What is a Circular Economy?
March 27, 2023
A study by the Ellen MacArthur Foundation concluded a development path to a circular economy could cut carbon dioxide emissions in half by 2030. The term “circular economy” has varying definitions, but the underlying goal of the system remains the same: to create a sustainable cycle limiting the creation of waste and extraction of raw materials through regeneration and recycling.
According to The World Economic Forum definition, a circular economy is “an industrial system that is restorative or regenerative by intention and design.” In other words, a circular economy — compared to a linear economy — is a closed-loop network guided by three principles: elimination of waste and pollution, circulation of products/materials, and regeneration of nature.
From an individual collecting rainwater to nourish their garden to a city like Amsterdam shifting their policies towards a zero-waste approach, the world is trying to incorporate circular economies at all levels.
In 2020, the City of Amsterdam committed to building a circular economy by 2050. The city has goals to cut waste in three main areas: food, consumer goods, and construction. Amsterdam is focused on shifting the mindset of citizens and major corporations from one-time use and disposal-centric to one centered around reusing and recycling.
Alongside sustainability, diversity, inclusion, and equity are at the forefront of importance for Amsterdam as it builds its new economy. By working with the Dutch government and the European Union, Amsterdam plans to alter taxation on labor to taxation on raw materials and energy instead. This shift in policy incentivizes repairing products over replacing them, as well as increases product accessibility to those with less income.
Moreover, Amsterdam acknowledges the role of marginalized communities — who are disproportionately affected by the transition from the linear economy — in circular economy planning. For instance, the city is home to a Dutch startup that provides a platform for these communities to efficiently share and borrow necessary products from each other while reducing waste and product consumption and building stronger communities.
The City of Amsterdam is a pioneer and sets an example for other governments to create a renewable, economic transition.
Circular Economy: PROS
Global waste is projected to increase by 70 percent by 2050. Most of this waste is plastic, which ends up as pollution in landfills and oceans. A key objective of a circular economic system is waste reduction which can be achieved through maximizing the utilization of natural resources. For example, after extracting nutrients from the soil through farming, composting waste can return the natural balance of soils which allows for a regenerative system.
Additionally, a circular economy aims to change the reliance on fossil fuels and finite resources by highlighting renewable energy sources and creating feedback-rich systems that allow for recycling and regeneration of resources. For example, one could take any pieces of cotton clothing, turn them into furniture stuffing and then into insulation material before being broken down organically to return to the soil as nutrients. This process lessens extraction of raw materials and reduces the consumption of fossil fuels.
Innovative and creative solutions are needed to implement a circular economy as well as new infrastructure which allows for creation of new jobs and economic growth. From a business model standpoint, adoption of the circular economic model improves competition within the free market, increases the value of sustainably-made products, and reduces costs of raw materials. A new service-based economy will also create diverse jobs across industrial sectors such as higher-skilled jobs in manufacturing. The European Parliament’s 2020 circular economy plan noted that the system would be able to create about 700,000 jobs just within the European Union by 2030.
Circular economies are heading towards a future of innovation with a reaping of benefits, but implementation also comes with a few disadvantages.
Circular Economy: CONS
The term “circular economy” does not have a uniform definition which can make implementation quite challenging to execute. For some, a circular economy is all about innovation whereas for others, it is about recycling, renewable energy or environmental remediation. The lack of a clear definition causes disagreements on deciding the set guidelines that would constitute how a circular economy should work.
A major disadvantage of a circular economy is the lack of necessary infrastructure in order to recycle and reuse diverse types of materials. Large corporations are stuck with a linear economy practices that falsely connect economic growth and profits to the consumption of raw materials. Furthermore, not all products or materials can be recycled or have a long lifespan. This mindset leads to a lack of energy, money, and effort spent in providing the necessary groundwork to create a circular economy that can reduce operational costs and make these companies more independent and sustainable. However, the current equipment and labor in the recycling industry may not meet the standards required for circular economic development.
Circular economies have the power to tackle the climate crisis and create significant change in terms of scale and speed. EARTHDAY.ORG’s theme for Earth Day 2023, Invest In Our Planet, calls on businesses, economies, and governments to work together and implement green practices and policies to help cultivate a just, sustainable, and environmentally-friendly future.