Global demand for materials has been growing over the past century, driven by a steady economic growth in OECD countries, the industrialisation of emerging economies and a growing world population. Global materials use more than doubled between 1990 and 2017 and is projected to double again by 2060.
This OECD paper outlines several measures required to help improve resource efficiency and stimulate a transition towards a more circular economy. The authors note that while some governments have started to implement effective new policies and make progress, stronger efforts are needed across the board. In particular, resource efficiency policies need to be extended to cover all stages of materials lifecycle, and aligned with sectoral policies, such as those targeting trade of secondary materials.
THE METALS RECYCLING CHALLENGE
This paper highlights several obstacles that must be overcome to achieve a circular economy, as well as the urgency of the task at hand. In particular it discusses the policy barriers that currently hinder the recycling of metals and metal ores. In most cases, such barriers are generated by perverse policy incentives – such as export restrictions, bans and subsidies for primary metals and minerals – which incentivise extractive activities, thus preventing recycled materials to compete with extracted ones.
According to the OECD Inventory of Export Restrictions on Raw Materials, more than half of the identified export restrictions are related to metal waste and scrap. In the absence of additional policies to encourage the circular economy, recycling rates for metals are projected to remain constant and, in some cases, may even decrease over time.
Increasing the recyclability of metals and creating stronger incentives for recycling are fundamental steps to strengthen secondary materials markets. The authors suggest that a variety of policy instruments could enhance metal recycling rates, including grants, subsidies, tax incentives, R&D investment and other types of support to eco-innovation and eco-design. Simultaneously, countries could incentivise recycling practices using taxes on extraction or use of virgin materials, subsidies for secondary materials, and recycled content requirements. The implementation of such instruments would allow reducing the environmental impacts related to metals extraction and disposal, while at the same time creating new opportunities.
PROMOTE RESOURCE EFFICIENCY
The first of the paper’s recommendations centres on promoting resource efficiency policies throughout all stages of a material’s lifecycle – from extraction to transport, manufacturing, consumption, recycling and disposal. However, the authors note that one of the main challenges to integrated lifecycle approaches is that material lifecycles and their impacts often involve a multitude of actors and extend across political and geographic boundaries.
It is therefore important to consider all the environmental trade-offs among materials and their impacts, in order not to shift the environmental burden from one pressure to another. Measures to tackle this challenge include extended producer responsibility schemes, green public procurement, and multi-stakeholder partnerships.
In particular, establishing and incentivising partnerships with businesses and other stakeholders involved in different stages of the value chain can significantly improve coordination, while stimulating a lifecycle approach. Increased material recycling, reuse, repair, and remanufacturing, together with improved end-of-life sorting and treatment, are key elements in the transition towards a more circular economy
ALIGN SECTORAL POLICIES WITH RESOURCE EFFICIENCY OBJECTIVES
Policy misalignments, perverse incentives and conflicting priorities often represent an obstacle to the implementation of effective resource efficiency policies. Policy misalignments are often linked to inefficient incentives for transitioning to a circular economy across policy communities, levels of government, and stakeholders. For example, trade restrictions can lead to weaker markets for secondary materials and lower opportunities for material reuse and recovery. To manage this challenge, national and international policy frameworks need to mainstream resource efficiency and to treat the transition to the circular economy as an overarching economic policy challenge. Most notably, cross-cutting policies – such as innovation, investment and education strategies – should integrate resource efficiency objectives.
Aligning sectoral policies with resource efficiency principles is an effective tool to ensure coherent policy action and to effectively prevent and correct potential misalignments in the policy framework. At the same time, governments could also seek opportunities to exploit synergies across different policy objectives. For example, as the extraction, processing and disposal of raw materials are responsible for large volumes of greenhouse gas emissions, policies addressing resource efficiency could have significant climate co-benefits, contributing to countries’ Nationally Determined Contributions (NDCs) and scaling up efforts to keep the average rise in temperatures well below 2 degrees.
STRENGTHEN POLICY DEVELOPMENT THROUGH BETTER DATA AND INDICATORS
To attain resource productivity and circular economy objectives, the authors reiterate that it is fundamental to ensure the availability of accurate and reliable data. However, they note that incomplete datasets and significant data gaps, for example around material flows across industries, continue to hamper policy development. An additional challenge is posed by data availability, as information is often collected based on definitions and methodologies that are inconsistent across countries, thus hindering data comparability.
To respond to this challenge, countries should carefully assess their data needs and develop data systems that ensure the availability, quality, and consistency of information, either at national level or in collaboration with other countries.
Most importantly, it is fundamental to monitor and consider all the impacts of materials use, as well as their trade-offs and costs. For example, the substitution of one material with another might improve resource productivity while worsening the overall environmental impacts. Similarly, the socioeconomic impacts of materials use should be considered too, considering distributional and employment implications, such as for example employment levels and job quality.
In addition to developing sound data systems, governments should invest in capacity building to strengthen their ability to analyse material flows and the resulting environmental and socioeconomic impacts. In this context, governments could also engage in international efforts to help strengthening developing countries’ data and analytical capacity.
ENHANCE INTERNATIONAL CO-OPERATION
The paper’s final recommendation focuses on promoting greater international collaboration, given the increasing globalisation of value chains and the transboundary nature of resource flows.
International efforts can support resource efficiency and the transition to a circular economy in many ways. First, policy action at the international level is well placed to address challenges to resource efficiency in supply chains. For example, trade restrictions on raw materials and used products affect the efficiency with which materials are used, while other barriers to trade can hinder the diffusion of the best technologies.
Simultaneously, international efforts can support companies in managing their supply chains, thus facilitating the integration of resource efficiency considerations in global value chains. Second, international co-operation can help to improve and harmonise environmental labelling and information schemes. Besides facilitating the multilateral recognition of a growing number of schemes, this would support manufacturers who aim to green their supply chain and ensure the adequate stringency of environmental standards.
International co-operation could also help filling information gaps on resource efficiency and the circular economy, harmonising methodologies and ensuring the compatibility of data. Finally, international coordination could support the systematic mainstreaming of resource efficiency in Official Development Aid (ODA). Indeed, the authors argue that ODA can contribute to effective capacity development and technology transfer. Aligning development finance with resource productivity goals would also allow reducing the burden generated by the increasing outsourcing of production from richer countries to emerging economies.