Chile’s Journey to a Circular Economy

For the last few years, the circular economy has started gaining momentum in Latin America, particularly due to its triple benefits of creating new businesses, generating new jobs and fighting climate change. However, there has been one country that has become a pioneer by adopting an official national strategy in order to move towards a circular economy.

Chile is a thin and long shaped mountainous country located at was once considered “the end of the world”, that counts with several particularities, such as being the only country in the region to have sovereignty on three continents -America, Antarctica and Oceania- offering one of the most diverse and breathtaking natural landscapes on Earth, from the driest desert in the world -the Atacama Desert- to the most beautiful rainforests in Patagonia and the enigmatic Rapa Nui culture with its unique and magnificent Moais.

Natural Resources, Waste and Climate Change

Historically, Chile has based its economy on an agro-mining export model focused on the exploitation of natural resources — wheat, nitrate and copper — participating only at the user level of the technologies developed in the last three industrial revolutions. Currently there is consensus that this situation cannot be repeated and that this time Chile cannot miss the historic opportunity to participate in the new technological leap.

Furthermore, today the country faces new challenges that force it to rethink its economic model. Chile leads the ranking of countries that generate more waste per inhabitant in Latin America, with 456 kg/year, also occupying the third place in generation of electronic waste (e-waste) in the region, with 10 kg per capita per year. The country also falls behind in terms of recycling, since of the 17 million tons of solid waste that are generated annually, only 10% of this waste is finally recycled.

Climate change is another sensitive issue for the country. According to the 2017 Global Climate Risk Index (CRI), Chile is among the ten most affected countries in the world by this phenomenon. Indeed, just in the last few years the country has suffered the most extreme droughts, wildfires, landslides and floods ever recorded in its history, destroying infrastructure and forcing the displacement of the population from the affected areas.

National Policies and Government

Fortunately, Chile has managed to transform these threats into opportunities, being recognized for its leadership in the fight against climate change, adding to the commitment of the Paris Agreement of 2015 (COP21) in order to limit an increase in the temperature of the planet by over 1.5 °C, through the reduction of GHG emissions by 30%, as well as recovering and reforesting a total of 200,000 hectares of forest by 2030. In addition, Chile is considered a global example in the adoption of renewable energies, according to the Inter-American Development Bank (IDB), with 55.8% of the total installed solar capacity in Latin America and the Caribbean.

It is also one of the first countries in Latin America to adopt an “Extended Producer Responsibility (EPR)” policy in order to manage waste and reduce its generation by focusing first on six key products: lubricating oils, electric/electronic devices, batteries, packaging and tires. It is expected that throughout the years more products will be added.

Chile also took a decisive stand on plastics through highly effective communication initiatives, such as #ChaoBolsasPlásticas (Bye Plastic Bags), which created so much awareness that allowed them to become the first country in the region to totally ban the delivery of plastic bags in its territory.

The boldest step towards a circular economy was taken this year when the Chilean Economic Development Agency (CORFO) that, with the support of the Ministry of Environment of Chile, created the first public circular economy instrument in Latin America to promote entrepreneurs and companies with circular business models, financing projects with up to US$100.000.

Moreover, according to Carbon Brief, Chile is responsible for less than 0.1% of the world’s carbon emissions, but due to its commitment to fight global warming, it is already drafting a new Climate Change Law to help combat the effects of this phenomenon in the country. The bill is expected to enter Congress in 2019 and will further promote the transition towards a circular economy.

Circular Economy and the Fourth Industrial Revolution

As the majority of Latin America, Chile missed the three previous industrial revolutions, becoming a country with great deficits in terms of industrial development, innovation and technology. The current lineal economy, based on take-make-dispose, has made it even more difficult for the country to become an important player in the global economy, being mainly relegated to the extraction of its precious and finite natural resources, such as copper and lithium.

However, several specialists and organizations share the idea that the circular economy will become the economic model of the fourth industrial revolution. Therefore, by adopting a circular economy national strategy, Chile is creating a tremendous opportunity to actively join the new industrial revolution for the first time in its history, opening the doors to a new culture of entrepreneurship and technology.

CORFO is again playing an important role by creating policies to promote the development of an industry 4.0 in Chile, with initiatives such as the Advanced Manufacturing Strategic Program and Start-Up Chile that seek to promote the intensive use of digital technologies and the creation of new business models in order to install technological and manufacturing capabilities in the country.

The combination of a circular economy and an industry 4.0 will create a new breed of entrepreneurs and innovators that will incorporate technologies such as the internet of things, big data, advanced manufacturing, 3D printing, artificial intelligence and blockchain, allowing the birth of new companies and local world-class enterprises with disruptive business models that will not only fight climate change and create thousands of new high quality jobs, but will also allow, after more than 200 years, uncoupling Chile’s economic growth from the exploitation of its natural resources.

Towards a Circular Chile

As we see, the circular economy has been growing strong in Chile, becoming a mainstream economic model for companies, government and society. The compromise of the country to start its transition towards a circular economy is better described by the words of Chile’s President Sebastián Piñera:

“When we thought that natural resources were infinite, that they had no limits, we were used to an economy that extracted, produced, used and discarded. That time is over, now we have to learn to reuse and recirculate natural resources. For that reason we are promoting in Chile, a country that knows how to use natural resources with greater intelligence and with greater caution, not disposing of or rejecting things, but reusing them. That is the essence of the Circular Economy that we want to promote in Chile”.

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