Accelerating circular economy transition for plastics and other materials.

A strong, sustainable Australian chemicals and plastics sector, domestic manufacturing sector, recovery and recycling sectors, and industry-focused research are critical to realising a circular economy.

Chemistry Australia and its members are committed to enabling and accelerating the transitions to net zero and a more circular economy.

A more circular economy will prioritise resource conservation and efficiency to capture the greatest value from traditionally discarded materials. It will reduce pollution, litter, and waste, and help build new markets and employment.

To achieve this and support opportunities to build on current investments, a combination of technologies, market-based solutions, and policy solutions is needed. Both outcomes
are contingent on a strong, sustainable domestic industry investing in new technologies and market depth. This includes emissions reduction investments and new markets for recycled content delivered by mechanical and chemical recycling investments.

The chemistry industry is an enabler of the circular economy transition required across the multiple value-chains it provides inputs into. The development of national circular economy frameworks, standards and networks, based on cross sector consultation will be vital to support and leverage into the future. These should integrate with regional and global markets and jurisdictions needed for scale and optimisation.

The Australian plastics circular economy transition is already underway. Investments and innovations are being made in materials, products, technologies, circular systems and capacity building. Recycling is growing, with increasing recycled content in a range of applications.

However, the supply and demand of circular materials needs to be coordinated in partnership with policy makers, research and academia, and consumers to create viable market
demand, enabling the substitution of fossil-based feedstocks with recycled feedstock over time, to achieve sustainable production and consumption of plastics.

UN Treaty on Plastic Pollution

The introduction of global caps on plastics production could negatively impact Australia’s ability to achieve its circular economy ambitions as basic polymer infrastructure, including crackers, will play a critical role in advanced recycling systems.

Global production caps may also impact Australia’s ability to realise the full potential of its natural resources through high-value-adding chemistry investment.

Government should:

1. Introduce a national framework to guide the development and implementation of circular economy policy and programs;*
   *Ensure harmonisation of federal, state and local government policies and activities to remove barriers to collaboration and investment.
2. Support a suitably ambitious, balanced UN Treaty to eliminate plastic pollution that is an enabler of Australian circularity;** 
   **This should exclude caps on primary polymer production that will add cost to businesses and consumers for no net benefit, and not duplicate the roles of existing treaties to manage chemicals.
3. Ensure life cycle and circular economy principles are applied in policy development across government;***
   ***This includes the selection of all materials for applications, including plastics alternatives, based on merit, using sound science, risk-based principles and applying a whole of life cycle approach – including to account for the full impacts of unintended consequences and regrettable choices.
4. Establish and mandate standards to ensure design for recyclability and re-use;
5. Set suitably ambitious targets, including mandated recycled content levels to incentivise investment, supported by incremental market development arrangements and underpinned by informed consumer demand;
6. Support and enable mass-balance accounting for recycled content traceability, including the free attribution methodology;
7. Implement education and information campaigns to stimulate demand for circular products.

Leveraging chemistry to deliver net zero

The net-zero challenges across all sectors of our economy, including the built environment, minerals processing, transportation and agriculture, depend on chemistry.

Government should:

1. Continue to support investment in critical minerals (chemicals) to ensure that Australia leverages the maximum economic return from its natural mineral endowment, increasing our economic complexity; 
2. Continue to support the investment in alternative fuels and feedstocks through the Future Fuels Fund;
3. Adopt the “energy efficiency first” principle within the built environment through the deployment of energy efficiency technologies such as insulation by:
   1. Implementing incentives that increase the building envelope energy efficiency and resilience of Australia’s 11 million existing dwellings;
   2. Ensuring energy efficiency first principles are deployed for retrofitting social housing, including public and community housing, where insulation enhancement is generally the highest priority;
   3. Introducing minimum standards for insulation in rental properties;
   4. Introducing mandatory energy rating disclosure when homes are sold or leased;
   5. Regulatory intervention to stimulate residential retrofit, keeping installers safe, and improve standards of quality and conformance; and
      Improving the general compliance and enforcement systems for installation of insulation in new buildings, including inspections prior to plaster.

Safeguard mechanism

The path to net zero is particularly challenging for chemistry facilities covered by the safeguard mechanism. Many key abatement technologies depend on the successful deployment of other enabling technologies like CCS, CCUS and a reliable supply of sufficient low-cost renewable electricity (e.g. low- emissions and green hydrogen).

Requiring safeguard facility operators to purchase GHG emission offsets above their declining baseline while they endeavour to fund capital investment in emissions-reducing technology increases the cost of the net zero transition.

It reduces the funds available to invest in the emissions reduction task, as funds are diverted to purchasing offsets.

Indeed, it may also be counterproductive; it acts as a disincentive for emissions-reducing investment and incentivises operators to purchase offsets and shutter facilities when they are no longer viable. The safeguard mechanism should recognise operators’ investment in emission-reducing technology.

Government should:

1. Prevent carbon leakage through Carbon Border Adjustments or other financial support to emissions- intensive trade-exposed sectors of our economy;
2. Adopt a technology-neutral approach to emissions reduction, recognising that different technologies may deliver effective, lowest-cost emissions reductions in different locations and for different business operations;
3. Recognise the time-lag between capital expenditure on emissions-reducing technology and the commissioning of that technology (the delivery of emissions reduction), modify the safeguard mechanism to allow emission-reducing capital expenditure to be used to offset GHG emissions above baselines;
4. Provide financial incentives and implement policy measures (including targets) that support investment in a suite of recycling technologies able to transform used products back into high-value resources and build recycling capacity;
5. Support an ambitious, balanced outcome from the UN Treaty to End Plastic Pollution. However, this support should not extend to global production caps.