Basics of Circular Economy

The growing scarcity of natural resources like fresh water, oil clean air has brought environmental sustainability to the centre stage of any economic discussion. Circular Economy, is being voiced as a possible solution to the current situation. This post looks at basics of Circular Economy, to build an insight into the concept.

What is Circular Economy ?

Our current economic model is labelled as Linear. We extract raw materials, transform, sell, use and throw them away (make, use, dispose). It is estimated that every day we consume fossil fuels equivalent of 2,600 years of accumulation of oil. Since 1950, more than six billion tonnes of plastics have ended up either in nature, burnt or in landfills. This demands shift from current approach to a more responsible approach where we keep resources in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life. This alternative approach is precisely the ambition of circular economy.

A circular economy is an economic system where products and services are traded in closed loops or ‘cycles’. It is regenerative by design and aims to retain as much value as possible of products, parts and materials.

Definition

A circular economy goes beyond the pursuit of waste prevention and waste reduction to inspire technological, organisational and social innovation. At the core of Circular Economy lays a shift towards complete elimination of waste.

Background of idea of Circular Economy

In their 1976 research report to the European Commission, “The Potential for Substituting Manpower for Energy”, Walter Stahel and Genevieve Reday sketched the vision of an economy in loops (or circular economy) and its impact on job creation, economic competitiveness, resource savings, and waste prevention. The report was published in 1982 as the book Jobs for Tomorrow: The Potential for Substituting Manpower for Energy.

China was one of the first countries to legislate in 2016 on circular economy. Today, China has made circular economy one of its priorities through introduction of new model of “industrial symbiosis” — industrial ecosystems where one’s waste or by-products become the other’s raw materials.

The Ellen MacArthur Foundation has more recently outlined the economic opportunity of a circular economy, bringing together complementary schools of thought in an attempt to create a coherent framework, thus giving the concept a wide exposure and appeal.

Circular economy standard BS 8001:2017

To provide authoritative guidance to organizations implementing circular economy (CE) strategies, in 2017, the British Standards Institution (BSI) developed and launched the first circular economy standard “BS 8001:2017 Framework for implementing the principles of the circular economy in organizations Guide”.

Benefits of Circular Economy ?

Circular Economy provides both economic and environmental benefits. It is a continuous positive development cycle that preserves and enhances natural capital, optimises resource yields, and minimises system risks by managing finite stocks and renewable flows. It drives substantial material savings, growth in employment and incentives for innovation.

An important principle of circular economy is the decoupling of economic growth from resource consumption. This shift in focus from material resource to innovation, improving material functionality, and developing circular activities which eventually leads to higher valuation of labour.

Summarily, Circular Economy creates new opportunities for growth and a more circular economy:

• Reduces material & resource waste.
• Drive greater resource productivity. 
• Generates more employment & improves labour valuation.
• Provides incentives for innovation.
• Improves environmental sustainability.