Since the emergence of the First Industrial Revolution, the world economy has been following a process of linear industrial production. The life cycle of the products is articulated under the scheme: raw material, production, consumption and waste disposal. But from the moment our major material sources (different types of minerals) and energy sources (fossil fuels) are becoming increasingly difficult to obtain; and from the instant in which ecosystemic destabilizations such as climate change and loss of biodiversity have been verified, the system urgently needs to change paradigm and bet on economies that operate in a circular way.
The circular economy establishes a production model less dependent on raw materials and energies. As its name implies, the essence of circular economy is the closing of the cycles of matter. Its objective is to regenerate the different ecosystems of our planet. Do you know the origin of the circular model of the economy? Do you want to see examples of your application in companies like yours? We review its origin, current status and future prospects.
What is circular economy?
The concept of circular economy was defined in depth for the first time by two British environmental economists, David W. Pearce and R. Kerry Turner in their book Economics of Natural Resources and the Environment, published in 1989. Since then its theoretical framework has evolved and gained support at the international level.
See the conceptualization of Circular Economy in chapter 2 of Pearce and Turner's book
Following the recent definition of the Ellen MacArthur Foundation, one of the major drivers of the current transition to the circular economic process, this new economy is "restorative and regenerative, and seeks to ensure those products, components and resources in general remain useful at all times". It is a new model in which products, materials and resources are kept in the economy for the longest possible time and in which residues generation is minimized.
In short, it is a question of replacing a linear economy based on extracting, producing, consuming and disposing of, by a circular economy in which the materials containing the waste are reincorporated into the productive process for the production of new products or raw materials. In this approach, the reduction, reuse, recycling or material recovery of waste are essential processes.
At present, this philosophy has already transcended the framework of the theoretical. Numerous countries, agencies and companies have taken decisive actions to establish this model of sustainable development with optimum results.
What are the main strategic lines of the EU on circular economy?
Although the concept could be applied to a multitude of industrial processes, it is possible to determine the main areas of action for its consolidation in the different world economies. Taking as a reference the EU Action Plan for the Circular Economy, signed on 2 December 2015, which includes 54 measures on which it is necessary to act in the next 5 years to advance this new economic flow, immediate lines of action are:
- Product design
- The productive processes
- The habits of consumption
- The waste of resources or the economy of materials
In fact, the EU has launched specific actions in sectors and areas such as the plastics industry, food value chain, critical raw materials, construction and demolition sector, biomass, or new fertilizers obtained from food waste.
- The boost of R&D in support of the transition to the circular economy
At this point, the EU has launched various development instruments in the form of programs: Horizon 2020, COSME, European Structural and Investment Funds or the European Funds for Strategic Investments.
See the latest report of the European Commission on the implementation of the Circular Economy<a href="http://ec.europa.eu/environment/circular-economy/implementation_report.pdf"> Action Plan
Holland, an internacional model
The Netherlands is leading the movement towards a solidary, sustainable and much more circular economy. This focus of European innovation has become a living lab or test field of new technologies, circular business models and multi-stakeholder collaboration that show the world proven examples from which to learn.
In this sense, The Netherlands Circular Hobspot- where the Netherlands' commitment to the circular economy is centralized - emerges as an international reference for the implementation of the model at the administrative and multisectoral level.
To what limits does the circular flow face?
The application of this productive model finds different legal barriers for its optimal application. To achieve this, in the first place, according to Luis González Reyes, a doctor of Chemical Sciences and member of Ecologistas en Acción, "the less abundant and/or more difficult elements to be recycled should be replaced by others with equal benefits that could be reused indefinitely. This is not a minor problem, but probably unresolvable within the current system. An example is the case of a personal computer (central instrument in contemporary economics) which requires almost all elements of the periodic table for its operation".
The small percentage of the material flows that are recycled in the world economy could certainly increase and it is desirable to do so, but if you are committed to a truly circular economy, "it is essential to transcend capitalism based on fossil fuels and construction".
According to the report 'Regulatory barriers for the Circular Economy' commissioned by the European Commission to the Technopolis Group, these are the main challenges:
1. The absence of a defining framework and the existence of certain legal gaps.
2. The definition of legal objectives, for example in the context of the Waste Framework Directive.
3. The definition of strict numerical limits in normative regulation.
4. Overcoming delays or incomplete implementations of some European legislation.
5. Erroneous implementations within the National Action Plans. This problem is most evident in cases such as the Waste Framework Directive, the Basel Convention or the WEEE Directive.
Situation of the circular economy in Spain
Spain has also wanted to take a step forward in this strategic issue. Thus, on September 18, 2017, the Pact for a Circular Economy was signed as a key element to favor the change towards a model of sustainable development. The signing took place within the framework of the debate days organized by the Ministry of Agriculture and Fisheries, Food and Environment and the Ministry of Economy, Industry and Competitiveness, in line with the Package of Measures and the Action Plan of the European Comission.
This initiative had the collaboration of the other ministries involved, the regional communities and the Spanish Federation of Municipalities and Provinces. However, it will only be possible with the commitment of all the economic sectors (manufacturing, production, distribution and waste management), the social agents and especially the consumers and citizens, whose decisions of purchases of products, as well as their behavior in the waste separation are fundamental.
At the same time, other key agencies for the promotion of business competitiveness are adopting measures to support and promote this new economic model. This is the case of the Chamber of Spain, which has already launched a Committee on Circular Economy.
Advantages for companies that have bet on circular economy
The circular economic model is gaining adherents in the business field. On the one hand, it responds to the growing interest in corporate social responsibility; while, on the other hand, it provides all kinds of competitive advantages. According to the article Circular economy: rethinking the business model, published in Forbes magazine, these advantages are:
• Profitability. Tracking the "reduce, reuse and recycle" sequence allows companies to optimize their resources and materials to the maximum.
• Collaboration. The model promotes the mutual commitment and collaboration between companies, since the residues of some are the resources of others.
• Reputation and differentiation. Development and environment are two concepts that gain relevance in strategic plans and innovation of companies. The circular economy provides a methodological framework for environmental responsibility policies.
Successful cases
Ellen Macarthur Foundation brings successful cases that can inspire any business. Here are three examples:
- Application of an air-with as a service (ACaaS) model. Here, the initial installation costs are removed and replaced by a fixed rate. A third person, an expert in air conditioning, ensures that the installation, maintenance and use are as sustainable as possible.
- Short circuit of recycling in automotive. Renault has coined this strategy in which the whole process of recycling and reuse remains within the automotive sector. This is especially important in the case of battery and motor recycling.
- Reverse supply chain for the electronics sector. In this example, the company's effort is focused on extending the useful life of its equipment before sending it to recycling plants, where there is a significant energy expenditure.