What is the circular economy?
The circular economy is an evolution of the way the world produces and consumes both goods and services.
The circular model redefines the economy around principles of designing out waste and pollution, keeping products and materials in use for as long as possible.
Equally vital are restoring the world’s wilderness, building regenerative agricultural systems, using renewable materials, and shifting to renewable energy sources.
What a circular economy means
The circular economy means moving away from the world’s current – and enormously wasteful – economic model of ‘take, make, throw away’, in which resources are extracted, turned into products, used, and discarded.
It entails redesigning products to be more durable, reusable, repairable, and recyclable, and therefore kept in circulation for as long as possible. Beyond product design innovations, it also means changing the way we consume and use goods and services, and rethinking consumerism as a society.
The term ‘circular economy’ is sometimes used as if it is something that does not yet exist. In fact, many parts of the global economy are already ‘circular’ to some extent but are largely invisible to those living in developed economies.
In some developing nations there is already a far stronger tradition of repair and reuse of products.
Other nations play a vital and highly undervalued role in global recycling, such as the ship-breaking industry in Bangladesh and recycling operations across South East Asia.
The 2021 Circularity Gap Report states the global economy is only 8.6 per cent circular and sets an ambitious target of becoming 17 per cent circular by 2030 by targeting sectors with high potential for change.
Who invented the circular economy?
There was no single creator of the idea of a circular economy. The term is largely a 21st century construct, but the principles behind it were first talked about in the mid-twentieth century.
Kenneth Boulding’s The Economics of the Coming Spaceship Earth (1966), Herman Daly’s notion of a ‘steady-state economy’ from 1974, and Cradle to Cradle: Remaking the Way We Make Things (2002) by Michael Braungart and Bill McDonough are seminal publications on the topic.
Linear vs. circular economy
The linear economy is the term for our current globalized economy in which we extract resources, manufacture products, use them, and then throw them away. It is based on mass production and consumerist lifestyles of short-life disposable products such as mobile phones, fashion items such as trainers and clothes, and luxury items such as washing machines and cars.
The reason the linear economy has thrived in the past is because it offers high profits for manufacturers around the world and cheap prices for consumers in developed nations.
However, this low cost, high profit model is only possible because the linear economy does not price the cost of the enormous waste, pollution, and carbon emissions that are built into the system.
In fact, industry is often incentivised to waste, pollute, and emit, as they are rarely required to pay the full environmental or social costs of these actions.
If a price was put on social and environmental harms such as emissions or waste, and more circular and sustainable approaches were rewarded, there would be multiple improvements such as healthy ecosystems, safer working conditions, and high-quality environmental goods and services.
What are the benefits of a circular economy?
A circular economy offers a wide range of social, economic, and environmental benefits.
By maximising the lifetime of our products and materials and designing out waste, circularity reduces both our demand for raw materials and the environmental impact associated with obtaining them.
And using recycled raw materials will, in most cases, use less energy when manufacturing products, therefore reducing carbon emissions.
The circular economy, if done right, both shrinks harmful activities such as carbon emissions, air pollution, and toxicity exposure, and increases positive actions such as habitat restoration, renewable energy, and cleaning the air.
The circular economy also offers social benefits particularly in low-income economies, because integrating informal waste pickers into formal waste collection provides job security and fair wages.
Circularity also promises to deliver substantial economic benefits. Scaling up reuse, repair, remanufacturing, and recycling creates millions of jobs and stimulates innovation. Capturing and reusing critical materials such as rare earth metals helps make the economy more resilient to global supply chain shocks and ensures the world has the materials to create the renewable energy infrastructure it needs.
What are the disadvantages of a circular economy?
Some industries potentially lose out in the transition to a circular economy, as any business producing cheap goods with built-in, planned obsolescence would suffer. There are millions of jobs connected with this linear, high-waste economy – many in low-income countries – and so any switch to a circular economy could not happen overnight.
A good example is those people working in factories which produce ‘fast fashion’ – cheap, ready-made clothes – who are very vulnerable to sudden changes in consumption.
It is important discussions of the circular economy focus on the concept of a just transition, where the impact on people is built into careful, co-operative planning. Those who depend on traditional industries must not be adversely affected by the change, or existing inequalities aggravated.
How does a ‘just transition’ to a circular economy work?
The transition to a circular economy must compensate for job losses through retraining, new skills development, alternative employment, and other measures to support workers and communities. Any transition must not disproportionally affect poor and vulnerable communities and countries or it will likely fail.
The circular economy could have a positive net effect on job creation provided workers acquire the necessary skills. The International Labour Organization already estimates a global net increase of jobs from 7-8 million by 2030 due to shifts towards circular economy.
A just transition must also include fair and equitable access to natural resources and procedural justice to ensure workers and affected communities have a seat at the table when decisions are made.
Moving from a linear to a circular economy
The transition to a circular economy requires cultural change as well as new models of business and trade. Technology does not provide all the solutions, altering consumer behaviour is also vital.
Consumers in developed nations have to adjust to a world in which products are no longer seen as disposable fashion or prestige items to be constantly replaced with newer models.
Repair and reuse must be a far larger and high-prized part of the economy and society, as does sharing. The waste from printers, washing machines, and cars is considerable.
Digital technology should make this shift easily achievable but it requires a change of mindset by most in the developed world.