An innovation pathway to decarbonization: Circular economy solutions for policymakers and industry in the US
The US has a significant opportunity to decarbonise its industrial sector and boost its economy by transitioning to a circular economy. This report explores the economic and environmental benefits of circular solutions in key industries, such as batteries, construction, and electronics. It also analyses current US policies that support a circular economy and provides recommendations for further policy interventions to accelerate this transition.
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OVERVIEW
Executive summary
The US is at a critical juncture, facing escalating climate change risks, supply chain vulnerabilities, and economic rivalry. Circular economy solutions, which minimise waste and maximise resource utilisation, can address these challenges while advancing key priorities like climate action, national security, economic growth, and industrial innovation.
The circular economy presents a significant opportunity for the US, particularly in industrial decarbonisation. Research indicates that transitioning to a circular economy in just three sectors—batteries, the built environment, and electronics—could unlock substantial economic value, ranging from USD 883 billion to 1.5 trillion, and reduce annual greenhouse gas emissions by 370 to 852 million tonnes of CO2e.
Current US policies, such as the Inflation Reduction Act, the Bipartisan Infrastructure Law, and the Creating Helpful Incentives to Produce Semiconductors and Science Act, have laid the groundwork for circular solutions. However, a more cohesive, multi-industry policy strategy is needed to fully realise the potential of the circular economy.
Why move to a circular economy?
The circular economy offers a sustainable model that addresses resource scarcity, supply chain risks, and environmental degradation. It can strengthen supply chains, create jobs, reduce environmental impacts, and enhance economic resilience and competitiveness. By reducing reliance on imported raw materials and promoting domestic production, the circular economy can also bolster national security. Additionally, it can drive innovation in product design, material science, and business models, fostering economic growth and job creation.
The circular economy is critical to US industrial decarbonisation
Industrial decarbonisation is crucial for the US to achieve its net-zero emissions targets. Efforts in transitioning to renewable energy can only address 55% of emissions globally. The remaining 45% comes from how we produce and consume products—the circular economy can help to reduce these emissions by transforming the way we make and use products. It can play a pivotal role by reducing demand for carbon-intensive virgin materials and promoting the reuse and recycling of products. This approach can significantly reduce emissions in sectors like cement, steel, and aluminium, which are traditionally difficult to decarbonise.
There is real opportunity for circular economy solutions to decarbonise major sectors today
The report highlights the potential of circular solutions in three key sectors:
- EV and grid-scale batteries: Circular practices, such as battery reuse and recycling, can address supply chain vulnerabilities, reduce costs, and lower emissions in the rapidly growing battery market. The report suggests that circular practices within the US battery industry can generate approximately 6 to 24 billion USD in economic value and reduce GHG emissions by 2 to 3 million tons of CO2e.
- Built environment and infrastructure: Designing for deconstruction, reusing materials, and adopting lower-carbon alternatives can significantly reduce emissions and generate economic value in the construction sector. The report suggests that circular economy models within the US built environment can generate 575 billion to 1.1 trillion USD in economic value and reduce GHG emissions by 295 to 538 million tons of CO2e.
- Electronic equipment: Extending product lifespans, promoting repair and remanufacturing, and improving recycling infrastructure can reduce waste and emissions in the electronics industry. The report suggests that circular economy models within the US electronics industry can generate 301 to 388 billion USD in economic value and reduce GHG emissions by 73 to 311 million tons of CO2e.
The US has the opportunity to expand upon current policies to accelerate circular solutions and drive industrial decarbonisation
Recent US legislation and executive actions have created a favourable environment for circular solutions. However, further policy interventions are needed to accelerate the transition. These include:
- Setting a clear national vision and goals for the circular economy.
- Helping businesses and governments better understand and communicate the impacts of circular economy activities.
- Removing barriers to circular economy activities by addressing economic, infrastructure, and regulatory challenges.
- Mandating circular solutions in product design, production, use, and post-use phases.
- Continuing to invest in research and development to drive innovation in circular technologies and business models.
By implementing these recommendations, the US can unlock the full potential of the circular economy, fostering a more sustainable, resilient, and prosperous future.