Integrating decarbonisation and the circular economy is increasingly vital, but can these approaches work together?
AS global deadlines for decarbonisation loom, Malaysia – like many nations – faces the urgent challenge of adopting decarbonisation and circular economy strategies to reduce environmental impact while fostering economic growth.
Central to this transformation is the circular economy, a regenerative model focused on eliminating waste, maximising resource use, and minimising environmental harm.
By aligning decarbonisation efforts with circular economy principles, businesses can unlock a range of benefits.
The shared objectives of reducing waste and emissions create a unified strategy, amplifying the potential for success. Combining these approaches not only attracts greater attention and resources from policymakers, investors, and the public, but also fosters systemic change.
Taking on duality
Sustainability expert Pauline Goh opines that it prompts businesses to rethink production and consumption models, driving more efficient resource use and lowering environmental impacts.
Noting that this integrated effort can have a far-reaching influence, Goh suggests Malaysia to adopt a dual strategy of decarbonisation and the circular economy to tackle climate change and enhance economic resilience.
“These strategies complement each other. Decarbonisation reduces emissions through cleaner energy and sustainable practices, cutting down environmental impact. Circular economy strategies minimises waste by reusing, recycling, and redesigning processes, ensuring more efficient resource use throughout their lifecycle,” says the expert who has over 30 years of experience in various sectors holding senior roles.
She is currently a Member of the Industry Advisory Board at Sunway Business School; Swiss Malaysian Chamber of Commerce vice-chairman; BeLuxCham vice-president, French Chamber and EuroCham board member; and Alliance Française de Penang president.
She adds that integrating these approaches aligns with the nation’s commitment to achieving net-zero emissions by 2050 and advancing the 12th Malaysia Plan’s sustainable development goals.
Goh believes that integrating circular strategies is not only a necessity, but also an opportunity for Malaysia to lead the way toward a resilient and sustainable future.An uphill battle
Integrating decarbonisation and circular economy strategies presents challenges, especially in sectors like oil and gas. The industry faces pressure to decarbonise, but adopting circular practices like repurposing decommissioned platforms, carbon capture and storage can help mitigate impacts.
In manufacturing, reliance on fossil fuels and limited recycling infrastructure hinder circular practices at scale. Malaysia also struggles with low recycling rates and high plastic waste, highlighting the need for better waste segregation and recovery systems.
Goh says: “The integration of decarbonisation and circular economy initiatives in these industries face significant obstacles. One of which is the high upfront costs associated with implementing circular economy projects and decarbonisation technologies.
“Moreover, the lack of technical expertise in adopting advanced circular solutions, coupled with resistance to change due to established practices and profitability concerns, further complicates the transition.
“Fragmented supply chains also present a barrier, as collaboration across various sectors can be difficult to coordinate.”
Banking on emerging trends
Despite challenges, emerging trends and innovations are driving the synergy between decarbonisation and the circular economy. Goh shares that waste valorisation technologies are offering ways to convert industrial waste into valuable materials or energy, while green hydrogen holds promise for decarbonising heavy industries.
She adds that digital twins – a virtual model of a physical object, system, or process that uses real-time data to simulate its behaviour and performance – are being used to simulate resource flows and emissions, optimising circular designs, while the rise of biomaterials, such as sustainable aviation fuel, is aiding in replacing fossil-based materials with low-carbon alternatives – pushing the two strategies closer together.
Goh notes that digital technologies like artificial intelligence (AI), blockchain, and Internet of Things (IoT) are transforming waste management, while EPR policies, supported by Malaysia’s Circular Economy Blueprint, aim to drive circular practices by 2027-2028.
Green finance, through bonds and sustainability-linked loans, is fueling investments in low-carbon and circular initiatives, with increased backing from Malaysia’s financial sector.
“Technology plays a crucial role in facilitating the integration of decarbonisation and circular economy principles. AI optimises resource use and predicts waste streams, while IoT enables real-time tracking of resources and waste.“Blockchain can improve transparency in material flows, ensuring the integrity of circular practices. Carbon capture, utilisation, and storage (CCUS) technologies help capture and store emissions, providing a critical tool for decarbonisation,” she says.
Incentivising adoption
The integration of circular economy practices with decarbonisation efforts in Malaysia faces several policy and regulatory gaps. A lack of standardisation prevents the creation of a unified framework to measure both circularity and emissions reductions, which hinders ability to track progress and set clear targets.
Weak enforcement of existing waste management and emissions policies reduces their effectiveness, while limited financial incentives, such as subsidies or grants, fail to encourage businesses to adopt circular economy practices. Insufficient data collection on waste and emissions impedes informed decision-making.
However, the government recognises this and is taking steps to circumvent the issues by launching the National Circular Economy Blueprint 2025–2035.
To further drive efforts in decarbonisation and circular economy principles adoption, Goh says: “Authorities can drive circular and low-carbon adoption through tax incentives, grants for pilot projects, EPR regulations, low-carbon standards, and market mechanisms like carbon pricing and credits.”
Guaranteed success?
Goh believes that the integration of decarbonisation and the circular economy significantly enhances the likelihood of success for both strategies.
“They share common goals of reducing waste, emissions, and inefficiency, creating a unified approach to sustainability. By combining these efforts, resource prioritisation becomes more effective, as the integration attracts greater visibility, investment, and policy support.
“This dual strategy drives systemic change by encouraging a fundamental shift in production and consumption patterns, amplifying their impact and fostering long-term sustainability across industries.”
To effectively integrate decarbonisation and circular economy strategies, Goh advises businesses to adopt a structured approach to decarbonisation and circular economy strategies by starting with pilot projects, engaging wide-ranging stakeholders for collaboration, setting clear metrics to track progress, and leveraging government incentives like tax breaks and grants to ease the transition.
In summary, aligning decarbonisation with the circular economy offers Malaysian businesses the chance to support national climate goals while driving innovation and economic growth. Despite challenges, proactive strategies, collaboration, and a commitment to sustainability can foster transformative change.
“For Malaysia, integrating these approaches is not only essential but also an opportunity to lead toward a sustainable and resilient future,” says Goh.
However, the question remains. Given that the nation relies heavily on fossil fuels as a substantial source of income, will it be successful in adopting circular strategies and reducing environmental impact?
