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Tue 12 Feb 2019 03:56 PM

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How a circular economy could save the GCC $138bn by 2030

New report urges Gulf governments to enhance the value and productivity of material resources

How a circular economy could save the GCC $138bn by 2030

GCC countries can save almost $138 billion by 2030 if they adopt a circular economic model, corresponding to nearly 1 percent of the region’s cumulative GDP between 2020 and 2030, according to new research.

The report, published at the World Government Summit, claimed that under the prevalent linear economic model, the region is depleting its resources at an accelerated rate, generating unprecedented waste and emissions that are causing enormous social, economic and environmental damage.

It said a circular economy is a holistic solution that seeks to enhance the value and productivity of material resources, and minimize any value leakage in order to have a positive economic and environmental effect.

The concept derives its inspiration from nature’s biological and technical cycles by creating a closed loop material cycle.

The report, developed in collaboration with the World Government Summit and the Ideation Centre, the think tank for Strategy& Middle East, said the GCC should target its construction sector which produces 35 to 40 percent of the waste in the region, compared to 25 to 30 percent in the EU, leading to potential benefits of more than $23 billion between 2020 and 2030.

It added that considerable economic, social, and environmental value can be generated through a circular model in mobility by reducing congestion, traffic accidents, and fuel consumption, along with the costs associated with them. A circular mobility model could generate cumulative benefits in the GCC of $69 billion from 2020 to 2030.

Vehicle sharing, would reduce the number of personal car journeys and electric vehicles would cut fuel consumption significantly, it noted.

The research also said GCC consumers exhibit wasteful behaviour in their consumption of electricity, water, and food. Boosting circularity within households could generate cumulative benefits of $46 billion between 2020 and 2030.

“GCC countries are moving toward a path of sustainability, and have set a number of targets relating to renewable energy generation and recycling. However, they still lack a holistic approach for increasing circularity in line with the three principles of the circular economy,” said Alice Klat, director of the Ideation Centre, Strategy& think tank in the Middle East.

Marwan Bejjani, partner with Strategy& Middle East, added: “GCC countries need to move away from the current linear model described as ‘take, make, use, waste.’ For instance, the region’s households are responsible for the highest consumption of electricity in the world, while their gasoline consumption per capita compares to that of North America, the region with the most intensive usage of gasoline.

"This is not sustainable, so there is a pressing need to move to an alternative economic model before it is too late.”

The report said the Gulf region must optimise the consumption of finite resources by sourcing renewable materials, designing products that can be disassembled, reused, repaired, and/or upcycled, and using resources efficiently.

The region should also dematerialise products - instead of selling products through a one-time transaction, manufacturers or distributors agree a contract with customers to provide the product, maintain it, and eventually replace or recover it. It also involves the practice of sharing durable assets such as cars, rooms and appliances; and using products in a manner that ensures durability.

The report also recommends refurbishing and remanufacturing products, recovering by-products from the manufacturing process and reintroducing them into the production cycle and retrieving discarded materials after consumption and reusing them for new products.

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