A month ago, the Ministry of the Environment formally began the work to prepare a roadmap tha guides the way to install of the circular economy in Chile, with the first Strategic Committee meeting that will help set the guidelines and specific measures for this. It is a group made up of 25 representatives from industry, academia, citizen organizations, public bodies and experts in the field, who are joined by representatives of seven ministries.

The work is progressing, and there are already five major objectives identified: to connect the key actors for the development of the circular economy in the country; imagine what the future “Circular Chile” will look like, to the year 2040; agree on the great changes that must take place to achieve the envisioning; design the strategy and action plan for it, and relieve the issue of the circular economy in the country.

The goals of the roadmap were structured around four themes, which are: obtaining raw materials, production, consumption and services, and waste management. And at the same time, the ministry has already put a first objective on the table, and that is to achieve by 2040, 10% of household waste – at most – be sent to a sanitary landfill, compared to 96% currently registered and that has Chile behind Turkey, according to the OECD data.

Due to a recent survey to more than 3,400 people, carried out by Eurochile Business Foundation – entity that leads the work of the roadmap-, 75% of them declared that they separate and recycle their waste, and they mainly do so with plastic bottles, glass, cardboard and paper, cans and cardboard packaging for beverages. In addition, 66% were willing to lease – instead of buying – products such as minor machinery, cars, washing machines or telephones, while almost 90% of them affirm that the ability to reuse is relevant when choosing a product.

At first glance, it shows favourable figures for the circular economy in Chile. Furthermore, 74% of them think that their purchasing decisions influence the products offered in the market, 62% know what the circular economy is, and 92% say it is very likely to buy a product or service that is friendly to the environment. However, only 10% of the surveyed persons would be willing to pay more for a product made from recycled materials or reused components, and more than 40% say that a product’s reusable information is difficult to access.

What are the gaps, opportunities and challenges that exist today for the implementation of the circular economy in Chile? At the second meeting of the Strategic Committee of the roadmap, held last week, Eurochile presented a diagnosis report where the main advances of the country in this matter were highlighted.

According to the document, “the circular economy raises a radical systematic change, saying goodbye to linear production models and aiming to maintain the value of resources, materials and products for as long as possible; eliminate the concept of waste through ecodesign, repair and remanufacturing of products, recirculation and / or recycling of materials, among others, valuing innovation and promoting the development of new business models”.

A change, it adds, for which the health and economic crisis caused by Covid-19 “establishes a new context and precedents that present us with the opportunity to propose the circular model as one of the solutions to the social, economic and climate crisis, leaving us with the task and the challenge of establishing, through the roadmap, an attractive vision of the future with clear guidelines and actions that allow us to launch a profound transformation of the Chilean economy, aligned with the concepts of the circular economy ” .

Capacities and infrastructure in the country

The diagnosis indicates,  that at the level of existing capacities and infrastructure for the adoption of the circular economy in the country, there are already an important number of actions that are helping in this advance, such as the Green Growth Strategy of the Ministry of the Environment, the National Electromobility Strategy (ME, Energy, Transport), the instruments of Corfo oriented to promote a more sustainable economy, the strong impulse to renewable energies in the energy sector, and the new market trends in retail that mark second-hand entry or lease for various products.

However, there are also important gaps. For example, the development of economic instruments that support inclusive recycling, and the provision of infrastructure and machinery, are areas that need to be strengthened to increase storage capacity and deliver more valuable material. “The absence of these measures makes it impossible to implement the circular economy,” states the report.

Regarding the existence of collaborative projects in science, technology and innovation, numerous initiatives are identified that demonstrate the interest that exists in the country to develop innovative ideas that result in more circular prototypes and clean technologies, as well as platforms that contribute to the transition to a circular economy, such as the Circular Economy Technological Development Center that is being built in the north of the country. To this are added, for example, 20 Fab Labs throughout the country -13 of them in the Metropolitan Region, spaces for creation and innovation that can support the development of eco-designed prototypes and other initiatives related to the circular economy.

As for the physical infrastructure for recycling and recovery in the country, a study carried out by the Ministry of the Environment, identifies the existence of 7,186 green points, 98 clean points and 54 waste recovery companies -most concentrated in Santiago-, in addition to 216 collection centers.

Human capital will also play an important role in this transformation, and must understand and have knowledge about ecodesign, material valorization and business models associated with reuse and remanufacturing, among others. To implement it, the report states, “this human capital must be inserted in the different productive sectors.”

Although in Chile there are various centers for the generation and training of human capital in this area, the document says, “in some areas of the circular economy there is not enough prior knowledge of ‘how to do things’, which is why there are quite a few professionals who have developed an interest in circular issues and who have developed skills on their own, or within the organization in which they work, through trial and error”.

“In general,” it adds, “although there are some efforts to update the resumes in universities and other higher education centers, and offer graduate courses in circular economy, in some of the interviews the academy was rated as the most lagging sector in Chile regarding the adoption of the circular economy”.

Still, the report indicates, there are already a strong number of successful cases of circular economy in Chile, which may have an effect to promote other similar projects. One of the most highlighted during interviews carried out for the report was Comberplast’s “Tying Ropes” project, as well as the Aguas Andinas biofactory – “it is an example of how a large and traditional company can innovate and rethink its business model”-, Ecocarga – an example of an initiative that dared to break schemes, the role of TriCiclos in the promotion and dissemination of the circular economy, and the F4F project for sub-high level of innovation.

Main existing gaps

The report also identifies existing gaps in the country for the implementation of the circular economy, although it emphasizes that it is still a new concept -even globally-, so that its understanding and incorporation is still in the initial stage.

The report points out, in terms of human capital that the lack of skills and knowledge in issues of the circular economy is transversal in all the productive sectors analyzed in this study, whether from the definition of their productive strategies to adopted business models.  So, in conclusion, this is seen from now on as a priority matter to tackle.

The same occurs with the generic technologies for the adoption of the circular economy, among them the technologies and processes of waste separation and recycling, remanufacturing or repair, new materials technologies and 4.0 technologies, among others.  The report states that, “Its management as well as its transmission to the workers of the company or sector, is key to advance in the implementation of circular economy concepts in the industrial branch.”

Here, however, some structural problems appear. The first is that the process of deindustrialization that Chile had in the late 1970s was a brake on the installation of these generic technologies in the country, so it is considered necessary to reinstall those technical and technological capacities.

“Although several of these technologies exist worldwide, including in Chile, their systematic adoption is lacking in the large companies and SMEs of the country, a gap that needs to be addressed and that implies cultural changes and economic strategy that Chile must face  in long-term ”, states the report.

The problem is that this has led to a lack of national industries and a high level of importation of consumer products and inputs for primary sectors, while there is a lack of industrial symbiosis that allows an efficient use of raw materials, inputs, power lines and logistics. According to one of the experts interviewed for this report, in Chile “it is difficult to convert recycled waste into inputs for production processes, because there is sometimes no one that can transform, repair or adapt. This is due to the destruction of the national industry due to the opening of the international market, which has had many benefits but also negative things”.

This also has a second effect, which results in gaps in market access. As the country imports many products developed under a linear model, there is a supply of products at low prices that limits the competition of eventually more sustainable local products. In addition, since in our economy many of the Chilean companies represent only a part of the chain, and there are very few products whose complete cycle is done in Chile, it is very difficult to circulate them if part of the processes is carried out in other continents.

Added to this are a series of well-known regulatory and standardization, financing and infrastructure gaps, to which is also added a cultural gap for the implementation of the circular economy. “A critical aspect that was mentioned by many of the interviewed is the lack of trust in articulation and collaboration processes, both in the public and private sector, where companies work on their own: there are no clusters or other collaboration mechanisms between companies to address pre-competitive or sectoral challenges, ”the report states.

Opportunities to install the circular economy in Chile

According to the Ellen MacArthur Foundation, the transition to a circular economy in Europe could increase resource efficiency by 3% by 2030, generating savings of 600 million euros and another 1.8 trillion in economic benefits. And in Latin America and the Caribbean, ECLAC states that it could generate 4.8 million jobs in 2030.

For this reason, opportunities are identified in the business sector that emerges from trends in international markets, and multinational companies in the country are already establishing requirements in this matter for their Chilean subsidiaries.

At the market level, one of the initiatives that is most closely watched is the European Green Deal, “which is both a risk and an opportunity for Chile,” the report states. “If the country manages to join at an early stage, the European Union’s proposal to generate an international agreement on natural resource management, it can position itself as a strategic commercial partner of the EU.”

This is because, among other things, the Green Deal will propose, through a “green regulation”, a border carbon adjustment or tax mechanism for specific sectors, so that the price of imports more accurately reflects their carbon content. “If Chile has the ability to adapt its processes to meet these new requirements, a European market opens up with high potential for the Chilean industry sectors that export the most to Europe: mining, forestry, wine, agriculture, fishing and chemical”, indicates the document.

At the level of production processes, it is stated that “an interesting opportunity to mention arises paradoxically from the extractive economy on which Chile bases its development, and this is the specialization based on natural resources in preparation for the successful insertion in what it could be the next technological revolution, probably based on the life and materials sciences, where the circular economy is the coordinating system”.

And as for new goods and services, the document proposes, since it has a great variety of natural resources -renewable and non-renewable-, Chile has the opportunity to innovate in the development of materials and products, both in the technical and biological cycle. For example, sustainable materials from wood and other renewable natural resources.

“Furthermore, these new business models are associated with more ‘tailored’ products and services, adapted to the specificities and needs of the region and ecosystem where they are developed, promoting the development of local economies, increasing resilience of those territories and generating jobs ”, it states.

Although the report prepared by the Eurochile Business Foundation states that there are still many gaps to overcome for the adoption of the circular economy in Chile, where “a critical aspect is the lack of awareness of the existence of the broad scope of this, which goes beyond waste management and recycling “,  it also affirms that an opportunity that glimpse as a key to counteract this scenario” is the interest that exists today, both in the public and private sectors, and the great convening power of the circular economy ”.

In addition, the report says, that an opportunity is added provided by the climate crisis and a social and economic crisis due to the coronavirus pandemic, “which is projected deep, showing that strong, resilient and inclusive models are needed, shaping the circular economy as a model to achieve that strength”.

“These crises,” concludes the report, “have demonstrated the speed with which governments can adapt their policies, and the business sector to transform and reinvent itself when the objectives are clear. That is the purpose of this roadmap, to deliver goals and a clear direction for the next 20 years, to allow an effective transition to the circular economy, which is undoubtedly a critical tool to face the economic, social and of the climate crisis”.