Australia is undergoing a significant transition towards a circular economy, a system designed to minimise waste, maximise resource efficiency, and promote sustainability.
With the launch of Australia’s first Circular Economy Framework in December 2024, the country is taking definitive steps toward embedding circularity across industries. This shift presents substantial economic and environmental benefits, with an estimated A$26 billion in economic value annually and a projected A$210 billion GDP growth by 2048 (DCCEEW, 2024).
The Australian government has introduced several policies to accelerate circularity, including the National Circular Economy Policy Framework, aimed at doubling the nation’s circularity rate.
Key initiatives such as the Recycling Modernisation Fund, National Reconstruction Fund, and Northern Australia Investment Fund are providing financial support to businesses innovating in this space.
Additionally, waste reduction targets are set to divert 26 million tonnes of waste from landfills annually, cutting greenhouse gas emissions by 14% (World Economic Forum, 2025).
A circular economy presents significant economic opportunities for Australia. Reports indicate that embracing circular practices could increase GDP by A$210 billion by 2048, creating 17,000 full-time equivalent jobs (Rynne B,2020).
By transitioning towards a circular economy, Australia can reduce its material footprint by 10%, increase material productivity by 30%, and recover 80% of resources by 2035 (DCCEEW, 2024).
Emerging technologies such as Artificial Intelligence (AI), Blockchain, and the Internet of Things (IoT) are expected to significantly improve material traceability, optimise waste recovery, and streamline supply chain efficiencies.
Innovations in material science, including bio-based alternatives and advanced chemical recycling, will enhance resource recovery and promote sustainable production systems.
Australian research institutions and startups are at the forefront of developing cutting-edge solutions that will define the next phase of circular economy expansion.
The growing demand for sustainable products and services is shifting market dynamics. Australian consumers are increasingly prioritising eco-friendly goods, leading to the rise of second-hand marketplaces, sustainable fashion brands, and zero-waste packaging solutions.
Businesses that align their strategies with circular economy principles are expected to gain a competitive edge as consumer preferences continue to evolve.
However, Australia’s circularity rate currently stands at just 4%, significantly below the global average of 8%. This highlights the untapped potential for resource recovery and efficiency improvements.
Despite promising developments, the transition to a circular economy faces critical hurdles -
Infrastructure Gaps
Inadequate recycling and resource recovery infrastructure remains a barrier, necessitating further investment in waste processing and circular supply chains.
High Initial Costs
Businesses, especially SMEs, often struggle with the upfront capital required for transitioning to circular models.
Regulatory Uncertainty
While policies are advancing, inconsistencies between state and federal regulations may pose challenges to nationwide implementation.
Need for Cross-Sector Collaboration
Greater cooperation between industry players, policymakers, and research institutions will be essential to scale circular practices effectively.
The outlook for the circular economy in Australia remains highly positive, with government policies, industry investments, and technological innovations shaping its future.
For a deeper understanding of Circular Economy, read éthica capital's "Circular Economy" report here; https://www.ethica.capital/research-insights
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References
DCCEEW (2024). Australia’s Circular Economy Framework. dcceew.gov.au. https://www.dcceew.gov.au/sites/default/files/documents/australias-circular-economy-framework.pdf.
World Economic Forum (2025). Circular Transformation of Industries: Unlocking Economic Value. https://reports.weforum.org/docs/WEF_Circular_Transformation_of_Industries_2025.pdf.
Rynne, B. (2020). Potential economic pay-off of a circular economy for Australia - KPMG Australia. KPMG. https://kpmg.com/au/en/home/insights/2020/05/potential-economic-pay-off-circular-economy-australia.html.
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