wynand uys south africa
Ohrigstad, South Africa. (Image: Wynand Uys via Unsplash)

Circular Economy to fight climate change: Are countries walking the talk?

Pledges are mostly tilted towards energy-related emissions, but a broader paradigm shift is needed to fight the climate crisis.

By Manuel Albaladejo, Nicola Cantore and Solomon Owusu

The UN Climate Change Conference in Glasgow (COP26) did not clearly define the path forward to keep the 1.5 degree goal alive. The slow phasing out of fossil fuels advocated by some fossil fuel-dependent countries undermines the science behind the scope and magnitude of climate change.1 UN Secretary General Antonio Guterres’ plea to accelerate climate action2 coincides with the rebound of global CO2 emissions to its highest level in history following a sharp decline due to COVID-19 in 2020 (figure below). Global financial and health crises—leading to temporary emissions reductions as a result of a drop in demand for goods and energy3—seem to have been more impactful than the countless climate change conferences that have taken place and government pledges that have been made since the mid-1990s. 

CO2 emissions from energy combustion and industrial processes (2006-2021)

Source: Authors’ elaboration from International Energy Agency (2021).

On a positive note, however, COP26 has been an eye-opener to understanding the impact of the broader context on climate change and how best to address the emergency. The energy sector, the usual suspect and protagonist in most climate change debates, is only partially to blame. How we produce and consume goods is the other side of the story. The COP26 side event ‘Strengthening NDC ambition through the circular economy: The path for 1.5 degrees’ positioned circularity at the heart of the climate change debate.4 Its role in achieving carbon neutrality was already highlighted by Frans Timmermans, executive vice-president of the EU Green Deal, during the launch of the Circular Economy Action Plan in March 2020.5  

The Circular Economy: A climate change warrior?

The circular economy has taken central stage in the policy debate not only because of its potential for the economy and labour market in general, but also because of its role in fighting climate change. This latter twist in the story is relatively new. While the Paris Agreement recognized the role of sustainable production and consumption in climate change, CO2 targets have mostly been linked to the need to decouple economic growth from fossil fuels. Accordingly, countries’ climate commitments, i.e. the measures, targets and policies included in their Nationally Determined Contributions (NDCs) and which reflect their overriding energy-related goals, such as efficiency, renewables and decarbonization, are the pathway to reducing greenhouse gas (GHG) emissions.

Energy-related emissions are only half the story, with new evidence indicating that 45 per cent of global GHG emissions are attributable to how we produce and use materials and goods, including food.6 This figure might even rise up to 70 per cent when taking into account emissions from freight transport and the energy required to move consumer goods around the globe.7 The circular economy mechanisms to reduce industry-related emissions build on waste elimination through resource efficiency; more intensive and productive use of products by reusing, refurbishing and re-manufacturing them; and increasing recirculation through recycling (figure below). Agro-related emissions can be cut by applying circularity practices such as anaerobic digestion and composting, as well as practices that favour natural CO2 capture (e.g. grazing) and the restoration of nutrient cycles in ecosystems. 

Share of annual global industry’s CO2 emission reduction potential across different circular economy channels

Source: Authors’ calculation based on Ellen McArthur Foundation (2019).


There is mounting evidence that reaching the 1.5 degree pathway is closely linked to both the extraction, handling, use and disposal of materials and to a radical change in the food production and consumption paradigm. The circular economy offers strategies to eliminate waste, extend product lifespan and to lower overall material and resource consumption, thereby embodying a true climate change warrior.

Walking the talk: Do Circular Economy strategies address climate change?

If the circular economy has been widely recognized as being a pillar in the fight against climate change, why is it that 60 per cent of all countries do not even mention circular economy in their NDCs?8 And despite the hype, why is it that global circularity has declined from an already low 9.1 per cent in 2021 to 8.6 per cent in 20229, resulting in a massive circularity gap owing to waste-related emissions? Could this possibly be linked to the fact that unlike energy, emission reductions from circularity are difficult to quantify, hence making them less appealing to policymakers? Or more worryingly, has the circular economy become a trendy topic in green talk with very low prospects for real, hands-on climate action?

To address the above questions, we review the circular economy strategies and roadmaps of ten countries10 to examine at which level climate change is addressed: 1) the policy documents broadly acknowledge the general link between the circular economy and climate change through the corresponding NDCs; 2) the policy documents not only acknowledge this link but also establish general waste targets; and 3) the policy documents go one step further and estimate the amount of waste-related GHG emissions specific circular economy interventions could achieve. Obviously, only countries that fall into the last category have a comprehensive framework in place to implement circular economy mechanisms to reduce GHG emissions. We specifically focus on materials used in industrial processes and exclude any agriculture and soil restoration aspects.

There generally seems to be a common understanding that circularity is linked to climate change through emission reductions. All circular economy strategies and roadmaps allude to the countries’ climate change commitments as depicted in their NDCs. All policy documents also cite specific waste, consumption and raw material use targets, all of which are typical circular economy outputs. For instance, Chile plans to achieve 70 per cent recycling of paper and cardboard, 65 per cent for glass, 60 per cent for Tetra Pak, 55 per cent for metals and 45 per cent for plastics by 2035.11 Germany has set a quantitative target of halving its consumption of natural resources by 2050.12 The Netherlands plans to reduce the use of primary raw materials (minerals, fossil fuels and metals) by 50 per cent by 2030.13 Finland has pledged to reduce food waste throughout the food chain by cutting store and consumer food waste in half by 2030, a measure that is in line with the EU’s overall target.14 In France, the goal is to reduce natural resource consumption by 30 per cent in relation to GDP by 2030 and to achieve 100 per cent recycling of plastics by 2025.15 Portugal has put ambitious plans in place to increase urban water recycling to 65 per cent by 2050. India aims to achieve a 100 per cent recycling and reuse rate of PET plastic by 2025, and of 75 per cent for other plastic packaging materials by 2030.16 Kenya plans to implement a national recycling target of 15 per cent in 2022 from a baseline of 9 per cent in 2020, increasing its target to 27 per cent by 2025 and to 30 per cent by 2030.17

The picture becomes blurry when we try to assess the impact of such targets on climate change based on the reduction of GHG emissions. The truth is that besides France18, none of the other circular economy policy documents link emission-related outcomes to their circularity targets. The question is whether countries have deliberately chosen to ignore the climate change-circular economy connection when it comes to measurable targets, or whether they have simply failed to recognize that such a link actually exists in practice. Excluding emission-related targets and trackable baselines makes it impossible to assess the impact of circularity on climate change, even though all of the countries included acknowledge that the circular economy has a climate change impact. Is this sufficient evidence to claim that policymakers perceive the circular economy as a leap of faith in the fight against climate change, or is it simply that the circular economy debate has raised too many climate-related expectations that have yet to be proven?

Policy implications

The current response to the climate change emergency is half-hearted as it ignores the huge amounts of emission created by the production and use of materials and goods. Countries’ climate change pledges are mostly tilted towards energy-related emissions, hence perpetuating a defective framework to fight climate change. Circularity has been widely recognized as a climate change warrior, however, a review of countries’ circular economy strategies reveals that countries only allude to the circular economy in a shallow fashion, particularly when it comes to measuring the real impact circularity has on GHG emissions.

Both political as well as methodological issues might represent the missing link to truly embed the circular economy into the climate change debate. On the one hand, the circular economy calls for radical systemic change involving many public and private stakeholders at the national and subnational levels. This may make policymakers wary of the complex mechanisms through which circular economy policies impact climate change. By contrast, targeting energy-related emissions is more straightforward, and is therefore a quick win in policymaking. On the other hand, the circular economy still lacks sector-specific, time series and cross-country data to demonstrate its true impact on GHG emissions.The development of sector calculators linking waste treated with estimated GHG emission reductions is an important way forward for policymakers to really pin down the impact of circularity in a given sector.19  

While the circular economy is broadly recognized as being a key player in the climate change debate, political and methodological barriers may slow down (or even reverse) the path towards global circularity. The new generation of NDCs will surely refer to the circular economy, but the real game changer will be countries’ commitments to reduce emissions through a set of circular economy initiatives with a measurable impact. This may be challenging at first, but if nations manage to incorporate measurable, actionable short- and long-term circular economy targets and their impact on GHG emissions, then the world will truly be geared to tackle close to 50 per cent of global emissions.

  • Manuel Albaladejo is Country Representative for Argentina, Chile, Paraguay and Uruguay, at the United Nations Industrial Development Organization (UNIDO).
  • Nicola Cantore is Research and Industrial Policy Officer at the Division of Capacity Development, Industrial Policy Advice and Statistics at the United Nations Industrial Development Organization (UNIDO). 
  • Solomon Owusu is Post Doctoral Researcher, Oxford Martin School, University of Oxford (UK).

Disclaimer: The views expressed in this article are those of the authors based on their experience and on prior research and do not necessarily reflect the views of UNIDO (read more).

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