Circular Economy: What It Is and Why We Need It?

Producing, consuming, and throwing products away is starting to affect our planet and our way of life. A new way of doing things, which is based on nature is starting to emerge: the circular economy.
Carmen Valache

If you follow the news, you may have heard the phrase circular economy bandied about. But what exactly is the circular economy, and why do we need it?  

The concept of the circular economy is based on several earlier theories and schools of thought, most of which draw their inspiration from nature. Over time, many have pointed out the fact that nature mostly works in cycles. We often study those cycles – like the water, carbon, and nitrogen cycles – in school. 

Unlike nature, humans have had a slightly different approach to things since the industrial revolution. We extract resources, manufacture goods, buy and consume them and when they break or we get bored with them, we throw them away. Then we set out to extract more resources to make new products.

Much of the waste produced in this manner ends up in landfills or is burned in incineration plants. This way of doing things has its benefits. It fuels our economies – it creates jobs, revenues, and taxes that go to building schools and hospitals – and it keeps us content because we have a lot of stuff. 

But there are obvious problems with it. One of them is the fact that resources are finite. The more we extract, the more we deplete the planet’s deposits and the less there is left for future generations. The other is that the amount of waste we generate is sizeable and we're not very good at managing it. That is why it ends up in places where it shouldn’t — like in oceans, in the belly of marine animals and birds, and, by going up the trophic chain, it makes its way into our own bodies.

Yet another issue is the fact that the world's population is growing and getting wealthier, as products are becoming cheaper and cheaper. The implications of these trends for the environment and the climate are worrisome, as scientists like the UN's Intergovernmental Panel on Climate Change have repeatedly pointed out.

If we keep doing what we are doing, the climate stands to warm by as much as another 3 degrees Celsius before the end of this century, which will spell doom for much of biodiversity and for life as we know it.

The solution

The obvious solution is that we as a society need to change the way we do things. Instead of throwing broken or old products away, we should design them in such a way that they can be repurposed into new products —that is, switching from a linear consumption model to a circular one.

There are numerous ways to accomplish that. Among them are making more durable products, designing them to be modular so that their parts can be replaced when they break, remanufacturing goods into new products, using fewer materials and materials that can be re- and upcycled. The good news is that our technological know-how is sophisticated enough to make most of these ideas possible.


The bad news is that, in practice, technology isn't enough. The problem continues to be us, people. People need incentives to do things differently, especially if doing things differently will cost them money. That is why we speak about a circular economy, as opposed to circular manufacturing or circular technology. It is because we need to figure out a way to enable technology to make it into the mainstream economy.

What exactly will a circular economy look like in practice?

Since less than 10% of our economy is circular, according to the Circularity Gap Report, we can only imagine what a fully circular economy will look like and the pathways that will take us there. Pictured below is the latest diagram of a circular economic system published by the Ellen MacArthur Foundation in February 2019. Set up by and named after the British circumnavigator and retired sailor, this is a leading institution in the field of circular economy.

The Circular Economy diagram by the Ellen MacArthur Foundation
The Circular Economy Diagram, Source: Ellen MacArthur Foundation

The diagram is divided into two parts: on the right-hand side, in blue, are the non-renewable goods that we consume, such as most consumer products. Contrary to popular belief, recycling such products parts is not the best way to make them more circular. Rather, sharing then, designing them so they have longer lives and can be repaired, reusing, redistributing, remanufacturing, and refurbishing are all better options.

Why? Because the second law of thermodynamics which says that the quality of energy decreases with each transformation, as its entropy increases — also applies to the products we consume and the energy embedded in them.

Recycling implies that materials will be transformed into something inferior compared to their initial state, whereas redistributing products so that they are used more doesn't. Besides, even if the process of manufacturing a certain good were perfectly circular, there would still be an environmental impact associated with the transformation of materials from one state to another, stemming from things like energy consumption and water use.

Meanwhile, on the left-hand side (in green), are the production loops for renewable resources. Biodegradable waste — such as food waste — can also be fed into new production processes through techniques like anaerobic digestion (which turns it into fuels like biogas) and composting (which turns it into fertilizer).

Diagrams like these may make the transition to a circular economy seem simple. After all, how difficult can it be to repair products more often than we currently are doing? But things tend to get more complicated in practice. Case in point, a few months ago, I covered but a small aspect of the battle to make electronic products easier to repair.

In actuality, switching to an entirely different economic model will require systemic changes to how we do things and how we think about things. Many of the changes we will need to make are low on technology but big on impact. For instance, how often do you use your washing machine or your car?

Once a week? Once a day? And when you do, for how long do you use them? In many cases, these products sit idle the majority of the time. Among other things, a circular washing machine or car could be a washing machine or car that is used more frequently by more people.

The mere shift in consumer mindset from owning products to deriving utility from them (for example, focusing on clean laundry instead of the need to own a washing machine) will take us one step closer to a circular — and more sustainable — economy, without having to sacrifice any of the comforts of modern life.

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