A Circular Economy Strategy for Scotland – Business and Regulatory Impact Assessment (BRIA)

Section 1: Background, aims and options

Background to policy issue

In line with the First Minister’s priorities of growing the economy and tackling climate change there is increasing evidence that transitioning to a more circular economy can drive sustainable growth, increase resilience, create jobs and encourage innovation while tackling the twin crises of climate change and biodiversity loss.^[8]

Minimising pollution and waste is an outcome of the Environment Strategy.^[9] A circular economy will also contribute to a range of UN Sustainable Development Goals,^[10] and help to embed our economy in the natural world, recognising the need to live within the sustainable limits of our single, shared planet.^[11]

The National Strategy for Economic Transformation recognises that transitioning to a circular economy represents a significant economic and industrial opportunity for Scotland by improving productivity and opening-up new markets.^[12]

There are wider societal and community-focused benefits to a circular economy. A circular economy provides local employment opportunities and lower cost options to access the goods we need. It is estimated that 10,000 tonnes of waste can create up to 296 jobs in repair and reuse, compared to 1 job in incineration, 6 jobs in landfill or 36 jobs in recycling.^[13] Overall, the waste and resources sector contributed £750 million to the Scottish economy estimated gross value added (GVA) in 2021.^[14] More widely, circular economy sectors in Scotland generated an estimated £4 billion in Gross Value Added (GVA), representing 4.7% of total GVA.^[15]

A circular economy also keeps valuable materials flowing through the economy for longer, driving greater resource productivity and decreasing costs for businesses, the public sector and households. As we face the current cost of living crisis, the rapid transition to a more circular economy is needed more than ever.

Purpose/aim of action and desired effect

The Strategy includes the vision that:

• By 2045 Scotland will be a net zero and nature positive nation helped directly by the significant progress in transitioning towards a circular economy with sustainable levels of material use.
• Scotland will have a thriving economy that meets societal needs and is based on circular economy principles, and we will have reduced the negative global impact of our production and consumption.
• People, businesses and the public sector will have the skills and knowledge to benefit from opportunities arising from a circular economy and these will be fairly distributed across society.

The Strategy has eight economy, environment, international or social based outcomes in support of that vision. The outcomes are:

Economy:

• The economic value derived from material use is maximised without increasing our environmental impacts minimised.
• The Scottish economy is more resilient to disruptions in global supply of materials, including the supply of critical raw materials.
• Business and entrepreneurs have the opportunities to develop circular economy innovations.

Environment:

• Non-renewable resource extraction is minimised and renewable resource use is sustainable and just.
• The negative environmental impact of our production, consumption and disposal is minimised and sustainable.

International:

• The negative human and environmental impacts experienced internationally from production, consumption and disposal are reduced.

Social:

• People and communities engage in and benefit from circular activities in a fair and inclusive way.
• Circular behaviours and supportive systems are the norm across business and society.

Options

Two options were considered in the development of the Strategy. These options included:

• Option 1: The position taken in the Circular Economy Strategy.
• Option 2: Doing “more and sooner”, this option would be more ambitious and intend to meet the aims much sooner than those set out in the Strategy.

A “Business-as usual” or “do nothing” scenario was not considered, as the Circular Economy Strategy is a statutory requirement of the Circular Economy (Scotland) Act 2024,^[16] with Section 1 requiring Scottish Ministers to prepare and publish a Circular Economy Strategy.

Option 1 was chosen, given the system wide changes needed to move towards a more circular economy and the need to consider and avoid unintended consequences. Following the conclusion of the public consultation, Scottish Government Ministers have considered the views expressed and decided on the next steps and the options taken in the published Strategy.

Discussion of impacts, positive, neutral or negative, is framed around the priorities set out in the Strategy. As the detail of the individual interventions resulting from the Strategy’s priorities are subsequently developed, in line with business engagement principles,^[17] detailed analysis of the impacts will be undertaken as appropriate.

As a cross-cutting strategy, all sectors of the economy are potentially affected by the interventions resulting from Strategy priorities. Presented below is an assessment of the potential costs, benefits, and scale of impact of the Strategy’s priorities.

As a strategic document, many of the interventions resulting from the stated priorities are not developed and so, currently, an in-depth and comprehensive view of the quantitative impacts is not possible. Individual BRIAs will be undertaken as required when specific interventions have been developed and will be identified where possible throughout this BRIA. These future processes will include consultation and engagement with stakeholders where required.

Sectors/ Groups affected

The Strategy identifies the following priority sectors:

• Built Environment
• Energy Infrastructure
• Textiles
• Transport
• The Food System

As a whole, the Strategy has the intention of bringing a wide range of benefits across the economy for the private, public and charity sectors. The priorities described in the Strategy, and the cumulative impact of future interventions resulting from them, may bring both benefits and some potential impacts and costs to businesses and individuals.