The new 2019 Circularity Gap report warns the rate of current raw material extraction at 92 billion tonnes per year is already exceeding planetary boundaries, and that due to population and economic growth this figure could swell to a staggering 184 billion tonnes per year by 2050. Only a mutually reinforcing combination of low-carbon development and resource efficiency can shift our world economy towards a low carbon pathway.

The Paris Agreement requires a systematic and holistic approach to tackling climate change which steps away from focusing on a single sector or industry. It defines collaborative financing strategies for transferrable mitigation outcomes through which countries and sectors can cooperate to achieve a country’s development priorities, while simultaneously reducing greenhouse gas emissions and making more efficient use of its resources. This approach also steps away from the often, punitive narrative that reducing emissions is costly to the economy, and instead focuses on a pragmatic and inspiring vision of sustainable, low-carbon growth.

In a globally connected world where production and consumption span global supply chains, countries will increasingly have to take responsibility for emissions which are embedded in the products they consume - even if these emissions took place outside of their jurisdiction. As we currently measure it, the carbon footprints’ of developed countries are shrinking, while raw material extraction and heavy industry is increasingly moving to developing countries where labour costs are lower and there is less capacity to enact and enforce regulations and standards.

Consequently, emissions related to the extraction of raw materials and the production of goods along supply chains are the sole responsibility of the developing country, which they must account for under the Paris Agreement. However, within the Paris Agreement, international cooperation along supply chains under Article 6 could be a means to create financial incentives for shifting to more efficient production cycles along the value chains.

Cooperative approaches under Article 6.2 of the Paris Agreement can open new opportunities for international cooperation and target the 20 to 30 percent of global emissions which take place in the producing country but would best be addressed by climate action in the country of consumption.

Climate finance provided through cooperative approaches can specifically take into consideration emissions generated along these supply chains and address the emissions embedded in the consumed products. For example, this could happen through an upward adjusted price per tonne of CO2e paid to the selling country, or downward adjustments of volumes of Internationally Transferred Mitigation Outcomes (ITMOs), transferred to a sovereign buyer of mitigation outcomes.

Circular economy strategies with their focus on resource efficiency and reusability are well placed to target these embedded emissions and transform production and consumption patterns.

UNDP, as the largest implementing partner on climate action in the UN system, has been supporting developing countries such as Lao PDR and Kenya to develop circular economy strategies to advance a low-carbon, sustainable development pathways in line with the objectives of Paris Agreement and the 2030 Agenda for Sustainable Development. UNDP is also exploring cooperative approaches as an instrument to strengthen a selling countries ability to adapt to climate change through ensuring a share of proceeds is allocated to green adaptation funds.

Realizing the interlinkages between carbon finance and circular economy will open more concrete sustainable development perspectives in countries’ growth sectors, and put them on a low carbon development pathway to successfully achieve the ambitious targets of the Paris Agreement.


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