towards the circular economy
The principle, as described here under, was introduced by the Ellen MacArthur Foundation. Click here for full text and download of the report.
A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and, within this, business models.
Such an economy is based on few simple principles. First, at its core, a circular economy aims to ‘design out’ waste. Waste does not exist—products are designed and optimised for a cycle of disassembly and reuse. These tight component and product cycles define the circular economy and set it apart from disposal and even recycling where large amounts of embedded energy and labour are lost. Secondly, circularity introduces a strict differentiation between consumable and durable components of a product. Unlike today, consumables in the circular economy are largely made of biological ingredients or ‘nutrients’ that are at least non-toxic and possibly even beneficial, and can be safely returned to the biosphere— directly or in a cascade of consecutive uses. Durables such as engines or computers, on the other hand, are made of technical nutrients unsuitable for the biosphere, like metals and most plastics. These are designed from the start for reuse. Thirdly, the energy required to fuel this cycle should be renewable by nature, again to decrease resource dependence and increase system resilience (e.g., to oil shocks).
For technical nutrients, the circular economy largely replaces the concept of a consumer with that of a user. This calls for a new contract between businesses and their customers based on product performance. Unlike in today’s ‘buy-and-consume’ economy, durable products are leased, rented, or shared wherever possible. If they are sold, there are incentives or agreements in place to ensure the return and thereafter the reuse of the product or its components and materials at the end of its period of primary use.
These principles all drive four clear-cut sources of value creation that offer arbitrage opportunities in comparison with linear product design and materials usage:
The ‘power of the inner circle’ refers to minimising comparative material usage vis-à-vis the linear production system. The tighter the circle, i.e., the less a product has to be changed in reuse, refurbishment and remanufacturing and the faster it returns to use, the higher the potential savings on the shares of material, labour, energy, and capital embedded in the product and on the associated rucksack of externalities (such as greenhouse gas (GHG) emissions, water, toxicity).
The ‘power of circling longer’ refers to maximising the number of consecutive cycles (be it reuse, remanufacturing, or recycling) and/or the time in each cycle.
The ‘power of cascaded use’ refers to diversifying reuse across the value chain, as when cotton clothing is reused first as second-hand apparel, then crosses to the furniture industry as fibre-fill in upholstery, and the fibre-fill is later reused in stone wool insulation for construction—in each case substituting for an inflow of virgin materials into the economy—before the cotton fibres are safely returned to the biosphere.
The ‘power of pure circles’, finally, lies in the fact that uncontaminated material streams increase collection and redistribution efficiency while maintaining quality, particularly of technical materials, which, in turn, extends product longevity and thus increases material productivity.
These four ways to increase material productivity are not merely one-off effects that will dent resource demand for a short period of time during the initial phase of introduction of these circular setups. Their lasting power lies in changing the run rate of required material intake. They can therefore add up to substantial cumulative advantages over a classical linear business-as-usual case