INSIGHTS

FOTP 6 South Asia Southeast Asia Waste Management Water and sanitation

Finger on the Pulse: 3 Key Factors for Building Stronger Circular Economies in Water and Waste Management

This edition of Finger on the Pulse dives into three crucial factors that can propel Asia towards a circular economy. Finger on the Pulse is a content series from Infrastructure Asia, offering insider insights on key developments and trends shaping Asia's infrastructure landscape.

Asia's booming cities are straining under the weight of waste and water woes. In just the region alone, a staggering 1.8 billion tonnes of waste is projected to be generated in its urban areas by 2025. The water situation is equally alarming, with over 75% of Asia already being water insecure and facing a looming water crisis.

Circular economy principles offer a powerful, yet untapped, opportunity for Asia to address these pressing challenges head-on when leveraged correctly. This approach prioritises resource recovery and minimises waste to promote sustainable resource management. It serves as a crucial tool to help tackle Asia's pressing water and waste management issues, which was also a focus at our recent Growing Infrastructure Course (GIC).

According to Jemima Sy, Lead Public-Private Partnerships (PPP) Specialist at the World Bank Infrastructure Finance Group, the benefits of a circular approach extend far beyond environmental protection. "Globally, only about half of the 270 billion cubic meters of wastewater is treated before disposal, posing significant pollution risks," she explains. "Now, imagine if instead of this, governments encouraged reuse through appropriate circular management? We would not only abate pollution, but also preserve scarce freshwater."

Jemima also highlights the economic potential of a circular economy, not just for water, but for solid waste as well. "The innovation push from a circular approach allows us to derive materials that have value. A linear approach to waste management would have seen, at best, refuse destined to a landfill or simply dumped or burned, using up yet another scarce resource that is land for low value purposes."

By embracing circularity, Asian cities can not only tackle their environmental challenges but also unlock innovation, create jobs, and revitalise entire industries.

Here are three key factors Asian cities need to focus on to strengthen their circular economies:

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1. Tailor circular solutions to local contexts

Different regions have varying infrastructure and societal needs, leading to variations in waste composition. Recognising these nuances enable targeted, context-specific circular strategies that optimise resource recovery and minimise environmental damage.

Waste-to-energy (WTE) technology offers numerous environmental benefits, including reducing greenhouse gas emissions and extending the lifespan of existing landfills. A prime example is Singapore's adoption of WTE technology. With limited land space available, WTE plants offer a compelling solution for the nation. They help conserve precious landfill space by significantly reducing waste volume while simultaneously generating valuable energy. For instance, Singapore's fifth WTE plant, Keppel Seghers Tuas Plant, is one of the most compact WTE facilities globally and is able to treat approximately 800 tonnes of solid waste daily to generate about 22 MW of energy. In addition, Singapore is also looking to implement carbon capture technology to mitigate its impact on environment and climate change.

Professor Shantanu Bhattacharya, from the SMU Lee Kong Chian School of Business, highlights collaboration as a key to achieving circular systems, "One of the critical elements of a circular economy in water and waste is the need for collaboration and alliances. Individual firms will not have the scale to invest profitably in the circular economy, but our research shows that collaborative alliances at the sectoral level lead to economic value being created from the circular economy, which is a must for the successful long run viability of circular economies.”

In the same vein, public-private partnerships (PPPs) have emerged as a crucial driver for encouraging regional WTE adoption. Japan International Cooperation Agency (JICA)'s collaboration with Indonesia demonstrates this. By sharing expertise, resources, and risk, the partnership will help facilitate the development of Indonesia's first bankable PPP Waste-to-Energy project. This collaboration will mobilise private capital for the project, marking a significant milestone in demonstrating the power of collaboration to advance a circular economy.

Given Indonesia's prioritisation of the WTE sector to increase its renewable energy mix from 13% to 23% by 2025, well-designed PPPs can foster an environment conducive to implementing circular solutions. For instance, the by-products from the waste treatment process such as Refuse-Derived Fuel (RDF), possess sufficient net calorific value to supplement or replace traditional fuels in industrial settings. This presents a promising opportunity for companies to adopt RDF and effectively decarbonise their manufacturing processes, such as steel and cement production. Infrastructure Asia plays a vital role of curating and connecting project sponsors in the region with the best-fit solution providers for such collaborations.

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2. Fully understand the circular economy framework for efficient implementation

Successful implementation of the circular economy framework hinges on three crucial stages, namely:

This approach can also be seen in Singapore’s wastewater management strategies, illustrated in the diagram below. Wastewater is collected through an extensive network of drains and sewers (product return). It then undergoes various treatment stages (remanufacturing/reconditioning) to varying degrees depending on the intended reuse application. Lastly, the treated water is distributed for diverse uses such irrigation in agriculture, industrial purposes, and consumption (remarketing).

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Image Credit: Public Utilities Board (PUB) of Singapore

However, as Professor Shantanu highlights, achieving a sustainable circular economy goes beyond just collection and treatment. "Our discussion [during GIC] also emphasised the need for other elements like standardised design of consumable components and the need for cradle-to grave design principles for the sustenance of circular economies."

A solid grasp of the circular economy principles will equip city leaders and businesses with the knowledge and tools to effectively integrate circular thinking into the core of their economic models.

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3. Achieve mutual gains through Extended Producer Responsibility (EPR)

Building on the importance of collaboration for a successful circular economy, Extended Producer Responsibility (EPR) is also a critical concept to consider. EPR places the responsibility on manufacturers for the entire life cycle of their products by embracing the cradle to cradle concept. Manufacturers become financially and operationally accountable for collecting, treating, and disposing of their products at end-of-life. This incentivises them to design products with durability, repairability, and recyclability in mind—all essential pillars of a long-term circular economy.

The Philippines' EPR Act of 2022 showcases this approach in action, with the law mandating sustainable product design and enforcing responsible waste management practices among manufacturers.

However, the reality of implementing this approach can be challenging, especially for countries without access to funding for establishing efficient collection systems or adequate recycling infrastructure in place. To address this, a possible solution lies in recycling alliances where collaborative partnerships bring together manufacturers, waste management companies, and environmental NGOs. By cross sharing knowledge, resources, and infrastructure, they make circular solutions more economically viable and scalable for manufacturers.

At present, our world remains heavily reliant on extracting new resources, with only 7.2% circulating in a closed-loop. This presents Asia with a significant opportunity for a circular economy, offering a compelling solution to meet the region’s needs while keeping within the planet's ecological limits. Governments and regulators are increasingly recognising this, as evident by the development of circular economy strategies and frameworks—the next crucial step will be to translate these plans into action and tangible results. As outlined in the Circularity Gap Report 2024, governments and industries need to roll out bold, contextually-appropriate policies, bridging the gap in sustainable and circular skillsets, and actively dismantling entrenched linear processes. The ultimate goal is for circular solutions to replace linear norms while ensuring people possess the skills to implement them effectively.

Devin Chan, Deputy Executive Director of Infrastructure Asia, highlights promising signs of progress demonstrated by the region. "We have seen numerous opportunities during our market trips, and have already started bringing our ecosystem partners to develop these projects. With their innovative approaches to waste and water management, we hope to move towards a more circular economy."

The upcoming Asia Infrastructure Forum (AIF) 2024 will further discuss how Asia can harness the power of the circular economy as a key driver of its sustainable transformation. By bringing together key stakeholders, from policymakers and industry leaders to environmental experts, AIF 2024 will help foster meaningful discussions and facilitate collaboration. Leveraging this collaborative spirit will drive systemic change and scale up circular economy initiatives, accelerating the transition for Asia towards a more sustainable future.

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