The Circular Economy

Blog written by Erika Lindholm, all artwork credited to the Ellen MacArthur Foundation
​
In our current economic system, the linear economic system, we extract resources from our planet at an ever-increasing pace, and turn them into a product that we mostly dispose after use. From the perspective of an individual or organization, that seems efficient. However, zooming out to a global level shows how unsustainable this approach is.  The circular economy is a redesign of this future, where industrial systems are restorative and regenerative by intention and design. 

A circular economy reflects the natural systems in which waste from one process becomes nourishment to another. Materials circulating in distinct streams - the biological, in which the materials are designed to be able to return to the biosphere without causing damage, and technical, in which the materials are designed to circulate while maintaining quality in order to become nourishment for industrial processes. The cleaner these flows and the higher the quality of the materials is when they circulate, the more value is retained in the economic system.

Principles of circular economy


Two distinct cycles: biological and technical. Starting from the idea that all materials will be included in a biological and technical cycle Ellen MacArthur Foundation developed a schematic overview of how the circular economy can function (picture below).

On the left side of the figure: Clean biological material returns to the biosphere without doing harm, as biological nutrients that help to restore natural resources. This is done by composting or by anaerobic digestion for production of biogas and fertilizers. Production based biological material means new withdrawals from the biosphere. Materials become nutrition that becomes new materials, in an eternal cycle. Another possibility is to extend the life of the biological materials in a way that they are designed to be used in several different products following one another, before returning to the biosphere. For example, cotton clothing used as upholstery and then as insulation before the material is returned to the biosphere.​

On the right side of the figure: Clean and defined technical materials (such as metals and polymers) are kept in circulation as nutrients for industrial processes in the techno sphere. In the outer circle (recycle) recycling of materials is done in ways that ensure materials do not lose in quality and can be returned to production, over and over again. Much of today's recovery is downcycling, a sort recycling where materials are not designed to be recycled, which means that they lose the quality of every recovery cycle. In the circular vision all technical materials are designed for upcycling, meaning that the materials circulating maintain their quality - and thereby their economic value, regardless of the number of cycles.
A core principle to maintain the value of the materials and create economic opportunities in the circular economy is that the closer you can get to the innermost circles of the direct re-use, the greater the savings because the need for new raw material is reduced and less energy is needed for transport and processing of materials.

The circle inside the recovery is about re-manufacturing, meaning that manufacturers take back the products to a remanufacturing facility to replace worn-out parts and refurbish parts that can be reused. The products are then reintroduced on the market with renewed warranty but at a lower price than newly manufactured counterparts. This is done today for example in the automotive industry with good profit margins.

Innovative business models

In the two innermost circles (reuse / redistribute and maintenance) the value-creating principle is that the longer the products and components can be circulated "as they are", the lower the cost of materials, labour and energy. These include re-distribution models (such as various types of second-hand markets) and innovative business models based on rental, subscription and sharing of products. The latter type of circular business models comes from the idea that access to a product in many cases is the most important factor, not necessarily to own it.  Companies would then sell the product as a service, rather than the product itself. In this context, it is more relevant to speak of users rather than consumers.

It is also important to design products so that they last long and is upgradable to work for several consecutive users (reuse) or, with the help of the maintenance / service can stay with a single user for a long time (maintenance). In these business models, the principle is that if the product can serve as many customers as possible and for as long as possible it provides more profit per unit.

 Design of circular economy

A prerequisite for the breakdown in a biological and technical cycle to work is that products, components and materials are designed for circular economy, which is in a horizontal plane is about "designing out waste".

Biological materials need to be as clean as not to cause injury when they return to the biosphere and technical materials need to be designed so that they can be recycled without loss of quality for each cycle. In addition, products need to be designed for disassembly. This means that the products must be easy to dismantle and composite materials should be avoided. Certain types of product should be modular and built with replaceable parts so that repair / update can easily be done instead of replacing the whole product. Products affected by rapid technological development should be designed for upgrading (preferably software-rate), not to prevent development.

We would love to hear your thought and responses about the #CircularEconomy please comment and share with us!