Summary

• There is growing optimism about the potential of the ‘circular economy’ (CE) as a new model for sustainable growth in developing countries. A CE is one in which products are recycled, repaired or reused rather than thrown away, and in which waste from one process becomes an input into other processes. In recent months there has been CE-related activity in countries as diverse as Laos, Rwanda and Colombia.
• A CE strategy could help lower-income countries ‘leapfrog’ to a more sustainable development pathway that avoids locking in resource-intensive practices and infrastructure. But a stronger evidence base is needed to show how the agenda can deliver opportunities for industrialization, as well as addressing environmental insecurity.
• Lower-income countries are in many ways more ‘circular’ than their developed-economy counterparts – the question is how to turn this into a development opportunity. Much economic activity in lower-income countries revolves around sorting and reusing waste. However, higher-value, employment-generating opportunities for reuse and remanufacturing are yet to be captured.
• The existence of circular activities in developing countries provides excellent political ‘entry points’, which could enable governments, the private sector, civil society and other actors to promote innovative economic models. The CE could provide a powerful narrative, helping to build momentum around a set of ideas that can be applied in and tailored to multiple sectors or cities.
• There is a window of opportunity in which to align the efforts of development organizations and partner countries. Donors are exploring how the agenda should be aligned with the Sustainable Development Goals (SDGs) and the Paris Climate Agreement. Wider international cooperation on the CE could involve trade partnerships, regional hubs or pilot zones.

As the UK leaves the EU and the formal negotiations on the future relationship begins, this workshop will discuss any immediate changes and review the short and medium term impacts of Brexit on the energy sector. 

The workshop will look to cover:

• The implications for UK business and system operations of the UK leaving the Internal Energy Market.
• Current and future investment trends in the UK energy system.
• The trade of electricity and gas over inter-connectors.
• The need for the development of a new EU-UK operational framework mechanism.
• The UK's EU withdrawal agreement and the operation of the Single Electricity Market (SEM) across Ireland. 
• Options for the UK outside of the EU Emissions Trading System (ETS) and the impact on carbon prices.

This workshop is part of a programme funded by the UK Energy Research Centre on Brexit and the UK’s Net Zero Energy Policy being run by the University of Warwick and Chatham House.

Attendance at this event is by invitation only.

COVID-19 is a sharp reminder of why trade and climate policy matters. How can governments maintain access to critical goods and services, and ensure global supply chains function in times of crisis?

The timing of many trade negotiations is now increasingly uncertain, as are the UK’s plans to host COP26 in November. Policy work continues, however, and the EU has released its draft negotiating text for the new UK-EU trade deal, which includes a sub-chapter specifically devoted to climate. 

This is a timely reminder both of the pressing need for the UK to integrate its trade and climate policymaking and to use the current crisis-induced breathing space in international negotiations - however limited - to catch up on both strategy and priorities on this critical policy intersection.

The UK government has moved fast to reset its external trade relations post-Brexit. In the past month it formally launched bilateral negotiations with the EU and took up a seat at the World Trade Organization (WTO) as an independent member. Until the COVID-19 crisis hit, negotiations were also poised to start with the US.

The UK is also in the climate spotlight as host of COP26, the most important international climate negotiation since Paris in 2015, which presents a vital opportunity for the government to show leadership by aligning its trade agenda with its climate and sustainability commitments in bold new ways.

Not just an empty aspiration

This would send a signal that ‘Global Britain’ is not just an empty aspiration, but a concrete commitment to lead.

Not only is concerted action on the climate crisis a central priority for UK citizens, a growing and increasingly vocal group of UK businesses committed to decarbonization are calling on the government to secure a more transparent and predictable international market place that supports climate action by business.

With COP26, the UK has a unique responsibility to push governments to ratchet up ambition in the national contributions to climate action – and to promote coherence between climate ambition and wider economic policymaking, including on trade. If Britain really wants to lead, here are some concrete actions it should take.

At the national level, the UK can pioneer new ways to put environmental sustainability – and climate action in particular - at the heart of its trade agenda. Achieving the government’s ambitious Clean Growth Strategy - which seeks to make the UK the global leader in a range of industries including electric cars and offshore wind – should be a central objective of UK trade policy.

The UK should re-orient trade policy frameworks to incentivize the shift toward a more circular and net zero global economy. And all elements of UK trade policy could be assessed against environmental objectives - for example, their contribution to phasing out fossil fuels, helping to reverse overexploitation of natural resources, and support for sustainable agriculture and biodiversity.

In its bilateral and regional trade negotiations, the UK can and should advance its environment, climate and trade goals in tandem, and implementation of the Paris Agreement must be a core objective of the UK trade strategy.

A core issue for the UK is how to ensure that efforts to decarbonise the economy are not undercut by imports from high-carbon producers. Here, a ‘border carbon adjustment (BCA)’ - effectively a tax on the climate pollution of imports - would support UK climate goals. The EU draft negotiating text released yesterday put the issue of BCAs front and centre, making crystal clear that the intersection of climate, environment and trade policy goals will be a central issue for UK-EU trade negotiations.

Even with the United States, a trade deal can and should still be seized as a way to incentivize the shift toward a net zero and more circular economy. At the multilateral level, as a new independent WTO member, the UK has an opportunity to help build a forward-looking climate and trade agenda.

The UK could help foster dialogue, research and action on a cluster of ‘climate and trade’ issues that warrant more focused attention at the WTO. These include the design of carbon pricing policies at the border that are transparent, fair and support a just transition; proposals for a climate waiver for WTO rules; and identification of ways multilateral trade cooperation could promote a zero carbon and more circular global economy.  

To help nudge multilateral discussion along, the UK could also ask to join a critical ‘path finder’ effort by six governments, led by New Zealand, to pursue an agreement on climate change, trade and sustainability (ACCTS). This group aims to find ways forward on three central trade and climate issues: removing fossil fuel subsidies, climate-related labelling, and promoting trade in climate-friendly goods and services.

At present, the complex challenges at the intersection of climate, trade and development policy are too often used to defer or side-step issues deemed ‘too hard’ or ‘too sensitive’ to tackle. The UK could help here by working to ensure multilateral climate and trade initiatives share adjustment burdens, recognise the historical responsibility of developed countries, and do not unfairly disadvantage developing countries - especially the least developed.

Many developing countries are keen to promote climate-friendly exports as part of wider export diversification strategies  and want to reap greater returns from greener global value chains. Further, small island states and least-developed countries – many of which are Commonwealth members – that are especially vulnerable to the impacts of climate change and natural disasters, need support to adapt in the face of trade shocks and to build climate-resilient, trade-related infrastructure and export sectors.

As an immediate next step, the UK should actively support the growing number of WTO members in favour of a WTO Ministerial Statement on environmental sustainability and trade. It should work with its key trading partners in the Commonwealth and beyond to ensure the agenda is inclusive, supports achievement of the UN Sustainable Development Goals (SDGs) and helps developing countries benefit from a more environmentally sustainable global economy.

As the UK prepares to host COP26, negotiates deals with the EU and US, and prepares for its first WTO Ministerial meeting as an independent member, it must show it can lead the way nationally, bilaterally, and multilaterally. And to ensure the government acts, greater engagement from the UK’s business, civil society and research sectors is critical – we need all hands on deck to forge and promote concrete proposals for aligning UK trade policy with the climate ambition our world needs.

Brexit will significantly change the balance within the EU in relation to nuclear energy. Apart from France and Finland, both of whose nuclear development programmes are behind schedule, the UK is the only member state in northern or western Europe currently investing in new nuclear capacity. Brexit will therefore leave the supporters of nuclear energy within the EU27 and the European Commission in a weaker position.

The speaker will argue that at a time when the energy industry needs to accelerate its shift away from fossil fuels, and when the electricity generation industry must cut its carbon emissions faster than it has ever managed to do in the past, this change is unhelpful.

The workshop will also address the need for additional interconnector capacity and the future of carbon-trading outside the EU emission trading system and how this relates to potential nuclear energy capacity.

Attendance at this event is by invitation only. 

This half-day strategic workshop, organized by Chatham House and E3G, brought together key climate experts, policymakers and influential actors, especially in Europe, for a focused and facilitated discussion on the roles, risks and potentials of negative emissions technologies (NETs). 

An interactive scenario exercise will be conducted, drawing on a climate simulation tool developed by Climate Interactive, to consider the potential roles and risks of different NETs deployments to meet the Paris Agreement targets and to consider the international co-operation required to manage the pathway to net-zero emissions. Participants will explore the political opportunities, discuss different scenarios and risks and identify areas of interventions and collective action.

The meeting is part of a series of events being held at Chatham House as part of London Climate Action Week (LCAW).

Climate change and energy transition are re-shaping the extractive sectors, and the opportunities and risks they present for governments, companies and civil society. As the central governance standard in the extractives sector, the EITI has a critical role in supporting transparency in producer countries.

This workshop will bring together experts from the energy and extractives sectors, governance and transparency, and climate risk and financial disclosure initiatives to discuss the role of governance and transparency through the transition. It will consider the appropriate role for the EITI and potential entry points for policy and practice, and the potential for coordination with related transparency and disclosure initiatives. 

Please note attendance is by invitation only.

December’s UN climate talks held in Madrid were aptly titled ‘Time for Action’. While little progress was made at the conference in establishing an international framework that would help to instigate this, there is still much scope for action in 2020. The need for this has become all too apparent as the impacts of climate change are increasingly seen around the world.

One of the key areas where progress can be made in 2020 is in increasing the ambition of nationally determined contributions (NDCs), these being governments’ plans to take action in response to climate change. To date, 184 countries have submitted NDCs, yet the commitments that have been made fall far short of what is needed to avert catastrophic climate change.

In 2020, however, many countries will be revising their NDCs, presenting an important opportunity to shift momentum; to date 79 countries have announced that they will be enhancing the ambition of their NDCs.

The forest sector is one area where more ambitious targets are likely to be set, and indeed, at the Climate Action Summit in September 2019, more than 20 countries made new commitments for the conservation, reforestation and restoration of their forests.

This will be essential. As is well documented, reducing deforestation is critical to reducing carbon emissions, while healthy and diverse forests are vital for adapting and increasing resilience to climate change.

However, while it is important that ambitious targets are set, this is relatively easy; the bigger challenge lies in ensuring that these are achievable.

This is all too apparent from experience thus far. In 2014, the New York Declaration on Forests set the goal to halve forest loss by 2020, and to end it by 2030. In addition, it included the goal to restore 150 million hectares of degraded landscapes and forestlands by 2020, and a further 200 million hectares by 2030.

The declaration has been endorsed by over 50 countries, as well as business and civil society organizations, yet the 2020 goals are far from being reached – in the six years since the declaration was launched, it has been found that forest loss increased rather than declined, and only about 27 million hectares of land have been restored.

What then is needed to ensure that the commitments being made by governments in their NDCs will actually be met? Three big changes are required.

Firstly, a shift in perspective is needed in many countries to a more forest-sensitive approach to development, one that gives adequate recognition to the full range of values provided by forests, rather than primarily focusing on their role as a global carbon sink. These include their importance for local and national economies, for livelihoods and the well-being of forest-dependent peoples, and for biodiversity and the regulation of local climate and water systems.

The focus on nature-based solutions at the international level offers potential to support this shift. However, it is critical that these are not seen as ‘niche’ approaches, and that countries identify what nature-based solutions mean for them, and how forests and tree-rich landscapes can best be integrated into their development strategies.

Fundamental to achieving this will be further improvements in governance, and this is the second change that is required. Legal and institutional reforms are needed in many countries as well as significant investments in human and technical resources. This will enable processes to be strengthened, or put in place, so that equitable strategies can be developed and implemented – strategies that reflect a balance of the needs and priorities of the full range of stakeholders, including local and global, rural and urban, women and men, young and old.

Financing will of course be critical for this, and the least developed countries in particular will be hindered in the actions they can take without additional finance. This is the third area of change that is needed, and it is to be hoped that the international community will make better progress on this in 2020. Forest and land-use options are often described as a cost-effective means of tackling climate change, as is noted in the Santiago Call for Action on Forests for example.

This is not to say that these will be easy or cheap – as Chatham House has documented, experience of forest governance reform has shown that it takes significant funding and time to bring about deep-rooted change. However, the huge potential benefits that can result, for the citizens of forest-rich countries as well as for the planet, mean that forests and sustainable land-use are a good investment.

The 2019–20 fire season in Australia has been unprecedented. To date, an estimated 18 million hectares of fire has cut swathes through the bush – an area greater than that of the average European country and over five times the size of blazes in the Amazon.

This reflects previous predictions of Australian science. Since 2008 and as recently as 2018, scientific bodies have warned that climate change will exacerbate existing conditions for fires and other climatic disasters in Australia. What used to be once-in-a-generation fires now re-appear within 10–15 years with increased ferocity, over longer seasons.

In a country known for climate denial and division, debate has erupted around bushfire management and climate change. One of these is whether controlled burns are the answer to Australia’s climate-affected fire conditions.

There is no single risk reduction strategy. Controlled burning remains key, if adapted to the environment and climate. 

But when three out of four seasons in a year can support destructive bushfires, there are clear limits to what controlled burning and other fire management techniques can achieve. Other ‘adaptation’ measures are also likely to provoke intense debate – including bush clearance. As one Australian expert offered to highlight where Australia has got to, families should probably not go on holiday to bush and beach during the height of summer when temperatures and fire risk peaks. 

So, unless Australia is prepared to debate radical changes to where people live and how land is used, the limits to adaptation imply the need for mitigation. This means supporting ambitious global greenhouse emissions reductions targets. As research from Victoria, one fire-prone state in Australia, highlights, ‘the emissions pathway we follow is the largest determinant of change to many variables [such as temperature] beyond the next few decades.’

Can Australia become a more active global partner on emissions?

Australia accounts for just over one per cent of global emissions, so reducing domestic emissions – even though on a per capita basis they are the highest in the world – will not reduce Australia’s climate risk. Showing international leadership and supporting a powerful coalition of the willing to tackle climate change is the only way ahead. By showing a willingness to adopt climate ambition, Australia can help more constructive worldwide action, and thereby reduce its own risk exposure. 

Leading by example is a politically difficult issue for Australia. Prime Minister Scott Morrison was re-elected in May 2019 on an economic stability platform, and a promise not to imperil employment growth through climate action. Australia has contested UN estimates that it will not meet its existing modest goals for domestic emissions, by seeking to rely on carryover credits from action under the Kyoto Protocol as proof of progress.

It has also distanced itself from concerns over global supply and demand in fossil fuels. Australia remains a global supplier for fossil fuels, including coal – the nation’s coal exports accounted for $67 billion in revenues in 2019 in an expanding but changing Asian market, supplying ‘some of the cheapest electricity in the world’.

Possible influencers of change

With Australians experiencing first-hand the risks of climate change, there is already pressure to do more. Many are sceptical this will translate into domestic targets or export policies that give Australia the moral authority to ask for more action on the global stage.

Here, diverse groups who share a common interest in seeing Australia recover from the bushfires and address future climate risks could be key.

Importantly this includes rural and urban-fringe communities affected by the bushfires. They were part of Morrison’s traditional supporter-base but are angry at the government’s handling of the crisis and increasingly see how tiptoeing around emissions (including exports) has also ‘buried’ open discussion at home on climate-readiness.

Australian states could also find themselves taking a lead role. Virtually all jurisdictions have now committed to their own goals, most based on zero-carbon goals by 2050 (as has New Zealand). These can support modelling for Australia’s energy transition from coal, through gas, to market competitive renewables, while also help to ensure this reflects community expectations on jobs, electricity prices and other costs. 

Other emerging voices include the insurance and banking sectors (the Reserve Bank of Australia warned of the long-term financial stability risks of climate change before the fires) and indigenous Australians (one group of Torres Strait Islanders have filed a complaint to the UN Human Rights Committee which, if heard, will place Australia’s emissions record under the spotlight again). Their challenge now is finding a common language on what a cohesive approach to addressing climate change risk looks like. 

The international picture is mixed. The United States’ poor federal climate policy is a buffer for Australia. French President Emmanuel Macron has tried to raise the cost of inaction for Australia in current EU–Australia trade negotiations, but many large emitters in the Indo-Pacific region remain key Australian trading partners, investors and buyers of Australian coal. 

In the meantime, the United Kingdom is preparing for the meeting of parties to the Paris Agreement in Glasgow in November. A key global event following Brexit, the UK will no doubt be hoping to encourage a leadership circle with national commitments that meet global need to make the Glasgow meeting a success.

The UK public has expressed enormous sympathy for Australia in the bushfires and outrage over ‘climate denialism.’ Australia’s experience will be a cautionary tale of the effects of climate change at the meeting. Could the UK also support Australia to become a less reluctant partner in global climate action?

As the UK leaves the EU and the formal negotiations on the future relationship begins, this workshop will discuss any immediate changes and review the short and medium term impacts of Brexit on the energy sector. 

The workshop will look to cover:

• The implications for UK business and system operations of the UK leaving the Internal Energy Market.
• Current and future investment trends in the UK energy system.
• The trade of electricity and gas over inter-connectors.
• The need for the development of a new EU-UK operational framework mechanism.
• The UK's EU withdrawal agreement and the operation of the Single Electricity Market (SEM) across Ireland. 
• Options for the UK outside of the EU Emissions Trading System (ETS) and the impact on carbon prices.

This workshop is part of a programme funded by the UK Energy Research Centre on Brexit and the UK’s Net Zero Energy Policy being run by the University of Warwick and Chatham House.

Attendance at this event is by invitation only.

This meeting formed part of a programme of work which investigates the role of negative emissions technologies (NETs) in achieving the Paris Agreement climate targets. Previous meetings held in London and Brussels have looked at integrating negative emissions into EU policy-making, the implications and degree to which NETs, and in particular bioenergy with carbon capture storage (BECCS), can be an effective climate mitigation tool. This meeting focused on the possible deployment pathways of NETs and alternatives to BECCS for the US in particular, in the context of geographical constraints and socioenvironmental implications, the role of the private sector, and appropriate governance and finance mechanisms. 

COVID-19 is a sharp reminder of why trade and climate policy matters. How can governments maintain access to critical goods and services, and ensure global supply chains function in times of crisis?

The timing of many trade negotiations is now increasingly uncertain, as are the UK’s plans to host COP26 in November. Policy work continues, however, and the EU has released its draft negotiating text for the new UK-EU trade deal, which includes a sub-chapter specifically devoted to climate. 

This is a timely reminder both of the pressing need for the UK to integrate its trade and climate policymaking and to use the current crisis-induced breathing space in international negotiations - however limited - to catch up on both strategy and priorities on this critical policy intersection.

The UK government has moved fast to reset its external trade relations post-Brexit. In the past month it formally launched bilateral negotiations with the EU and took up a seat at the World Trade Organization (WTO) as an independent member. Until the COVID-19 crisis hit, negotiations were also poised to start with the US.

The UK is also in the climate spotlight as host of COP26, the most important international climate negotiation since Paris in 2015, which presents a vital opportunity for the government to show leadership by aligning its trade agenda with its climate and sustainability commitments in bold new ways.

Not just an empty aspiration

This would send a signal that ‘Global Britain’ is not just an empty aspiration, but a concrete commitment to lead.

Not only is concerted action on the climate crisis a central priority for UK citizens, a growing and increasingly vocal group of UK businesses committed to decarbonization are calling on the government to secure a more transparent and predictable international market place that supports climate action by business.

With COP26, the UK has a unique responsibility to push governments to ratchet up ambition in the national contributions to climate action – and to promote coherence between climate ambition and wider economic policymaking, including on trade. If Britain really wants to lead, here are some concrete actions it should take.

At the national level, the UK can pioneer new ways to put environmental sustainability – and climate action in particular - at the heart of its trade agenda. Achieving the government’s ambitious Clean Growth Strategy - which seeks to make the UK the global leader in a range of industries including electric cars and offshore wind – should be a central objective of UK trade policy.

The UK should re-orient trade policy frameworks to incentivize the shift toward a more circular and net zero global economy. And all elements of UK trade policy could be assessed against environmental objectives - for example, their contribution to phasing out fossil fuels, helping to reverse overexploitation of natural resources, and support for sustainable agriculture and biodiversity.

In its bilateral and regional trade negotiations, the UK can and should advance its environment, climate and trade goals in tandem, and implementation of the Paris Agreement must be a core objective of the UK trade strategy.

A core issue for the UK is how to ensure that efforts to decarbonise the economy are not undercut by imports from high-carbon producers. Here, a ‘border carbon adjustment (BCA)’ - effectively a tax on the climate pollution of imports - would support UK climate goals. The EU draft negotiating text released yesterday put the issue of BCAs front and centre, making crystal clear that the intersection of climate, environment and trade policy goals will be a central issue for UK-EU trade negotiations.

Even with the United States, a trade deal can and should still be seized as a way to incentivize the shift toward a net zero and more circular economy. At the multilateral level, as a new independent WTO member, the UK has an opportunity to help build a forward-looking climate and trade agenda.

The UK could help foster dialogue, research and action on a cluster of ‘climate and trade’ issues that warrant more focused attention at the WTO. These include the design of carbon pricing policies at the border that are transparent, fair and support a just transition; proposals for a climate waiver for WTO rules; and identification of ways multilateral trade cooperation could promote a zero carbon and more circular global economy.  

To help nudge multilateral discussion along, the UK could also ask to join a critical ‘path finder’ effort by six governments, led by New Zealand, to pursue an agreement on climate change, trade and sustainability (ACCTS). This group aims to find ways forward on three central trade and climate issues: removing fossil fuel subsidies, climate-related labelling, and promoting trade in climate-friendly goods and services.

At present, the complex challenges at the intersection of climate, trade and development policy are too often used to defer or side-step issues deemed ‘too hard’ or ‘too sensitive’ to tackle. The UK could help here by working to ensure multilateral climate and trade initiatives share adjustment burdens, recognise the historical responsibility of developed countries, and do not unfairly disadvantage developing countries - especially the least developed.

Many developing countries are keen to promote climate-friendly exports as part of wider export diversification strategies  and want to reap greater returns from greener global value chains. Further, small island states and least-developed countries – many of which are Commonwealth members – that are especially vulnerable to the impacts of climate change and natural disasters, need support to adapt in the face of trade shocks and to build climate-resilient, trade-related infrastructure and export sectors.

As an immediate next step, the UK should actively support the growing number of WTO members in favour of a WTO Ministerial Statement on environmental sustainability and trade. It should work with its key trading partners in the Commonwealth and beyond to ensure the agenda is inclusive, supports achievement of the UN Sustainable Development Goals (SDGs) and helps developing countries benefit from a more environmentally sustainable global economy.

As the UK prepares to host COP26, negotiates deals with the EU and US, and prepares for its first WTO Ministerial meeting as an independent member, it must show it can lead the way nationally, bilaterally, and multilaterally. And to ensure the government acts, greater engagement from the UK’s business, civil society and research sectors is critical – we need all hands on deck to forge and promote concrete proposals for aligning UK trade policy with the climate ambition our world needs.

Summary

• Many social and political issues have so far been neglected in planning for the circular economy transition. This paper aims to redress this by considering how ‘just transition’ and social equity may be achieved through policy and practice.
• The prevailing economic model is linear, in that resources are extracted, transformed into products, used, and finally discarded. In contrast, the circular economy recognizes that natural resources are finite, and aims to keep the materials in products in circulation for as long as possible: reusing, repairing, remanufacturing, sharing and recycling. While the concept of the circular economy is largely focused on developing new technologies and businesses to enable keeping materials in circulation, it also includes the notions of ‘designing out’ waste, substituting renewable materials for non-renewable ones, and restoring natural systems.
• The UN 2030 Agenda demonstrates that environmental, social and economic sustainability objectives cannot be separated. As the links between the environmental issues of climate change, overconsumption of resources and waste generation, and social issues of inequality and the future of work become increasingly obvious, the urgency to connect environmental with social justice is gaining in significance. The language of ‘just transition’ – a transition that ensures environmental sustainability, decent work, social inclusion and poverty eradication – has started to penetrate debates and research on sustainability policy, particularly in the contexts of climate change and low-carbon energy transition.
• A just transition framework for the circular economy can identify opportunities that reduce waste and stimulate product innovation, while at the same time contributing positively to sustainable human development. And a just transition is needed to reduce inequalities within and between countries, and to ensure that the commitment of the UN Sustainable Development Goals to leave no one behind is fulfilled.
• It is important to identify the likely impacts on employment as a result of digitalization and industrial restructuring. Combining circular economy policies with social protection measures will be important in order to ensure that the burden of efforts to promote circularity will not fall on the poor through worsening working conditions and health impacts, reduced livelihoods, or job losses. Identifying potential winners and losers through participatory ‘roadmapping’ can help shape effective cooperation mechanisms and partnerships nationally and internationally.
• Many low- and middle-income countries that rely heavily on ‘linear’ sectors such as mining, manufacturing of non-repairable fast-moving consumer goods, textiles and agriculture, and the export of these commodities to higher-income countries, are likely to be negatively affected by the shift to circularity. These countries will need support from the international community through targeted assistance programmes if international trade in established commodities and manufactures declines in the medium to long term. 
• International cooperation to create effective and fair governance mechanisms, and policy coordination at regional, national and local levels will play an important role in shaping a just transition. Multilateral technical assistance programmes will need to be designed and implemented, in particular to support low- and middle-income countries.
• Governments, international development finance institutions and banks are among the bodies beginning to establish circular economy investment funds and programmes. Just transition principles are yet to be applied to many of these new finance mechanisms, and will need to be integrated into development finance to support the circular economy transition.
• New international cooperation programmes, and a global mechanism to mobilize dedicated support funds for countries in need, will be critical to successful implementation across global value chains. Transparent and accountable institutions will also be important in ensuring that just transition funds reach those affected as intended.

The President of the European Commission, Ursula von der Leyen, has declared that she wants Europe to become ‘the first climate-neutral continent by 2050’, and in December 2019, the Commission presented the European Green Deal in order to achieve this objective. However, even though greenhouse gas emissions from the EU have fallen by more than 20 per cent since 1990, the Union remains the third largest emitter in the world, after the United States and China.

What are the opportunities and challenges for raising climate ambition in Europe?  Will the EU increase its Nationally Determined Contribution and what impact might this have globally? How might Brexit affect climate action in the EU and the UK?  The second event in the Chatham House COP26 Diplomatic Briefing Series will address these critical questions.

The world is currently witnessing how vulnerable existing production and consumption systems are, with the current global health crisis harshly exposing the magnitude of the risks associated with the global economy in its current form, grounded, as it is, in a linear system that uses a ‘take–make–throw away’ approach.

These ‘linear risks’ associated with the existing global supply chain system are extremely high for national economies overly dependent on natural resource extraction and exports of commodities like minerals and metals. Equally vulnerable are countries with large manufacturing sectors of ready-made garments and non-repairable consumer goods for western markets. Furthermore, workers and communities working in these sectors are vulnerable to these changes as a result of disruptive technologies and reduced demand.

In a recently published Chatham House research paper, ‘Promoting a Just Transition to an Inclusive Circular Economy’, we highlight why a circular economy approach presents the world with a solution to old and new global risks – from marine plastic pollution to climate change and resource scarcity.

Taking the long view

So far, action to transition to a circular economy has been slow compared to the current crisis which has mobilized rapid global action. For proponents of transitioning to a circular economy, this requires taking the long view. The pandemic has shown us that global emergencies can fast-forward processes that otherwise might take years, even decades, to play out or reverse achievements which have taken years to accomplish.

In this vein, there are three striking points of convergence between the COVID-19 pandemic and the need to transition to an inclusive circular economy.

Firstly, the current crisis is a stark reminder that the circular economy is not only necessary to ensure long-term resource security but also short-term supplies of important materials. In many cities across the US, the UK and Europe, councils have suspended recycling to focus on essential waste collection services. The UK Recycling Association, for example, has warned about carboard shortages due to disrupted recycling operations with possible shortages for food and medicine packaging on the horizon.

Similarly, in China, most recycling sites were shut during the country’s lockdown presenting implications for global recycling markets with additional concerns that there will be a fibre shortage across Europe and possibly around the world.

Furthermore, worldwide COVID-19 lockdowns are resulting in a resurgence in the use of single-use packaging creating a new wave of plastic waste especially from food deliveries – already seen in China – with illegal waste fly-tipping dramatically increasing in the UK since the lockdown.

In this vein, concerns over the current global health crisis is reversing previous positive trends where many cities had established recycling schemes and companies and consumers had switched to reusable alternatives.

Secondly, the need to improve the working conditions of the people working in the informal circular economy, such as waste pickers and recyclers, is imperative. Many waste materials and recyclables that are being handled and collected may be contaminated as a result of being mixed with medical waste.

Now, more than ever, key workers in waste management, collection and recycling require personal protective equipment and social protection to ensure their safety as well as the continuation of essential waste collection so as not to increase the potential for new risks associated with additional infectious diseases.

In India, almost 450 million workers including construction workers, street vendors and landless agricultural labourers, work in the informal sector. In the current climate, the poorest who are unable to work pose a great risk to the Indian economy which could find itself having to shut down.

Moreover, many informal workers live in make-shift settlements areas such as Asia’s largest slum, Dharavi in Mumbai, where health authorities are now facing serious challenges to contain the spread of the disease. Lack of access to handwashing and sanitation facilities, however, further increase these risks but circular, decentralized solutions could make important contributions to sustainable sanitation, health and improved community resilience.

Thirdly, it is anticipated that in the long term several global supply chains will be radically changed as a result of transformed demand patterns and the increase in circular practices such as urban mining for the recovery and recycling of metals or the reuse and recycling of textile fibres and localized additive manufacturing (e.g. 3D printing).

Many of these supply chains and trade flows have now been already severely disrupted due to the COVID-19 pandemic. For example, the global garment industry has been particularly hard-hit due to the closure of outlets amid falling demand for apparel.

It is important to note, workers at the bottom of these garment supply chains are among the most vulnerable and most affected by the crisis as global fashion brands, for example, have been cancelling orders – in the order of $6 billion in the case of Bangladesh alone. Only after intense negotiations are some brands assuming financial responsibility in the form of compensation wage funds to help suppliers in Myanmar, Cambodia and Bangladesh to pay workers during the ongoing crisis.

In addition, the current pandemic is damaging demand for raw materials thereby affecting mining countries. Demand for Africa’s commodities in China, for example, has declined significantly, with the impact on African economies expected to be serious, with 15 per cent of the world’s copper and 20 per cent of the world’s zinc mines currently going offline. 

A further threat is expected to come from falling commodity prices as a result of the curtailment of manufacturing activity in China particularly for crude oil, copper, iron ore and other industrial commodities which, in these cases, will have direct impacts on the Australian and Canadian mining sectors.

This is all being compounded by an associated decline in consumer demand worldwide. For example, many South African mining companies – leading producers of metals and minerals – have started closing their mining operations following the government’s announcement of a lockdown in order to prevent the transmission of the virus among miners who often work in confined spaces and in close proximity with one another. As workers are laid off due to COVID-19, there are indications that the mining industry will see fast-tracking towards automated mining operations. 

All of these linear risks that have been exposed through the COVID-19 pandemic reinforce the need for a just transition to a circular economy. But while the reduction in the consumption of resources is necessary to achieve sustainability, the social impacts on low- and middle- income countries and their workers requires international support mechanisms.

In addition, the current situation also highlights the need to find a new approach to globalized retail chains and a balance between local and global trade based on international cooperation across global value chains rather than implementation of trade protectionist measures.

In this vein, all of the recovery plans from the global COVID-19 pandemic need to be aligned with the principles of an inclusive circular economy in order to ensure both short-term and long-term resilience and preparedness for future challenges and disruptions.  

Avoiding the worst economic, social and environmental risks of climate change requires a better understanding of what those risks may be. Decision-makers need information on the full range of risks that climate change poses, across the full spectrum of probabilities. Monitoring the nature and severity of these risks is essential if decision-makers are to make the right choices about effective mitigation and adaptation responses.

To meet this need, international scientists and policy analysts in the UK (including at Chatham House) and China have been engaged in a multi-year, multi-disciplinary, and collaborative research process. This has deepened understandings of how these complex, interconnected first, second and third-order risks can be better assessed and tracked.

Phase one, culminating in 2015 and involving experts, demonstrated how general principles of risk assessment could be applied in relation to climate change.

Phase two (culminating in 2019) was a bilateral cooperation between the UK and China that was agreed during President Xi Jinping’s state visit to the UK in 2015. It addressed a specific recommendation from phase one - that risk assessments need to be made on a regular and consistent basis - by providing a proof of concept indicator framework.

Substantive project funding for phases 1 and 2 was provided by the UK Foreign and Commonwealth Office, with additional contributions and in-kind support from the China Expert Panel on Climate Change, the UK Government Office for Science, the Skoll Global Threats Fund, the Global Challenges Foundation, the UK Institute and Faculty of Actuaries, and Willis Research Network (phase 1); and Chatham House, China Expert Panel on Climate Change, UK Committee on Climate Change, International Energy Agency, Willis Towers Watson (phase 2).

Many institutions contributed to the project under phases 1 and 2 (see reports for full list of contributors).

• Phase 1 report, 2015: Climate Change: A Risk Assessment
• Phase 2 report, 2018: Developing Indicators of Climate Risk

Chatham House now leads a third phase of this project (2020 to 2022), funded by the Prosperity Fund of the UK Foreign and Commonwealth Office. The purpose is to help ensure emissions reduction and resilience strategies, policies and decision-making - both in China and globally - are better informed by an evidence-based perspective on climate-change risks.

Under the guidance of the China Expert Committee on Climate Change and the UK Committee on Climate Change, the programme is building on the risk indicator and risk assessment work developed in Phase 1 and 2.

This phase of work has four complementary workstreams looking at emissions risks, direct climate risks, systemic climate risks and the integration of climate risks into Chinese and international governance frameworks. Embedded throughout the project is considerations of gender and inclusion（G&I) which are fundamental to achieve climate-compatible development.

The programme is delivered through a cohort of partner organisations based in both China and the UK, including Chatham House, E3G (Third Generation Environmentalism), Hubei University of Economics, National Climate Centre of China, Tsinghua University and the University of Reading.

Finance plays a key role in enabling climate change mitigation and adaptation. It is also a contested issue in the UN climate negotiations. The fourth event in the Chatham House COP26 Diplomatic Briefing Series will explore the politics of climate finance in the context of the COP, and provide a comprehensive update of the main climate finance-related negotiation items and processes. The topic is particularly timely given that the UK Government has made climate finance one of its top thematic priorities for COP26 and that 2020 constitutes the deadline for developed countries to mobilise USD 100 billion per year to support climate action in developing countries.