The circular economy is a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible. In this way, the life cycle of products is extended. In practice, it implies reducing waste to a minimum. When a product reaches the end of its life, its materials are kept within the economy wherever possible thanks to recycling. These can be productively used again and again, thereby creating further value.
Circular economy (CE) is a solution to climate change, biodiversity loss, waste, and pollution. It is a resilient system that is good for business, the environment and mankind as it decouples economic activity from the consumption of finite resources.
The concept of CE speaks for itself. With the rapid growth in popularity and increased demand for raw materials, there is an urgent need to prevent further damage to the planet and ultimately aim to restore our planet. Additionally, with finite supplies means that countries are dependent on others in the importation of raw materials.
BusinessToday spent some time with Dr S. Sri Umeswara (pic) of the National Circular Economy Council (NCEC) to understand how the traditional linear economic production models in Malaysia have proven to be unsustainable and insecure in the face of economic development and the Fourth Industrial Revolution (4IR).
The issue being is that the take-make-dispose approach of the linear economy posed an imbalance of economic growth with sustainability which contributed to carbon footprint, resource depletion, waste generation, and increased greenhouse gas (GHG) emissions.
A circular economy is fundamentally different from a linear economy. To put it simply, in a linear economy, people mine raw materials that is processed into a product that is thrown away after use. In a circular economy, these cycles pending on all raw materials are closed as it changes the way in which value is created and preserved. This would relate to how are the raw materials produced to be more sustainable and which business models are used.
Challenges which Exist Circular Economy (CE)
Numerous reports often point to low awareness, hinderance from the stakeholders on the ground to carry out these initiatives and possibly a lack of political will in adapting to a circular economy.
Dr S. Sri Umeswara, who is also the Chief Sustainability Officer at FIG Metal Industries Sdn Bhd and a subject matter expert – Circular Economy, Waste & Environmental Management, said the challenges include all of the above and more. Lack of awareness has its roots in the scope and depth of education, both formal, in schools, at home, where children form their values based on the values and behaviour of their parents, and in social settings, from their peers.
Having said that, it is interesting to note that the corporate and commercial sectors are, through their various sustainability and green marketing (not green-washing) and communication campaigns, quickly increasing awareness levels among their stakeholder communities.
In effect, they have become part of the informal education process. However, despite growing awareness, there are limitations due to the lack of opportunities for implementation.
He added that implementation faces a constant uphill battle as economic valuation of resources (including waste resources) are seldom consistent with environmental or social valuation of these resources.
As a consequence, programme implementers are encountering difficulties in finding stable and consistent resource recovery entities to partner with. Furthermore, regulatory frameworks are frequently outdated or may not exist, leading to confusing and contradictory enforcement.
To a great degree, political will stems from economic and socio-cultural norms that society will demand of its elected representatives. For this to occur, the behavioural cues associated with the linear, take-make-dispose approach (unnecessary single-use plastic, ‘disposable’ goods, etc) needs to become socially unfashionable and culturally abhorrent, and the public needs to give its elected officials an unequivocal mandate to drive policy and regulations in this direction.
CE is based on three principles, eliminate waste and pollution, circulate products and materials and regenerate nature. Similar to recycling, the CE also has its cycles to achieve the three principles. There are two main cycles, the technical cycle, and the biological cycle. The technical cycle is when products are kept in circulation in the economy by way of reuse, repair, remanufacture and recycling. Biological cycle is when the nutrients from biodegradable materials are returned to Earth through composting or anaerobic digestion. In short, CE is recycling, so no materials go to waste.
Focusing on the live and pressing issue in Malaysia, ever since China banned plastic imports at the start of 2018, it has been reported that Malaysia has become the world’s top destination for global plastic waste for recycling. Additionally, there is also the bulk stems from domestic consumption of single-use plastics.
In fact, Malaysia is one of the fastest-growing and developing countries even with the impact caused by the Covid-19 pandemic. Naturally, such rapid development of manufacturing industries will cause pollution and sustainability issues. The waste path is linear, meaning it flows in one direction from production to consumer to landfill, incineration, or litter. To transition towards a CE by increasing resource efficiency and reducing the use of virgin material, requires better product and packaging designs, collection, sorting systems, and recycling infrastructure.
Reducing GHG emissions
Malaysia has committed to enhance the low-carbon economy and reducing GHG emissions intensity of its gross domestic product by 45 per cent by 2030, making circular economic models a top priority to accelerate some pressing crosscutting sustainable development challenges and reverse the adverse impacts of climate change, biodiversity loss, unsustainable waste, and pollution while fostering economic growth.
Dr S. Sri Umeswara said: ‘Yes, although the federal government and some of the state government administrations have announced aspirational goals and targets, the policies and regulatory frameworks needed to build the needed enabling environments have not been developed, implemented and enforced. To add to the confusion, the aspirational goals themselves are often misaligned, incoherent and often compete for available budgets and other resources.”
A comprehensive assessment of all programmes and frameworks is needed to identify synergies and conflicts between federal, state and local government programmes, together with corporate and civil society initiatives, and develop a nationally aligned strategy for achieving these ambitious goals.
Government policies reflect the country’s commitment to transitioning towards a circular economy where resources are used efficiently and waste is minimised. It also has been said challenges hindering the circular economic transitions in Malaysia include lack of comprehensive conceptual knowledge on the model, limited innovation, lack of financial investment on R&D, and integrated data, particularly on waste management and sustainable consumption and production.
Once again, all the hindrances identified above are material to the problem of transitioning to a circular economy. Modelling resource flows is necessary for identifying optimal resource use pathways and developing policies and incentives to shift resource allocation accordingly.
Before these can occur, the government needs to identify the key policy principles that will govern the circular economy and communicate these to stakeholders, notably government ministries, agencies, and private sector actors. With clarity on the principles and a comprehensive model, the circular economy transition can be modelled, and financial, technological and other hindrances identified and addressed.
The ASEAN Framework
The ASEAN Member States (AMS) include diverse and vibrant economies with specific strengths and vulnerabilities. Building a regional circular economy framework with common principles and coordinated objectives would help speed the adoption of circular economy practices in the member states and in turn accelerate the regional transition to a circular economy.
The Youth and Low-Carbon development to enhance climate resilience
The youth play a vital role as change agents and fostering changes from the linear economy and once the National Circular Economy Principles have been published such as the ‘National Circular Economy Blueprint for Solid Waste’, the government needs to begin implementing these principles through regulations for educational institutions at all levels, from preschool all the way to university.
These can begin with commitments to minimise the use of energy, water, paper and other consumables, coupled with the complete phasing out of unnecessary single-use plastics. Ongoing programmes including commitments for recycling paper, cardboard, metals and reusable plastics and quickly be expanded to include used cooking oil and other recoverable commodities. In this way, the students will be exposed not just to theoretical principles and concepts of a circular economy but will have practical experience in implementing these concepts.
Taking this a step further, Dr S. Sri Umeswara said Biochar (a carbon-rich solid product produced from the pyrolysis of biomass residues) has shown promise as a stable form of carbon sequestration over the span from hundreds to thousands of years.
Biomass methodologies for carbon accounting for biochar have already been developed by entities such as the International Biochar Initiative and Verra, and biochar credits have been traded on Finland’s voluntary carbon market since 2019.
Biochar pathways for biomass waste utilizing steam gasification can yield hydrogen-rich syngas fuels that have many applications, including furnaces, gas engines, solid oxide fuel cells (SOFCs), combined cycle gas turbines (CCGTs).
Here again, setting clear circular economy guiding principles for the preferred pathways for biomass waste and biochar that reflects not just economic value, but also environmental value, coupled with a regulatory framework governing biomass and biochar would send a strong signal to investors and to the private sector.
Stimulus allocations in the five-year development plans and annual budgets would further accelerate the piloting and possible scaling up of biochar sequestration, including a vibrant and lucrative biochar credit market.
CE and MSMEs
Prior to the Cabinet reshuffle in December of 2023, the Ministry of Economy and the Ministry of Natural Resources, Environment and Climate Change engaged frequently and openly with key stakeholders, including MSMSEs and youth, on key policy issues, and, on a regular basis, issued joint announcements and press statements containing integrated and coherent policies and measures.
These initiatives served to strengthen stakeholder confidence in future policy direction and reinforce the government’s commitment to achieving national emissions goals and aspirations.
It is perhaps too early to assess whether the reshuffled cabinet, which, in a somewhat retrogressive move, separated the Ministry of Natural Resources, Environment and Climate Change into two ministries: The Ministry of Natural Resources and Sustainability and the Ministry of Energy Transition and Utilities, will effectively integrate the policies of what is now three separate ministries that with jurisdiction over key climate change and greenhouse gas emissions policy.
CE Guidelines, big data analytics towards sustainable practices
The government has acknowledged the importance and value of comprehensive and current data. Key agencies, notably the Joint Committee on Climate Change (JC3), comprising the Central Bank (BNM), the Securities Commission (SC) and the Malaysian Stock Market (Bursa Malaysia) have supported the development of a data catalogue for use by corporate and financial stakeholders to facilitate the comprehensive and transparent reporting of climate-relevant sustainability information – which is a right step forward, he said.
Dr S. Sri Umeswara said: “The transition to a sustainable and low-emission economy will not be possible without a swift transition to a circular economy. However, the transition to a circular economy will not be effective without comprehensive participation of all sectors of the economy.
“More importantly, an enabling ecosystem comprising strong policy direction coupled with robust legal and regulatory frameworks, informed by transparent reporting and disclosure, and driven by global sustainability standards and independent verification, must be established and supported with capacity and technology.
Finally, green and sustainable financing, sourced domestically or from international sources, is vital to drive the national transition to a sustainable and circular economy.
