Circular Economy and the Plastic Value Chain

Plastic Granulate

GIZ – GSI Circular Economy Solutions Dialogues 2021

Bending the Linear Agenda: Circular Economy Policy Instruments, Business Models and Technology Uptake in the Plastics Value Chain

"You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” (R. Buckminster Fuller)

The Circular Economy Solutions Dialogues (CESD) is an initiative hosted by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and the Global Solutions Initiative (GSI).

After four consecutive sessions the first CESD series Bending the Linear Agenda: Circular Economy Policy Instruments, Business Models and Technology Uptake in the Plastics Value Chain came to an end. The series was designed in a co-creative set up and involved participants with various institutional and sectoral backgrounds with the goal to inspire a conducive narrative feeding into the G/T20 process; analyse mechanisms scaling-up circularity and devise context-sensitive strategies for their broad implementation while building on the momentum of multilateral policy dialogues and commitments on the circular economy (GACERE, ACEA, LAC CE Coalition, G20 Resource Efficiency Dialogue).

Four sequences of the dialogue

  • Session one built a common understanding of challenges and solutions in integrating circularity in value chains, focusing on plastics. A forward looking, solution-focused discussion encouraged participants to view the circular economy in two parallel lens: the enabling frameworks and the actual implementation.
  • Session two took a deep dive into the technological perspective across the plastics value chain. Breaking through the dilemma of searching for the great technology or rather promoting modest but existing and proven circular economy solutions, the discussion addressed issues like the use of new technologies (indicatively, sharing platforms, circularity metrics/data analytics, product/material tracking), standardisation, and circularity reporting.
  • Session three delved into the scaling up challenge. The nitty gritty of promoting an ecosystem approach within the plastics value chain, one that enables policy makers, the industry, as well as finance and technology providers effectively work together, was in focus.
  • Session four was all about strategy. How can we define context-sensitive strategies for a broad implementation of mechanisms scaling up the uptake of circular economy practices across the plastics value chain? The discussion took due consideration of the ‘why’ factor: what does more circularity in the plastics value chains mean for people, business and nature?

Key messages

Four key messages were generated over the course of the dialogue sessions:

  1. Embrace technological pioneers and innovations: recognise existing models that hold the potential to help businesses evolve by creating customised and localised solutions for the application of new technologies and the distribution of circularity within their respective cluster and ecosystem; mainstream the use of new technology-based circular economy business models in the plastics value chain (i.e., innovation, regulation/licensing, investment bankability).
  2. Decide for disruptive regulations that allow for a new normal of manufacturing design: enable standardisation of circular practices across the entire plastics value chain; design and implement frameworks for processes that are reliant on producers and manufacturers depending on the re-use of materials.
  3. Value a systems approach for functional material flows: promote an ecosystem approach to scale-up circular solutions uptake in the plastics value chain (i.e., multinational companies’ leverage on local suppliers, policy support under EPR schemes, national partnerships for action to address pressing waste and pollution challenges); develop appropriate infrastructure for plastic waste recycling and to prolong the useful life.
  4. Phase out non-circular production and manufacturing, operationalise local and multi-national circular economy ecosystems and align circular economy stakeholders at all levels: nurture global, regional and multilateral partnerships within as well as across sectors and countries towards circularity in the plastics value chain, facilitate knowledge exchange, and promote local partnerships, especially with regards to urban agglomerations, mobilising local governments, starting at project levels and reaching alliances for systems change.

Four key elements to shape the future circularity of plastics

  1. Inspiring and Learning (awakening awareness across stakeholders - not just the stockholders - at all levels of a global challenge is key, closing knowledge and information gaps, education to serve a circular economy transition is essential): Those features act as “natural” catalysts that shape existing manufacturing and consumption models, but the accessible (foreign) knowledge becomes only an applicable solution when the local and sectorial businesses and stakeholders understand and benefit from it.  
  2. Enabling (frameworks, policies): Distributive soft and hard infrastructures are crucial to make global technological solutions applicable in specific sectorial and local contexts. They anticipate the respective necessary ecosystems around available circularity models that become the foundation for prosperous up-take at all business levels.
  3. Financing (moving away from unsustainable investments, increasing sustainable investments, as well as diversifying sustainable investments beyond renewable energy production and energy efficiency, to also address circularity in the plastics value chain): The growing evidence that regulation from the current investment models and targets can only achieve limited goals in terms of ecological sustainability initiatives of a new financing rational begins to encourage new and distributive models for investing. Embracing the latest advancements in the sustainable financial sector would level the playing field between technological pioneers and (private or public) financial institutions. 
  4. Implementing (capacity development, new business models, overcoming hurdles): Once business communities in a sector become informed by the innovations of pioneering companies there will be little chance for a return to the previous business as usual – hence, moving mindsets away from end-of-pipe solutions. New business models based on circular economy principles in the plastics value chain that can be adjusted to local contexts along with suitable framework conditions are needed.

Ten prioritising actions in developed and emerging countries & recommendations

The overarching opportunities for improving the performance of the plastic value chain converge, even though prioritisation differs depending on the respective economies. Recommendations in particular are:

  • raise awareness (policy and business decision makers, entrepreneurs, consumers)
  • introduce and contextualise the flexible and universally applied CE terminology,
  • advance from voluntary schemes to enforced standards and regulations,
  • introduce cross-boundary jurisdictions and applying measures to address increasing resource consumption and waste generation in cities,
  • align finance mechanisms to evidence-based targets and providing a variety of incentives for firms to encourage and support innovation,
  • promote the diversification of available financial support and emerging sustainable investment schemes,
  • include blending schemes, local banks, investment funds, angel finance, etc.,
  • promote the proper implementation of EPR systems, and promote implementation with schemes for supervision and enforcement while involving all stakeholders,
  • shift the effort upstream (reduction / reuse) by supporting suppliers to embed CE solutions at an early stage of production,
  • expand infrastructure distributing and promoting available technological solutions and improve skills and competences

A three-fold approach for circular economy scale-up strategies and their effects on people, business and nature

  1. pushing for more transparency across value chains
  2. reconsidering the reuse and remanufacturing options and
  3. integrating these scale-up strategies into trade policies, with harmonised definitions and standards.