Regional policy implications of the circular economy

As circular economy thinking takes hold among policy makers, civil servants and scientists, policy is tending towards circular as a strategy to reach environmental objectives.  Hopes are that  production systems will continue to deliver and indeed grow economically, but with far less material and fossil energy intensity. The Swedish Government formed its own Circular Economy Delegation last year and recently announced its national strategy for the Circular Economy  and 100 measures to transition to circularity.

Policy needs to align, but this raises questions. The economy is a complex adaptive system, and any intervention may cause the opposite of the intended effects. This article explores my own very personal reflections based on earlier work together with my recent work with the local university.  

Our research looked at material flows in the region and to what extent they could reveal priorities for regional policy. How useful would it be for policy makers and strategists to see the material flows in the region quantified, qualified and visualised when viewed from the point of view of the national strategy to introduce the circular economy as a path to de fossilisation?

This includes:

  • What approaches to visualisation are readily available and to what extent are they useful in policy and strategy contexts?
  • To what extent is it possible to model material flows based on existing statistics and statistical categories generally and specifically in a region?

Many circular economy approaches focus at the corporate level. At regional or county level, the circular economy (CE) approach could be characterised as follows:

Nature & natural resources are seen as building blocks – nutrients – for use and return. In contrast to the take-make-use discard model of industrialism, CE gives us a library model: pick out resources, use them and put them back so others can use them.

CE gives rise to three areas of challenge: 

  1. To extract metals, use them and put them back into some kind of store for future reuse.
  2. To keep the minerals extracted inside the economy for as long as possible, also putting them where necessary into a store. 
  3. To ensure biomaterials do not degrade the eco-system they are harvested from, and that they are replaced in a way that benefits the functioning of the ecosystem.

Will identifying the sources of waste, greenhouse gasses and social impact tell us anything?

Looking high level, SNI classification and related statistics can be useful. All companies in Sweden are registered in the SNI 2007 taxonomy according to the type of industry they operate in. The highest level is a one-letter code for the industry while the lowest level offers four numbers. A company’s operations will determine use of materials and methods of material handling so our initial approach used the SNI coding at high level together with the statistics available from official sources like SCB – Statistics Sweden.

The diagram below shows one of the visualisations for Sweden – the relative impacts on society for the various industry types.

Statistics from Statistics Sweden, diagram by author

Studying the graph above, several general observations can be drawn:

Most waste is generated by extraction

In terms of waste generated, the mining industry is by far the largest, followed by the construction industry, manufacturing and waste handling. 

Most employment is in non-extractive industries.

The two industries where a large proportion of waste is generated are construction and manufacturing.

GDP is generated at the service end of the supply chain by largest proportion.

The jobs and money are in the service end of the supply chain.

Category A, agriculture, etc generates a large proportion of greenhouse gasses compared to its contribution to GDP and its number of employees.

Agriculture should, in a circular economy be the receiver of nutrients from households and the regenerator of eco systems. In its current form, agriculture, and indeed the food provision industry, are large greenhouse gas and nutrient emitters.

Energy use, fossil fuel combustion and industry

In terms of energy use and greenhouse gas from fossil sources, the summary diagram below gives an idea of the areas of non-circularity.

Energy use and source, Sweden. Statistics from Statistics Sweden and Swedish Energy Agency, diagram by author

As the diagram above shows, the main use of fossil fuels is in the transport sector, followed by manufacturing. In Sweden, the largest proportion of transport emissions actually come from private cars

GHG contribution from transport. Statistics: Swedish EPA. Diagram by author

Waste categories and SNI industry codes

The diagram below comes from official statistics on waste

Source: Statistics Sweden. Diagram by author.

Keeping with the high-level SNI codes, aggregating G-T, and looking at waste, we see that :

  • Most categories of industry produce biowaste, much of which passes through waste handling industries in category E after category A.
  • Mineral waste is highest in the mining and construction industries, with energy production waste also exhibiting a high level of mineral waste.
  • Manufacturing has the highest proportion of metal waste, followed by households and the service sector.

Industrial sector, A – agriculture, fisheries and forest, seems to have little societal impact from the two lines of enquiry above. However, a map of water status gives cause for concern from a circularity perspective:

Source: Swedish Water Authorities

The diagram above shows us that much of the surface water is medium status or unsatisfactory. Blue and green are good status, yellow is medium and orange and red are poor.  Water status is degraded from the burden of phosphorus and nitrogen nutrients. This indicates that emissions form society and land are higher than can be received by surface water. The following graphs show sources:

Source: Statistics Sweden. Diagram by author.
Source: Statistics Sweden. Diagram by author.

Visually, we see that agriculture and waste water are the largest hitters in these categories taken together. 

National vs regional material flows. Are the differences significant for policy?

Before we go into a deeper discussion of the policy implications of this overview we could ask one further question: how do regions differ from the national picture? Our research focussed on the Gävleborg county. From official statistics we were able to create coefficients that estimated the likely material impacts of the various industries in the county. These coefficients are based on industry types and relative sizes of firms based in the region.

The diagrams below contrasts the national impacts with Gävleborg.

All statistics from Statistics Sweden and diagrams by author.

As the comparison shows, the two graphs look basically similar. This approach, though, of using coefficients is only indicative. For example, mining waste is shown to be a smaller part of the waste generated in the region. There are no mining operations in the region, but several mining companies. At the same time, it gives an indication that policy might be angled at these types of companies as they are involved in extraction even if it is not happening within regional boundaries. 

That regions share more similarities than differences is to be expected. Wherever the population lives, they still all need the basics, and supply chain and societal structure, are similar over the whole country.

Which industries need to change their material handling, and how?

Several general over-arching observations of the different material flows in a region/nation can be made from the analysis above.

Biological nutrients: Going back to our original description of circular economy principles, biological nutrients enter the economy at harvest. They need to return to agriculture and forestry from waste water and industry sectors. At the same time, the agricultural sector needs to be a better land manager to prevent nutrient leakage and ensure that nutrients in surface water are removed biologically

Metals: there is no reason to return these back to the earth. A circular economy sees metals as being in circulation in society for perpetuity. A circular handling of metals is one where metals stay in use as long as possible and after useful life in products are returned to a stock for reuse. Recent EU research shows that recycling of metals, minerals, and  plastic could reduce mining needs by 85%. 

From a policy perspective, then, there needs to be development in manufacturing towards long life products and recycling. This responsibility seems to fall on the manufacturing industry together with the service industry- to be able to offer repair, upgrade and to handle the associated product flow.

Minerals: Apart from the mineral waste generated in mining, the construction industry is the main producer of mineral waste, along with the energy production sector. As with metals, there is no logic in returning minerals to the earth, they should remain in service as long as possible and be put in a store for use. Unlike metals, which can be refined and upgraded, minerals generally degrade. The construction industry could be the engine of mineral recycling. Building materials can be recycled as houses are demolished to make way for new ones, and the industry might be able to find uses for mineral waste from other sources, like the energy sector.

Plastics: Plastics are a special case of man-made materials. The superior properties of plastic make it hard to substitute. Rather, a circular approach would be to keep plastics in use in society as long as possible, going possible from high grade uses to lower grade uses until there is no choice but to burn them.

Fossil fuel combustion: Burning of fossil fuels is absolutely contra circular. The carbon released into the atmosphere should be returned to a store somewhere to prevent it causing climate system disruption. As Sweden uses a good proportion of its fuel for private car use, it would make sense to find ways to reduce the demand for that kind of mobility (in city planning) and stimulate mobility in other forms of propulsion.

Towards a role of regional authorities in the circular economy.

Regional authorities have responsibility to ensure ecosystem functioning, citizens’ health and well being, jobs and sound economy. There is also a strong focus on resilience – to ensure that basic needs can be met even in the face of external challenges like extreme weather conditions, economic downturns and fossil fuel shortages. The table below summarises the discussion above and attempts to identify policy imperatives at the interface of circular economy and regional authority responsibility.

These imperatives include:

  • Using all means to encourage local food resilience along with an agricultural sector that focuses on land regeneration and nutrient reception
  • Directing municipal waste handling towards bio-recirculating and the reduction and 100% recycling of household waste
  • Encouraging the construction industry to reuse buildings and materials
  • Reducing personal vehicle transport demand
  • Stimulating the transition of manufacturing industries to circularity
  • Ensuring all production equipment and infrastructure are circular
  • Stimulating green jobs in repair, recycling, the bio-economy, etc.

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