Why is infrastructure important in the circular economy?

The extraction, manufacturing and production of materials is responsible for around 45% of global greenhouse gas emissions. A 2019 Ellen MacArthur Foundation study showed that moving to renewables can only address 55% of these emissions, indicating that the 1.5°C target of the Paris Agreement can only be achieved by combining current efforts on renewable energy and energy efficiency together with circular economy approaches. The circular economy is therefore a powerful solution for meeting long-term policy objectives related to climate change. It can also reduce supply chain risks and short-term supply shortages by requiring less material input and by establishing local secondary material supply.

In the transition to a circular economy, infrastructure has a dual role to play, in (1) integrating circular economy principles into infrastructure itself, and (2) building infrastructure that supports circular economy activity.    

In preparing our thought piece, The Role of Infrastructure in the Circular Economy, for the G20, the GI Hub asked industry experts to outline what they believe the turning point will be for a circular economy.

In Europe, it is estimated that the circular economy has added around 3.5 million jobs, around €126bn of economic value and mobilised private finance of around €15bn.  Furthermore, it has been observed to empower lower income groups and support economic productivity.

-  European Commission 2018 and Ellen MacArthur Foundation 2020

The GI Hub's thought piece identified six opportunities for infrastructure in the circular economy:

1. Reducing or foregoing the need for finite materials in infrastructure
2. Replacing finite materials with renewable materials
3. Infrastructure that enables material reuse, repair, refurbishment and recycling
4. Infrastructure that enables resource recovery / near zero waste strategies
5. Infrastructure that enables waste-to-energy
6. Digital infrastructure / InfraTech.

To effectively implement these infrastructure opportunities at scale, significant systemic change and technological innovation will be needed. The thought piece uncovered key elements of transition, which policymakers should contemplate. These include:

• Raising awareness by presenting the evidence for change, specifically for infrastructure
• Facilitating policy dialogue
• Identifying opportunities for innovation and incentivising them
• Enabling international collaboration to support the funding and financing of circular infrastructure activity.

Transition pathways will differ by country, as the pathways will be influenced by a range of economic and demographic factors. This presents both a challenge and an opportunity for policymakers. The challenge is that a uniform approach to circularity will not be possible. The opportunity is the significant benefit that can be derived through international collaboration, particularly in developing innovative blended financing solutions for infrastructure circularity in upper-middle and lower-middle income countries.

The GI Hub invites participation in our circular economy workstream. We see this thought piece and the subsequent workshop and roadmap as just the beginning of a journey in the transition towards a circular economy. The aspiration beyond these deliverables is for the G20 to continue the policy dialogue in collaboration with international organisations and industry stakeholders, and to agree on priority areas of focus in the coming months. The GI Hub encourages those interested in being part of this engagement to contact us and get involved.

Contribute to the circular economy roadmap

In June 2021, the GI Hub is releasing a circular economy roadmap to provide high-level guidance on how to transition infrastructure towards a circular economy. If you are interested in being part of this engagement, contact our Director of Thought Leadership, Monica Bennett.

Contribute case studies on green and circular economy funding and financing

Further work is underway to expand the case studies that form part of GI Hub’s Innovative Funding and Financing tool. The tool is designed to help governments understand their options, identify frictions in their markets, and access solutions to improve the quality and quantity of projects attractive to private sector investors. If you would like to submit your own case studies to share with the G20 IWG, please click here and select the option to 'Suggest a resource or case study.'