Australia should adopt stronger regulation in order to maximise opportunities which are available through the circular economy, a major engineering conference has heard.

At the Climate Smart Engineering Conference held by Engineers Australia in Melbourne, Professor John Thwaites AM, former Deputy Premier of Victoria, said that Australia needs to adopt a proactive approach toward regulation in order to embed circular practices across the economy.

Thwaites is Chair of the Circular Economy Ministerial Advisory Group, which advises Environment and Water Minister Tania Plibersek on circular economy issues.

He says the Advisory Group would like action on three areas.

These include:

• Developing a national circular economy framework which would give the Commonwealth powers to set specific circulatory requirements including for products, materials and services.
• Amending the National Construction Code to include requirements to minimise embodied carbon emissions during fitout and capital works projects and amending building regulations to focus on end-of-life considerations in design strategy and material selection in new building construction.
• Amending finance and commercial regulation to require public companies to disclose the opportunities and risks which they face in terms of sustainability including the circular economy.

(Former Victorian Deputy Premier John Thwaites (centre) and Circular Australia CEO Lisa McClean address the Climate Smart Engineering Conference held by Engineers Australia in Melbourne. The session was moderated by Aaron Wood AM (right), Chief Policy and Impact Officer of the Clean Energy Council )

The latest call comes as Australia faces significant challenges in reducing the level of waste that ends up in landfill.

All up, the 2022 edition of the National Waste Report shows that Australian generated around 75.8 million tones (Mt) of waste during 2020/21.

Almost one third of this (25.2 Mt) consists of building and demolition materials. Other waste streams include organics, ash, hazardous waste (contaminated soil), paper and cardboard, metals and plastics.

Of the waste generated in 2020/21, almost two-thirds (63 percent) was recovered through recycling, reuse and waste to energy schemes.

However, the remaining 37 percent (28 Mt) went into landfill.

In response, all levels of government have committed to a National Waste Policy which aims to see Australia transform into a circular economy by 2030.

Commitments under this policy include preventing the export of key waste streams, increasing the resource recovery rate (63 percent in 2020/21) to 80 percent by 2030, halving food waste by 2030 and a series of national targets for the reusability or recycling of packaging materials.

According to Thwaites, Australia lags behind international counterparts in circular economy regulation.

Thus far, the main legislation which has come out of the aforementioned waste policy is the Recycling and Waste Reduction Act 2020.

This Act has led to a ban on exporting waste or materials such as glass, tyres, plastic and paper and cardboard. It also provides a framework for promoting co-regulation through a range of stewardship recycling schemes. The Act provides the Environment Minister with powers to restrict or prohibit substances and to require either labelling, durability and/or reparability – although this can be done only as part of a product stewardship scheme.

Thus far, however, the practical impact of this has been limited as implementation of product stewardship schemes has proven to be cumbersome.

Overseas, some have gone further.

In the European Union, a new Ecodesign for Sustainable Products Regulation establishes a framework for the development of eco-design requirements for specific product groups.

In France, a new anti-waste law that was passed in 2020 bans the destruction of unsold non-food products. Rather than landfill or incinerate unsold goods, companies now need to reuse, donate or recycle their unsold products.

The new French law has also introduced a mandatory repairability index which must be disclosed on certain electronic products (smartphones, laptops, washing machines, televisions). This aims to increase the proportion of products which are repaired. It aims to achieve this by forcing manufacturers to consider repairability at the design stage and by making consumers aware of repair options when purchasing a device.

In China, a Circular Economy promotion law which was passed in 2008 requires new government polices to meet certain criteria for promoting a circular economy and requires industries to implement management systems that reduce waste generation and improve resource recovery and recycling.

Thwaites says the importance of regulation should not be underestimated.

Whilst some businesses will naturally adopt innovative approaches, he says it is only through regulation that circular economy approaches can be driven across the economy.

“When we think about the transition economy, we will have some businesses who innovate and lead,” Thwaites said.

“But then we have to move all businesses through the mainstream if we are going to achieve circular economy. And unfortunately, we have a lot of laggards who really don’t act until there is regulation.

“When we want to support the innovation side, we should use things that enable and incentivise that. That includes things like research, support or subsidies and incentives to get innovation going.

“But to get the circular economy operating across the whole of the economy and to pick up those laggards, we do need regulation.”

In terms of specific actions, Thwaites says the aforementioned Advisory Group has provided three core recommendations.

First, the Group has called for the development of a national circular economy framework which would give the Commonwealth the power to set specific circulatory requirements including for products, materials and services.

This would enable the Commonwealth to set or adopt national circular economy standards for products and materials or to create relevant directives that drive circulatory.

Initially, the focus would be on fast moving consumer goods such as packaging, electronics and textiles.

Next, changes to drive circularity in the built environment should be implemented through changes to the National Construction Code (NCC) and building regulations.

Toward this end, the Committee recommends that the NCC should be amended to include requirements to minimise embodied carbon emissions when undertaking fitout and new build projects.

As things stand, the Code has provisions which cover energy efficiency and thus operational emissions.

However, it does not address the embodied emissions which are inbuilt into the building’s fabric through materials which are used and emissions which occur during construction.

In addition, the Advisory Group believes that building regulations should also be amended to incorporate end-of-life considerations.

In this area, regulations should support the keeping of records across the building life-cycle. This includes records on design and materials so as to support disassembly and re-use at end-of-life.

Finally, the Committee has called for financial regulation that would mandate disclosure of sustainability related risks and opportunities.

This would align with the General Requirements for Disclosure of Sustainability-related Financial Information published by the International Sustainability Standards Board.

The requirement would apply to companies who are required to produce financial reports under the Corporations Act. This mostly encompasses public companies and other large companies.

It would force such organisations to disclose sustainability related risks and opportunities that could reasonably affect their financial prospects over the short, medium or long-term.

According to Thwaites, the importance of this last point should not be underestimated.

He says a key reason why circular economy concepts tend do not generate the same level of management attention as that afforded to other areas revolves around a current lack of any requirements for public disclosure in this area.

Australia’s waste generation and recovery performance

(source: National Waste Report 2022)

Speaking alongside Thwaites at the conference was Lisa McLean, Chief Executive Officer of Circular Australia and a member of the aforementioned Advisory Group.

McClean says that benefits of circular economy practices are substantial.

As well as reducing carbon emissions, McClean says that circular economy approaches can help to avoid biodiversity loss and depletion of natural resources. This includes critical resources of which supply is finite.

Citing a 2021 report from PwC, McLean said that circular economy solutions could deliver $1.9 trillion in economic benefits over 20 years.

Whilst recycling is important, McLean says that Australia should adopt a broad range of strategies.

In particular, this involves avoiding the need for waste by designing out waste across the stages of production, use and end-of-life.

One area of opportunity is ‘dematerialising’. This could include replacing cement with supplementary cementitious materials. Another example could be the replacement of concrete and steel with cross laminated timber.

A second area of opportunity is ‘as a service’ solutions.

These could include items such as lighting, fashion, mobility or facades.

In the Netherlands, for example, Phillips is now providing lighting as a service in the terminal buildings at Amsterdam Airport Schiphol. Under the arrangement, Phillips remains the owner of all fixtures and fittings and the fixtures and fittings will be reused at the end of their life. Schiphol will simply pay for the light which it uses.

Finally, McClean says it is critical to ensure that products and buildings are designed for repair and disassembly at their end-of-life.

(The Circular Economy Ministerial Advisory Group would like to see the National Construction Code amended to require embodied carbon emissions which occur during construction to be minimised in new builds and retrofits.)

Asked about prospects for uptake of circular economy approaches, Thwaites says he remains optimistic.

He points to the level of ‘buy-in’ which the Advisory Group has had with key Government ministers.

This includes face to face meetings not only with Plibersek (who established the Group) but also Treasurer Jim Chalmers along with the Ministers for Climate Change (Chris Bowen), Science (Ed Husic)  and Trade (Don Farrell).

“I’m always optimistic,” Thwaites said.

“But I don’t think there is an alternative. The alternative is giving up.

“I think that if we are optimistic and we are implementing this, we are going to get better outcomes than if we are negative.”