UNEP: The role of resource extraction in a “circular” world

If the latest major report on global warming makes one thing clear, it’s that humanity must transition to a low-carbon economy, and fast.

To do that, many countries are embracing what’s known as circularity, the idea that humanity should reuse things – from computer parts to clothes – instead of making them anew in factories.

But what does that mean for countries, especially those in the developing world, whose economies rely on resource extraction?

A new report from Canada’s Smart Prosperity Institute (SPI) explores that issue, finding that so-called primary material producers will need to better integrate themselves into the burgeoning circular economy.

The report, Primary Materials in the Emerging Circular Economy, also says that more research is needed to develop policies and practices that support resource-producing countries.

“Our current understanding of approaches to increase circularly has largely been led by resource importers, such as the European Union or Japan,” said Geoff McCarney, SPI Senior Director of Research and the report’s lead author. “But for many other places, improving circularity is likely to have deep and different implications for the existing economy. We need to improve our understanding of how this transition will impact the entire value chain, while ensuring we transition equitably and pay attention to impacts on workers’ livelihoods.”

The path to a circular economy

A circular economic model aims to reuse, refurbish and recycle products instead of taking virgin materials from the ground. Proponents say that’s crucial to combating climate change, reducing pollution and heading off mass extinctions, which are imperiling humanity’s long-term survival.

The SPI report found that over the next several decades, the world will need to use more raw materials to satisfy the needs of a fast-growing population and create the underpinnings of a low-carbon economy. (Minerals and metals are key components in everything from electric car batteries to solar panels.)

The report, which was completed with support from the United Nations Environment Programme’s (UNEP) North America Office, focused on the mining industry. Resource extraction is an economic driver in 81 countries but leads to greenhouse gas emissions, pollution, biodiversity loss, and in some cases, conflict. The report found that there were several barriers to promoting circularity in the industry. Interviewees said that in many places recycled materials often cost more than virgin ones. And businesses that recover waste, including from mining operations, often see low margins, hampering efforts to promote circularity.

“There is a real need for more research and policy guidance in the extractives industry, which is why we commissioned the report,” says Barbara Hendrie, Director of the UNEP North America Office.

“Without the kind of policy interventions that incentivize circularity and discourage a take-make-waste model, widespread adoption remains unlikely.”

SPI’s McCarney said countries need to consider smart incentives for circular innovation both at the mine site and along the entire value chain. This requires improved data at the mine site, as well as increasing integration between primary material producers and designers and manufacturers for better efficiency and innovation.

“That will help us provide more sustainably-sourced primary and secondary commodities,” McCarney says. “It will also push downstream end-users to design products and demand materials that are more recoverable, recyclable, and traceable, to demonstrate values of sustainability and circularity in product markets.”

Unexpected benefits

McCarney and his co-authors said the broad implementation of the circular economy will bring challenges but also opportunities in resource-producing economies. The circular economy could unlock $4.5 trillion of economic growth and create 6 million new jobs through activities like recycling, repair and remanufacturing.

It could also bring benefits to the mining industry, which is increasingly the target of public opposition. By adopting greener, more circular standards, firms can improve their public standing, the report found.

As the global population rises and the middle class grows, the report finds that, even if recycling and reprocessing rates grow faster than the extractive sectors, economies will continue to rely on new materials in the short to medium term.

But the SPI report found that there was a growing appetite, including in the corporate world, for increasing industrial efficiency through recycling and recovery. The right incentives, tools, and data can bolster this movement, the report found.