Policy Package for Accelerating the Transition to Circular Economy
3/1 2025
Author: Hideka Morimoto
UNEP International Resource Panel notes that the extraction and processing of the world's natural resources accounts for more than 55% of greenhouse gas emissions and more than 90% of biodiversity loss and water stress. On the other hand, resource nationalist movements are becoming more active in resource-rich countries. For example, China introduced an export license system for rare earths in 2015, and Indonesia introduced a ban on nickel ore exports in 2020. Amid these growing environmental and resource constraints, the demand for recycled materials is increasing, and the competitiveness of the materials and product industry is shifting to "quality + price + recycled materials."
What is the current state of effective use and recycling of resources in Japan?
At present, there is a supply-demand gap between Japan's waste treatment and recycling industry and the manufacturing industry in terms of both quality and quantity of recycled materials, and a large amount of recycled materials are incinerated, landfilled, or exported overseas.
Specifically, despite Japan's dependence on imports of petroleum, metals, and other resources (imports of oil, naphtha, ores, metals, and metal products are about 38 trillion yen), Japan exports 6.85 million tons of steel scrap, 390,000 tons of copper scrap, 470,000 tons of aluminum scrap,1.25 million tons of plastics and about 120,000 tons of waste cooking oil (about 30% of the amount recovered) . In addition, a large amount is incinerated or landfilled: 4.72 million tons of food, 450,000 tons of clothing (95% of the clothes discharged), and 5.1 million tons of plastic (about 70% of the plastic emitted).
Even in terms of recycled materials, they are flowing out of the country. For example, the domestic use of domestically manufactured recycled plastic is only 460,000 tons out of 1.71 million tons. In addition, 5,000 tons of black mass (powder containing metals such as cobalt and nickel obtained when recycling lithium-ion batteries) is produced annually, but almost all of it is exported overseas.
Since Japan is a resource-poor country, there is an urgent need to transform into an economic system that maximizes the use of waste as a resource, creates added value, and leads to new growth. Based on this sense of crisis and awareness of the problem, Japan is accelerating the transition to a circular economy.
In August 2024, the Cabinet approved the Fifth Basic Plan for Recycling, and announced that it would work strategically and integrally as an important national strategy. In this plan, the transition to a circular economy is positioned as contributing not only to solving environmental issues such as net-zero and nature positive, but also to regional revitalization and the realization of high-quality livelihoods, strengthening industrial competitiveness, and ensuring economic security. In addition, the Ministerial Council on Circular Economy was launched, and at the second meeting in February 2024, the " Policy Package for Accelerating the Transition to a Circular Economy (a group of specific policies such as budgetary measures by each ministry)" was compiled to advance the plan.
Japan has made a major move in the direction of achieving sustainable economic growth by establishing a strong domestic supply chain by utilizing Japan's advanced resource recycling technology, establishing its position as a recycling resource powerhouse, derisking resource dependence on countries of concern, and regional revitalization through the utilization of local resources.
The "Policy Package for Accelerating the Transition to Circular Economy" consists of three areas: "Realization of affluent lifestyles and local communities by utilizing local recycling resources," "Establishment of an advanced resource recycling network integrated in Japan and overseas," "Formulation of domestic and international rules for the creation and expansion of resource recycling markets."
By utilizing waste generated in various parts of Japan as recyclable resources and also incorporating recycled resources generated overseas, Japan aims to expand the size of the circular economy-related business market to 80 trillion yen by 2030.
Japan has great potential for circular economy-related businesses that utilize advanced recycling technology. For example, Japan recycles the largest amount of e-scrap in any OECD member countries. Specifically, in 2019, 361,000 tons were recycled annually, accounting for just under 50% of the OECD's share(fig. 1). In addition to gold, silver, and copper, Japan excels in recycling technology for critical minerals such as palladium. In addition, 48.7% (2022) of the e-scrap recycled is imported from overseas, making Japan a major hub for e-scrap recycling in the world(fig2).
The "Policy Package for Accelerating the Transition to Circular Economy" sets a goal of increasing the amount of recycling to 500,000 tons by 2030. In addition to strengthening the collection of domestic e-scrap, the government will speed up and facilitate import procedures and formulate cooperation plans with ASEAN countries. It aims to build an international recycling network in cooperation with Southeast Asian countries.