Fix the economy, fix the climate

Solving the climate crisis also requires economic transformations outside the energy production sector. What steps can be taken to create a circular economy regarding product and food lifecycles? Banner Image: Shutterstock/Michael Kaercher

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This article is part of a series in which OECD experts and thought leaders — from around the world and all parts of society — address the COVID-19 crisis, discussing and developing solutions now and for the future. Aiming to foster the fruitful exchange of expertise and perspectives across fields to help us rise to this critical challenge, opinions expressed do not necessarily represent the views of the OECD.

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As the global economy is gradually getting back on track, we’re entering another round of climate negotiations with current emissions pledges still falling short of the objectives laid out in the Paris Agreement. The scope of the discussion has nevertheless evolved, and the message that we sent by releasing Completing the Picture in 2019 has gained significant momentum: if we want to solve the climate crisis, we have to transform the economy—and not only the way it’s powered.

The energy transition naturally remains a central pillar of the pathway to a low-carbon economic system, and the material side of the equation is today better understood. A growing number of governments are pledging to accelerate the transition to a circular economy as a tool to combat climate change: UNFCCC figures show that 25% of new or updated Nationally Determined Contributions to July 2021 included circular economy measures. This is progress, but a lot remains to be done to highlight economic opportunities and move the solutions space upstream, beyond traditional (yet necessary) material efficiency strategies.

Forty-five percent of emissions arise from the way we make and use products and food. If we are to address this, a systemic approach to redefining value creation has to be adopted, one that relies on three fundamental principles: eliminating waste, circulating materials and products, and regenerating nature. Translating these into concrete action could start now, and yield significant results while paving the way for innovation. For instance: 

  • Eliminating waste in the food industry alone would reduce annual emissions by 1.4 billion tonnes by 2050—that’s more than the entire airline industry pre-pandemic 
  • Circulating steel without contaminating it, and getting more value from what we use, would avoid 500 megatonnes of additional primary steel production by 2050—this corresponds to more than 1 billion tonnes of CO2 emissions per year
  • Regenerating nature through ecosystems-focused agricultural practices not only reduces GHG emissions but also sequesters carbon in soils and plant matter—switching to regenerative food production globally would reduce emissions by 3.9 billion tonnes of CO2 equivalent per year by 2050

As a nature-positive solutions framework, the circular economy brings answers to the interconnected biodiversity and climate emergencies. But while leading companies are starting to harness the opportunities it offers, scaling up circular innovations is now a priority. Mobilising finance and making ambitious national commitments are essential steps on the journey; COP25 raised the profile of the circular economy in the multilateral process, and since then the understanding of its relevance to climate has steadily increased. Yet it remains important to “join the dots” and show how circular economy strategies—too often only within the remit of environmental ministries—can apply to a variety of sectors and contribute to achieving several SDGs, all while ushering in new growth opportunities.

Read the OECD report Tracking Economic Instruments and Finance for Biodiversity 2021, which discusses economic instruments that foster biodiversity across all sectors

Read the OECD report Tracking Economic Instruments and Finance for Biodiversity 2021, which discusses economic instruments that foster biodiversity across all sectors

The question of where to start also comes up regularly, and in order to help governments in their transition efforts The Ellen MacArthur Foundation has developed a set of Circular Economy Policy Goals. They identify five key focus areas—ranging from design and skills development to fiscal measures—and stress that the relevant policies are interconnected, helping to avoid a patchwork of fragmented solutions. The goals also provide a blueprint for co-operation, echoing SDG 17, recognising that we need to work together across the private and public sectors to make them effective.

Addressing the root cause of the global challenges facing our societies amounts to profoundly rethinking the way value is created, moving away from the extractive and polluting “take, make, waste” linear economy. As leading scientific organisations such as the IPBES now recognise, transformative change—which entails a “system-wide reorganization across technological, economic and social factors, including paradigms, goals and values”—is required. Which is another way of saying that incremental tweaks that do not challenge business as usual will not get us on a positive path: we need a circular, regenerative economy at scale.

Watch the video World Circular Economy Forum 2021: Towards a mutually supportive trade and circular economy agenda, which discusses the solutions to overcome barriers to scaling up the global transition to a more resource efficient, circular economy

Related Topics 

Climate Sustainable Development Goals Tackling COVID-19

Ellen MacArthur

Founder, Ellen MacArthur Foundation

Dame Ellen MacArthur made yachting history in 2005, when she became the fastest solo sailor to circumnavigate the globe. She remains the UK’s most successful offshore racer ever, having won the Ostar, the Route du Rhum, and finished second in the Vendée Globe. She received the French Legion of Honour from President Nicolas Sarkozy in 2008, three years after having been knighted by HM Queen Elizabeth II.

Having become acutely aware of the finite nature of the resources on which our linear economy relies, she retired from professional sailing to launch the Ellen MacArthur Foundation in 2010. The Foundation works to accelerate the transition to a circular economy, and has helped establish the subject on the agenda of decision-makers around the world. Since the publication of its first economic report in 2012, the Foundation has launched global initiatives on plastics, fashion, and food, developed innovation networks with educators, businesses, and governments, and released more than 20 reports and books. Dame Ellen is a World Economic Forum Global Agenda Trustee for Environment and Natural Resource Security and Board Member of its Platform for Accelerating the Circular Economy, and she sat on the European Commission’s Resource Efficiency Platform between 2012 and 2014.

Ellen MacArthur Foundation on YouTube