The triple planetary crises of climate change, biodiversity loss and increasing pollution warrant an alternative approach to how we manage finite resources, make and use products, and deal with the materials encompassed in our products once they reach the end of their first life.

To counteract these global environmental challenges, the “circular economy” model has emerged. This model embraces three main principles: designing out waste and pollution from all products and services, keeping products and materials in use for as long as possible, and regenerating natural systems.

In Canada, while we’ve seen fragmented policy developments and pockets of interest among businesses, most circular initiatives are being driven by collaborations involving NGOs, research institutes, and municipalities.

Without strategic action to build circular economy capacity in Canada, we risk falling behind in global market share as our competitors push ahead on a more sustainable and circular innovation agenda.

As one example, the market for electric mining equipment is projected to grow at a compound annual growth rate of 19.6 per cent and reach US$11.7 billion by 2030.

Similarly, the size of the metals recycling market is projected to grow from $217 billion in 2020 to $368.7 billion by 2030, while the “smart mining” market is expected to grow between US$13billion to $38 billion by 2027 at a compound annual growth rate of between eight and 20 per cent.

And the need for these circular solutions will only increase as our key trading partners drive demand for the critical minerals and metals required for electric vehicles and renewable energy — such as through the Inflation Reduction Act in the U.S.

The market for plastic recycling is also projected to grow, reaching US$67.3 billion by 2030. Similarly, the circular bioeconomy is estimated to present a US$7.7-trillion opportunity by 2030.

A recent report from the McKinsey Global Institute estimates the direct economic impact of the ongoing “Bio Revolution” at US$4 trillion per year over the next 20 years, with Canada potentially sitting on an untapped $200 billion a year in sustainable economic development opportunity.

All these market and export segments fall under the umbrella of the circular economy opportunity. Globally, Canada’s major trading partners and competitors are embracing circularity, decarbonization and resource efficiency. International circular initiatives such as the EU’s Circular Economy Action Plan and the forthcoming global plastic pollution treaty demonstrate Canada’s international trading partners are shifting toward more sustainable goods and services.

While there have been fragmented policy developments & some business interest, most circular initiatives are driven by collaborations involving NGOs, research institutes, and municipalities, write Shahid Hossaini, Paul Shorthouse & Marena Winstanley.

If Canada fails to make the same shift, our international trade in natural resources, recycled materials, cleantech and service exports are at risk of being negatively impacted. Maintaining strong levels of high-value trade is key to Canada’s current and future prosperity, as argued in Smart Prosperity Institute and Circular Economy Leadership Canada’s latest research, conducted in collaboration with The Delphi Group.

The good news is that Canadian companies have already started making the shift toward circular solutions. Examples include:

Mining: Canadian companies are developing leading solutions for waste and mining byproduct management, as well as deploying innovative technologies, such as electrified mining equipment, to reduce the overall environmental footprint stemming from mining operations.

Plastics: Canadian companies are leveraging expertise in petrochemical engineering to create solutions for chemical plastics recycling, subsequently enabling a true circular outlook for end-of-life plastics management.

Bioeconomy: Canadian bioeconomy companies are leveraging existing strengths in torrefaction, pyrolysis and gasification technologies to convert byproducts from various sectors into bioenergy with low life cycle greenhouse gas intensity.

Companies are also leveraging technological strengths in the form of artificial intelligence, Internet of Things (IoT) and smart imaging technologies, amongst others, to enable and accelerate the application of circular economy principles across all sectors. This includes reducing embodied carbon emissions in the built environment, diverting difficult-to-recycle materials from landfills, and producing high-performance, low-carbon building material alternatives.

Findings from our new research show Canadian companies are already innovating and using a circular lens to address concerns over their environmental footprints and to capitalize on a growing international market for circular solutions. However, there is a need for a strategic approach at a national level to help companies fully capitalize on the rapidly growing export opportunities in the circular economy.

Such an approach should include building Canadian capacity to track nascent clusters of circular business solutions appearing across the country as emerging companies advance circular solutions in a rapidly evolving space. Further, Canada should work to build strategic trade partnerships across North America to create a supporting regional ecosystem for circular innovation, investment attraction and trade, taking inspiration from the Nordic regional co-operation model.

Finally, Canada should realize strategic opportunities to lead in multilateral efforts to push the circular economy transition. Such efforts include the WTO’s Trade and Environmental Sustainability Structured Dialogues and the Global Alliance on Circular Economy and Resource Efficiency.

The global circular economy transition provides an excellent opportunity for Canadian companies to leverage and build on existing competitive advantages to ensure ongoing prosperity because circular exports and trade will increasingly play critical roles in sustaining the incomes and living standards of all Canadians.

Shahid Hossaini is the Smart Prosperity Institute's research associate.
Paul Shorthouse is the Circular Economy Leadership Canada's managing director.

Marena Winstanley is the Smart Prosperity Institute's senior manager of research partnership.