The Circular Economy: A Solution to the Climate Crisis?

By Silia Tsigka, GLOBUS Correspondent

The sustainable use of natural resources has been imperative for the continuation of human life on Earth for years now. However, climate denialism along with uneven economic development in certain countries have been obstacles to adopting more sustainable lifestyles. And yet, the clock is still ticking – we cannot afford to wait anymore. We have 18 months to prevent the irreversible damage we have inflicted on the planet. We have 18 months to change the production processes of primary resources as well as replace some of the latter with secondary materials coming from waste or recycling procedures. Whether a circular economy will be the ideal solution or not, we have 18 months to find out (BBC, 2019).

The circular economy is an economic model whereby “new products and assets are designed and produced in a way that reduces virgin material consumption and waste generation; new business models that optimize capacity utilization are applied and resource and material loops are closed through recycling materials” (Conventus Law, 2019). In other words, the circular economy is vaguely defined as an economic context where all goods and services are recycled, repaired and reused rather than being disposed of. One the main principles of the circular economy is based on the well-known saying “one man’s trash is another man’s treasure”: waste from one productive process can be treated as an input in another productive process, which is estimated to significantly decrease the levels of primary resource use per capita required by our current lifestyles.

The concept of circular economy has been around for a long time. In 2009, China was the first country to implement a new law on the promotion of circular economy, known as the “Circular Economy Promotion Law”. The EU followed, in 2015, with the “Circular economy package” in which it proposed waste management of resources. But until this year, no country has heavily invested in a solid circular economy scheme.

Although the circular economy may seem like a reasonable policy, it is almost unattainable in developing countries. Countries that have now embarked on development as well as industrial growth schemes will not prioritize the environment the same way developed countries will. One of the main reasons for this is the “grow first then clean-up” strategy, in which countries will not invest in more environmentally friendly policies until they have reached the desired level of development and economic growth. This can be graphically depicted on the Environmental Kuznets Curve, below.

The Environmental Kuznets Curve

Pollution is expected to increase until GDP per capita reaches some ‘threshold’; this point, lying somewhere between five and eight thousand dollars, is the turning point for production to be more sustainable, as the country becomes “rich enough” to finally prioritize the environment (Stern, 2003).

To understand the benefits of the circular economy model, we have to understand the basic three faces of a circular business model. During the production phase of the cycle, products are designed to be as durable and repairable as possible to minimise waste. This is significant, especially in a time when the fast-fashion industry produces “single-use” clothes fit only for a one-time Instagram picture. Instead, in a circular economy, products are meant to outlive their utilisation ‘capacity’ during the use phase. This explains the recent boom of second-hand and vintage clothing which is fundamentally based on the idea of making the most out of our products even when we think that they are of no more use. Next, during the recovery phase, businesses try to “close the loop” of production by recycling and repairing “end-of-life” materials and products to be used in new productive processes. Lastly, the energy used for all those processes is renewable to increase resilience in the productive sector in case of external variables such as oil shocks and energy crises. Maximising the efficiency of each face of the cycle is imperative for the functioning of a circular economy.

A representative example of the recovery phase described above is the processing of toilet paper in the Netherlands to produce raw material for asphalt or other building materials (The Guardian, 2017). More specifically, the cellulose found on discarded toilet paper is cleaned and sterilized in very high temperatures, thus turned into a raw material suitable to produce asphalt. Outside of the developed world, countries like Pakistan have introduced practices inspired by the circular approach for electronic waste: designing products to have as long a life as possible and implementing recovery once their useful life has ended.

In light of the above, we can clearly see the potential implications for climate change of introducing a circular economy approach. The productive phase means that less output will be required in the first instance, which reduces demands on resources and energy; the recovery phase reduces the use of previously-unspoilt resources, reducing further the amount of extraction required; and the energy phase ensures that the level of resource use in the process is made as renewable as is possible. As a consequence? Lower emissions all round – not to mention environmental co-benefits in fields such as habitat destruction.

However, there is more to circular economy than just promoting new productive schemes. More specifically, if we adopt a circular economy, there is expected to be a change in predictive financial models, investment schemes and how revenue is spread out. There also needs to be constant and systematic monitoring for a circular economy to work effectively, given the risks of, for example, lack of communication and collaboration throughout the value chain, which potentially offer the opportunity for changes to business and organisational processes on a wider scale.

Concluding, we should note that there are significant obstacles to achieving a fully circular economic strategy: constant and systematic monitoring is required for the principle to work most effectively – a level of information gathering and processing that may not even be practical. However, we need to recognize that, along with other initiatives, the principle constitutes a promising solution for the environmental crisis we are facing. Although some of the financing and investment aspects of a circular economy scheme are still related to capitalist doctrines, which I believe are largely responsible for climate change, a more leftward leaning form of circular economy could prove effective in combating environmental challenges.

Header image: Photo by Viktor Talashuk on Unsplash

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