The global clean energy transition and the transition to a circular economy are both fundamental pillars to securing humanity’s sustainable future. Yet, how they depend on each other has not received the public attention and spotlight it deserves. When in fact, you simply cannot have one without the other.

Today’s economic system can be considered a “linear economy”, built on a model of extracting raw materials from nature, turning them into products, and then discarding them as waste. Currently, only 7.2 percent of used materials are cycled back into our economies after use – posing a significant burden on the environment and worsening the climate crisis.

The circular economy, on the other hand, aims to minimise waste as much as possible and promote a sustainable use of natural resources, through smarter product design, longer use, recycling and more, as well as by regenerating nature. For this reason, they are essential for fighting climate change, as well as a vital pillar for the energy transition.

A successful energy transition needs circular strategies to ensure resource availability, while a successful circular transition needs clean and abundant energy inputs. Harnessing synergies between both systems will be critical for accelerating the world’s net-zero transition while ensuring reliable access to clean energy for all.

Source: Ramboll

 Understanding the energy-circular economy nexus

 According to the International Energy Agency, a complete transformation in how the world produces, transports, and consumes energy is imperative to achieve the Paris Agreement’s net-zero goal by 2050. This highlights the importance of considering the full life cycle of energy services – from the production process, the use phase, to the end-of-life phase.

To be on track for net-zero, renewable energy (RE) capacity will have to quadruple by 2030 – signaling an urgent pivot away from fossil fuels and towards zero emissions technologies supported by batteries. But transitioning to these technologies is also triggering massive demand for critical materials and minerals that form the building blocks for RE production.

For solar alone, the expected increase in capacity to meet net-zero is equivalent to adding the world’s largest solar farm every single day by 2030. Meanwhile, electric cars (which require at least 2.5x times more copper than traditional cars) is expected to reach over 60% of global car sales by the end of the decade from the current 5% share today.

 

Source: European Circular Economy Stakeholder Platform

Given these trends, the global supply chains for materials such as copper, rare earth metals, and other key materials for RE production need to be expanded urgently. Reshaping the RE industry into a more circular economy can be a potential solution to reduce waste and carbon emissions, while extending the supply of critical parts and materials.

Indeed, recycling could help recover metals from the almost 60 million tonnes of smartphones, laptops, hard drives, and other electronic waste collected globally. The circular economy can also be a source of low-carbon materials – for instance, recycled aluminium emits up to 95% less carbon dioxide than that from virgin sources.

As such, building energy transition infrastructure from secondary materials can support the global transition to net-zero. What’s more, this new paradigm also gives rise to a secondary market for repair, refurbishment, and trading of used components – creating an estimated $4.5 trillion reward for circular business models based on Accenture research, and over six million jobs by 2030 according to the International Labour Organization.

Moreover, networks of ‘prosumers’ would emerge as integral for a circular economy, facilitating exchange of surplus energy. By engaging consumers as active contributors to the energy grid, prosumption can foster a more sustainable energy landscape in the future by redistributing power generation and promoting community-level energy resilience.

Unlocking Asia’s potential for circularity

As a global consumption and production powerhouse, Asia especially has potential to demonstrate the impact of the circular economy at scale. Many Asian countries have become global manufacturing hubs today – experiencing rapid growth, urbanisation, and industrialisation, while bringing with it considerable associated environmental impact.

By 2030, Asia is projected to account for two-thirds of the 4.9 billion global middle-class population, further depleting its resources in light of rising populations and incomes. Nonetheless, the experiences of major economies in the region show significant opportunities to create new value and growth from transitioning to a circular economy.

Policymakers across Asia have already seen the potential of a circular economy model and have thus interpreted it into their national policy frameworks. China and India were among the region’s first adopters of circular economy rules and regulations – which studies show could potentially unlock about $9 trillion in China by 2040 and $624 billion in India by 2050 in the circular economy sector.

Closer to home, Indonesia’s new capital built in the jungles of Borneo embodies our neighbour’s bold vision for constructing a futuristic city based on the principles of the circular economy. Named Nusantara, the capital will include a water recovery system expected to be fully in place by 2035 and a complete waste recycling system operating by 2045.

Meanwhile within the private sector, both large and small companies have also started to put circular economy models into action, designing products for longer life, easy disassembly, and recycling. For instance, Chinese electric vehicle maker BYD claims that its simpler battery chemistry and large cell size allows for easier recycling.

Beyond introducing new policies and products for the circular economy, many Asian countries have also embarked on initiatives to empower more prosumers in the energy industry. India for instance has encouraged the use of solar-powered grids and a prosumer model through subsidies for solar PV installation, net-metering and feed-in tariffs.

While the region has made notable progress towards designing and implementing circular economy principles, there remains considerable work to be done on public education and bringing corporate practices in line. Yet one thing is clear, the public dialogue on circularity is already happening with the benefits of a successful transformation visible to all.

Malaysia’s leadership opportunity in ASEAN

For many countries in ASEAN, a circular economy is already embedded in their national cultures – even if this is not explicitly termed as such. Communities across the region have long been reusing, repairing, sharing, and upscaling products as part of their everyday economic activities, in what is now seen as advanced models of circular economy.

But while circular practices already exist in ASEAN, most national programmes have focused on the environment alone, with limited roles for trade, technology, and markets. To this end, the Framework for Circular Economy adopted by ASEAN in 2021 identifies priority focus areas along with key enablers to accelerate the realisation of its circular economy.

This includes the development of regional value chains to be a highly integrated and cohesive economy, enabling new trading and market opportunities. The Framework also proposes initiatives to encourage ASEAN-wide cooperation on knowledge and technology sharing to scale up promising circular innovations at various levels.

As Malaysia gears up to officially assume the Chairmanship of ASEAN in 2025, the nation is uniquely positioned to catalyse ASEAN’s circular economy transition. For instance, the ASEAN Cooperation on Environment offers Malaysia as a basis from which to grow regionally, promoting more regional collaboration by unifying circular economy criteria.

Simultaneously, initiatives like the Net Energy Metering (NEM) scheme, spearheaded by the Ministry of Energy Transition and Water Transformation (PETRA), are empowering more Malaysians to become prosumers, feeding excess energy back to the grid. With its success, Malaysia can inspire neighbouring countries to accelerate their circular economy initiatives, while leading the way to greater energy integration in ASEAN.

Indeed, the nation has made significant strides particularly through the recent adoption of a Circular Economy Policy Framework. The framework introduced by the Ministry of Investment, Trade, and Industry (MITI) marks a pivotal step in transitioning the country away from fossil fuel-based economic models towards a more sustainable, circular economy.

The framework will serve as guidance for optimising strategic natural resources by concentrating on circular inputs, efficient processes, and sustainable outcomes. The framework has also been designed to complement the ambitions of the National Energy Transition Roadmap (NETR), hence is aligned to the nation’s broader energy transition plans.

Building on this, the Ministry of Housing and Local Government (KPKT) recently launched the Circular Economy Blueprint for Solid Waste in Malaysia (2025-2034). Its success hinges on the active collaboration of all stakeholders to drive initiatives that enhance climate action. The outcomes of these initiatives will contribute to Malaysia’s Biennial Transparency Reports (BTR), a key requirement under the Paris Agreement, coordinated by the Ministry of Natural Resources and Environmental Sustainability (NRES).

Designing circularity in the energy transition

The need to transition to a low carbon energy economy while securing our energy supply has never been more acute than today. At the core of this energy transition is a move away from burning fossil fuels to a system which relies on a much broader range of critical materials required for low-carbon energy technologies like solar panels and battery storage systems.

Circular economy practices need to be baked into the energy transition by design to ensure that Asia and the world continues to have a sustainable supply of raw materials. As we enter a critical execution phase for limiting climate change, designing the circular economy into the energy transition will allow us to move faster and more sustainably to reach net-zero.

Nonetheless, this will take concerted action from companies, governments, and consumers alike. Being at the forefront of Southeast Asia’s energy-circular economy nexus, Malaysia can lead the way for ASEAN to build a more integrated and robust circular economy, while unlocking significant new opportunities for growth and innovation along the way.