Anthony Cox WCEF2019: Overview of world trade and the circular economy
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Global materials use and greenhouse gas emissions from materials management are projected to more than double by 2060 if no action is taken. International trade can both support and be impacted by the transition to a circular economy. Trade enables the circulation of goods like secondary raw materials and second-hand goods across borders and allows countries to specialize. However, differences in standards and regulations across countries pose challenges. Cooperation on areas like harmonizing definitions, classifications, and policy alignment will help ensure trade supports improved resource efficiency on a global scale.
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Anthony Cox WCEF2019: Overview of world trade and the circular economy
- 1. OVERVIEW OF WORLD TRADE AND THE CIRCULAR ECONOMY Anthony Cox Deputy Director, Environment Directorate World Circular Economy Forum 2019 4 June, Helsinki
- 2. Import restrictions are re-shaping the plastic waste system 2 Source: UN COMTRADE (2019), HS3915 Monthly global exports of plastics waste by destination: 2016 to 2018
- 3. 0 25 50 75 100 125 150 175 1990 2000 2010 2020 2030 2040 2050 2060 Non-metallic minerals Metals Fossil fuels BiomassGigatonnes 3 Global materials use will more than double by 2060 Source: OECD (2019), Global Material Resources Outlook to 2060
- 4. 4 Growth in materials use differs across countries Source: OECD (2019), Global Material Resources Outlook to 2060
- 5. 5 GHG emissions in CO2 equivalent Transport End users Industry Energy supply Agriculture 0 10 20 30 40 50 60 70 80 2011 2060 Materials management emissions Other emissionsTransport Transport End users End users Industry Industry Energy supply Energy supply Agriculture Agriculture 0 10 20 30 40 50 60 70 80 2011 2060 Materials management emissions Other emissions Greenhouse gas emissions related to materials management will more than double 12%of total GHG emissions associated with 7 key metals 12%of total GHG emissions associated with concrete 50Gt CO2 eq emissions associated with materials cycle Source: OECD (2019), Global Material Resources Outlook to 2060
- 6. Environmental impacts will more than double – but varying by material…Environmental impacts will more than double – but varying by material… primary much more polluting than secondary 6Per kg environmental impacts (highest impact normalised to 1) for 2015 Acidification Climate change Cum. energy demand Eutrophication Freshwater aquatic ecotoxicity Human toxicity Land use Photochemical oxidation Terrestrial ecotoxicity Copper Nickel PrimarySecondary Source: OECD (2019), Global Material Resources Outlook to 2060
- 7. 7 Trade and Circular Economy - broad interlinkages National boundary Repair Recycling (secondary raw materials) Eco- design policies Refurbishment and Remanufacturing Reuse (second-hand goods) Trade in second-hand goods Trade in waste for recovery Trade in goods for refurbishment and remanufacturing Trade in secondary raw materials Product-service-systems Trade flows: CE impacts on trade Policy alignment Trade in waste, secondary material, second-hand goods International co-operation Trade in services Source: Yamaguchi (2018) “International Trade and the Transition to a More Resource Efficient and Circular Economy: A Concept Paper”
- 8. International trade can contribute to reduced material use 8 Effects of CE policies on global materials use by driver (percentage deviation from baseline in 2040) Source: Dellink (2019, forthcoming), The consequences of a more resource efficient and circular economy for international trade patterns - a modelling assessment -60% -50% -40% -30% -20% -10% 0% Aluminium Copper Iron and steel Other non-ferrous metals Non-metallic minerals Scale effect Efficiency effect Trade effect
- 9. Towards a mutually supportive trade and circular economy agenda International trade flows will shift according to structural changes induced by a circular economy Trade will create opportunities for enhancing resource efficiency via comparative advantage Need to seriously consider international standards & mutual recognition - material content, recyclability Advances needed in data availability, definition and classification of waste Innovation and digitalization will provide additional opportunities 9
- 10. THANK YOU! For more information: oe.cd/recircle www.oecd.org/environment/envtrade Anthony.Cox@oecd.org
Editor's Notes
- Implication of import restrictions on waste trade – example of plastic waste above China made 3 notifications to restrict imports on waste and scrap in effect from 2018. A WTO notification was made in July 2017 and listed 24 types of waste and scrap to be prohibited for imports from 1 January 2018. An additional WTO notification was made in November 2017 to set forth a maximum level of contamination (0.5% by weight) for 11 categories of waste and scrap to come into effect from 1 March 2018. A further announcement was made in April 2018 to further add 32 categories of waste and scrap to be prohibited for imports taking effect sequentially either from 31 December 2018 or 31 December 2019 All trade restrictions applied with motivation to prevent and control environment pollution. This led to reduced imports of (plastic) waste to China and HK China (light blue, orange area) This has two main implications: Restrictions may provoke increased domestic incineration and landfilling for exporters lacking domestic capacity to process materials (at least in the short term). Restrictions can risk diverting waste and scrap exports to alternative sinks in Asia with relatively weak treatment standards (In response - Indonesia, Malaysia, Thailand, Vietnam have announced to impose similar restrictions) While there is no short term solution, this may require more managed forms of trade in waste. The Basel COP (in 29 April to 10 May 2019) had two significant outcomes in this regard: First, Parties adopted an amendment to the Basel Convention to improve controls on the transboundary movement of plastic waste. Second, Parties agreed on updated technical guidelines on environmentally sound management of e-wastes, and will work to further distinguish export of wastes for refurbishment while preventing potential loopholes for end-of-life products to be exported under the guise of “repairability.”
- Competing forces lead to near doubling of materials use by 2060.
- Greenhouse gas emissions related to materials management will more than double in 2060 12% of total ghg emissions associated with 7 key metals 12% of total ghg emissions associated with concrete 50Gt CO2 eq emissions associated with materials cycle
- Environmental impacts from extraction and processing will more than double between 2015-2060: Acidification Corrosive impact of pollutants (SO2; NOx) on soil, water, ecosystems, buildings. Climate change Radiative forcing of GHGs causing rising temperatures, sea level rise, extreme weather events. Cumulative energy demand Total energy use along the production chain. Eutrophication Impacts of nutrients (N, P) on soil and water quality affecting ecosystems and drinking water. Freshwater aquatic ecotoxicity Impacts of toxic substances on freshwater aquatic ecosystems. Human toxicity Impacts of toxic substances on human health, either by inhalation or via the food chain. Land use Land surface used to produce the resource. Ozone layer depletion UVB impacts of reduced stratospheric ozone on health, ecosystems, materials. Photochemical oxidation Impacts of tropospheric ozone from air pollutants (VOC, CO), sometimes visible as smog. Terrestrial ecotoxicity Impacts of toxic substances on terrestrial ecosystems. but this will vary widely by material: In particular, primary materials cause much more environmental damage than secondary materials.
- There are broad interlinkages between international trade and the circular economy. Circular economy initiatives are largely facilitated through domestic policies. Policy action to close, extend and narrow material loops – such as through reuse, repair, recycling, eco-design, and product service systems (providing lighting services instead of selling light bulbs = longer lasting and sustainable products, easier to collect at end-of-life) - are commonly considered at the national level. However, circular economy transition can have several implications for trade, such as through: Trade in second-hand goods Trade in goods for refurbishment and remanufacturing Trade in waste for recovery Trade in secondary raw materials Trade in services (as the circular economy transition has high service content) Trade can provide potential opportunities for circular economy flows, and resource efficiency There are several aspect to consider to further establish our understanding on these interlinkages: The Circular Economy transition can have impacts on trade patterns Policy alignment between trade and circular economy may be necessary Need to better understand the nature of trade in waste, secondary materials, second-hand goods There may be a role for international co-operation – to facilitate these trade flows, e.g. standards for material content, to avoiding hazardous content, recyclability, repairability
- This graph shows more clearly how important trade is in reducing materials use - Global production of Aluminium products declines with 12% compared to baseline; this scales down Aluminium ores use proportionately; - Improved efficiency in production of aluminium products brings ores use down with another 10%; - The rest of the full decline is the combination of shifts in regional production and shifts in regional sourcing of aluminium ores; together these amount to 15% aluminium ores reduction. - Similar stories for the other materials. - Strongest trade effect for non-ferrous metals, almost none for iron ores.
- International trade flows may shift according to structural changes induced by a circular economy Competitive position on markets for metals and minerals will impact trade patters Trade impacts will be region-specific even with a uniform implementation of the policy package Trade can provide potential opportunities for resource efficiency via comparative advantage Trade barriers should be avoided to the extent possible - e.g. import and export restrictions But benefits should not be at the expense of environmental consequences insufficient waste management capacity, Illegal trade in waste informal sector In some cases there may be a need for more managed forms of trade Basel Convention – significant improvements very recently on plastic waste and also on e-waste Proximity principle – could be revisited Potential trade offs to be considered For example, lock-in of importing economies to inefficient secondary goods Possible need for international standards & mutual recognition – material content Avoiding hazardous content Recyclability Repairability Need to advance in data availability, definition and classification of waste Digital trade and Innovation may provide additional opportunities – such as tracking material flows, tracking material content