Addressing barriers to circularity in the GCC
By Mirko Rubeis, Managing Director & Senior Partner, Boston Consulting Group (BCG), Marcin Jedrzejewski, Partner & Associate Director, Boston Consulting Group (BCG), and Stefano Castoldi, Principal, Boston Consulting Group (BCG)
Along with many countries across Europe, Asia, and the United States, the Gulf Cooperation Council (GCC) has sought out a circular paradigm shift in waste generation to increase resource efficiency and reduce costs, as well as support economic diversification away from consuming the planet’s finite resources while minimizing the impact on the environment. In short, creating a more sustainable future. Recent estimates show a circular economy would increase GCC countries’ Gross Domestic Product (GDP) by USD 95-105 billion, generate 205-306 thousand jobs, significantly improve people’s quality of life, and create attractive growth opportunities for the private sector. As the GCC works to adopt this new paradigm, challenges need to be addressed to ensure the advancement of the global and as well the GCC’s recycling processes, production of bio-based products, and support of new ventures and growth opportunities. A focused strategy leveraging international best practices of collection and treatment across waste streams is needed to accelerate circularity in the GCC region.
Ongoing diversification efforts in the region have greatly benefitted from the momentum generated at Dubai’s Expo 2020, Dubai Circular Economy Strategy, and both the Kingdom of Saudi Arabia’s G20 Presidency and circular economy for carbon policy. Governments in the region have since introduced ambitious targets aimed at reducing landfilling (diversion of 80-100% of waste from landfills) and increasing waste treatment, recycling, and composting to up 77% of all waste streams by 2035.
Investing in Waste Management in the GCC
Many GCC cities are now invested to improve their waste management. In Saudi Arabia, for instance, the Public Investment Fund (PIF) plans to invest USD 11 billion by 2035 to increase recycling through the Saudi Investment Recycling Company. Overall, Saudi Arabia has earmarked USD 27 – 32 billion for investment to meet its landfill diversion targets. Several municipalities are also increasing recycling efforts. In Sharjah in the UAE, the Bee’ah waste management company has achieved 76% landfill diversion. Aluminum Bahrain (Alba), in partnership with the Australian company Regain, has begun treating hazardous waste and converting it into raw materials for the construction and steel industries. The Dubai Green Building System, a new set of regulations to increase recycled content in construction projects, has recently been issued in Dubai.
Despite these commitments and efforts, a recent joint study by the World Business Council for Sustainable Development (WBCSD) and BCG finds that securing finite resources for future generations and minimizing environmental impact will depend on further increasing waste collection and recycling targets globally as well as across the GCC. Based on international best practices, concrete and cement and plastic could potentially be collected at 95%, metals at 97%, and bio-waste at 90% in the GCC region. Recyclability of material streams should not stand in the way of such enhancement, as respective technologies either exist already or innovation is underway. The ultimate ambition for recycling rates for concrete and cement should be 95%, plastic 75%, metal 95%, and bio-waste 80% in the region.
What are the Implications?
Given the projected GCC waste volumes, meeting these collection targets implies collecting approximately 280 and recycling approximately 320 million tons of additional waste by 2040 compared to 2020. This implies a 91% collection and 87% recycling and composting rate across all waste streams by 2040. It means significantly expanding existing ambitions – for instance, Saudi Arabia would need to increase its recycling and composting target of 77% by 10 percentage points across all waste streams.
It is estimated that contributing to such global targets as 80-90% recycling would not only save 0.9-1.5 billion tons of CO2 emission by 2040 in the GCC, helping to reduce global warming, but also protecting nature through the conservation of water, land, and biodiversity. Quality of life in the GCC could also be enhanced through reduced air pollution and cleaner, more livable surroundings. Additional waste volumes of approximately 255 million tons will make up 75% of all waste streams to be recycled in 2040 across GCC, this means potential for at least 200 – 300 thousand jobs in the GCC region. Current waste management practices across the GCC region, however, present multiple barriers to achieving increased circularity targets:
Scale and fragmentation. The GCC waste management sector is fragmented and still emerging. While previously waste management in GCC meant either being a landfill operator (disposal), waste collector, or small-scale specialized treatment provider, these newer players operate large-scale facilities able to treat multiple types of waste.
Data availability and tracking. The lack of consistent and reliable data on waste generation in the GCC region is preventing full baselining and visibility into the composition of waste streams, hindering optimal capital deployment. Full waste traceability further limits the potential for illegal practices.
Regulation. Several environmental and sustainability policies have been introduced across the region, like Dubai’s Green Building System or Saudi Arabia’s National Environment Strategy linked to Vision 2030. However, most GCC countries still do not have a comprehensive framework to regulate the adoption of circular economy practices across all sectors and material streams in particular.
Financial incentives. Financial incentives or even penalties are required to discourage landfilling and incineration in the recycling industry.
Landfill standards. Non-sanitary or un-engineered landfills present a fifth challenge across the GCC. In Saudi Arabia, for instance, estimates suggest that approximately 98% of landfills are not engineered according to international standards.
A Call to Action for the Industry
Producers in the chemical industry should assess opportunities for participation in the upstream value chain of plastic waste sorting and treatment. For example, they could partner with local municipalities, waste management companies, or the private sector to build mechanical recycling facilities. In addition, they can also consider investing in chemical recycling regionally where they could have the right to win through scale and technology. Also, in this case, they could partner with waste management companies, to secure a stable, reliable, quality Mixed Plastic Waste fit for recycling. Last but not least, they could create partnerships and eco-systems with local consumer brands, to enhance the design of their packaging (making it fit for recycling), supply circular polymers for products and packaging, and more broadly design circular eco-systems. Chemical companies need to transform their business model to more closely work with the other stakeholders in a circular economy, both upstream (e.g. waste management companies) and downstream (recyclers, consumer brands).
Meeting bold targets and increasing circularity in the GCC region will yield multi-dimensional benefits. Beyond the obvious environmental value, the transition to a circular economy promises economic gains linked to job creation, economic growth, diversification, self-sufficiency, and independence from external regulatory pressures. The joint WBCSD-BCG study estimates that it will take USD 60-85 billion invested in the four key waste streams across the GCC region over the next 20 years to meet targets. This investment would cover design, collection, sorting, and recycling investment across these four key waste streams: plastic, concrete and cement, metal, and bio-waste. Joint action around the value cycle is therefore needed to realize the potential benefits of a circular economy, requiring the cooperation of multiple stakeholders and a partial overhaul of established practices. At both government and organizational levels, the GCC can contribute to a global economy that will use the earth’s materials responsibly and preserve its resources for future generations.