, and investment policies to support circular development.
Clearly there is room for further improvement, as water and air pollution is serious and in some areas deteriorating, but China has made progress in resource efficiency. It is now making more efficient use of water and coal in its power plants and in 2011 tightened emissions standards for new generators, having in 2007 began shutting down inefficient small coal-fired power units.
China has also increased the use and recycling of waste products, with its approach to rubber tyres being one particular example of good practice. In light of the increased waste from its rapidly expanding transport sector, the government in 2008 exempt from VAT all businesses focused on retreading old tyres or producing rubber powder from used tyres. By 2013 more than 1,000 companies were focused on this business.
Although there are many positive developments in the Asian region, we must do much more to develop coherent policy frameworks that drive innovation if we are to deliver the maximum economic, environmental, and social benefits. We must promote waste prevention by designing more durable products and encouraging reuse, remanufacturing, and refurbishment.
Much work is needed at a government level as we work towards these circular economy goals. We need to take a serious look at present regulations and standards, which are not stringent enough. We must devise smart policies that maximise social and environmental benefits and translate into economic benefits. And to obtain these maximum benefits we must also twin our environmental policies with other economic instruments, with microeconomic, public procurement, tax and trade policies, and with improved information and research.
Governments must also support research and development in order to make the transition to circular economies faster and smoother. Partnerships in research, business and innovation, as well as knowledge and technology sharing are crucial. There are many opportunities for co-operation between Asia and other regions, including the Nordic countries, where a wide range of policy measures have been implemented and consumers are already engaged.
Delving deeper into the area of research, further work is needed in particular to understand the effects on the complex problem of jobs and how to compensate those who may lose out. As we adopt circular practices, new jobs will be created at the sector, region and micro level, but others will be lost. Again, lessons can be learned from Japan, which was able in the 1990s to absorb workers from decommissioned incinerators into a reformed recycling sector, through new skills training.
Stakeholders and non-governmental actors are also crucial in this transition to a circular economy. Driven by market demand and common sense, businesses, researchers, activists, and consumers accelerate the process.
Although there remains much to do, the steps that have already been taken are encouraging. Above all, innovation is key. Through further investment in circular innovation and in upscaling successful projects we can boost the global economy’s resilience and support people and communities around the world.
Production and consumption must become more resource-efficient and policy makers must create the right conditions in which a circular economy can thrive. Asian countries are ready to take a lead and show the world the transition to a circular economy is both possible and profitable.
Dr Venkatachalam Anbumozhi is a Senior Economist at the Economic Research Institute for ASEAN and East Asia (ERIA), based in Jakarta, Indonesia. He has published several books, authored numerous research articles and produced many project reports on resource management policies, energy infrastructure design, and private sector participation in Green Growth. Dr Anbumozhi was invited as a member of the APEC Expert Panel on Green Climate Finance and the ASEAN Panel for promoting climate-resilient growth.