This chapter provides an overview of the rationale for the circular transition in Ireland by analysing the main socio-economic and environmental trends and drivers. Global sustainability agendas such as the United Nations (UN) Sustainable Development Goals (SDGs), the Paris Agreement and the European Green Deal are key sources of inspiration and guidance for Ireland’s climate targets, which the transition to a circular economy can help achieve.
The Circular Economy in Ireland
1. Socio-economic and environmental drivers of the circular economy in Ireland
Abstract
The circular economy and the COVID-19 pandemic: Challenges and opportunities
As most other countries across the world, Ireland has been hit by the COVID-19 pandemic, which stimulated a reflection on resource efficiency and value chains. With 1 238 deaths per million inhabitants as of February 2022, Ireland is the fourth-least affected country by COVID-19 in the European Economic Area (Worldometer, 2022[1]). Real gross domestic product (GDP) contracted by 3.2% in 2020 and private consumption in real terms dropped by 13.2% but the Irish economy grew 15.2% in 2021. The pace of GDP growth in Ireland is expected to slow to 5.7% in 2022 and 3.9% in 2023 (OECD, 2021[2]). The disruption in global supply chains caused by the COVID-19 pandemic highlighted the benefits of shorter supply chains, further driving the Irish government’s willingness to push the circular economy agenda forward. In addition, by keeping materials in use for as long as possible and designing out waste and pollution, the shift to a circular economy (Box 1.1) in the recovery from COVID-19 would enable economic growth and environmental pressure to decouple (OECD, 2020[3]).
The unprecedented amount of public spending and investment occurring in Ireland in the wake of the pandemic should strive to avoid linear lock-in and align with longer-term government strategies. With a budget of EUR 503 million, “Advancing the green transition” is the first of three priorities1 under Ireland’s National Recovery and Resilience Plan to access funding under the European Recovery and Resilience Facility (Department of the Taoiseach, 2021[4]). Around one-third of the EUR 10 billion investment envelope in Ireland’s state budget for 2021, which at EUR 17 billion was the largest in the country’s history, was allocated to sustainable transport and water infrastructure, energy efficiency and renewables, landfill remediation and peatland rehabilitation (DPER, 2020[5]). Preparing for a “greener, more sustainable economy in the future” was also one of the four pillars of Ireland’s July Jobs Stimulus package of EUR 7.4 billion for 2020-21 (Department of the Taoiseach, 2020[6]). This may pave the way for concrete actions to transition from a linear to a circular economy.
Box 1.1. Definitions of the circular economy
There are many definitions of the circular economy: in fact, more than 100 have been counted. However, most definitions agree that it consists of designing waste and pollution out of the economy. Examples of definitions of the circular economy include:
An economic system that replaces the end-of-life concept, with reducing, alternatively using, recycling and recovering materials in production/distribution and consumption processes. It operates at the micro level (products, companies, consumers), meso level (eco-industrial parks) and macro level (city, region, nation and beyond), with the aim of accomplishing sustainable development, thus simultaneously creating environmental quality, economic prosperity and social equity, to the benefit of current and future generations. It is enabled by novel business models and responsible consumers (Kirchherr, Reike and Hekkert, 2017[7]).
The circular economy is one that has low environmental impacts and makes good use of natural resources through high resource efficiency and waste prevention, especially in the manufacturing sector, and minimal end-of-life disposal of materials (Ekins et al., 2019[8]).
The circular economy is restorative and regenerative by design. Relying on system-wide innovation, it aims to redefine products and services to design waste out while minimising negative impacts. A circular economy is then an alternative to a traditional linear economy (make, use, dispose) (Ellen MacArthur Foundation, 2018[9]).
The circular economy is where the value of products, materials and resources is maintained in the economy for as long as possible by returning them into the product cycle at the end of their use, thus minimising the generation of waste (EC, 2015[10]).
There are three different layers of circularity, with increasingly broad coverage: i) closing resource loops, which is defined relative to a traditional economic system; ii) slowing resource loops and materials flows; and iii) narrowing resource loops, which implies a more efficient use of materials, natural resources and products within the linear system (OECD, 2019[11]).
Source: Extract from OECD (2020[12]), The Circular Economy in Cities and Regions: Synthesis Report, https://doi.org/10.1787/10ac6ae4-en, based on EC (2015[10]), Circular Economy – Overview, https://ec.europa.eu/eurostat/web/circular-economy (accessed 1 July 2020); Ellen MacArthur Foundation (2018[9]), What Is a Circular Economy?, www.ellenmacarthurfoundation.org/circular-economy/concept (accessed 1 July 2020); Ekins, P. et al. (2019[8]), “The circular economy: What, why, how and where”, https://www.oecd.org/cfe/regionaldevelopment/Ekins-2019-Circular-Economy-What-Why-How-Where.pdf; McCarthy, A., R. Dellink and R. Bibas (2018[13]), The Macroeconomics of the Circular Economy Transition: A Critical Review of Modelling Approaches, http://dx.doi.org/10.1787/af983f9a-en; OECD (2019[11]), Global Material Resources Outlook to 2060: Economic Drivers and Environmental Consequences, https://doi.org/10.1787/9789264307452-en; Kirchherr, J., D. Reike and M. Hekkert (2017[7]), “Conceptualizing the circular economy: An analysis of 114 definitions”, https://doi.org/10.1016/j.resconrec.2017.09.005.
Some national governments in OECD countries, including Canada, Estonia, New Zealand and the Slovak Republic, have included measures related to the circular economy in their COVID-19 recovery strategies. Results from the OECD Green Recovery Database show that USD 677 billion have been allocated to environmentally positive recovery measures as of 30 September 2021 (Box 1.2). However, this accounts for just 21% of total COVID-19 recovery spending in OECD, European Union (EU) and key partner countries (OECD, 2021[14]). While mixed and negative measures account for “just” 10% of funding (EUR 319 million), the green recovery budget will be spent over a variable number of years, while support measures for fossil fuels amounted to USD 345 billion for 2020 alone in G20 countries and emerging economies, undermining green recovery efforts (OECD/IEA, 2021[15]). The findings of the OECD Green Recovery Database also highlight that governments spend roughly USD 500 billion annually on subsidies that harm biodiversity (OECD, 2019[16]). Resources for green measures have mainly been channelled towards energy and surface transport, while other crucial sectors for the green recovery such as industry, agriculture and waste management are poorly represented. In particular, water accounts for just 5% of funding for positive environmental measures, and waste and recycling for 1.5%.
Box 1.2. The circular economy in COVID-19 recovery package: Insights from the OECD Green Recovery Database
The Green Recovery Database tracks COVID-19 recovery measures with likely positive or negative environmental implications across 44 countries. It contains around 1 375 national-level measures that are environmentally relevant, covering a range of environmental impacts beyond energy and climate, including pollution (air, plastics), water, biodiversity and waste management. Some countries have included circular economy-related measures in their COVID-19 recovery packages. For instance:
In Canada, the Surplus Food Purchase Program is being launched with an initial USD 50 million designed to help redistribute existing and unsold inventories to local food organisations serving vulnerable Canadians.
Estonia is supporting separate waste collection solutions in municipalities. Since the COVID-19 outbreak, the maximum rate of support has been increased from 75% to 90%. The purpose of the grant is to increase the use of secondary raw materials and reduce the extraction of primary raw materials by increasing the capacity for separate collection of waste at the local government level.
New Zealand is preventing food waste and supporting primary sector production by supplying food to New Zealanders in need. This initiative addresses acute immediate food production challenges from the drop in demand due to COVID-19 restrictions by maintaining and redirecting products to struggling communities. The initiative established a contingency fund to directly purchase products where significant food waste, animal welfare, biosecurity concerns or environmental concerns would otherwise result and will scale up the Fruit in Schools project to provide an additional 10 000 fruit and vegetable boxes per week for 10 weeks and enable other food products likely to be wasted to be redirected. It will also fund the development and trial of digital platforms to enable other novel solutions to connect food with consumers.
The Slovak Republic is including circular economy transition measures as part of the draft reform programme for the period 2021-26. More specifically, these measures include reforming sorted collection of waste, making pay-as-you-throw mandatory, increasing the availability of reuse centres and removing illegal dumping sites.
Source: OECD (2021[14]), “Key findings from the update of the OECD Green Recovery Database”, https://www.oecd.org/coronavirus/policy-responses/key-findings-from-the-update-of-the-oecd-green-recovery-database-55b8abba/ (accessed 19 December 2021); OECD (2021[17]), “The OECD Green Recovery Database: Examining the environmental implications of COVID-19 recovery policies”, https://www.oecd.org/coronavirus/policy-responses/the-oecd-green-recovery-database-47ae0f0d/ (accessed 29 April 2021).
Drivers for the circular transition in Ireland
In 2020, Ireland was the European country with the second-lowest circular material use rate (2% against the EU27 average of 12.8%) (Eurostat, 2021[18]). Bridging this gap holds great promise for the Irish economy. The circular material use rate, also known as the circularity rate, measures the share of material resources coming from recycled and recovered materials:2 the greater the use of secondary materials, the higher the circularity rate (Eurostat, 2021[19]). Beyond the limits of the indicators itself (i.e. it does not account for repair and reuse) and the characteristics of Ireland’s domestic extraction (93% of which, in 2019, was biomass or non-metallic minerals, which are less suited to recycling than metallic minerals), it is clear that there is room for improvement in terms of material and resource efficiency in the Irish economy. It has been estimated that a 5% increase in resource efficiency would result in savings of EUR 2.3 billion annually for the Irish economy (EPA, 2014[20]). By making resource use more efficient, the circular economy alleviates environmental pressures linked to resource extraction and product manufacturing, namely greenhouse gas (GHG) emissions and air, water and soil pollution.
Global agendas such as the UN 2030 Agenda for Sustainable Development and the Paris Agreement, and supranational legal frameworks such as the European Commission (EC) Circular Economy Package are the main sources of inspiration and guidance for the transition towards the circular economy in Ireland. The government of Ireland views the EU Circular Economy Package (which includes the 2015 Circular Economy Action Plan and its 2020 update) and, in particular, its roadmap as high-level policy guidance to transition towards the circular economy (Box 1.3). Several new packages and initiatives at the EU level are also expected to promote the shift to a circular economy in Ireland. For example, the Fit for 55 package adopted by the EC in July 2021 will support the European Green Deal, of which one of the building blocks is the circular economy. With a view to reducing net GHG emissions by at least 55% by 2030, the Fit for 55 package strengthens 8 existing pieces of EU legislation and presents 5 new initiatives across a range of policy areas and economic sectors: climate, energy and fuels, transport, buildings, land use and forestry. For instance, the public sector will be required to renovate 3% of its buildings annually to drive renovation, create jobs and reduce energy use and costs, a target that circular economy principles applied to the built environment, for instance by applying circular economy criteria to green public procurement processes, can help to achieve.
Ireland committed to achieving net-zero carbon emissions by 2050 through its Climate Action and Low Carbon Development (Amendment) Act 2020, which is a significant driver for the circular economy (DECC, 2019[21]). Under the 2019 Climate Action Plan, the Whole of Government Circular Economy Strategy (hereafter “the Strategy”), to be renewed approximately every two years, recognises that a circular economy is essential to achieve climate targets, as renewable energy and energy efficiency can only address 55% of global GHG emissions (DECC, 2021[22]). The shift to a circular economy can mitigate emissions from the remaining 45% from agriculture, industry and land use (Ellen MacArthur Foundation, 2022[23]).
Box 1.3. European Commission measures for the circular economy
In December 2015, the EC adopted the Closing the Loop–- An EU Action Plan for the Circular Economy package to support the EU’s transition to a circular economy. The package included the EU Action Plan for the Circular Economy, which set out 54 actions targeting the whole life cycle of products across 5 priority areas (plastics, food value chain, critical raw materials, construction and demolition, biomass and biobased products, and the review of fertilisers legislation), as well as four legislative proposals amending the Waste Framework Directive, the Landfill Directive, the Packaging Waste Directive and directives on end-of-life vehicles, batteries and accumulators and waste electrical and electronic equipment.
The EC set the following targets as part of the Circular Economy Package:
55% of municipal waste recycled by 2025, 60% by 2030 and 65% by 2035.
Reduction of landfilling to 10% of municipal waste generated in 2035.
Mandatory separate collection for hazardous waste (2022), organic waste (2023) and textiles (2025).
It also foresaw a reform of extended producer responsibility schemes, broadening their scope and governance and the setting of new objectives for preventing waste, especially marine and food waste.
In January 2018, the EC adopted several new measures for the circular economy, including the EU Strategy for Plastics in a Circular Economy, to transform the way plastic products are designed, produced, used and recycled. By 2030, all plastic packaging should be recyclable.
As part of the European Green Deal, one of the EC’s six priorities for 2019-24, 2050 is the deadline to achieve net-zero GHG emissions in the EU. The new Circular Economy Action Plan, adopted in March 2020, is one of the building blocks of the Green Deal. It sets out 35 actions and initiatives aiming to:
Make sustainable products the norm in the EU.
Empower consumers and public buyers.
Focus on the sectors that use most resources and where the potential for circularity is high.
Ensure less waste.
Make circularity work for people, regions and cities.
Lead global efforts on the circular economy.
Under the new Circular Economy Action Plan and as of March 2022, the EC has several initiatives underway to improve the reparability and extend the useful life of products. These include a Sustainable Products Initiative, legislation on the right to repair and design requirements for electronics, among others. The Sustainable Products Initiative will revise the Ecodesign Directive and propose additional legislative measures to make products more durable, reusable, repairable, recyclable and energy-efficient. The EC intends to propose new “right to repair” legislation in 2022 to strengthen consumer rights to repair products at fair prices, with the objective of extending the useful life of products.
The Global Alliance on Circular Economy and Resource Efficiency (GACERE) was launched in 2021 as part of the action plan to identify knowledge and governance gaps in progressing towards a global circular economy and to advance partnerships. Beyond EU member states, 15 other countries are members of the alliance, of which 8 are OECD member countries (Canada, Chile, Colombia, Japan, Korea, New Zealand, Norway and Switzerland).
Source: OECD (2020[12]), The Circular Economy in Cities and Regions: Synthesis Report, https://doi.org/10.1787/10ac6ae4-en; EC (2020[24]), Circular Economy Action Plan: For a Cleaner and More Competitive Europe, https://ec.europa.eu/environment/pdf/circular-economy/new_circular_economy_action_plan.pdf; EC (2018[25]), “New waste rules will make EU global front-runner in waste management and recycling”, https://ec.europa.eu/info/news/new-waste-rules-will-make-eu-global-front-runner-waste-management-and-recycling-2018-apr-18_en (accessed 9 March 2022); European Parliament (2022[26]), A European Green Deal - Legislative Train Schedule, https://www.europarl.europa.eu/legislative-train/theme-a-european-green-deal (accessed 16 February 2022); European Parliament (2022[27]), “Right to repair”, https://www.europarl.europa.eu/RegData/etudes/BRIE/2022/698869/EPRS_BRI(2022)698869_EN.pdf.
Socio-economic factors
Demography
Ireland’s growing population could drive increases in resource use, pollution and environmental pressure – issues that could be mitigated by a circular economy. The Irish population of 4.9 million has been growing at around 1% per year over the last 5 years, almost double the OECD average of 0.6% (OECD, 2020[28]). Much of this growth has been concentrated in the Eastern and Midland Region, seat of the capital city Dublin. Dublin3 alone accounted for 40% of the population of Ireland (OECD.stat, 2021[29]). In the 5 years between 2014 and 2019, the growth rate of the population in the Eastern and Midland region (7.6%) was almost double the rate of population growth in Ireland’s 2 other regions (4.1% and 3.9%) (Figure 1.1). This growth, projected to lead to an additional 1 million inhabitants by 2040, is expected to increase environmental pressure unless activities become more resource-efficient and environmentally sustainable. Ireland also has the highest share of the population living in a house in the EU (92%), including terraced houses, and the second-highest number of rooms per person (2.1), which partially explains Ireland’s high level of GHG emissions per capita (1 263 kg) from heating (Eurostat, 2020[30]). According to Housing for All, Ireland’s new housing plan, over 300 000 new homes will need to be built by 2030 to accommodate growing demand, and addressing vacancy and using the existing stock efficiently is established as one of four pathways towards a sustainable housing system by then (DHLGH, 2021[31]). This is an opportunity to embed circularity in Ireland’s built environment, reusing material while improving resource efficiency.
Ireland is predominantly rural, with relatively dispersed settlement patterns, but compact urban growth could provide opportunities to improve resource efficiency. Around 60% of the population and 90% of the territory is predominantly rural,4 the second-highest share among European OECD countries (OECD, 2020[32]). The remaining 40% of the Irish population lives in the Greater Dublin Area, where the population density is 21 times the national average (OECD, 2021[33]). However, Dublin residents have increasingly been moving out of the capital due to escalating housing prices (OECD, 2020[28]), a trend that may have accelerated with the COVID-19 pandemic. Compact urban development has been shown to have positive effects on productivity, energy efficiency and health, among other dimensions (OECD, 2019[34]). The OECD (2020[12]) highlights that compact cities can contribute to reducing GHG emissions by limiting the construction of new roads, sewers, water lines and other infrastructure. Achieving more compact growth of urban and rural settlements has been identified as the first national strategic outcome of Ireland’s National Development Plan (NDP) 2018-2027.5 As such, a circular built environment that makes the most of the existing stock while limiting urban sprawl can improve the resource efficiency of buildings throughout their life cycle.
Ireland’s relatively young population could facilitate the shift towards a circular economy, as younger people tend to be more inclined to change their consumption habits and more receptive to behavioural change incentives. A total of 21.4% of the population is aged under 15, higher than the OECD average of 17.8%, while 13.9% of the population is over 65, lower than the OECD average of 17.1% (OECD, 2020[28]). A total of 35% of 15-29 year-olds (and 43% of 15-19 year-olds) in Ireland consider climate change to be 1 of the top 3 challenges facing the country, compared to 29% and 28% of those aged 30 to 64, and 65 and older respectively (EIB, 2021[36]). Beyond age-related differences, in 2018, 86% of Ireland’s adult population recognised the environment as a valuable asset for the country and over one-third considered climate change the most urgent environmental issue, followed by waste management and water quality (EPA, 2019[37]). However, a 2019 Eurobarometer survey suggested that significantly fewer Irish people were taking climate-related actions than on average in the EU (EC, 2019[38]). To address this issue, the 2021 Climate Action Plan recognises local community activity as central to delivering on its objectives and sees the National Dialogue on Climate Action6 as a vehicle for providing financial support for local innovations, hosting climate conversations and an annual local climate action conference, as well as networking and capacity building (DECC, 2021[39]).
Economy
Before the COVID-19 pandemic, the Irish economy was booming, unemployment was low and consumption was growing, leading to increased environmental pressure (see the following sub-section on environmental data and trends). In 2018, driven by the relocation of multinational corporations to Ireland, GDP was growing 10.5% annually on average, almost 5 times the OECD average (2.3%) (OECD, 2020[28]).7 GDP per capita in Ireland (USD 85 027) was almost double the OECD average (USD 45 244), bringing Ireland to the second place of the GDP per capita ranking among OECD countries (OECD, 2021[40]). Between 2010 and 2019, productivity (GDP per hour worked) in Ireland grew 42%, over 4 times the OECD average (9%), and the unemployment rate dropped from around 15% to 5%. Average real wages exceeded the OECD average by 15%, driving private consumption, which showed sustained growth between 2014 and 2019. Following the COVID-19 pandemic, real GDP contracted by 3.2% in 2020 and private consumption in real terms dropped by 13.2%. However, growth surged by 15.2% in 2021 before slowing down to 5.7% in 2021. The Irish economy is expected to grow by 3.9% in 2023 (OECD, 2021[2]).
The close geographical and economic ties between Ireland and the United Kingdom (UK) mean that Ireland is on the frontline of the UK’s departure from the EU in January 2021 (Brexit). The UK is Ireland’s main export destination outside of the EU, accounting for 14% of Irish exports (up to 40% in the agri-food sector) and the Republic of Ireland and Northern Ireland (UK) share a land border (OECD, 2020[28]). The full extent of the impact of Brexit may not have been felt in Ireland due to the pandemic in the short term. However, challenges in sectors where the UK is a strong trading partner (e.g. in the agri-food, pharmaceuticals and retail sectors, among others) but also opportunities (e.g. from the relocation of financial services companies) should become clearer in the longer term (France Ireland Chamber of Commerce, 2021[41]). Government and civil society initiatives promoting cross-border co‑operation are considering the circular economy as an area of collaboration. The Shared Island initiative set up by the Department of the Taoiseach, Ireland’s prime minister, aims to enhance co‑operation across Ireland and build consensus around a shared future (Government of Ireland, 2021[42]). As part of this initiative, the National Economic and Social Council was consulted to produce reports on shared island issues, one of which on climate and biodiversity mentions the circular economy (Moore, 2021[43]). Additionally, certain civil society initiatives promoting the circular economy also take an all-island approach, such as the Community Resources Network Ireland (see Chapter 2).
Ireland’s economy is predominantly characterised by services and industry (59.7% and 39.3% respectively) (OECD, 2020[28]). Small- and medium-sized enterprises (SMEs) account for most employment in manufacturing and services but large companies dominate export-oriented sectors. Supply chain circular business models can be applied to enhance resource efficiency and create collaborations across businesses of different sizes. Virtually all of the approximately 250 000 active enterprises in Ireland in 2016 were SMEs of up to 249 employees (OECD, 2019[45]). SMEs account for as much as 56% of manufacturing employment and 74% of services employment in Ireland, while large firms are highly concentrated in capital-intensive and globalised activities, such as manufacturing of computers or pharmaceuticals, international financial services and software development. Many large companies have adhered to circular economy principles through water and energy efficiency initiatives (see Chapter 2) but a more holistic approach reaching across all businesses in Ireland, including SMEs, is needed to create circular supply chains.
Agriculture accounts for just 1% of Irish GDP but for around one-third of Irish GHG emissions, 7% of total employment and 9.5% of merchandise exports in 2019 (OECD, 2021[33]). Three-quarters of Irish territory is farmland and 74% of Irish agricultural output is animal output, notably milk and cattle (31% and 27% respectively) (EC, 2021[46]). Agriculture accounts for 33% of Irish GHG emissions, of which almost 60% are due to animals, 30% from soils fertilised by manure, synthetic fertiliser or animal grazing on pasture and the remaining 10% from other sources, primarily animal manure management (Teagasc, 2020[47]). Building circularity into the agriculture and food sector by, for example, closing nutrient loops, preventing food loss on farms and reusing or recycling biowaste as input for other production processes (e.g. onsite biomethane production) could significantly contribute to reducing GHG emissions in Ireland as well as environmental pressures such as water pollution and abstraction. According to the Department of Business, Enterprise and Innovation (DBEI), the circular economy and the bioeconomy in the agri-food sector, of which 80% is based in rural Ireland, have significant potential for further job creation in rural areas (DBEI, 2019[48]).
Living standards, employment and skills
Regional disparities between Dublin and Cork, Ireland’s two most populous cities, and the rest of the country have grown in the past decade. The shift towards high-added-value sectors (e.g. pharmaceutical products, chemicals and communication technology) and the arrival of large multinational companies over the past decade has affected the geographic distribution of economic activity in the country (OECD, 2021[33]). As a result, Dublin and Cork have experienced much faster growth than most other parts of Ireland since 2010 and, in most small regions, disposable income per person moved further away from the country average between 2010 and 2017 (Figure 1.3). However, Ireland’s highly redistributive tax and transfer system has contained income inequality. Taxes and transfers bring Ireland’s Gini coefficient down from 0.535 to 0.309, the latter being in line with the OECD average (OECD, 2020[28]). The P90/P10 ratio8 of 10.3 is the 12th-lowest among the 31 OECD countries with data for 2017 and similar to countries such as Austria and France (OECD.stat, 2021[29]). Our Rural Future, a government plan to revitalise rural areas, notably by attracting remote workers from urban areas, could help bridge income and well-being gaps between urban and rural areas (DRCD, 2021[49]). Urban-rural differences in unemployment were relatively limited: unemployment reached 6.3% in rural regions in 2018, one point higher than the rate in predominantly urban regions (5.2%) (OECD.stat, 2021[29]).
A circular economy can be expected to have a positive net effect on job creation in Ireland, provided that workers acquire the skills required by the green transition. An economy favouring repair, maintenance, upgrading, remanufacturing, reuse, recycling of materials and product-life extension is more labour intensive than the mining and manufacturing activities of a linear economy (OECD, 2020[12]). At the EU level, between 2012 and 2018, the number of jobs related to the circular economy increased by 5% to reach around 4 million (EC, 2020[24]). Fostering circular economy activities (e.g. repair activities) could potentially deliver an additional 700 000 jobs by 2030, while other studies have estimated a European circular jobs dividend of 1.2 to 3 million generated by increased consumer spending power as a result of cheaper recycled materials becoming more widely available (EC, 2018[50]).
Ireland may face a skills shortage in key areas for the circular economy. Six groups of skills are relevant for circular jobs: basic, complex problem-solving, resource management, social, system and technical skills (Circle Economy, 2020[51]). Relative to the OECD average, Ireland has a shortage in all of the aforementioned skills (Figure 1.2). The country also has the highest share of underqualified employees (29.5%) among OECD countries (whose average is 19%) (OECD, 2020[28]), despite the higher level of tertiary education attainment in Ireland (47%) compared to the OECD average (37%) (OECD.stat, 2021[29]). Irish strategies related to skills and employment are seeking to bridge these gaps. The 2019 Future Jobs Ireland strategy, which sets out an economic pathway for Ireland based on “embracing innovation and technological change, improving productivity, increasing labour force participation, enhancing skills and developing talent and transitioning to a low carbon economy”, aims to double participation in lifelong learning by 2025. The circular economy as well as the low-carbon- and bioeconomy are at the core of the fifth and final pillar of the strategy (DETE, 2019[52]). However, while Ireland’s Economic Recovery Plan (which supersedes the Future Jobs Ireland Strategy) includes a pillar relating to sustainability, it does not refer to the circular economy (Department of the Taoiseach, 2021[4]).
Ireland has made significant progress in digitalisation over the last five years, ranking 6th in the 2020 European Digital Economy and Society Index9 (EC, 2021[53]). The country ranks first for the integration of digital technology, with leading positions in the use of e-commerce by SMEs and the use of the Internet by individuals. The strong uptake of e-commerce among SMEs and the population suggests that small-scale circular businesses in Ireland could benefit from e-commerce to extend their customer base more than in other EU countries. However, progress is needed to improve digital connectivity, where Ireland ranks 23rd, and to boost human capital, as the Irish population at large lags in terms of digital skills. In this sense, recent government spending (around EUR 2.6 billion) to provide access to ultrafast broadband coverage to around 540 000 premises in rural Ireland, including free access to high-speed broadband for 300 community facilities, is a step in the right direction. New technologies and digitalisation are also enablers of the circular economy, as they can be used in a wide range of tools to achieve specific outcomes. Examples include material exchange platforms to increase product reuse, open-access calculation tools to highlight the benefits of increasing material efficiency in different economic sectors and awareness-raising platforms to build multi-stakeholder engagement for the circular economy (OECD, 2020[12]).
Environmental data and trends
This section identifies data and trends in key environmentally related sectors, namely energy, water and waste, and their relevance to the transition to a circular economy in Ireland.
Climate, energy and emissions
Ireland committed to achieving net-zero carbon emissions by 2050 through the Climate Action and Low Carbon Development (Amendment) Act 2020 and significant efforts will be required to reduce GHG emissions by 30% compared to 2005 levels. The country is not currently meeting its emission reduction targets (DECC, 2019[21]). The latest report of the Climate Change Advisory Council (2020[54]) highlights that Ireland did not meet its EU 2020 target of reducing GHG emissions by 20% compared to 2005 levels, even accounting for the downward impact of COVID-19 on GHG emissions, achieving just a 7% reduction.
Agriculture, transport and the residential sector are the main drivers of GHG emissions in Ireland. The agriculture sector is the largest contributor, accounting for around one-third of Ireland’s GHG emissions, a reflection of the country’s particularly intensive livestock production (OECD, 2020[28]). Emissions from agriculture are set to increase through 2030 due to growing cattle numbers, increased fertiliser use and ongoing carbon losses from land (Climate Change Advisory Council, 2020[54]). National mitigation policies are particularly relevant in the Irish context, given that agricultural emissions are not priced and are not covered by the EU Emissions Trading Scheme (EU ETS). Against this backdrop, the Climate Action Plan sets out direct land use, land use change and forestry (LULUCF) abatement measures for the agriculture, forestry and land use sector, from improving energy efficiency on farms to diversifying land use, to meet the required level of emissions reductions by 2030. Transport and the residential sector are the second and third most important drivers of GHG emissions, accounting for 20% and 15% of emissions respectively (OECD, 2021[33]) (Figure 1.5).
While the contribution of most sectors to overall direct GHG emissions in Ireland (which amounted to 60 megatonnes of carbon dioxide, MtCO2) has decreased between 1990 and 2019, the shares of agriculture and transport have respectively remained stable and significantly increased (EPA, 2020[55]) (Figure 1.6). The majority of economic sectors, including waste, energy and residential, have seen their contribution to GHG emissions decline, driven by a variety of factors such as improved waste management, the shift away from carbon-intensive energy sources to renewables, energy efficiency improvements and warmer winters. A circular economy in food and the built environment (see Chapter 2) can contribute to Ireland’s low-carbon agenda by increasing the intensity of land use, while minimising environmental impacts through closing input loops.
Nevertheless, Ireland has made progress in reducing the CO2 intensity of its GDP over the past 15 years, driven by declining energy intensity, rising renewable energy production and more recently, a strong increase in GDP. With an intensity of 0.18 kg of CO2 equivalent per USD of GDP, Ireland was among the best-performing OECD countries in this regard in 2018 (OECD, 2022[56]). In the same year, 10.3% of the energy supply in Ireland was sourced renewably, in line with the OECD average (10.5%) (OECD, 2020[28]). However, Ireland will need to triple the share of renewable energy in its electricity mix by 2030 to achieve its target of 70% of electricity from renewables by then (DECC, 2019[21]). Furthermore, at 12.7 tonnes10 of CO2 per capita, Irish GHG emissions per capita are above the OECD average of 12 tonnes of CO2 per capita (OECD, 2022[56]).
The recent spike in energy prices in Ireland, across Europe and globally may give further impetus to the circular economy and climate action. The average price of electricity to businesses increased by 14% between the second half of 2020 and the first half of 2021 to EUR 15.3 excluding VAT, above the EU-27 average price of EUR 13.36 (SEAI, 2022[57]). In October 2021, Electric Ireland announced a price increase of 9.3%, equating to an additional EUR 9 per month on the average electricity bill, due to “unprecedented” increases in wholesale energy costs (ESB, 2021[58]). Higher prices will make production and consumption more expensive and as such may drive higher resource efficiency in key sectors for the circular economy in Ireland such as the built environment and agriculture.
Water resources, pollution and infrastructure
Ireland is rich in renewable water resources but high abstraction rates and climate change could significantly increase pressure on them. Ireland had 10 193 m3 of renewable internal freshwater resources per capita in 2017, making it the 5th most water-rich country in Europe and the 11th-richest in the OECD (World Bank, 2021[59]). However, Ireland has one of the highest levels of freshwater abstraction per capita for public water supply in the OECD (2022[56]), partially due to a high level of water losses: around 40-43% of the public water supply is lost in leaks, although measures to limit leakage have been implemented (Irish Water, 2020[60]; 2021[61]). Additionally, Ireland is among the few OECD countries that do not charge households for water supply and wastewater services, as charges introduced in 2015 were scrapped a year later due to strong social opposition (OECD, 2021[33]). Households consuming water above a certain threshold will pay an excess use charge from 2022.
In the face of climate change, even Ireland has not been exempt from chronic drought. In July 2018, national water utility Irish Water introduced the first-ever National Water Conservation Order nationwide hosepipe ban following high temperatures and the absence of rainfall in June and July (EPA, 2020[62]). The hosepipe ban remained effective until September 2018. By increasing water treatment and reuse (e.g. in industrial processes), building circular water systems in Ireland could help to alleviate pressure on water quality and quantity, paving the way towards more climate resilience in water. Addressing the issue of leaks in the public water supply network, which new measures will seek to do (Box 1.4), is also essential to increase water efficiency.
Agriculture and urban wastewater are the main sources of water pollution in Ireland (EPA, 2020[63]). Ireland’s National River Basin Management Plan 2018-2021 highlights that agriculture is the most significant source of pressure in terms of the number of water bodies at risk of not achieving good ecological status (53% of water bodies at risk), significantly more than urban wastewater (20%) (DHLGH, 2018[64]). Water quality is particularly affected by nitrates from agricultural soils in the south and southeast and phosphorous in the east and south of Ireland. Significant agricultural pressures include runoff of nutrients and sediment from agricultural land and farmyards and the contamination of surface waters with pesticides.
The current limitations in water treatment infrastructure also affect water quality. Despite progress on upgrading wastewater treatment plants, 56% of wastewater collected from urban areas in Ireland did not meet the quality requirements of the EU Urban Wastewater Treatment Directive in 2019 for which compliance was required by 2005 (OECD, 2021[33]). Ireland has one of the lowest shares in the OECD – less than two-thirds – of the population connected to at least a secondary water treatment system (OECD, 2022[56]). Increasing the coverage of wastewater treatment infrastructure is required to support better water quality and the achievement of the UN SDG 6 on clean water and sanitation for all by 2030. Irish Water has postponed the completion of infrastructure works allowing all areas to be connected to the public wastewater network with treatment facilities from 2022 to 2024 (EPA, 2020[65]). Recent changes in the water management system and the implementation of measures to reduce water abstraction and pollution could start to pave the way to success in this area (Box 1.4). Going forward, building new and updating existing water and sanitation infrastructure should follow circular economy principles to take advantage of the co-benefits of circular water systems, such as closing nutrient loops and becoming a net-positive source of energy, in addition to improving water quality.
Box 1.4. Water governance reforms in Ireland: Towards implementation of the OECD Principles on Water Governance
Water governance in Ireland has improved over the past few years with the establishment of national water utility Irish Water and the adoption of a water services policy statement and funding framework. These reforms have supported progress towards the implementation of the OECD Principles on Water Governance (Figure 1.7), which provide the 12 must-dos for governments to design and implement effective, efficient and inclusive water policies.
The reform of the national water governance framework in Ireland focused on defining clear roles and responsibilities (Principle 1), policy coherence (Principle 3), capacity (Principle 4), data and information (Principle 5), and monitoring and evaluation (Principle 12). The Water Services Act established Irish Water as Ireland’s national water utility in 2013. It took over from 31 local authorities as the entity responsible for the operation of all public water and wastewater services, aiming to overcome fragmentation and improve efficiency. The Water Services Policy Statement 2018-2025, published by the Department of Housing, Local Government and Heritage (DHLGH), aims to clarify the government’s expectations for the delivery and development of water and wastewater services in Ireland. The newly created National Water Forum facilitates engagement with a wide range of actors at the national level.
The new institutional setting has allowed Ireland to boost investment in infrastructure and services, but investment levels in water and sanitation infrastructure by 2030 are still set to be insufficient. Irish Water invested approximately EUR 4.5 billion in public water and wastewater services between 2014 and 2020 and is expected to invest EUR 8.5 billion between 2018 and 2027 according to Ireland’s National Development Plan (NDP), notably in programmes aiming to reduce leaks, ensure safe and sustainable water supply and increase wastewater treatment capacity. These investments should ensure compliance with EU water quality standards and improve water efficiency by reducing leakage. However, this amount is far from the EUR 20-25 billion to 2030 required to meet the water infrastructure needs of a growing population estimated by the OECD. Furthermore, Ireland is one of the only countries in the OECD that does not apply charges to household water and wastewater services, implying that the state essentially covers most water financing needs. Although an excess use charge will come into effect for households consuming water above a certain threshold from 2022, the charge will apply to less than 10% of metered domestic households.
Over the coming years, the government aims to retain Irish Water as a national, publicly-owned, regulated water services utility, as outlined by the policy paper “Irish Water – Towards a national, publicly-owned, regulated, water services utility” published in February 2021 by the Minister for Housing, Local Government and Heritage. According to government expectations, this will involve: Irish Water separating from the Ervia Group in 2023; implementing an enabling framework ensuring adequate control of water services operations and human resources; and continued environmental and economic regulation carried out by the EPA and the Commission for the Regulation of Utilities respectively.
Source: OECD (2015[66]), OECD Principles on Water Governance, https://www.oecd.org/cfe/regionaldevelopment/OECD-Principles-on-Water-Governance-en.pdf (accessed on 7 August 2021); OECD (2018[67]), Implementing the OECD Principles on Water Governance: Indicator Framework and Evolving Practices, https://dx.doi.org/10.1787/9789264292659-en; Irish Water (2021[68]), About Irish Water, https://www.water.ie/about/about-irish-water/ (accessed on 7 August 2021); DPER (2019[69]), Project Ireland 2040 Documents & Information, https://www.gov.ie/en/collection/580a9d-project-2040-documents/ (accessed on 30 July 2021); DHLGH (2021[70]), “Minister O’Brien publishes Policy Paper on future of Irish Water”, https://www.gov.ie/en/press-release/adf08-minister-obrien-publishes-policy-paper-on-future-of-irish-water/ (accessed on 7 August 2021).
Material consumption and waste management
The Irish economy generates less waste than the EU average. Total waste (including major mineral waste) per capita in Ireland was less than half the EU average in 2018. In 2018, Ireland generated 2.9 tonnes of total waste per capita, significantly below the EU average of 5 tonnes (Eurostat, 2021[71]). This is partly explained by the relatively low contribution of mining and quarrying to total waste generated in Ireland (14% of total waste generation) relative to the EU average (24%) (Figure 1.8). Municipal waste11 accounted for around one-sixth of total waste generated in Ireland in 2018, amounting to 2.9 million tonnes or 604 kg per capita, above the OECD average of 538 kg per capita (OECD.stat, 2021[29]).12 The manufacturing and services sectors were the main contributors to total waste in the country in 2018, accounting for 25% and 22% respectively (Figure 1.8). The manufacture of food, beverage and tobacco products (24%) is the second contributor to waste from the manufacturing sector.
Irish domestic material consumption (DMC) per capita currently amounts to 23 tonnes, the 12th-highest level in the OECD (OECD.stat, 2021[29]). It mostly consists of non-metallic materials and biomass, food and feed, reflecting the role of the construction and agriculture sectors in material resource use (OECD, 2021[33]). Given that construction materials tend to stay in the economy for long and that biomass can be consumed as food and animal feed, this strengthens the hypothesis that materials consumed in the Irish economy stay in use for long periods of time and may also explain Ireland’s relatively low circularity rate to some extent.
Municipal waste per capita has been growing in Ireland, mostly driven by non-household waste. After following a strong rising trend between 2000 and 2006 (+33% in 6 years), municipal waste per capita significantly decreased between 2007 and 2012 (-27%), before stabilising until 2017 and rising again since then (Figure 1.9). Municipal waste is relatively equally split between household (53%) and commercial waste (47%) (EPA, 2020[62]). However, household waste per capita has decreased significantly since 2008 (Figure 1.10) and the share of household waste in total municipal waste has remained stable since 2014 despite an 8% increase in absolute value, while other sources of municipal waste increased by 14.5% over the same period. This suggests that non-household waste has been the main driver behind the increase of municipal waste per capita observed since 2015.
Recycling of municipal waste significantly increased between 2001 and 2004, but recycling rates have plateaued since then and even declined since 2017. In 2018, Ireland recycled 38% of municipal waste, including biowaste (EPA, 2020[62]). Ireland recycles glass, wood and a small amount of plastic on its territory. However, the shift from landfilling (from 58% in 2010 to just 14% in 2018) favoured incineration with energy recovery, which grew significantly from 4% in 2010 to 43% in 2018, rather than recycling. The recycling rate of municipal waste plateaued at around 40% between 2010 and 2017, before decreasing to 38% in 2018 (Figure 1.11). Ireland met the EU Waste Framework Directive (WFD) 2020 recycling target (50%) for municipal waste, as a different calculation method based on household-derived paper, metal, plastic and glass is used for reporting on compliance with this target until 2020.13 However, the higher EU recycling targets applying from 2025 will be challenging for Ireland to meet given the plateau in recycling rates and the new calculation methodology that is more comparable with the OECD-Eurostat indicator will make compliance with new targets even more challenging.
There are strong disparities across local authorities in the levels of waste collected from households and per bin type (Figure 1.12). According to the EPA, these disparities are likely linked to differences in waste collection services and infrastructure, differences in the share of the population using authorised waste collection services and behavioural factors (EPA, 2021[73]). Cities (notably Dublin and Cork, the two most populous cities in the country) drive overall household waste in Ireland due to their high concentration of the population. Dublin and Cork alone account for 18% of all household waste and the top 5 local authorities14 contribute 37%. As such, cities are ideal starting points to drive the circular economy in Ireland. The high waste levels and population density provide an opportunity for scaling up circular economy initiatives and extracting value from waste streams.
By preventing waste upstream, the circular economy in Ireland can contribute to reducing pressure on the country’s waste treatment capacity and to limiting the export of waste. Ireland has insufficient waste treatment capacity to treat all of its waste on its own territory, making it reliant on export markets for the treatment of much of its residual and hazardous waste (EPA, 2020[62]). In 2018, over one-third of municipal waste was exported for recycling (73% of exported waste) and incineration with energy recovery (29%), and 73% of hazardous waste was sent to other European countries for disposal or recovery. The country’s landfills and waste to energy facilities are operating at licensed capacity; it recycles glass, wood and small amounts of plastic on its territory but does not produce sufficient material to support a viable recycling industry for paper, steel or aluminium (DECC, 2020[74]). One-third of Irish municipal biowaste (89 642 tonnes) was treated in Northern Ireland in 2019, mostly due to more favourable gate fees (EPA, 2021[75]). Most construction and demolition waste generated in Ireland was treated domestically (96%) but only 9% was recycled, while the rest was recovered for backfilling. The circular economy can help to alleviate some of these pressures by preventing waste generation upstream (e.g. by embedding circular principles into planning and with effective end-of-waste criteria and by-product notification processes). However, additional treatment capacity will be needed to reduce exposure to export market shocks (e.g. closures at short notice) and to make the most of resources that can only be recycled or recovered as fuel.
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Notes
← 1. Ireland’s National Recovery and Resilience Plan has three priorities:
Priority 1: Advancing the green transition (EUR 503 million).
Priority 2: Accelerating and expanding digital reforms and transformation (EUR 295 million).
Priority 3: Social and economic recovery and job creation (EUR 181 million).
← 2. The circular material use rate, also known as the circularity rate, is defined as the ratio of the circular use of materials () to an indicator of the overall material use (): , with:
, where corresponds to recycling, to the amount of imported waste bound for recycling, and to the amount of exported waste bound for recycling.
, where is Domestic Material Consumption. is used as a proxy for raw material consumption, which more accurately reflects the overall material footprint of a country but is not available for all European countries yet (EC, 2018[77]).
As such, the circularity rate is lower than recycling rates (around 55 % in the EU), as some materials in the economy cannot be recycled, e.g. fossil fuels burned to produce energy or biomass consumed as food or fodder.
← 3. In this case, reference is made to the Territorial Level 3 (TL3) region of Dublin. Regions within the 38 OECD countries are classified on two territorial levels reflecting the administrative organisation of countries (OECD, 2021[35]).
← 4. A predominantly rural region is classified as predominantly rural remote (PRR) if at least 50% of the regional population needs more than 1 hour to reach a city (OECD, 2020[32]).
← 5. As a result of the COVID-19 pandemic, the plan will be extended to 2030. The NDP is the government’s investment strategy for public capital investment that supports the National Planning Framework, which extends to 2040. These two policy documents combine to form Project Ireland 2040.
← 6. According to the Environmental Protection Agency (EPA), the vision of the National Dialogue on Climate Action is to “create a long-term process by which the national objective of climate neutrality and resilience by 2050 is communicated to all of society in a manner that creates awareness and understanding towards enabling climate actions across all of society and the economy” (EPA, 2021[78]). It is led by the Department for the Environment, Climate and Communications (DECC) with secretariat support provided by the EPA.
← 7. It has been argued that GDP figures are distorted by the activity of multinational companies and relatively high consumer prices in Ireland compared to the rest of the Eurozone (Honohan, 2021[76]).
← 8. The P90/P10 ratio compares the average income of the top and bottom deciles of the income distribution. A P90/P10 ratio of 10 indicates that the top decile of the income distribution has, on average, 10 times as much income of the lowest income decile.
← 9. This index monitors EU member states’ progress with respect to digital connectivity, human capital, use of Internet services, integration of digital technology and digital public services.
← 10. The metric tonne, rather than the UK or US ton, is the unit of measure adopted throughout this report.
← 11. The OECD defines municipal waste as the waste collected and treated by or for municipalities. It covers waste from households, including bulky waste, similar waste from commerce and trade, office buildings, institutions and small businesses, as well as yard and garden waste, street sweepings, the contents of litter containers and market cleansing waste if managed as household waste. It excludes waste from municipal sewage networks and treatment and from construction and demolition activities.
← 12. It should be noted that definitions and measurement methods vary among countries. As such, the comparison of the Irish data with the OECD average should provide readers with a sense of scale rather an exact comparison.
← 13. This calculation puts Ireland’s municipal recycling rate at 51% in 2018.
← 14. The top five local authorities in terms of household waste produced are Cork County, Dublin City, Dún Laoghaire-Rathdown, Fingal and South Dublin. Aside from Cork County, all of these local authorities are adjacent or very close to Dublin.