Circular economy proposes a new way of producing and consuming goods by circulating materials and eliminating waste. It acts as a replacement for the currently used linear model of “take-make-dispose”, and promotes the habit of repairing, remanufacturing, reusing, and recycling.
The concept of circular economy focuses on closing loops in industrial ecosystems and originates from how nature has always functioned in a viable self-sustained cycle. Goods are no longer treated as disposables, but rather seen as materials that will continuously be a part of the cycle. Therefore, once products reach the end of their lives, they serve as resources for the creation of others.
Learn more about circular economy
In this article, the principles of circular economy, its benefits, as well as examples are discussed and explained. In the beginning, the overall theory and foundation of circular economy are being described, while increasingly going into further details as the article progresses. It is important for the reader to firstly build an adequate understanding of what a circular economy is, how it works, and what benefits it has, before examining more specific facts such as the EU Circular Economy Action Plan and examples of key players in the industry.
How does a circular economy work?
To understand how the circular economy works, it is essential to examine the Butterfly Diagram created by the Ellen McArthur Foundation. This diagram distinguishes two separate systems: the technical and the biological cycle. The technical cycle refers to materials that are finite and not biodegradable, such as metals. Whereas the biological cycle focuses on renewable materials such as food or wood.
Graphic from Ellen McArthur Foundation, https://ellenmacarthurfoundation.org/
The Technical Cycle
Most of us are daily users of technology products and electronics. If we wanted to understand how to apply the principles of circular economy in our everyday lives, we would have to start following the technical cycle from left to right. Therefore, examining it from a user perspective, the technical cycle begins with the first base rule of always trying to extend the life of an owned product. This is because restoring and prolonging an already purchased item is far less resource-intensive than buying a brand new one.
Hence, the first step is to sustain a product and repair it whenever necessary. The second principle is focused on sharing goods with others to minimize the number of people who buy similar objects. If for example, six people share one car amongst them, it is far less wasteful than every single one of them driving their own vehicle and ultimately not operating it as often. Following the third principle, a product should be gifted or repurposed once it’s no longer of service to the owner in its given form. Lastly, there are the concepts of remanufacturing and recycling. Both of them regard the time when the product has completely lost its functionality. In this case, the item is remanufactured into something else and parts of it are recycled. This way the materials maintain their highest value and can start a new cycle.
Biological Cycle
The biological cycle also follows the same principle of trying to keep an item/ good in use for as long as possible. The only difference to the technical cycle is that the resources following this cycle are renewing themselves by nature since they are biodegradable. Meaning that the nutrients we extract go back to earth. Therefore, rebuilding natural capital.
Additional value can be added by cascading materials which increases the resource effectiveness by using biomass in products that create the most economic value over multiple lifetimes. In the first cycle, a biorefinery biochemical feedstock can transform organic waste into fuels and high-value chemicals.
The outer cycle shows the potential usage of organic household waste and sewage. Through anaerobic digestion and composting valuable biogas and regeneration of our atmosphere can be achieved.
However, further value can be added to these materials by finding them new uses and “cascading” them to additional applications. Once they are no longer usable, they return their nutrients to the earth by biodegrading, hence enabling the land to keep the cycle going.
What is an example of a linear vs a circular economy?
We usually go through everyday life without really questioning nor excessively thinking about the structure of our current industrial model. Whereas in reality, there is a potential for a lot of food for thought here. That’s why examining an ordinary and routine-based behaviour of everyday life could assist us in understanding the key differences between a linear and a circular economy, hence making space for the right questions and doubts to come up in our minds.
Smartphone usage as an example of a linear vs a circular economy
Let’s take a look at the example of smartphone usage. We are all familiar with the situation of buying a new smartphone, feeling elated and happy with our new purchase and being particularly careful with how we use it, especially in the beginning, to avoid damage and wear. After a relatively short period, a newer and more improved model launches, evoking feelings of dissatisfaction and indifference towards our current model. Not rarely, the result is that we give in and buy the new smartphone while getting rid of our old one, ignoring the fact that it is still in perfectly good condition. And even though this behaviour doesn’t necessarily seem alarming, if we look at the long-term consequences it presents a great burden to our planet and the resources at hand.
We completely forget about the fact that our old phone will end up in landfills, while still being full of valuable materials and resources that could otherwise be extracted and used for the manufacturing of a new product. So, it is clear that the principles of the linear economy lie in creating value by producing and selling as many products as possible by falsely assuming that our planet provides infinite resources and endless space to absorb all of our waste. Circular Economy, on the other hand, comes in a contrast to this principle by proposing the 3 Rs: Reduce resource use to the lowest, Reuse materials and products as much as possible and lastly Recycle raw materials to a high standard.
What are the benefits of a circular economy?
Multiple benefits come with the implementation of a circular economy. One may think that transitioning to circularity only means a lot of effort, uncomfortable readjusting and minimization of comfort and carefree living. However, this is not the case. Not only does it immensely boost economic growth and environmental conservation. It also brings humanity back to its original alignment with nature’s pace and balanced way of functioning, where all entities are an ingrained part of an ongoing cycle, thus being continuously restored and renewed. To better understand the advantages of a circular economy, we examine them as part of two big categories.
How does circular economy help the environment?
- It combats climate change, by lowering greenhouse gas emission
- It reduces the creation of waste (especially plastic and landfill waste)
Since materials are reused again and again and products are being more intelligently designed, waste creation is being prevented from the starting point.
- It promotes a more clever use of non-renewable resources
- It protects natural reserves.
As waste is being eliminated and raw materials are not being extracted carelessly anymore, natural reserves are being restored and ecosystems are getting the chance to function in balance again.
How does circular economy help with economic growth?
- It increases employment through the creation of new job opportunities
Shifting towards circularity means that fundamental changes to the so-far linear system need to be made. This will enable the emergence of new career paths and job positions (particular in the service sector), that previously haven’t existed, thus benefiting the overall economy and consumers.
- It paves the way for innovation
Implementing a circular economy requires generating innovative ideas. The overall system needs to be optimized, products need to be designed differently and consumers need to start thinking and acting in a new manner.
- It promotes a stable material supply for companies, thus lowering their supply costs
Through the constant renewing and reusing of resources, companies are constantly supplied with materials at a lower cost.
Who are the key players in circular economy?
Ellen MacArthur Foundation is a forerunner when it comes to education on the topic of circular economy. According to them, waste is being created due to ingrained flaws in the design process of products. It can be fully avoided by “re-thinking” and “re-designing” goods with the motive of “made to be made again”.
However, a circular economy is difficult to implement unless people shift towards a new mindset that puts them in the spotlight. Their role changes from solely being users to also becoming creators. They are called to keep their products in use for as long as possible and thus extend their value, by repairing them when broken or finding a new purpose for them when required. Ultimately, “ownership transforms into stewardship”, meaning that from now on everyone is responsible for carefully and responsibly managing the natural resources that have been entrusted to us.
Besides Ellen MacArthur Foundation various organizations work on implementing a circular economy :
Other organizations/ key players in the circular economy
Circle Economy helps businesses, governments and cities identify opportunities to make transitions to a circular economy. They provide their clients with information as well as more practical solutions to make these transitions easier to implement.
PACE is a public-private collaboration platform where public leaders and their organizations have come together to pave the way to a circular economy. Its members are all committed to circularity and want to make a change rapidly, hence providing each other with connections, information and opportunities. The Ellen McArthur Foundation, Philips, Sitra, the World Forum, Apple, and the World Economic Forum are all examples of members of PACE.
The International Resource Panel is a group of experts that helps nations use resources in a more sustainable way without jeopardizing economic growth and abundance.
A Finnish innovation fund focused on finding ways to have a smoother transition toward a circular economy. They help businesses implement the principles of circularity and make a shift from ownership to sharing.
Miniwiz is a Taiwanese company founded in 2015 that upcycles general waste into consumer and construction products. Their goal is to use materials and resources over and over again without creating any waste.
What is the EU action plan for a circular economy?
The European Commission introduced a Circular Economy Action Plan (CEAP) as part of the European Green Deal in March 2020. This action plan consists of 35 legislative and non-legislative initiatives through which the fundamentals of a circular economy will be implemented into the European Economy until 2023. The goal is to maintain and prolong the European resources for as long as possible by making changes to the entire life cycles of products, including how they are being designed, and promote an overall more sustainable approach.
What are the objectives of the EU Circular Economy Action Plan?
The following objectives have been set for the purpose of the EU action plan (*source: https://ec.europa.eu/environment/strategy/circular-economy-action-plan_en)
1. Sustainable products will be made the norm within the EU.
a. By focusing more on recycling and remanufacturing and using fewer primary raw materials.
b. By designing products with the purpose of them lasting longer and making it easier for consumers to repair, reuse and recycle them
2. Empower consumers and public buyers. Let them benefit from the right to repair their belongings.
3. Set focus on sectors that are the most resource-intensive and have the most potential to become circular, such as:
a. Electronics and ICT. Prolong product life cycles for longer and manage e-waste more effectively.
b. Batteries and vehicles. Make more sustainable by leveraging their potential for circularity.
c. Packaging. Effectively reduce the practice of over-packaging and reevaluate what is allowed within the EU market.
d. Plastics. Reduce microplastics. Instead have more recycled content and bio-based/biodegradable plastics.
e. Textiles. Boost textile reuse and find ways to be more innovative and competitive in that sector.
f. Construction and buildings. Promote the principles of a circular economy for buildings and find ways to have an overall sustainable built environment.
g. Food, water and nutrients. Find reusable alternatives to single-use packaging, tableware and cutlery.
4. Ensure less waste
5. Make circularity work for people, regions and cities
6. Lead global efforts on circular economy
What are the key outcomes of the EU Action Plan?
The outcomes that the EU action plan is aiming for are the following.
- Recycle 70% of construction, demolition and excavation waste
- Ban single-use plastic
- Recycle 35% of municipal solid waste by 2035
- Boost Europe’s productivity by 3% until 2030
- Recycle 70% of packaging waste by 2030
- Increase EU’s GDP by 0.5% until 2030
Summary
Concluding, it is very obvious that a circular economy is the best solution to restore natural resources and slow down waste production until it is fully eliminated. Keeping materials in the loop and reusing them over and over again by introducing more sophisticated product designs and licensing schemes will enable us to maintain them at their highest value.
A circular economy promises prosperity and balance, but it won’t work unless we all start to rethink and shift our mindsets. It can be possible to live in a world like ours without having to sacrifice the remarkable progress in technology that has been achieved so far. The only important thing is to put forward new, creative ideas and implement innovative strategies to build a circular world. A world where the products of today will be the resources of tomorrow.
