We need to decouple economic growth from resource consumption
IMAGINE, if instead of discarding things after using them, we find ways to give them new life.
That's the idea behind a circular economy – creating a system in which we make the most of our resources by reusing, repairing and recycling items, rather than continuously producing and disposing of them.
The linear economy, which has been the norm of our societies for decades, follows a linear path whereby resources are extracted, transformed into products and eventually discarded as waste.
However, this linear approach has proven to be unsustainable, depleting natural resources, polluting ecosystems and exacerbating climate change.
The circular economy presents a radical departure from this status quo, offering an alternative framework that emphasises the regenerative use of resources and the reduction of waste.
The big shift
The circular economy is a transformative approach that aims to shift from the traditional linear "take-make-dispose" model to a closed-loop system.
This system focuses on keeping resources in use for as long as possible, extracting maximum value from them before recovering and regenerating materials at the end of their life cycles.
One of the fundamental principles of the circular economy is designing out waste and pollution. This involves reimagining product design and manufacturing processes to minimise the use of virgin resources, eliminate harmful chemicals, and ensure products are durable, repairable and recyclable.
Experts posit that by decoupling economic growth from resource consumption, and by shifting our focus from a linear "take-make-dispose" mindset to a more sustainable closed-loop system, it will help create a society that values circularity, resilience and sustainability.
This model also addresses a profound shift in how we produce, consume and interact with our natural resources.
'The circular economy is really about decoupling economic growth from resource consumption.' - Arup Sustainability Strategy South-East Asia lead Devni Acharya.
Clean growth expert Devni Acharya points out that that by decoupling emissions from economic growth, it will aid in the transition to a low carbon economy while increasing our national wealth and lowering carbon emissions.
“The circular economy is really about decoupling economic growth from resource consumption.
“It’s very different from what we’ve seen historically or currently where we extract materials from the Earth and manufacture products from them which we then, at best, recycle, and at worst throw them out,” says Devni who is Sustainability Strategy South-East Asia lead at Arup, a global sustainable development consultancy.
But shifting to a new system requires effort from all parties, not only manufacturers and consumers but also governments.
“When it comes to government, it’s about setting boundary conditions to make sure everyone has a level playing field.
“For instance, putting in place eco-design directors to help manufacturers and product designers in how they design products that get put onto the market.
“There are also areas of extended user responsibility in which manufacturers and waste management industries have a role to play alongside new industries like remanufacturers and recyclers, and these are areas where governments can step in,” she says.
Initiatives in place
Although the transition to circular economy and green growth is still in its early stages in Malaysia, there are concerted efforts by industry leaders and smaller players in exploratory pilot projects and new business models – such as clean energy company Gentari which is exploring clean, renewable energy, and ERTH which collects e-waste and sees to its refurbishment, remanufacturing or recycling.
We have national ambitions and policies to achieve this transition to a low-carbon economy though. This is reflected in the policies and strategies in place at federal, regional, state and local levels – with an emphasis on decarbonisation.
The government has also committed to reducing our greenhouse gas (GHG) emissions intensity against our gross domestic product (GDP) by 45% from 2005 baseline levels by 2030.
Parallel to ambitions and plans, there needs to be a coordinated effort between individual industries and sectors to ensure we meet our nationally determined contributions (NDCs) target based on emissions intensity.
In December 2022, Bursa Malaysia established the Bursa Carbon Exchange (BCX) which serves as the country’s voluntary carbon market (VCM) exchange to promote Malaysia’s low carbon transition.
Being the first shariah-compliant carbon exchange, the BCX provides sustainable and shariah-compliant solutions for investors too.
An old electronic device that has been disassembled can re-enter the supply chain as repurposed products.
The VCM enables companies to generate, purchase and sell voluntary carbon credits, with the BCX facilitating transparent prices for high-quality carbon credits derived from nature-based solutions and technologies that reduce or remove carbon emissions.
The BCX held its inaugural carbon credit auction earlier on March 16 this year which saw 15 buyers from various industries purchasing a total of 150,000 Verra-registered carbon credits.
VCMs have the capacity to catalyse and provide financial incentives for nature-based solutions such as reforesting mangroves and wetlands, avoiding deforestation, facilitating improved or sustainable forest management, or technology-based solutions that support emissions avoidance, reduction or removal.
According to the UK-Malaysia Clean Growth Handbook* co-produced by Arup, platforms like the VCM and BCX will help to increase “demand for high-quality removal credits as companies in the hard-to-abate sectors and those with high financed emissions will need offset strategies to meet emissions reduction targets.”
The BCX auction provides a clear signal to potential project owners and developers on the economic viability of carbon credits by establishing a market-based price for carbon credits, thereby encouraging local project owners to develop carbon credit projects that will have a significant impact in the race to decarbonisation.
Of course, this is just one way that policies and regulations can spur the transition towards a circular, sustainable economy.
Beyond waste management
Devni, who co-authored the UK-Malaysia Clean Growth Handbook, tells StarESG that “different countries have different entry points into the circular economy.”
“The majority of countries see the concept of the circular economy as a waste management method, which it is part of, but it’s much more than that,” she added, acknowledging that waste management is the most common in-route for countries beginning their circular economy journey.
“The circular economy is also about business growth, economic growth, social values and social cohesion which is missing from the dialogue in Malaysia currently.
“So there are ways to expand and understand what the circular economy means in the wider economy, and not only from the waste management perspective,” she says.
For instance, by prioritising eco-design and embracing innovative technologies, Malaysian businesses can explore new avenues and create products that have a longer lifespan and can be easily disassembled and repurposed at the end of their useful life.
“Manufacturers have a role in designing products and materials that either have durability as a key factor, or if they are designed for a short life, to ensure that the products are easily returned back into the economy,” says Devni, adding that “design for deconstruction” or “design for disassembly” ensures that the product can be returned into the material stream.
This shift not only reduces waste but also paves the way for new business models centred around product-as-a-service and sharing economies.
“Alternatively, manufacturers can explore new avenues like ‘product-as-a-service’. Rather than sell products, they can claim their products at the end of their life to potentially remanufacture these products and ensure the materials re-enter their supply chain, creating resilience in their supply chain,” says Devni, sharing that one of the hurdles in this case would be with the logistics sector in coordinating the retrieval of used products.
Samsung Electronics, for instance, recently announced the expansion of its Galaxy Upcycling programme Galaxy Upcycling at Home – an initiative that gives new life to older Galaxy smartphones by converting them into a variety of IoT (Internet of Things) devices through a simple software update – to India, Morocco and Papua New Guinea.
In principle, this encourages the extension of product lifespan through repair, refurbishment and remanufacturing, thereby reducing the premature disposal of goods and maximising their value over time while creating resilience in times of material shortages.
“While Malaysia continues to grow in the manufacturing space, we also need to look at the remanufacturing space,” says Devni.
New energy systems
One key area of focus for Malaysia is the development of solar energy. With abundant sunlight throughout the year, we have favourable conditions for solar power generation.
The government has set ambitious targets for solar capacity installation, aiming to increase renewable energy's (RE) share in the energy mix. This includes the implementation of large-scale solar projects and the promotion of rooftop solar systems for residential and commercial buildings.
In addition to solar, Malaysia is exploring other RE sources such as wind, biomass and hydropower. Our rich biodiversity also presents hydropower potential through the development of small and micro-hydropower projects.
On the other hand, Malaysia Investment Development Authority (MIDA) has begun work on biomass derived from agricultural waste and plant materials as opportunities for sustainable power production.
Presently, MIDA facilitates the BioHub Port Project in Sarawak in collaboration with the Sarawak Economic Development Corporation (SEDC), Bintulu Port Holdings, the Port of Rotterdam – Europe’s largest port – and other consortium partners.
The intention is to build a fully bio-based symbiotic industrial complex and integrated seaport in Bintulu, a coastal town 610km north-east of Kuching,
Malaysia has implemented various policies and incentives such as feed-in tariffs and net energy metering schemes to promote renewable energy generation, and encourage investment in clean energy projects.
The government also established the Sustainable Energy Development Authority (SEDA) to oversee and coordinate the development of renewable energy in the country.
According to SEDA chief executive officer Datuk Hamzah Hussin, SEDA produced the Malaysia Renewable Energy Roadmap (MyRER) that the government published in 2021, which included examining the baseline of RE installed capacity and possible sources, defining particular RE technology targets and scenarios, and developing a strategic roadmap.
"MyRER is our primary reference for targets and action plans until 2035, namely to achieve 31% of RE share in national installed capacity mix by 2025 and 40% (including major hydropower) in national electricity supply by 2035.
"MyRER is capable of effectively contributing to socioeconomic development, which is expected to provide green jobs as well as private investments. By 2035, the government hopes to have created 44,068 jobs and invested RM31.88bil, he says.
Alongside this are active measures in promoting energy efficiency and conservation measures to reduce overall energy demand. This includes implementing energy efficiency standards for buildings and appliances, and raising awareness among businesses and consumers about the importance of energy conservation.
Devni states that building the right infrastructure to transition to RE takes time, adding that national ambitions have a role in spurring divestment and investment into RE sources.
“In terms of infrastructure, we have to consider more than just RE generation, there’s also transmission and distribution of said energy for large-scale RE.
“Infrastructure upgrades to the grid can cause stability challenges and that’s where we need to consider battery storage or reserves to ensure that there is power on hand.
“So if there’s an excess of RE produced, the energy can be stored or if there is a shortage, that energy can then be returned to the grid,” she says.
In a report by the International Renewable Energy Agency titled Malaysia Energy Transition Outlook, an estimated US$23mil worth of investments till 2030 is expected to be on storage solutions, with current focus largely only on utility scale battery energy storage systems (BESS). According to the Energy Commission of Malaysia, a 500MW BESS pilot project will first be implemented, while 100MW of BESS capacity will be added each year between 2030 and 2034.
“While there have been pilot projects, we need more wide-scale adoption like what the UK currently has done such as the creation of battery storage facilities because it signals to RE developers that their products will have stable returns with a stable grid,” says Devni.
*The UK-Malaysia Clean Growth Handbook is a collaboration between our country and the United Kingdom in innovating and investing in the energy and manufacturing sectors to help the nation reach its net zero emissions target with practices to promote clean growth in the sectors, while promoting green finance and sustainable infrastructure development.