= The circular economy is a generic term for an industrial economy that is, by design or intention, restorative and in which materials flows are of two types, biological nutrients, designed to reenter the biosphere safely, and technical nutrients, which are designed to circulate at high quality without entering the biosphere.
- 1 Definition
- 2 Description
- 3 Principles
- 4 History
- 5 Examples
- 6 Policy
- 7 Discussion
- 8 More Information
"A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life." (http://www.wrap.org.uk/content/wrap-and-circular-economy)
"The Circular Economy is an alternative to our dominant linear economic model. It is grounded in the study of living systems and nature itself. We are pretty used to collecting and transforming resources that are later consumed and, once their lifespan ends, become waste. However, if you look at nature, you can see that processes are totally different. A tree is born from a seed, it grows and reproduces and when it dies, it goes back to the soil, enriching it and providing nourishment for new life. How could we apply that process to the objects we use at home and work?
"Circular Economy is a new business paradigm, inspired by nature, where all energy and resources flows are maintained in closed loops, eliminating the concept of waste while generating economic, social and environmental value," explains Nicola Cerantola, founder and director of Ecologing, an organization that helps businesses find sustainable ways of doing their work. "The Circular Economy is not waste management — it is about exploring new mechanisms that enable a radical and regenerative transformation of the society towards a healthier, fairer and sustainable world."
The Circular Economy looks at all the options across the chain to use as few resources as possible in the first place, keep resources in circulation for as long as possible, extract the maximum value from them while in use, and recover and regenerate products at the end of service life. Javier Goyeneche, co-founder of sustainable clothing brand ECOALF, puts it simply: "Circular Economy means not to understand garbage as a waste but as a potential resource that can be reused."
This new way of understanding goods also means designing products to last so that materials can be easily dismantled and recycled." (http://www.shareable.net/blog/a-shareable-explainer-the-circular-economy)
"The Circular Economy is based on three key principles, as explained by the Ellen MacArthur Foundation, one of the main organizations promoting this economic model worldwide:
- Preserving and enhancing natural capital by controlling finite stocks and balancing renewable resource flows. That is, using as less raw resources as possible and if totally needed, choosing renewable or better performing ones.
- Optimizing resource yields by circulating products, components, and materials at the highest utility at all times in both technical and biological cycles. This means designing for remanufacturing, refurbishing, and recycling to keep components and materials circulating in and contributing to the economy.
- Fostering system effectiveness by revealing and designing out negative externalities. This includes reducing damage to human utility, such as food, mobility, shelter, education, health, and entertainment, and managing externalities, such as land use, air, water, noise pollution, release of toxic substances, and climate change."
"The concept of Circular Economy has been gaining momentum since the late 1970s, when researchers Walter Stahel and Genevieve Reday sketched the vision of an economy in loops and its impact on job creation, economic competitiveness, resource savings, and waste prevention. They conducted a research for the European Commission and published their conclusions later in a book called "Jobs for Tomorrow: The Potential for Substituting Manpower for Energy."
In many ways, the Circular Economy model shares key ideas with others such as Biomimicry, which studies nature and imitates its designs and processes to solve human problems; the Cradle to Cradle proposal, which advocates for extending a product lifespan; and the Blue Economy, that uses open-source solutions based upon natural processes." (http://www.shareable.net/blog/a-shareable-explainer-the-circular-economy)
The Kalundborg Symbiosis in Denmark
"In the Danish town of Kalundborg, a number of industrial companies exchange waste and resources with each other in an elaborate network of pipelines. The cooperation is known as ”Kalundborg Symbiosis”. Among the participants are a refinery, a power plant, an enzyme producer, a producer of insulin, and a manufacturer of gypsum board.
These companies send waste from their production process on to other companies in the system, which can then use this as valuable input for their process. Steam, sludge, fly ash or hot water are some of the resources exchanged." (http://we-economy.net/?page_id=529)
The success of the circular economy in Japan
1. Dustin Benton:
"As Jonny Hazell outlined in a previous post, the Japanese have changed their linear manufacturing and consumption system into a more circular, collaborative system that is highly effective. Business collaboration may feel alien to the UK, but it would be a mistake to think that the Japanese system works just because the Japanese are enlightened, lovely people (though this helps).
Japan’s system is built on the assumption of collaboration, but the system incentivises everyone to do the right thing:
Consumers pay fees up front to dispose of electronics, and can recycle old electronics via home pickup or a drop off service at any post office or electronics retailer. Penalties for fly tipping are stiff, making participation in the recovery system the easiest thing to do.
Manufacturers co-own the recovery infrastructure. They know about the components inside the products coming back to them. Because they keep the proceeds of better recovery, it’s in their interest to design products for reuse and better recovery.
This model, neatly summarised as ‘honesty, with incentives’ in a fascinating analysis, shows effective Japanese systems in a less culturally essentialist light: honesty and lack of looting following the Fukushima earthquake was the result of consistent and strong rewards for honesty and strict punishments for the dishonest, not just Japanese character. The same factors apply to the Japanese appliance recycling and reuse system." (http://greenallianceblog.org.uk/2013/04/19/do-we-need-new-products-or-new-systems-for-a-circular-economy/)
2. Jonny Hazell:
"Japanese recycling rates are extraordinary: 98 per cent for metals for example and, in 2007, just five per cent of Japan’s waste ended up in a hole in the ground, compared with 48 per cent for the UK in 2008. Japan’s appliance recycling laws ensure the great majority of electrical and electronic products are recycled, compared with 30-40 per cent here. Of these appliances, 74-89 per cent of the materials they contain are recovered. Perhaps more significantly, many of these materials go back into the manufacture of the same type of products from which they were reclaimed . This is the ‘closed-loop’ holy grail of recycling essential for a truly circular economy.
So how has Japan managed it and can we do it too?
Collaboration is at the heart of the Japanese system. The public plays a part by separating out recyclables, paying recycling fees directly and holding companies to account when necessary. Manufacturers do their bit by using more recycled materials, and making longer lasting products that are easier to repair and recycle. The system has two key features:
Consumer-friendly collection: The system for collecting old appliances for recycling is so comprehensive and easy to use it’s harder not to recycle them. Old appliances are collected by retailers either in store or when delivering a new appliance. For old IT equipment, you can request that the original manufacturer collect it from your doorstep, or you can take it to any Post Office and have it sent back to them. This is standard across Japan, making it well understood and widely used.
Recycling infrastructure is co-owned: The law requires consortia of manufacturers to run disassembly plants, ensuring they directly benefit from recovering materials and parts. Because recovery is a legal requirement, companies invest for the long term in recycling infrastructure. And because they own both manufacturing and recovery facilities, companies send product designers to disassembly factories to experience the frustrations of taking apart a poorly designed product. Some companies even put prototypes through the disassembly process to make sure they’re easy to recover.
This system doesn’t just work well, it’s also big business: Japan’s reuse and recycling economy was worth £163 billion in 2007 (7.6% of GDP) and employed 650,000 people." (http://greenallianceblog.org.uk/2013/02/07/the-circular-economy-big-in-japan/)
The also researcher on Sustainable Design and Green Entrepreneurship, Nicola Cerantola, highlights the project Econyl by Aquafil. This company, based in Italy, has been researching and achieving to upcycle (recycling without losing quality of the material) its main raw material, the nylon. "They did it not only for complying with their CSR but also for strategic reasons since they forecasted a 30 percent increase on the demand for nylon in the coming years. So to prevent from suffering from supply chain disruptions or price volatility they chose to explore a circular way of doing business," says Cerantola.
As a result, this enterprise is currently recovering and upcycling used fishing nets around the world to create new fishing nets. It also provides other fishing services.
"This is one of the key in the transition to the circular economy, find the ways to align business interests with humanity's," adds Cerantola. (http://www.shareable.net/blog/a-shareable-explainer-the-circular-economy)
Another initiative that reuses fishing nets, this one in the fashion industry, is ECOALF. ECOALF is an eco-friendly fashion label that today produces more than 100 different fabrics made from recycled materials such as fishing nets, plastic bottles, used tires, and coffee grounds.
ECOALF was created by Javier Goyeneche in 2012 "from a deep frustration with the excessive use of the world's natural resources and the amount of waste produced by industrialized countries — specifically by the fashion industry." Today, ECOALF's team manages the full process from waste collection to recycling technologies, manufacture, design, and retail.
Currently in 11 countries, the company seeks to create the first generation of recycled products with the same attention to quality, design, and technical properties as the best non-recycled products in the market. "There is absolutely no need to continue depleting the earth's natural resources for the sake of production," says Goyeneche. (http://www.shareable.net/blog/a-shareable-explainer-the-circular-economy)
The Circular Economy model can also be used in architecture, focusing on three key resources of this sector that can work on a closed-loop: energy, construction materials, and water.
Think of a house that is designed to maximize natural resources like sunlight and the wind; one that is built using biomaterials (sheep's wool insulation can be reprocessed back into insulation or into fiber for use in clothing) which are locally sourced, have a low carbon footprint, and do not harm the environment. As architect Pablo Farfán explains, there are architectural organizations that are using the Circular Economy model all over the world: Passivhaus and Bioconstruction in Germany, Earthships in New Mexico, and the Neo Vernacular architecture in the U.K." (http://www.shareable.net/blog/a-shareable-explainer-the-circular-economy)
This is how we (P2P Foundation, Michel Bauwens) responded to a questions of the EU group on Common Goods:
1. What is the circular economy going to change in your field of activity? What are the priorities of your company/organisation to contribute to the transition towards a circular economy?
The specific priority of the P2P Foundation is to focus on the ‘open source’ circular economy. This is a open source circular economy that is based on participatory and open supply chains that allow both for the mutualization and knowledge, and thus for a much more rapid transition than under conditions of proprietary and secret knowledge, but also the increased capacity for mutual coordination in supply and demand. We also focus on ‘subsidiarity in material production’, i.e. the capacity of new model which combines globally shared productive knowledge, with distributed manufacturing closer to the place of use and demand, a process which is also called sometimes ‘DGML’ (Design Global, Manufacture Local’) or ‘cosmo-localization’ (what is light is global, what is heavy is local)
2. Are you going to cooperate differently with your partners in this cycle?
The P2P Foundation is an observatory and research network, hence our activities in this field are about observing ‘best practices’ in this field, and to catalyze their use.
3. What should be the role of public authorities and at which level of intervention should they be involved? Should they coordinate the circularity or rather be “organising authorities”? Does an organising authority (a public local or regional player) have to intervene in this process?
Public authorities should be active at all levels by providing legal and regulatory frameworks but also practical facilitation. We recommend the institutionalization of this practice through ‘Sustainability Empowerment Platforms’, which are public-civic (public-commons, public-social) multi-stakeholder arrangements. Public authorities can also help by providing ‘circular financing’, i.e. encouraging those actors that save public resources by sharing the gains that they help provide. For example, if a community land trust provides land to farmers, which allow them to practice ecological and non-toxic farming at low rents, thereby providing substantial better health outcomes for the population and dramatically less polluted water and thus water purifications costs, then sharing the savings as investments, can create positive loops for the circular economy that also allow for the redirection of public funds to other purposes. The public authorities, knowing that any growth that is above 1% annually in raw material extraction, renders circularity inoperable, should also set limits that encourage this transition, so that it can be effective.
4. Are the models of organising and managing Social Services of General Interest (SSGIs) going to change with the circular economy?
5. Is the circular economy creating new Services of General Interest (SGIs) and Services of General Economic Interest (SGEIs) (e.g. waste collection and management)?
These should and will exist for every provisioning system needed by humanity for its social reproduction, and should use public-civic, polycentric, multi-stakeholders institutional forms.
6. How can we guarantee that the externalisation of waste management is not made at the expense of one actor rather than another, especially concerning citizens/users?
The use of open accounting and open supply chains involving all actors, should make the material processes transparent, so that a dialogue between the stakeholders, especially the citizens/users, can discuss and organize more just distribution mechanisms.
7. How is it possible to include ensuing benefits, such as social and vocational integration, and to move away from an “all-market” position?
We believe this can be achieved through a commons-centric model, which puts open contributions to the productive knowledge commons at its centers, strives for mutualization of physical infrastructures, creates more generative entrepreneurial forms, and can be managed by polycentric for-benefit associations for their governance. This new mix of commons, market and institutional forms is geared towards the integration of negative social and environmental costs in the economic models of these new ecosystems. The role of public authorities is to make sure that such integration leads to rewards compared to those who fail to make such adaptations.
8. How is it possible to budget and apportion transition costs in a fair manner? How is it possible to socialise transition benefits?
We propose to transition towards a biophysical economy using the appropriate metrics for matter and energy usage. Gains in such thermo-dynamic efficiencies should be rewarded; and circuits for generative funding should be used to create virtuous cycles. The use of common assets based organizations can be used to reward those that generate value as compared to those who maintain extractive practices. This means the introduction of commons trust that can generate incomes for all members.
9. Which political priorities are you identifying for the next months and years?
The goal in the material economy is to create meta-economic circuits that generate a mode of production and exchange that combines shared knowledge that increases innovation in this field, the mutualisation of physical assets and objects to diminish its material footprint, and a just distribution of income and rewards. We believe this takes the form of open and contributory communities, ethical and generative entrepreneurs, and democratic institutions that maintain the infrastructure of cooperation. This requires more social and political representation of the forces that are engaged in such process, and enabling public services. This means that pubic officials and political movements need to be made aware of the potential of this model, so that appropriate public processes can be developed to encourage this transition.
10. Which investment and accompanying measures need to be implemented?
We propose the creation of more commons trust for the ownership and governance of material infrastructures, the creation of circular finance as explained above, and the development of integrative Commons Transition Plans by public authorities.
"At this point I want to tell you about a very important man. His name is François Grosse. He is French and initially comes across as the epitome of the soft-spoken, serious, rigorous engineer which the French grandes écoles are famous for producing. An unassuming man, he’s very discreet about the momentous discovery that led him to change his own career path after having worked for a long time for the giant company Veolia. During a sabbatical, he was asked by the then-CEO of Veolia to analyze the business opportunities of the circular economy, and of recycling in particular. With characteristic earnestness, Grosse set out to understand how intensive recycling could help a business like Veolia do well economically while also doing good environmentally. Surely, he believed, generalized recycling would so strongly modify industrial metabolisms that over time, and with enough technological innovation, raw material consumption curves would become flatter — perhaps even plain flat or, why not, downward-sloping.
After several long months of pondering, doing calculations, re-doing them, and re-doing them again to really make sure, François Grosse had to come to terms with a result that shook his own convictions pretty deeply. He showed it to the CEO of Veolia but, most importantly, published it in a series of scientific articles in French and English. It’s a result that carries deep wisdom — and, as such, seems self-evident with the benefit of hindsight — but rocks the foundations of the whole mainstream circular-growth-economy establishment.
Here is how he summarizes his findings (in an article entitled “Quasi-Circular Growth: A Pragmatic Approach to Sustainability for Non-Renewable Material Resources”, published in S.A.P.I.E.N.S., vol. 4, no. 2, 2011):
“The influence of recycling on resource preservation is negligible for any raw material with a greater than 2% per annum increase in world production. It is only if the annual raw material consumption growth rate is below 1% that recycling has a significant positive impact. It can then provide over one hundred years of respite. However, … a growth rate in total material consumption below 1% is insufficient on its own, and, in addition, requires a very high recycling rate (more than 60 to 80%) in order to delay significantly the resource depletion rate. The time shift for cumulative consumption is highly sensitive to the growth rate of total material consumption (primary + secondary). The slower the growth, the more recycling contributes to ‘buying time’ before resource depletion. Recycling has a higher impact if material residence time in the economy is short; conversely, its impact is smaller for a long residence time. Finally, the impact of recycling must be analysed in relation to present economic parameters (as trends), not on the basis of an assumed future slowing down of consumption. As a whole, the relative impact of cumulative present-day recycling becomes negligible after a few decades in view of global production growth.”
So even provided recycling rates are very high (which they’re not in most cases at the moment) and materials cycle through the economy very quickly (which they don’t in most cases at the moment), recycling can only offer a general solution to the “clean growth” problem, as promised in “cradle-to-cradle” or “upcycle” approaches, if the sum of primary and secondary raw material consumption practically grinds to a halt — with a less than 1 percent annual growth rate. Could efficiency gains really ever be so huge (factoring in the resource costs the new efficient technologies would generate upstream and downstream from their localized use) as to allow for a financially desired growth rate of — say — 5% or 7% and a growth is sales volumes of — say 4% or 5% — while generating only a 0.5%, or even 0%, growth rate in global, planet-wide raw material use? Extremely unlikely, to say the least. Why? Because that would represent a truly astronomical efficiency performance and because, as Grosse very correctly emphasizes, our modern economies are intrinsically geared towards consuming more per person — more goods but also, in general, more resources, raw materials and energy:
“… our consumer society, far from being exclusively a society of disposable objects, is just as much a society of accumulation: increased wealth not only serves to consume what is short-lived, or intangible, but also to add significantly to our individual and collective ownership of material goods.”
Efficiency gains rarely, if ever, contribute to the advent of sufficiency. On the contrary, they become themselves the “raw material” for generating new economic growth thanks to lower raw material requirements — and, therefore, lower production costs — per unit produced. Efficiency does not serve as an economizing tool: In our type of economic culture, it is mainly a tool for marketing, that is, for increasing sales volumes after having economized on the resource intensity of the existing volumes. This is the basic dynamics of our economies, and it explains why the circular growth economy attracts so much enthusiasm among businesspeople and industrialists: The mirage is that of perpetually expanding markets along with perpetually contracting raw material consumption. A delusion indeed, especially when placed (as it is in many arguments by mainstream circular-economy enthusiasts) within a purported ethical framework in which the capitalist dynamic is seen as the privileged tool to ensure equal living standards for all human beings on the planet.
Against this delusion, François Grosse (in the same article already cited twice above) offers a rather sobering outlook:
“Material growth must be less, or even considerably less, than 1% per annum (growth rate of global production of each raw material, primary + recycled). The recycling efficiency rate must be greater than 60%, or even 80% (proportion of material contained in waste which is actually recycled). The rate of addition to stocks must be less than 20%, meaning that the economy must discharge as waste at least 80% of the quantities of each material it consumes. The path is narrow and challenging, demanding a strict balance between three fundamental parameters, failing which it would simply become impossible to find a solution to the problem of sustainable management of non-renewable resources.
… The richer countries therefore, as regards resource management, can and should consider and implement a ‘quasicircular’ growth: an economy with a very low level of material growth, accumulating as little as possible, and therefore proportionally generating a large quantity of waste which is largely recycled.
… a ‘permanently sustainable’ economy cannot, to be perfectly honest, rely essentially on material growth. … our analysis [acknowledges the need] to work on a transition towards a sustainable economy and to set environmental limits on human activity, in the shape not of theoretical criteria, but of criteria related to the economy’s statistical values.”
Please note: “… a ‘permanently sustainable’ economy cannot, to be perfectly honest, rely essentially on material growth.” You can’t be any clearer than that. Circularity will have to be compatible with low or no growth, or it will just be a time-buying, ultimately hypocritical gimmick that a handful of industrialists can use to tinker with their “symbioses” and “closed-loop human ecologies” at the micro level of a single plant or an industrial park, while leaving the long-term, global future of our planet pretty much as bleak as before — and perhaps even bleaker for our having delayed action through false promises and not having addressed soon enough the genuine sustainability problem that is facing humanity as a whole.
There is indeed deep wisdom in this exceptionally open-minded engineer’s insights into the perverse effects of a growth-driven economy when it comes to the alleged virtues of circularity. He shows us rather precisely how we can begin to discriminate between the well-meaning but ultimately false promises of unsustainable pseudo-circularity and the genuine and truthful, but more sobering, prospects offered by a sustainable circularity. What François Grosse has done with his notion of “quasi-circular growth” is nothing less than to revive the much-needed reflection on stationarity and sufficiency in our modern economies. He can therefore be seen as the father of perma-circularity. (I prefer “perma-circularity” because, contrary to “quasi-circular growth”, it puts the very notion of growth outside the main frame, thus making economic growth into a secondary, residual phenomenon entirely subordinated to the necessities of genuine circularity.)
In a sense, once we own up to François Grosse’s scientific findings, the only circular economy worth looking at is the perma-circular one. Over any horizon longer than 50 or 75 years — which as of today encompasses the lives of our children and certainly our grandchildren — we have no use for a pseudo-circular metabolism that is actually a steadily widening spiral: circling, yes, but spinning slowly out of control nevertheless, in ever broader circles of ever-growing circumference. We need a genuinely circular metabolism, and that can only be a self-maintaining circle — one that doesn’t spiral outward but, rather, promises to keep the same circumference for as long as our beautiful planet remains alive in its orbit around the sun.
So to come back to the questions posed at the outset of this post: No, a perma-circular economy isn’t some sort of neo-primitivist pipe dream; it’s, in fact, the epitome of modernity. And yes, we really do need to reduce; it’s, in fact, the epitome of rationality and has strong scientific foundations. “Perma-circularity” needs to become a pleonasm, and “circular growth economy” an oxymoron." (https://carnsperger.wordpress.com/2016/06/22/one-engineers-deeper-wisdom-francois-grosse-and-the-rediscovery-of-the-perma-circular-mindset/)
Closed Nature of Cradle to Cradle Certification Process Holds Back Progress in Pioneering Netherlands
"I was interested to find out whether experts working on the circular economy in the Netherlands also shared Braungart's confidence. Krispijn Beek, who worked at the Ministry of Economic Affairs, Innovation and Agriculture on sustainable business policy, said "Cradle to Cradle was a big hit in the Netherlands, including government." Apparently, the trend really took off after a 2006 television documentary, Afval = Voedsel (Waste = Food).
However, at a later point the idea stalled – at least in government. Beek claims that "one of the showstoppers was the commercial certification process, which made it impossible to use Cradle to Cradle in public procurement."
Michel Schuurman, a director at MVO Nederland, agrees that "the concept gained a lot of attention some years ago but has faded a bit in recent times." He believes the reason, at least partially, is that "businesses are in the process of experimenting with it and are not yet ready to communicate publically." Another reason is what he calls "the closed system of Cradle to Cradle" – "its monopoly, lack of transparency and (expensive) certification has been a reason for some to follow the principles but not the scheme."
Beek expresses a similar frustration. "The Dutch government had a chance to get Cradle to Cradle thinking into the Reach regulatory framework [but] this momentum was lost because the owners of Cradle to Cradle stayed vague about their objectives against Reach and which changes would be required [to] fit into the Cradle to Cradle framework."
The private sector has seen more progress. In fact, Beek believes that a critical factor for its success here is that design of the circular economy uses a business perspective, while similar earlier concepts were too driven by non-profits or government policy. Beek is now CSR manager at Strukton, one of the top 10 construction companies in the Netherlands. "We are working on a process called 'concrete-to-concrete aggregates' (C2CA)", he says. "With international partners (universities and companies), we are recycling not only concrete but also concrete aggregates."
This is only one of many circular economy initiatives and leading corporate examples in the Netherlands. Others I came across in my research include Aveda, Auping, Philips and Interface FLOR. Some local municipalities and regions have also taken a lead, such as Venlo, which hosts a Cradle to Cradle expo lab and Paviljon at the annual Floriade flower exhibition.
As far as spreading these best practices goes, Schuurman observes that, so far, the circular economy has been "driven by visionary and bold leaders" and "the increasing need and desire to have closer relationships along the value chain." Van Dalen stresses that scaling up the circular economy requires it to be translated into concrete measures and clearly demonstrated as a way to meet multi-stakeholder sustainability targets. Besides these drivers, it is also important to stimulate public debate. According to Beek, this includes ideas like upcycling, the process of converting waste materials or useless products into new materials or products of better quality or for better environmental value, and service lease concepts like Turn Too, Rendemint, or Philips, where you can now lease lumen (units of luminous flux) for your office instead of buying LED lights." (http://theeconomicrealms.blogspot.co.uk/2012/12/where-next-for-circular-economy.html)
“1. Why do we need one?
The circular economy is touted as a practical solution to the planet's emerging resource crunch. Reserves of key resources such as rare earth metals and minerals are diminishing, while exploration and material extraction costs are rising. The current 'take-make-dispose' linear economy approach results in massive waste – according to Richard Girling's book Rubbish! published in 2005, 90% of the raw materials used in manufacturing become waste before the product leaves the factory while 80% of products made get thrown away within the first six months of their life. This, coupled with growing tensions around geopolitics and supply risk, are contributing to volatile commodity prices. A circular economy could help stabilise some of these issues by decoupling economic growth from resource consumption.
2. It is more than just recycling
While substituting secondary materials for primary materials can offer a part solution, recycling offers limited appeal as its processes are energy-intensive and generally downgrade materials, leading to continuing high demand for virgin materials. The circular economy goes beyond recycling as it is based around a restorative industrial system geared towards designing out waste. This graphic from the Ellen MacArthur Foundation shows how recycling is an 'outer circle' of the circular economy, requiring more energy input than the 'inner circles' of repair, reuse and remanufacture. The goal is not just to design for better end-of-life recovery, but to minimise energy use.
4. The economics stack up
The business case for a circular economy is compelling. Analysis by McKinsey estimates shifting towards circularity could add $1 trillion to the global economy by 2025 and create 100,000 new jobs within the next five years. Under the Waste & Resources Action Programme's Circular Economy 2020 Vision, the European Union (EU) could benefit from an improved trade balance of £90 billion and the creation of 160,000 jobs. Manufacturers are most likely to reap the benefits quickest given their reliance on raw materials – McKinsey argues that a subset of the EU manufacturing sector could realise net materials cost savings worth up to $630 billion per annum by 2025.
5. Business leadership
Ground-level innovation in this field is being driven by large corporations who are piloting business models based on leasing, product performance, remanufacture, and extended lifecycle thinking. These companies have the power to effect change quickest, given their geographical reach through global supply chains, and their efforts are likely to accelerate with the emergence of a business-led platform for collaboration, the Circular Economy 100. While the circular economy also relies on the involvement of SMEs, take-up in this sector remains limited. A recent survey of nearly 300 small businesses across England, France and Belgium found almost 50% had not heard of the concept.
6. Government intervention
Scaling up a circular economy on an international level will likely require government support. A co-ordinated approach by world leaders to introduce positive legislative drivers such as waste prevention targets and incentives around eco-design to promote products that are easier to reuse, remanufacture and disassemble would be welcomed by many. Some countries are already starting to act – China has set up CACE, a government-backed association to encourage circular growth while Scotland has issued its own circular economy blueprint. In a highly significant move the European Commission's circular economy framework, released next month, is expected to introduce higher recycling targets and a landfill ban on recyclable materials across all 28 EU member states.” (http://www.theguardian.com/sustainable-business/10-things-need-to-know-circular-economy)