Since the industrial revolution, we have been relying on the linear economy model for economic growth, in which raw materials are extracted from nature and turned into products, and disposed of after use. Whilst our standard of living has improved, this is at the cost of the environment.
The EU generates over 2 billion tonnes of wastes every year, and only 7.2% of materials are cycled back to the global economy. This “take, make and dispose” model is far from sustainable and the EU is shifting towards a more sustainable model known as “circular economy”.
So, what is the circular economy? It is more than the commonly known 3Rs: reduce, reuse and recycle. The circular economy is a production and consumption model in which waste is kept at minimum, and produce is continuously transferred and used somewhere in the system, creating further value.
Firstly, it minimises waste and pollution. Waste is first stopped by using new and recycled materials with low impact, and reducing construction impacts and economic activities that negatively impact human health and the environment. Release of greenhouse gases are kept to a minimum.
Secondly, products and materials are kept in use. Products are designed to last longer, and materials from the end-of-life products are reused to keep them circulating in the closed system.
Thirdly, natural capital is built and restored and natural systems are regenerated. Renewable resources are used, and fossil fuels and non-renewable resources are avoided. Practices are employed to rebuild soil and increase biodiversity.
So, what are the benefits of a circular economy? One of the most obvious benefits of switching to a circular economy is the reduction of natural resource consumption and waste production, which in turn reduce the disruption to landscapes and loss of habitat and biodiversity. Moreover, the circular economy is less dependent on raw materials, thus mitigating the risk associated with the supply of raw materials such as price and availability. Finally, shifting towards a circular economy stimulates innovation, boosts economic growth and creates jobs. There will be a new demand for services such as logistics, remanufacturing, refurbishing and remarketing, as well as demands for talents in long-term customer engagement and loyalty.
In response to resource scarcity and climate change, there is an increasing interest in shifting towards a circular economy. The shift towards a circular economy is progressing. The European Commission presented their action plan for the circular economy in March 2020 with a focus on resource intensive sectors such as construction and electronics, and new measures to speed up the transition to circular economy were released in March 2022.
To implement a circular economy, there are challenges that have to be addressed, which include setting up an effective circular supply chain and waste infrastructure, meeting customers expectations for convenience and redesigning of products. The partnership between the public and private sectors, and the support and financial incentive from the government, are key to implementing a circular economy.