Embedding a Circular Economy through Local Government in Gippsland: A Case Study, Utilising Smart Specialisation Methodology

Abstract In 2017, the ageing Hazelwood coal-fired power station in Gippsland (Australia), finally—and abruptly, closed. The Latrobe Valley Authority (LVA), funded by the Victorian State Government was then established to assist redundant workers and develop a long-term approach to transitioning towards a more sustainable regional economy and socially cohesive community. To enable this, the LVA adopted and implemented a methodology made popular in the European Union of the ‘Smart Specialisation Strategy’ (S3), bringing together practitioners from government, business, research and education, and the wider local community (known as the ‘quadruple helix’) to co-design a shared vision for the region’s future prosperity. With Australia declaring its commitment to and the Victorian government developing policy support for a Circular Economy (CE), the LVA funded a research project in 2022 to facilitate a ‘place-based’ approach to implementing a CE business model across Gippsland. Based on interviews and workshops conducted in the period 2022–23 with key regional stakeholders, as well as on the analysis of secondary sources, this paper provides an overview of the experience utilising the S3 methodology to explore the implementation of CE in a regional setting, historically dominated by natural resource-based industries, that is now undergoing multiple economic transitions, including cessation of coal-fired power generation, oil and gas extraction and native timber harvesting. Significant barriers identified include: poor understanding of broader opportunities embedded in systemic notions of S3 and CE, siloed structure of local government authorities (both within or between councils), difficulty in promoting alignment and cooperation at all levels between a diverse range of stakeholders, lack of policy coordination and support for business innovation, together with the absence of financial incentives or regulatory mechanisms to change behaviour from a linear to CE. Despite improved intentions in policy settings around intentionality of CE practices and other initiatives being progressed simultaneously with this work, CE in Gippsland (and Victoria more broadly) and its implementation continue to be narrowly focussed on recycling and waste management, where there are clear pressures in stock-piling of waste and limitations on landfill expansion. Regional approaches to implementation of circular economy are limited in Australia, with the exception of exemplars such as Geelong, Barwon South West, and Bega. However, there are currently no examples of utilising S3 methodology to implement CE in a regional setting. Here we identify current barriers and provide recommendations on how to overcome these with the engagement of a diverse range of stakeholders across Gippsland from agribusiness, regional planning, local governments, small and medium enterprises, utilising S3 methodology, to enable systemic changes towards CE models to be implemented region-wide. This study documents the journey so far for Gippsland, where the transition from traditional extractive industry provides the opportunity to embed more sustainable practices moving forward.