News and Blog

Circular economy- Concept and Principles


Circular economy- Concept and Principles

Circular economy is a concept that has gained currency in the recent years. It describes an economic system that is based on business models that replace the ‘end-of-life’ concept of a tangible product with reducing, alternatively reusing, recycling, and recovering materials in production/distribution and consumption processes, at micro level (products, companies, consumers), meso level (eco-industrial parks) and macro level (city, region, nation), with an aim to accomplish sustainable development, which implies creating environmental quality, economic prosperity and social equity, to the benefit of current and future generations (Copernicus Institute of Sustainable Development, Netherlands, 2016). According to the World Economic Forum report, one-thirds of plastic waste globally is not collected or managed. The most sustainable and resourceful way of using a product is not ensuring its long-term use, but, instead, ensuring that they generate minimal waste during their end of service life and are reused or recycled into a better alternative. This is called ‘closing loops’ in industrial ecosystem, which is otherwise bent towards a linear economy, driven by ‘bigger-faster-better’ with no liability for waste management (Stahel W, 2016).

Many companies worldwide have also realized that Linear systems in production and consumption increases their exposure to risks, most notably higher resource prices and supply disruptions (Towards a Circular Economy, McKinsey Report, 2013).

A ‘Circular economy’ concept is based on certain key principles (McKinsey Report, 2013):

  • Elimination of Waste– Products are designed to ensure disassembly and reuse to ensure embedded cost and labor are not lost.
  • Non-toxicity: To ensure that consumables are made of ‘nutrients’ that are least toxic, so that they can be safely returned to the biosphere.
  • Technical consumables are reusable– Durables such as computers, engines, are designed from reuse from the start of their product cycle journey.
  • Energy required is reusable– Finally, energy required to fuel this circular motion of economy should be renewable to reduce the resource dependance and increase resilience.

It has been estimated that the U.K. could save USD 1.1 billion a year on landfill cost by keeping organic food waste out of landfills- which would also reduce the greenhouse gas emissions by 7.4 million tones p.a. and could deliver up to 2 GWh worth of electricity and provide much-needed soil restoration (McKinsey Report, 2013).

The idea of circular economy will not only reduce dependency on resources and ensure resilient growth, but will also reduce the exposure to price shocks and societal environmental external costs. Realizing a circular economy will take efforts on multiple front- social, technological and commercial (Stahel W., 2016). The circular economy is a first step towards ‘intelligent decentralization’ (Stahel, 2015) and therefore policymakers should focus on blending ownership of goods with liability on both consumer and producer side, so as to ensure that present economy is synergized with sustainable future ideas.

No More Excuses

Study Anytime.