Understanding the Circular Economy

See also: Understanding Corporate Social Responsibility

The concept of the ‘circular economy’ has developed as an alternative to the so-called ‘linear economy’, which was founded on the idea of making something, using it, and then throwing it away when it becomes obsolete or broken. This offers high profits to manufacturers, and cheap products to consumers, especially in developed countries. However, it does not take into account the cost of disposing of the products at the end of their life, including the environmental cost of pollution.

The circular economy, by contrast, is built on the idea of using everything for as long as possible, including through lending or sharing, repurposing, repairing or refurbishing, and recycling.

The idea behind the circular economy is that we have finite resources available to us. We therefore cannot keep using them up. Instead, we need to find a way to prolong their life, and to get the maximum value from everything that we use. This page explains more about the circular economy, including the principles that underpin it, and its potential benefits.

A Broken System

On a global scale, the amount of waste that we produce is truly frightening.

The United States, for example, produces 268 million tonnes of waste each year, of which 140 million tonnes goes into landfill. Looked at another way, the average American throws out just over 2 kilograms of rubbish every day. In the European Union, the average waste per head per year is around 530 kg (equivalent to 1.45 kg per person per day), of which around half is recycled, and 18% goes to landfill.

This is not a sustainable position.

We cannot keep sending waste to landfill. We also cannot continue with the alternatives, which include incineration or sending waste abroad, to be disposed of there (an astonishing 14.7 million tonnes of waste was sent from EU countries to Turkey alone in 2021).

It has therefore become clear that a complete rethink is needed. The circular economy is the answer to this conundrum.

In the circular economy, goods and products are used for as long as possible. When one person has finished with them, they are passed onto someone else. This may be by lending, or as hand-me-downs (especially popular for children’s clothes and toys), or via shops such as charity shops, thrift stores or online marketplaces. When goods break or tear, they are repaired or refurbished.

When they can no longer be used for their original purpose, they may be ‘repurposed’ into something else (an old shirt into cleaning cloths, for example). When no further use is possible for the product, its elements are recycled wherever possible, so that they can be reused again in other products or materials.

Not a new concept?

The circular economy was an idea developed and named in the early years of this century. However, its principles would have been familiar to our grandparents and their parents, with their practices of ‘turning’ sheets middle to centre when they started to wear, repairing anything that broke, and passing clothes down a family.

The problem is therefore a relatively recent issue, driven by the rise of cheap—some would say ‘shoddy’—manufacturing and the concept of a ‘throwaway’ economy.

The 7 Rs of a Circular Economy

There are seven key principles of a circular economy, known as the 7 Rs (see picture). These are:

  • Redesign, or changing products so that they are easier to recycle or reuse, or changing processes to reduce their impact on the environment;

  • Reduce, or using fewer resources or raw materials to make a product, for example, by using recycled materials, or changing the process to use less water;

  • Reuse, or using products more than once, for example, by leasing them to multiple customers over their lifecycle, or buying them back to resell second-hand;

  • Repair, or mending products instead of throwing them away when they break;

  • Renovate, or taking used goods and returning them to close to their original condition, or sometimes turning them into something else, such as repairing or painting old barrels or containers to use as municipal planters;

  • Recycle, or reusing the materials within products, for example, using plastic bottles to make fleeces, or reusing the aluminium in cans to make more cans; and

  • Recover, or extracting resources from products that can no longer be used, such as taking the valuable rare earth metals from mobile phones so that they can be used to make other electronic goods.

The Role of Design

Of all the seven Rs of the circular economy, the most important is redesign. Everything hinges on getting the design right. If you can do this, your products will be more suitable for use in a circular economy, and the other ‘Rs’ will flow from that.

The Benefits of a Circular Economy

There are three important benefits of a circular economy:

1. Reducing dependence on raw materials

The global supply of raw materials of all kinds is limited.

We have also used up many of the accessible supplies of these materials, meaning that we need to search ever more remote places—and more pristine environments—in search of new sources. The remoteness of these sources also means that extracting raw materials and then transporting them to where they are needed is becoming much more expensive.

Over time, developed countries have come to import considerably more goods than they export, resulting in a trade deficit. This, again, is not sustainable in the long-term.

Recycling raw materials can reduce dependence on supplies from elsewhere in the world, and also decrease the cost of manufacturing.

2. Protecting the environment

If we reuse and recycle more materials, we can slow down the use of natural resources. This is partly raw materials, but also water and energy sources. Industrial processes and the use of manufactured products account for 9.1% of total greenhouse gas emissions in the EU each year, and the management of waste accounts for 3.32%.

If we can get better at both—fewer industrial processes, and less manufacturing, coupled with less waste through better products and less packaging—then we can potentially reduce greenhouse gas emissions.

We can also reduce disruption or destroying of landscapes and habitats, and limit the loss of biodiversity.

3. Generating jobs and saving consumers money

Estimates in the EU suggest that moving to a circular economy could create 700,000 jobs in the EU alone by 2030.

There are likely to be new jobs in designing better products, repurposing, repairing and refurbishing goods, and also in recycling. The reduced costs of production from using recycled materials rather than expensive imported raw materials could also save consumers money on new products.

Disadvantages of moving to a circular economy

It is important to point out that there will be losers from a global move to a circular economy.

These include anyone employed in key parts of the linear economy. For example, people working in factories that produce short-life goods such as ‘fast fashion’ or goods with built-in obsolescence (those that are designed to fail after a certain period, and which cannot be repaired). It will also include people employed to extract raw materials, for example, miners.

Many of these people are likely to be living in low-income countries, and may be close to the poverty line.

It is therefore important to plan carefully for transition to a circular economy, to ensure that everyone is treated fairly during this process. This may mean retraining and reskilling workers.

Moving to a Circular Economy

There are several important elements of building a transition to a circular economy.

The first principle is fairness and justice.

The move to a circular economy is likely to create jobs in the longer term. The International Labour Organization estimates that the net gain is likely to be over 7 million jobs by 2030.

However, that is a net gain, which means that some jobs will also be lost in the process. These will include many in developing countries. It is important to ensure that these people are not badly affected, or that the transition does not disproportionately affect poorer countries. Developed countries may need to supply funding for retraining and reskilling of workers.

It is also important to ensure that poorer countries have fair access to resources, especially if they cost more to produce from recycling.

The second principle is changing consumer behaviour.

The circular economy rests on consumer acceptance of the principles of repairing, reusing and recycling. It is therefore essential to educate people to understand the importance of this, and to explain why concepts like ‘fast fashion’ should not be seen as good.

A Final Thought

In the final analysis, whether or not we move to a circular economy depends on all of us.

Governments can tell us that it is the right thing to do—and, indeed, the EU has done exactly that. However, we as consumers need to change our behaviour to fit the new ideas. The responsibility is with each and every one of us.