Increased momentum towards a circular economy: opportunities to transform the GCC region

Increased momentum towards a circular economy: drastic changes and opportunities to transform the GCC region

The global economic downturn, caused by the pandemic, has brought the term ‘circularity’ centre stage, renewing the call for global collaboration to replace the conventional linear model. Over the years, the implementation of this linear ‘take-make-dispose’ industrial model has led to the overconsumption of raw materials, which consequently resulted in the irrational use of available resources.

This conventional model continues to exhaust raw materials and energy and increases CO2 emissions. Given the growing world population and increasing demand for the finite supply of resources, ecological crises become a reality, and the transition to a more sustainable model becomes a top priority for governments, businesses, and citizens worldwide. Weighing all alternative paths to a more environment-conscious economic model, the circular economy has an integral role to play. It represents a promising vehicle to yield enormous economic, social, and environmental benefits, and is based on the 3R principle: reduce, reuse and recycle. In essence, the model offers opportunities well beyond profit marking, to benefit both society and the planet.

Mapping the benefits of a circular economy

A key question raised at this year’s?World Economic Forum (WEF) in Davos was, how can we avoid the next crisis? Current economic conditions, persevering business instabilities and geopolitical tensions continue to impose more challenges to traditional business models. This clearly explains the increasing momentum towards a circular economy.

Adopting this model accelerates the efficient use of resources, reduces the need for finite resources, enhances supply-chain resilience, restores natural systems, and boosts economic growth. The transition towards a circular economy is set to create a?$4.5 trillion global growth opportunity?by 2030, a report by Accenture estimated. In June 2020, more than 50 global leaders and chief executives endorsed the circular model as a viable solution to ‘build back better’ and achieve green and sustainable recovery from the COVID-19 crisis. As a result, since the beginning of the pandemic, assets in public equity funds with a circular economy focus have increased from $0.3 billion to over $2 billion, a sixfold jump as shown in a report by the Ellen MacArthur Foundation.

Within ground-breaking transformation lie many challenges. Similar to the born-digital companies that disrupted traditional business models, we are likely to witness more born-circular companies, disrupting the linear-based model. For circularity to achieve wide adoption at the global level, international collaboration is needed to overcome transition barriers such as abandoning current business models, writing off important linear-based assets, and reconfiguring the current linear-based supply chains.

Circular economy transition across the GCC

Acknowledging the indispensable need to shift from hydrocarbon-led economic growth to sustainable models, the Gulf Cooperation Council (GCC) countries have seen accelerated development in all aspects of life, backed by solid government finances. The region has witnessed the launch of economic diversification programmes based on developing new circular sectors and activities, such as waste management, maintenance and repair, remanufacturing, and advanced recycling processes, among others.

In Qatar, the building blocks of a circular economy are already in place. Qatar’s efforts to transition to a more sustainable model stem from its national vision and include climate change strategy, green cities, and national targets for resource efficiency and waste management. Developing state-of-the-art green living environments, including Lusail City and Msheireb Downtown, hosting the first carbon-neutral FIFA World Cup in 2022, and rolling out environmentally friendly transportation systems are some of the milestones that propel and place Qatar in an excellent position to further advance its work on resource efficiency and the circular economy.

A recent circular economy policy paper published by the Investment Promotion Agency Qatar (IPA Qatar) highlights a recent study that found the GCC can save up to $138 billion by 2030 with the circular model. For Qatar in particular, the study estimates an additional $17 billion to be generated by 2030, corresponding to 10 percent of Qatar’s current GDP. It also highlights that a circular model can create an estimated 9,000-19,000 jobs in Qatar alone by 2030, increasing disposable income, and attracting more greenfield FDI as the world gravitates toward sustainable investing. Equally as important is achieving a balance between economic growth and environmental stewardship.

Advancing the GCC’s circular transformation

The high potential non-oil sectors, including renewables, water, food, built environment, transportation, and waste management, need to be considered for circular pilot projects and initiatives to speed up the transition process across the GCC. Transitioning to a circular economy, however, entails more than designing superior products and recycling waste. It involves a drastic change in the relationship between businesses and their customers. In this context, only with collaborative action and substantial joint efforts, can the traditional linear model be reinvented, and systemic change can be realised to scale circular innovation.

The IPA Qatar’s report stresses the need to harness technological advances such as the 4th Industrial Revolution (4IR) to optimise processes, advance regional collaboration on the circular economy, increase competitiveness, and, above all, achieve sustainable development.