Draft circular economy strategy: consultation

Appendix 1: Development of this draft strategy

Background

Scotland’s first Circular Economy Strategy ‘Making Things Last’ was published in 2016.

Since then there has been a lot of progress. The amount of Scottish waste going to landfill has more than halved over the past decade, 62% of our waste is recycled and Scotland has cut waste by 20% since 2011. When it comes to reuse, since 2022 the number of active projects in the Share and Repair Network run by Circular Communities Scotland has grown from 22 to 83, a growth rate of 277%.^[39]

Despite this improvement, we recognise there is much more to do to achieve a circular economy. In 2024 we published the Circular Economy and Waste Route Map to 2030.^[40] This sets out the actions we need to take to deliver sustainable use of our resources and progress a circular economy in Scotland by 2030. It recognises that this is a shared challenge that requires system-wide transformation, and we will be working closely with local government, householders and the business community to ensure the approach has collaboration and co-design at its heart.

The Route Map is complemented by provisions in the Circular Economy (Scotland) Act 2024^[41] (”the CE Act”). The CE Act establishes the legislative framework to support Scotland’s transition to a zero waste and circular economy including requiring that Scottish Ministers prepare a circular economy strategy.

This draft strategy has been prepared in line with section 1 of the CE Act which requires that the strategy must set out ‘objectives relating to developing a circular economy strategy’, plans for meeting those objectives (including priorities for action), and arrangements for monitoring progress towards those objectives. The objectives are reflected in the draft strategy’s vision and outcomes. The draft strategy then sets out a range of plans and priorities to deliver change across a range of policy mechanisms, priority sectors and specific products. Arrangements for monitoring progress are set out in the Circular Economy Monitoring and Indicator Framework section.

Section 2 of the CE Act requires that Scottish Ministers must publish a strategy and consult with a range of stakeholders including public sector, private sector, charitable and international organisations. Section 3 of the CE Act requires that the final published strategy should also be laid before the Scottish Parliament. Section 4 of the Act requires that the Scottish Ministers must keep the strategy under review and must revise it within 5 years after publication of the last strategy. Section 5 requires that Scottish Ministers must report on progress as soon as practicable after the end of each reporting period of the strategy (meaning 2.5 years following the publication of the strategy).

Vision and Outcomes

This is the first draft circular economy strategy prepared under the CE Act. It sets out our broad approach to make the transformation we need to see, recognising that doing so requires systemic change informed by evidence. It also recognises that circular economy policy does not sit alone and touches on almost all aspects of our lives.

It builds on the foundations laid by the Route Map but takes a longer lens to 2045 in line with our Net Zero goals and places the circular economy within the broader economic context. It sits alongside other related activity such as our National Litter and Flytipping Strategy,^[42] which not only looks to improve the environmental quality of our communities but also capture additional material that would otherwise be lost to the economy.

In line with section 1 of the CE Act, in developing the strategy Scottish Ministers have had regard to the desirability of the economy being one in which:

(a) processes for the production and distribution of goods, products and materials are designed so as to reduce their consumption and their whole life-cycle carbon emissions,

(b) the delivery of services is designed so as to reduce the consumption and whole life-cycle carbon emissions of goods, products and materials,

(c) goods, products and materials are kept in use for as long as possible to reduce their consumption, their whole life-cycle carbon emissions and their impacts on the environment,

(d) the maximum value is extracted from goods, products and materials by the persons using them,

(e) goods, products and materials are recovered or, where appropriate, regenerated at the end of their useful life,

(f) waste is managed in Scotland if it is appropriate to do so,

(g) due diligence in relation to environmental protection and human rights is exercised in supply chains.

The outcomes selected are covered in the themes identified below:

Economy Outcomes

• Circular economy sectors in Scotland generated an estimated £7.11 billion in Gross Value Added (GVA), representing 4.7% of total GVA^[43].
• Jobs linked to circular economy activities in 2021 represented 4.4% of total Scottish employment.
• A more circular economy could create 470,000 jobs and add £25bn to UK GDP by 2035.^[44]

A more circular economy is an economic opportunity that can drive innovation, investment, and the creation of new business models. Companies adopting circular approaches can benefit from cost savings, higher productivity, efficient production, innovation, stronger customer relationships and create jobs.

A circular approach can increase the value from final goods by extending their lifetime and creating new opportunities, for example through repair, remanufacture and servicing opportunities.^[45] More widely it benefits the economy by bringing new value from materials that would have previously been considered waste, which can also help replace the need for new material, including that imported from abroad.

Reducing our dependency on raw materials can protect growth by reducing the economic security risks associated with linear supply chains, such as global supply chain shocks, and reduce exposure to resource scarcity, particularly for critical raw materials where global demand is growing.

It is important that both businesses and communities have the skills and abilities and business support in place to benefit from more circular practices. The importance of a circular economy as an economic driver is captured in the National Strategy for Economic Transformation (NSET),^[46] which recognises that better integration of circular economy policies is essential to supporting Scotland’s ambition to lead in sustainable innovation and inclusive growth and build a more resilient economy for all. Similarly, the Green Industrial Strategy^[47] and Onshore Wind Sector Deal for Scotland^[48] highlight the desire to position Scotland as a leader in material circularity of wind turbines and components.

Our economy outcomes place the circular economy within that broader policy goal of building an economy that is both sustainable and beneficial to people and communities.

Environment Outcomes

• 90% of global diversity loss and water stress is caused by extraction and processing of products.^[49]
• Around four-fifths of our carbon footprint in Scotland comes from products and services we manufacture, use and throw away.
• In Scotland, the average material footprint per person is 21.7 tonnes per year, well above the global average (11.9 tonnes).^[50]
• Globally we have consumed over half a trillion tonnes of materials – nearly as much as the entirety of the twentieth century – in just the last 6 years.^[51]

The Scottish Government recognises that we are in climate and nature emergencies. Reducing demand for virgin material limits the impact of resource extraction on natural capital, which provides a range of valuable ecosystem services such as water purification or soil provisioning. Given Scotland’s reliance on imports, those impacts on ecosystems are often particularly keenly felt overseas. A more circular economy is an important mechanism for addressing these pressures.

Building a more circular economy is critical to meeting our 2045 net zero emissions goal, and reducing Scotland’s overall carbon footprint:

1. For territorial emissions, it cuts the waste we dispose of here in Scotland through more sustainable resource management (e.g. reusing and recycling more), and supports other sectors to reduce their territorial emissions through more circular approaches.

2. It tackles the wider lifecycle emissions associated with resource use and waste (e.g. the carbon impact of waste produced at all stages, from production, transportation, to disposal).

3. It helps us take responsibility for Scotland’s larger global carbon footprint associated with the goods and services we import (see international outcome below).

Our environment outcomes focus on minimising resource extraction and environmental impacts of our consumption and use of materials. They recognise the importance of renewable and non-renewable resources as well as the need to minimise impact across the supply chain from the production, consumption and disposal of goods and materials.

It should be recognised however that in some cases, for example critical materials, some extraction may be required to meet increasing demand as supply from the circular economy may be insufficient. While there will always be a need for goods and materials, these should be produced and used in the most circular way possible.

International Outcomes

• Scotland’s ecological footprint – the area of land and sea around the world needed to produce the goods and services we consume – exceeds the area in Scotland capable of supplying these demands by around one quarter.

The system for production of our products and materials involves supply chains that span the globe. While Scotland is a relatively small part of the global market, we have a responsibility to reduce our ecological and social impacts, for example the potential negative impacts of mining and deforestation on communities, the export of waste and the leakage of harmful material into the environment and oceans.

This responsibility is recognised in the draft Environment Strategy,^[52] which has an outcome that ‘Scotland’s global environmental impact is sustainable’; and our

next Climate Change Plan, for the period 2026-2040, will set out our approach to delivering on Scotland’s net zero targets and recognise the impact of consumption that is not captured within territorial emissions.

Our international outcome aims to capture the range of impacts from across the supply chain.

Social Outcomes

• Since 2022 the number of active projects in the Share and Repair Network run by Circular Communities Scotland has grown from 22 to 83, a growth rate of 277%.^[53]

In line with just transition principles, a circular economy must be designed and delivered in a fair, inclusive way.^[54]

A circular economy provides opportunities to strengthen our communities by providing local and sustainable employment opportunities and access to lower cost goods. For example, increasing opportunities for reuse and repair can shorten and strengthen supply chains, potentially provide lower cost options for householders through mechanisms such as sharing libraries, and teach skills through repair cafes. It can also address some of the environmental blights on communities through reduced littering.

In these ways a more circular economy contributes strongly to community wealth building, which seeks to enable local communities to have a greater stake in, access to, and benefit from the wealth our economy generates. This is at the heart of place-based thinking, with the potential to create jobs, reduce supply chains and strengthen local and regional economies as part of a just transition.

Our social outcomes seek to capture the need for behaviour change across business, communities and householders. Promoting and facilitating easier access to sustainable choices will make it possible to transition towards a more sustainable and resource-efficient economy.

Priority Sectors

Under the CE Act, in considering the priorities for action set out in this circular economy strategy the Scottish Ministers must have particular regard to sectors and systems most likely to contribute to developing a circular economy with reference to the following criteria:

(a) achieving the net-zero emissions target set out in section A1 of the Climate Change (Scotland) Act 2009;

(b) reducing the consumption and whole life-cycle carbon emissions of goods, products and materials;

(c) maximising the value of the circular economy in Scotland;

(d) considering the wider environmental impact of particular sectors and system.

Having considered analysis by Zero Waste Scotland, the Scottish Ministers are of the view that the sectors set out in relevant section are those most likely to contribute to developing a circular economy in Scotland and we therefore consider these to be priority sectors. In its analysis, Zero Waste Scotland drew on international evidence, such as the European circular economy platform, to highlight how other countries identify key sectors. It also used its own research and modelling, including the Scottish Waste Environmental Footprint Tool,^[55] as well as Material Flows Accounts,^[56] Scotland’s Carbon Footprint,^[57] Energy Materials Mapping,^[58] and research on embodied carbon^[59] to identify sectors with the highest environmental impact, before applying criteria in the CE Act to identify potential priority sectors for developing a circular economy. Some key statistics linked to the five sectors are set out below.

The Built Environment:

• Construction accounted for £9.3 billion of GVA in 2022, 7.4% of Scotland’s total GVA, and had a turnover of £24 billion (8.3% of Scotland’s total).
• Over 140,000 people are employed in the sector.
• The built environment and construction sector currently accounts for around 40% of our emissions in Scotland^[60].
• Construction and demolition accounts for up to half of all waste produced in Scotland.

Net Zero Energy Infrastructure:

• Decommissioning of turbines in Scotland between 2021 and 2050 could result in up to 1.46 million tonnes of material becoming available^[61].
• Refurbishment and reuse options could generate significantly more revenue than traditional recycling or disposal: potentially £230,000 cost recovery for a 3MW turbine through the reuse of components^[62].

Textiles:

• In 2023, Scottish household textile waste made up 4% of arisings but accounted for 19% of carbon impacts of household waste^[63].
• The Scottish textiles sector had an estimated turnover of £818.8 million and 8,100 jobs in 2022^[64].

Transport:

• Transport is Scotland’s largest emitting sector, accounting for 33.2% of emissions in 2023^[65].
• Estimates suggest that by 2030 there will be 10 million electric vehicles in the UK, with each battery containing on average 185kg of minerals^[66].
• Scotland currently exports approximately 78% of existing battery waste for reprocessing elsewhere.

The Food System:

• The Scottish food and drink industry contributes £5.3 billion to our economy in GVA and £7.5 billion in Scottish exports^[67].
• The sector employs 123,000 people across fishing, farming, aquaculture and manufacturing – providing high-value employment in rural areas.
• In 2021, householders contributed around 60% of Scotland’s food waste (2.3 million tonnes CO2eq.); and business and non-business organisations contributed around 40% (2.5 million tonnes of CO2eq.)^[68].

Links to other strategies

The forthcoming Climate Change Plan, Environment Strategy and broader economic policy are also directly relevant and have informed this draft strategy, with a view to achieving consistency, so far as practicable, between the objectives and plans in this draft strategy and those other policy areas. To be successful we also need to embed circular economy principles across government as well as in business practices, community wellbeing and consumer behaviour.

Separately from this draft strategy we will also be developing a plan for residual waste to ensure the best environmental outcome for unavoidable and unrecyclable waste.

We are also engaging with Defra on the development of its Circular Economy Strategy for England as well as the other devolved governments.