Activating new circular economy markets in Australia

Australia’s circularity rate is approximately 4%, below the global average of 7.2%. Transitioning to a circular economy by 2030 will require coordinated action from government, industry, and research sectors. Circular Australia and Arup’s report identifies opportunities, barriers, and pathways to establish circular markets in five value chains—lithium-ion batteries, PET bottles, green steel, low carbon concrete, and textiles. Building these markets can reduce embodied carbon, enhance productivity, and improve Australia’s economic resilience.

Net zero circular world

Achieving Net Zero emissions depends on circularity. Even with renewable energy, linear production and high consumption continue to drive emissions. Circular systems create value by improving resource efficiency and reducing risks in hard-to-decarbonise sectors. The report highlights Australia’s competitive advantages in low-carbon resource productivity and the need for strategic investment and policy alignment to realise them.

Circular value chain principles

Circular industries rely on connectivity, transparency, and long-term thinking. Collaboration between designers, producers, recyclers, and consumers enables resource loops. Transparency through product passports and eco-labelling supports accountability. Applying the circular hierarchy—refuse, reduce, reuse, repair, recycle—maximises value retention and minimises waste across industries.

Circular markets

Five case studies—lithium-ion batteries, PET bottles, green steel, low carbon concrete, and textiles—demonstrate Australia’s potential to recover lost economic value through circular practices. The report outlines strategies to decouple growth from resource extraction and highlights collaboration as key to achieving scale and consistency.

Lithium-Ion batteries for mobility

Australia produces 39% of the world’s lithium yet recycles only 3% of used batteries. Lost value from exporting unprocessed ore and limited recycling could total AUD603 million–3.1 billion. Opportunities include scaling domestic refining and recycling, repurposing used batteries, and improving mobility efficiency through shared transport. Key barriers are volatile lithium prices, low collection rates, limited local processing capacity, and skills shortages. Recommended actions include fiscal incentives, onshore investment, and stronger product stewardship.

PET bottles for beverages

Over 113,000 tonnes of single-use PET bottles entered the market in 2020–21, with only 52% recovered through container deposit schemes. Lost value stems from landfill leakage, exports of recyclable material, and underused reprocessing capacity. A circular pathway includes higher CDS recovery, standardised bottle designs, improved sorting, and investment in advanced recycling. Barriers include consumer behaviour, low data quality, and competition from cheap virgin PET.

Green steel for the built environment

Australia exports 36% of global iron ore but adds little domestic value. Producing green steel using renewable hydrogen could reduce emissions in an industry responsible for 8% of global CO₂ emissions and generate AUD120 billion in export value. Developing direct reduction iron and electric arc furnace capacity, supported by renewable energy investment, would increase competitiveness. Barriers include high costs, infrastructure needs, and limited hydrogen supply.

Low carbon concrete for the built environment

Concrete accounts for 6–7% of global emissions and 1% of Australia’s total. Circular strategies prioritise retaining existing structures, designing for disassembly, and increasing clean recycling. Using low-carbon materials such as fly ash, calcined clay, or geopolymer concrete can lower emissions. Policies like Victoria’s Recycled First initiative demonstrate government-led demand for alternatives. Barriers include non-uniform standards, limited infrastructure, and low awareness.

Textiles for fashion, upholstery and other goods

Australians buy 56 clothing items per year and discard most after seven wears, sending 227,000 tonnes to landfill annually. The sector is dominated by polyester (52%) and cotton (24%), with less than 1% recycled. Lost value stems from fast fashion, poor sorting, and waste exports. Opportunities lie in textile-to-textile recycling, repair and resale models, and digital product passports to improve traceability. Barriers include low consumer engagement, high costs, and a lack of clear circularity policy.

Recommendations

The report calls for coordinated national policy, fiscal incentives for circular activities, landfill bans for critical materials, and expanded product stewardship schemes. Investment in recycling technologies, data transparency, and standardised circular design practices is recommended to improve material efficiency and strengthen Australia’s economic resilience.