Understanding Circular Economy and its future
Disruptive changes in the organisation of our society and enterprises are required for sustainable development. The circular economy (CE) concept provides a new opportunity for innovation and integration among natural ecosystems, companies, everyday lives, and waste management. Raw natural resources are gathered, converted into goods, and discarded in the linear economy. On the other hand, a circular economy model seeks to bridge the gap between production and the natural ecosystems' cycles on which humans ultimately rely.
What is a Circular Economy?
The circular economy is a new manufacturing and consumption paradigm that assures long-term growth. We may use the circular economy to promote resource optimisation, minimise raw material consumption, and recover trash by recycling or giving it a second life as a new product. The goal of the circular economy is to maximise the use of material resources by following three basic principles: reduce, reuse, and recycle. As a result, product life cycles are extended, waste is reduced, and a more efficient and sustainable production model is established over time.
We have previously lived with linear production models, in which we extract, create, consume, and dispose of. Because of the civilisation we live in, the consumption rate is increasing, resulting in a quick yet unsustainable model for the earth. The circular economy establishes a more sustainable production and consumption model in which raw materials are kept in production cycles for longer and can be reused multiple times, resulting in much less waste. The essence of this model, as its name suggests, is that resources are kept in the economy for as long as possible, allowing us to use the waste we generate as raw material for other industries.
History of Circular Economy
The notion of a circular economy is neither novel nor readily linked to a single thinker or theoretical approach. Kenneth Boulding's 1966 essay, The Economics of the Coming Spaceship Earth, is frequently considered the first hesitant step toward what has now become a fully established framework for an economy that tries to repair and renew rather than discard. From these modest beginnings, various seemingly disparate concepts with similar goals began to converge. These ideas include cradle-to-cradle thinking combined with ecological laws, biomimicry with performance economy concepts, and regenerative design with closed-loop systems.
However, the economic and commercial potential were not explored pragmatically until a 2012 paper from the Ellen Macarthur Foundation titled Towards the Circular Economy: Economic and Business Rationale for an Accelerated Transition. This research has helped to make the circular economy a necessary and economically feasible alternative to the existing system for all sorts of industries and enterprises. In 2018, the World Economic Forum, World Resources Institute, Philips, Ellen MacArthur Foundation, United Nations Environment Programme, and 40 other partners formed the Platform for Accelerating the Circular Economy (PACE) to advance the circular economy agenda. PACE is now in charge of various worldwide programmes to hasten the transition to a circular economy.
Importance of Circular Economy
As previously stated, the fundamentals of a circular economy are the reduction of our dependency on nonrenewable resources and the elimination of waste. However, its goals have expanded beyond this, and its scope now includes several additional concepts that have grown to be regarded as essential components of a real circular economy. While much of the theoretical foundation of the circular economy has been agreed upon, there are several schools of thought on how these principles are growing and will evolve. However, an underlying fact shared by all methods is the notion that the circular economy, rather than being a burden, should be viewed as an economic and social opportunity.
Naturally, these gradual adjustments in our products will have varying effects on different products. Raw materials are ethically and sustainably derived from the earth, plants, and animals in the biological cycle. After that, any "waste" is digested and returned to the land as compost. Raw materials are processed or created in the technological cycle to ensure the lifespan and simplicity of recycling. After that, the products are utilised before the materials are recycled or individual components are recovered and reused. The energy utilised in manufacturing in both situations comes from renewable sources such as solar electricity. Products may come within both the biological and technological cycles in various circumstances. Plastic bottles constructed of biodegradable plastic components, for example, should be designed to be refilled numerous times before reaching the disintegration stage. A circular economy, as a closed-loop system in which commodities and materials keep their greatest value, attempts to repair the environment by lowering the use of scarce resources, which substantially reduces waste creation. Citizens and corporations alike may effectively adopt a circular economy throughout society by taking activities such as minimising waste, reusing things, and recycling resources. A circular economy promotes biodegradable materials and attempts to repair the environment by changing firms' manufacturing processes sustainably. Companies that create materials from discarded goods/products save trash away from landfills while also lowering material costs.
Businesses that include a sustainable strategy in their manufacturing process not only prevent environmental harm and pollution from post-consumer waste but also enhance the economy by providing financial possibilities. As a necessary investment, a circular economy is critical for supporting the economy both now and in the future. Businesses must change to new techniques to satisfy customer demand while still making money to meet the rising need for more sustainable and eco-friendly products. Adopting a circular economy company model is one such strategy. A circular economy business model can help with corporate development and sustainability while also reinforcing a positive business reputation, resulting in increased brand awareness. Furthermore, corporate social responsibility focusing on the circular economy may recruit and keep people who want to make a difference in the world. According to studies, employees who engage in corporate social responsibility are more likely to remain in their professions.
A circular economy to decrease waste, closes the loop in typical linear economies by recycling waste, lowering the quantity of rubbish in our landfills. The circular economy may reallocate a considerable amount of our trash back into society by upcycling, improving the lifespan of resources, limiting value loss, and recirculating materials. As many countries struggle to rid themselves of the massive discharge of dung from animals, using biogas facilities to turn manure into bio-methane, a potential energy source, can be life-changing. Using biomethane is a win-win situation since it not only reduces waste from cow manure but also reduces the need for fossil fuels for energy. Renewable energy, as one of the foundations of the circular economy, decreases both environmental exploitation and pollution from fossil fuel burning. Renewables provide a steady and infinite power supply in industrial civilisations, improving energy security and lowering extra expenses connected with nonrenewable energy sources. Renewable energy supports the local economy while improving food availability in agricultural parts of our economy. Furthermore, a new energy industry is emerging from the agricultural society: biomass energy. Biomass energy, such as ethanol fuel's, is an appealing option for many people due to its widespread availability and carbon neutrality.
Challenges to the Circular Economy
There are various difficulties in implementing a circular economy model in our existing economic structure. Prices do not account for social and environmental externalities, favouring financial market signals over people and nature when making economic decisions. Raw material costs fluctuate, and excellent-grade secondary resources are uncompetitive at low prices. Circular economy company ideas are more difficult to build since most investors still operate on a linear economy logic and often demand upfront investments. These kind of circular items and alternatives are still in short supply. There aren't many trained professionals with expertise in 'information and communication technology (ICT).
Many challenges may need to be overcome to establish and expand the circular economy. The reality is that our existing economic structure is geared toward the demands of the linear economy and is not yet equipped to cope with entrepreneurs in the circular economy. New business models may be difficult to execute and develop due to rules and regulations that are not equipped for such innovations. Many firms rely on old and/or strong connections, making it difficult to form new alliances and complete loops. Many businesses still have goals and evaluation systems based on short-term value generation, but the circular economy model is based on long-term value creation. The GDP index ignores social and environmental externalities, inhibiting value growth in both domains.
According to Swedish research undertaken in 2017 to incorporate many viewpoints on this issue, the primary impediments to shifting towards the circular economy model may be financial, structural, operational, attitudinal, and technical. The first hurdle is the difficulty quantifying circular economy's financial benefits and profitability. The 'structural' obstacle that follows stems from a lack of clarity about who is accountable for the circular economy inside firms. Then, the 'operational' issues indicate the difficulty of dealing with and maintaining the control of processes inside the value chain. The fourth barrier, 'attitudinal,' has mostly demonstrated a lack of knowledge about sustainability issues and a strong fear of risk, indicating that disruptive changes aren't the best way to develop circular strategies. The final hurdle to a circular economy is technological, which has to do with the necessity to change and redesign items and production/take-back processes. These requirements raise questions about the capacity to meet these requirements while remaining competitive and producing high-quality products.
Conclusion
The circular economy is progressively being adopted into our society through the inclusion of the circular economy in the Paris Climate Agreement, the UN Sustainable Development Goals, and several other international treaties. Community action, on the other hand, necessitates individual effort. We contribute to society's goal of creating a healthy world for everybody by adopting a sustainable lifestyle.
Creating a circular economy would necessitate a complete redesign of practically every industry, and you may take direct action to aid in the creation of a sustainable, circular economy. However, the consumer acts that support a circular economy are usually known and straightforward. Buy fewer goods, but also less power, a smaller house, and fewer, smaller automobiles. Take only what you require. The entire concept is all about making the best use of the products and the resources you already have. When an object can no longer be used, recycle it wherever feasible.
We should consider creating a global platform for sharing knowledge about the circular economy at the urban and regional levels. This could also help in the development of new standards and key performance indicators, as well as new alliances with corporate and other actors to encourage large-scale experiments and upscaling. National governments should have the normal policy instruments to adjust incentives, affect behaviour, build infrastructure and supporting institutions, and act directly in markets at the macro level. The extent governments employ the authorities at their disposal to promote the circular economy will determine if it becomes more than a fleeting concept.
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Pic Courtsey-Pankaj Jha
(The views expressed are those of the author and do noT represent views of CESCUBE.)
