Harnessing Innovation For Circular Economy

Our global economy consumes massive amounts of resources year after year—shooting past our planet’s safe limits and raising an increasing number of environmental challenges. The divide between what we extract and use and what our planet can provide is widening. Last year’s Earth Overshoot Day fell on July 28th, indicating that we consumed the Earth’s yearly regenerative capacity in a little over half a year, using resources at a pace that would require nearly two planets to sustain.

Aside from damaging biodiversity and posing a threat to reserves of natural resources, such prodigious consumption is tightly linked to climate breakdown: around 70 per cent of greenhouse-gas emissions are tied to the handling and use of materials. To ensure both people and the planet can thrive, we need to usher in a new economic paradigm—one that regenerates nature, designs out waste and keeps materials in use at the highest value possible for as long as possible.

The big shift is to a circular economy, and we have a powerful toolbox of solutions which could fulfil people’s needs with just 70 per cent of the materials we use, thereby limiting temperature rises and further environmental degradation. But global change requires local action: cities are the future of the circular-economy transition.

Driving the transition

As epicentres of innovation, infrastructure, investment and culture, cities are big consumers: in many countries, urban hubs are responsible for the largest portion of material and carbon footprints. According to the Global Footprint Network, by 2050 up to 80 per cent of the world’s population is expected to live in urban areas, projected to consume 90 billion tonnes of materials annually, although they occupy just 3 per cent of the world’s surface.

Their massive impact means that cities (as also regions) boast the power to drive the circular-economy transition. More agile than national governments and closer to local initiatives, municipalities can influence a range of critical sectors, from construction to manufacturing.

Cities comprise many complex systems that fulfil residents’ needs, from housing and transport to food and energy. Systemic change must occur across sectors, requiring actors to rethink how they do business and consume resources. As with any disruptive transition, innovation must underpin this.

Defining ‘innovation’ in the context of a circular economy can be tricky—but central are novelty and improvement, value creation and redistribution, and dissemination of ideas and technologies. Innovation can, and should, affect politics and society alike, drawing on social (including organisational) as much as technological considerations. Innovative circular practices and initiatives range from incremental to radical and can involve a wide range of stakeholders.

Municipal authorities can use various instruments, from awareness-raising to capacity-building, to engage and mobilise citizens and associations, kickstarting the long-term change a circular economy entails. By providing the crucial catalyst of shared spaces—variously described as living labs, maker spaces or FabLabs—they can make resources available within the city for the ‘co-creation’ of schemes.

Independent initiatives and new businesses frequently encounter high costs and inadequate public infrastructure and resources. Cities can acquire essential assets for sharing by multiple actors—such as water-cutting or 3D-printing machines—which startups may be unable to afford themselves, thereby surmounting startup barriers and propelling innovation.

Take Amsterdam Smart City’s Circle Lab, an open innovation platform promoting collaboration among companies, policy-makers and others. It fosters innovation by helping translate Amsterdam’s circular goals from theory into practice—while mobilising other cities, businesses and citizens to ‘learn by doing’. The lab’s users—which now top 8,000 members and organisations—can meet to learn about city-wide circular initiatives, share ideas and events and get in touch with other innovators.

As public entities, cities have huge spending power, which they can use to leverage innovation. Through their purchasing decisions, cities can incentivise businesses to rethink their products or services, while supporting local businesses and startups and so shaping a thriving economic ‘ecosystem’. 

For instance, Toronto’s Circular Economy Procurement Implementation Plan, a joint effort across the municipality’s departments, aims to spur innovation and create value by engaging directly with local businesses, encouraging the use of new technologies and building capacity to raise awareness. Toronto’s procurement contracts now include circular-economy principles and requirements. With a focus on economic benefits, environmental criteria and job creation, the plan drives circular procurement in the city while supporting Toronto’s broader goals of achieving zero waste and enhancing social prosperity.

Pilot projects are experimental springboards for innovation. By encouraging creativity and out-of-the-box thinking, cities can soften the risks associated with novel, small-scale ideas and test their feasibility. Crucially, pilots allow organisations to learn from their experiences and improve over time—helping them better understand the benefits and limitations of scaling up their innovations. 

For example, the O-House, a project launched in Kongsvinger in Norway, is a modular home for young people made from recycled and renewable materials. It can be moved from place to place around the municipality, demonstrating how moveable, sustainable homes could be an affordable option for first-time buyers struggling to enter the housing market. 

Report card

Before launching pilots or embarking on innovative journeys, cities must know where they stand: they need a circular-economy ‘report card’ that shows how they are doing and where they can best focus their action. Circle Economy’s Circularity Gap Reporting Initiative, which has calculated circularity at the national level for years, is now coming to cities with the launch of ‘CGR4cities’.

The Circularity Gap Reporting Initiative brings together stakeholders from businesses, governments, academia and non-governmental organisations to evaluate findings, based on the latest scientific evidence, and to design scenarios to inform policy-making and industry strategy. With the use of participatory and multi-stakeholder processes, it ensures that plans lead to sustained actions on the ground. Cities wishing to take part can request a scan.

(Pau is a research analyst at Circle Economy while Ana is a writer and editor for Circle Economy.)

- Social Europe